July 11, 1997
BY EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
On behalf of Ascent Entertainment Group, Inc. (the "Company"), submitted
for filing under the Securities Exchange Act of 1934, as amended, is a complete
copy of a Current Report on Form 8-K/A, with exhibits, relating to, among other
things, the Preferred Share Purchase Rights to be distributed by the Company to
shareholders of record on July 10, 1997 pursuant to a dividend distribution
declared on June 27, 1997. This Form 8-K/A contains no substantive revisions.
However, technical difficulties related to converting the Form 8-K that was
filed on July 8, 1997, to EDGAR format caused each section break in the document
to show up as a page break in EDGAR. With this Form 8-K/A we have attempted to
correct this formatting discrepancy.
Please do not hesitate to contact the undersigned at (303) 626-7042 with
any questions regarding the enclosed.
Very truly yours,
/s/ David B. Ehrlich
David B. Ehrlich
Assistant General Counsel
DBE/ml
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 27, 1997
ASCENT ENTERTAINMENT GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State of Incorporation)
0-27192 52-1930707
Commission File
Number(IRS
Employer
Identification No.)
1200 SEVENTEENTH STREET, SUITE 2800
DENVER, COLORADO 80202
(Address of Principal Executive Officers) (Zip Code)
(303) 626-7000
Registrant's Telephone Number
Item 5. Other Events.
On June 27, 1997, Ascent Entertainment Group, Inc. ("Ascent" or the
"Company") issued a press release confirming the consummation of COMSAT
Corporation's spin-off of its 80.67% ownership interest in Ascent to COMSAT's
shareholders through a tax-free dividend. Additionally, as noted in the release,
two COMSAT officers, Allen Flower and Alan Korobov and two COMSAT directors,
Edwin Colodny and Robert Schwartz, resigned as directors of Ascent and Mr.
Schwartz resigned as Chairman of the Ascent Board. Immediately thereafter, the
remaining members of the Ascent Board acted to set the size of the Board at six
members and elected Peter Barton, James A. Cronin, III and Paul Gould as
directors of Ascent and named Charlie Lyons, President and CEO of Ascent as
Chairman of the Board.
Additionally on June 27, 1997, the Board of Directors of Ascent
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.01 per share (the "Common
Shares"), of the Company. The dividend is payable on July 10, 1997 (the "Record
Date") to the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company at a price of $40.00 per one one-hundredth
of a Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and The Bank of New York, as Rights
Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares,
(the earlier of such dates being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of the Summary
of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on July 10, 2007 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the consolidations or combinations of the Common Shares
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights, in whole but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis with such conditions as the Board of Directors, in its sole discretion,
may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any such
person or group of affiliated or associated persons and (ii) 10%, except that
from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed as an Exhibit hereto.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
On June 27, 1997, the Company's Board of Directors also approved
certain amendments to the Company's Bylaws relating to, among other things, (i)
procedures to be followed by stockholders to nominate director candidates, to
bring business before a stockholders' meeting and to act by written consent,
(ii) eliminating the ability of stockholders to call special meetings of
stockholders and (iii) indemnification of directors and officers. The Board of
Directors also amended the employment agreements between the Company and two of
its executive officers, and entered into employment agreements with two other
executive officers. Copies of the Company's Amended and Restated Bylaws and the
Employment Agreements between the Company and its executive officers have been
filed as Exhibits hereto and are incorporated herein by reference.
Item 7.Exhibits.
3.1 Amended and Restated Bylaws of Ascent
Entertainment Group, Inc. as of June 27, 1997.
4.1 Rights Agreement, dated as of June 27,
1997, between Ascent Entertainment Group, Inc. and The Bank
of New York.
10.1 Amended and Restated Employment Agreement
by and between Ascent Entertainment Group, Inc. and Charles
Lyons.
10.2 Amended and Restated Employment Agreement
by and between Ascent Entertainment Group, Inc. and James
A. Cronin, III.
10.3 Employment Agreement by and between Ascent
Entertainment Group, Inc. and Arthur M. Aaron.
10.4 Employment Agreement by and between Ascent
Entertainment Group, Inc. and David A. Holden.
99.1 Press Release, dated June 27, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ASCENT ENTERTAINMENT GROUP, INC.
By /s/ Arthur M. Aaron
Arthur M. Aaron
Vice President, Business &
Legal Affairs and Secretary
Dated: July 11, 1997
<PAGE>
EXHIBIT LIST
3.1 Amended and Restated Bylaws of Ascent
Entertainment Group, Inc. as of June
27, 1997.
4.1 Rights Agreement, dated as of June 27,
1997, between Ascent Entertainment Group,
Inc. and The Bank of New York.
10.1 Amended and Restated Employment Agreement
by and between Ascent Entertainment Group,
Inc. and Charles Lyons.
10.2 Amended and Restated Employment Agreement
by and between Ascent Entertainment Group,
Inc. and James A. Cronin, III.
10.3 Employment Agreement by and between Ascent
Entertainment Group, Inc. and Arthur M.
Aaron.
10.4 Employment Agreement by and between Ascent
Entertainment Group, Inc. and David A.
Holden.
99.1 Press Release, dated June 27, 1997.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED BYLAWS
OF
ASCENT ENTERTAINMENT GROUP, INC.
as of June 27, 1997
ARTICLE I.
OFFICES
The Corporation shall maintain a registered office in the State of
Delaware as required by law. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders for
the election of directors shall be held at such place, within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a board of directors, subject to the rights of
any series of stock having a preference over the Common Stock of the Corporation
as to dividends or upon liquidation ("Preferred Stock") to elect directors under
specified circumstances, and transact such other business as may properly be
brought before the meeting.
<PAGE>
Section 3. Special Meetings. Subject to the rights of the holders of
any series of Preferred Stock with respect to such series of Preferred Stock,
special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute or by the Certificate of Incorporation, may be
called only by the Chairman of the Board or by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of directors which the
Corporation would have if there were no vacancies (the "Whole Board"). Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 4. Notice of Meetings. Written or printed notice of each
meeting, stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be delivered by the Corporation
to each stockholder of record entitled to vote at such meeting not less than 10
nor more than 60 days before the date of the meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail with
postage thereon prepaid, addressed to the stockholder at his address as it
appears on the stock transfer books of the Corporation. Such further notice
shall be given as may be required by law. Meetings may be held without notice if
all stockholders entitled to vote are present, or if notice is waived by those
not present in accordance with Section 2 of Article VI of these Bylaws. Any
previously scheduled meeting of the stockholders may be postponed, and (unless
the Certificate of Incorporation otherwise provides) any special meeting of the
stockholders may be canceled, by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
stockholders.
Section 5. Quorum; Adjournments of Meetings. The holders of a
majority of the stock issued and outstanding and entitled to vote in the
election of directors thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business, except as otherwise provided by the Certificate of Incorporation.
However, when specified business is to be voted on by a class or series of stock
voting as a class, the holders of a majority of the shares of such class or
series shall constitute a quorum of such class or series for the transaction of
such business. The Chairman of the meeting or the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, whether or not there is such a quorum. No notice
of the time and place of adjourned meetings need be given except as required by
law. At a duly called meeting at which a quorum is present or represented, any
business may be transacted until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
Section 6. Vote; Proxy. In all matters other than the election of
directors, when a quorum is present at any meeting, the vote of the holders of a
majority of the shares of stock having voting power present in person or
represented by proxy and entitled to vote on the matter shall decide any
question brought before such meeting, except as otherwise provided by express
provision of the statutes, the Certificate of Incorporation or these Bylaws.
Unless otherwise provided in the Certificate of Incorporation, each stockholder
shall at every meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
stockholder on the record date set by the Board of Directors as provided for in
Section 6 of Article V of these Bylaws, but no proxy shall be voted on after
three years from its date, unless the proxy provides for a longer period. All
proxies must be filed with the Secretary of the Corporation at the beginning of
each meeting in order to be counted in any vote at the meeting.
Section 7. Notice of Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or
at the direction of the Board of Directors or (c) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of notice
provided for in this Bylaw, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Bylaw.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Bylaw, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a stockholder's
notice as described above. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
re-election as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement by the Corporation naming all of the nominees
for director or specifying the size of the increased Board of Directors at least
70 days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Bylaw, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Bylaw. In the event the
Corporation calls a special meeting of stockholders for the purpose of electing
one or more directors to the Board of Directors, any such stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (A)(2) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as described
above.
(C) General. (1) Only such persons who are nominated in accordance
with the procedures set forth in this Bylaw shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Bylaw and, if any proposed
nomination or business is not in compliance with this Bylaw, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national or international news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights
(i) of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
Section 8. Action in Lieu of Meeting. Unless otherwise provided in
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders of the Corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Section 9. Record Date for Action by Written Consent. In order that
the Corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board of Directors. Any stockholder of record
seeking to have the stockholders authorize or take corporate action by written
consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within 10 days after the date on which such a request is received,
adopt a resolution fixing the record date. If no record date has been fixed by
the Board of Directors within 10 days of the date on which such a request is
received, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in Delaware,
its principal place of business or to any officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action
<PAGE>
by the Board of Directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
Section 10. Inspectors of Written Consent. In the event of the
delivery, in the manner provided by Section 9 of this Article II, to the
Corporation of the requisite written consent or consents to take corporate
action and/or any related revocation or revocations, the Corporation shall
engage nationally recognized independent inspectors of elections for the purpose
of promptly performing a ministerial review of the validity of the consents and
revocations. For the purpose of permitting the inspectors to perform such
review, no action by written consent without a meeting shall be effective until
such date as the independent inspectors certify to the Corporation that the
consents delivered to the Corporation in accordance with Section 9 of this
Article II represent at least the minimum number of votes that would be
necessary to take the corporate action. Nothing contained in this paragraph
shall in any way be construed to suggest or imply that the Board of Directors or
any stockholder shall not be entitled to contest the validity of any consent or
revocation thereof, whether before or after such certification by the
independent inspectors, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).
Section 11. Effectiveness of Written Consent. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the date the earliest dated written consent
was received in accordance with Section 9 of this Article II, a written consent
or consents signed by a sufficient number of holders to take such action are
delivered to the Corporation in the manner prescribed in Section 9 of this
Article II.
Section 12. Stockholders Record. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
ARTICLE III.
DIRECTORS
Section 1. Powers. The business of the Corporation shall be managed
by or under the direction of its Board of Directors which may exercise, in
addition to the powers and authorities by these Bylaws expressly conferred upon
them, all such powers of the Corporation and do all such lawful acts and things
as are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 2. Number of Directors. Subject to the rights of the holders
of any series of Preferred Stock to elect directors under specified
circumstances, and subject to compliance with law and the provisions of the
Corporation's Certificate of Incorporation, the number of directors shall be
fixed from time to time exclusively pursuant to a resolution adopted by a
majority of the Whole Board.
Section 3. Compensation of Directors. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, the Board of Directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 4. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 6. Special Meetings. Special meetings of the Board of
Directors shall be called by the Chairman of the Board, the President or a
majority of the Board of Directors then in office. The person or persons
authorized to call special meetings of the Board of Directors may fix the place
and time of the meetings.
Section 7. Notice. Notice of any special meeting of directors shall
be given to each director at his business or residence in writing by hand
delivery, first-class or overnight mail or courier service, telegram or
facsimile transmission, or orally by telephone. If mailed by first-class mail,
such notice shall be deemed adequately delivered when deposited in the United
States mails so addressed, with postage thereon prepaid, at least 5 days before
such meeting. If by telegram, overnight mail or courier service, such notice
shall be deemed adequately delivered when the telegram is delivered to the
telegraph company or the notice is delivered to the overnight mail or courier
service company at least 24 hours before such meeting. If by facsimile
transmission, such notice shall be deemed adequately delivered when the notice
is transmitted at least 12 hours before such meeting. If by telephone or by hand
delivery, the notice shall be given at least 12 hours prior to the time set for
the meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice of such meeting, except for amendments to these Bylaws, as provided under
Section Article IX. A meeting may be held at any time without notice if all the
directors are present or if those not present waive notice of the meeting in
accordance with Section 2 of Article VI of these Bylaws.
Section 8. Quorum. At all meetings of the Board of Directors a
majority of the number of directors constituting the Whole Board shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute, by the Certificate of Incorporation or by these Bylaws. If a quorum
shall not be present at any meeting of the Board of Directors, a majority of the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting. The directors present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
<PAGE>
Section 9. Action in Lieu of Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or such committee.
Section 10. Conference Call Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 11. Committees of the Board of Directors. The Board of
Directors may, by resolution passed by a majority of the Whole Board of
Directors, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. The Board of Directors may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it, but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the Bylaws of the Corporation. Unless
the resolution creating such committee or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock or to adopt a
certificate of ownership and merger. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 12. Minutes of Meetings. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
ARTICLE IV.
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a president, a secretary and such other
officers as in its opinion are desirable for the conduct of the business of the
Corporation. The Board of Directors may also choose a treasurer, one or more
vice presidents, and one or more assistant secretaries and assistant treasurers.
Any number of offices may be held by the same person, unless the Certificate of
Incorporation or these Bylaws otherwise provide. The Board of Directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
Section 2. Powers and Duties. Each of the officers of the
Corporation shall, unless otherwise ordered by the Board of Directors, have such
powers and duties as generally pertain to his respective office as well as such
powers and duties as from time to time may be conferred upon him by the Board of
Directors.
Section 3. Compensation. The rates and method of compensation
of all officers of the Corporation shall be fixed by the Board of Directors
or a committee thereof.
Section 4. Term of Office; Removal and Vacancy. The officers of the
Corporation shall hold office until their successors are chosen and qualify. Any
officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors.
<PAGE>
Section 5. Power to Vote Stock. Unless otherwise ordered by the
Board of Directors, the president of the Corporation shall have the full power
and authority on behalf of the Corporation to attend and to vote at any meeting
of the stockholders of any Corporation in which the Corporation may hold stock,
and may exercise on behalf of the Corporation any and all of their rights and
powers incident to the ownership of such stock at any such meeting and shall
have power and authority to execute and deliver proxies, waivers and consents on
behalf of the Corporation in connection with the exercise by the Corporation of
the rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other person or
persons.
ARTICLE V.
CAPITAL STOCK
Section 1. Certificates of Stock. The shares of the Corporation
shall be represented by a certificate or shall be uncertificated. Certificates
shall be signed by, or in the name of the Corporation by, the chairman or vice
chairman of the Board of Directors, or the president or a vice president, and by
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation.
Section 2. Facsimile Signatures. Any or all of the signatures on a
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Legends. If the Corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates or uncertificated shares
to be issued in place of any certificate or certificates theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate
or certificates or uncertificated shares, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 5. Transfer of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares such uncertificated shares shall
be canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the Corporation.
Section 6. Fixing Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stock holders of record entitled to notice of
or to vote at a meeting of stock holders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of the State of Delaware.
ARTICLE VI.
NOTICES
Section 1. Notice. Whenever, under the provisions of the statutes,
the Certificate of Incorporation or these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram or by facsimile.
Section 2. Waiver. Whenever any notice is required to be given under
the provisions of the statutes, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time state therein, shall be deemed
equivalent thereto.
ARTICLE VII.
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII.
INDEMNIFICATION; ADVANCE OF EXPENSE
Section 1. Right of Indemnification Generally.
(A) Directors and Officers. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
of whom he or she is the legal representative is or was a director or officer of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans maintained or sponsored by the Corporation, whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that except as provided in
Section 3 of this Article VIII, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors.
(B) Advance of Expenses; Undertaking. Each person referred to in
Section 1(A) of this Article VIII shall be paid by the Corporation the expenses
incurred in connection with any proceeding in advance of its final disposition,
such advances to be paid by the Corporation within 20 days after the receipt by
the Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; provided, however, that, if the General
Corporation Law of the State of Delaware requires, the advancement of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) prior to the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking by or on
behalf of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Article VIII or otherwise.
(C) Contract Right. The right to indemnification conferred in this
Article VIII and the right to be paid by the Corporation the expenses incurred
in connection with any such proceeding in advance of its final disposition
conferred in this Article VIII each shall be a contract right.
Section 2. Written Request; Determination of Entitlement. To obtain
indemnification under this Article VIII, a claimant shall submit to the
Corporation a written request, including therein or therewith such documentation
and information as is reasonably available to the claimant and is reasonably
necessary to determine whether and to what extent the claimant is entitled to
indemnification. Upon written request by a claimant for indemnification pursuant
to the first sentence of this Section 2, a determination, if required by
applicable law, with respect to the claimant's entitlement thereto shall be made
as follows: (1) if requested by the claimant, by Independent Counsel (as
hereinafter defined), or (2) if no request is made by the claimant for a
determination by Independent Counsel, (i) by the Board of Directors by a
majority vote of a quorum consisting of Disinterested Directors (as hereinafter
defined), or (ii) if a quorum of the Board of Directors consisting of
Disinterested Directors is not obtainable or, even if obtainable, such quorum of
Disinterested Directors so directs, by Independent Counsel in a written opinion
to the Board of Directors, a copy of which shall be delivered to the claimant,
or (iii) if a quorum of Disinterested Directors so directs, by the stockholders
of the Corporation. In the event the determination of entitlement to
indemnification is to be made by Independent Counsel at the request of the
claimant, the Independent Counsel shall be selected by the Board of Directors
unless there shall have occurred within six years prior to the date of the
commencement of the action, suit or proceeding for which indemnification is
claimed a "Change of Control" as defined in Section 10 of this Article VIII, in
which case the Independent Counsel shall be selected by the claimant unless the
claimant shall request that such selection be made by the Board of Directors. If
it is so determined that the claimant is entitled to indemnification, payment to
the claimant shall be made within 10 days after such determination.
Section 3. Recovery of Unpaid Claim. If a claim under Section 1 of
this Article VIII is not paid in full by the Corporation within 30 days after a
written claim pursuant to Section 2 of this Article VIII has been received by
the Corporation or, in the case of a claim pursuant to Section 1(B), within the
20-day period provided therein, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standard of conduct which makes it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, Independent Counsel or stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, Independent Counsel or stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 4. Determination of Entitlement Binding. If a determination
shall have been made pursuant to Section 2 of this Article VIII that the
claimant is entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding commenced pursuant to Section 3 of this
Article VIII.
Section 5. Corporation's Stipulation of Validity. The Corporation
shall be precluded from asserting in any judicial proceeding commenced pursuant
to Section 3 of this Article VIII that the procedures and presumptions of this
Article VIII are not valid, binding and enforceable and shall stipulate in such
proceeding that the Corporation is bound by all the provisions of this Article
VIII.
Section 6. Exclusivity; Subsequent Modification. The right to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or Disinterested Directors or otherwise. No
repeal or modification of this Article VIII shall in any way diminish or
adversely affect the rights of any director, officer, employee or agent of the
Corporation hereunder in respect of any occurrence or matter arising prior to
any such repeal or modification.
Section 7. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another Corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware. To
the extent that the Corporation maintains any policy or policies providing such
insurance, each such director or officer, and each such agent or employee to
which rights to indemnification have been granted as provided in Section 8 of
this Article VIII shall be covered by such policy or policies in accordance with
its or their terms to the maximum extent of the coverage thereunder for any such
director, officer, employee or agent.
<PAGE>
Section 8. Other Persons Granted Right of Indemnification. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and rights to be paid by the
Corporation the expenses incurred in defending any proceeding in advance of its
final disposition, to any employee or agent of the Corporation to the fullest
extent of the provisions of this Article VIII with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
Section 9. Illegality; Unenforceability. If any provision or
provisions of this Article VIII shall be held to be invalid, illegal or
unenforceable for any reason whatsoever: (1) the validity, legality and
enforceability of the remaining provisions of this Article VIII (including,
without limitation, each portion of any Section of this Article VIII containing
any such provision held to be invalid, illegal or unenforceable, that is not
itself held to be invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Article VIII (including, without limitation, each portion of
any Section of this Article VIII containing any such provision held to be
invalid, illegal or unenforceable) shall be construed so as give effect to the
intent manifested by the provision held invalid, illegal or unenforceable.
Section 10. Definitions. For purposes of this Bylaw:
(A) A "Change of Control" shall be deemed to have occurred if
(a) any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation or a corporation owned,
directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, has become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 20% or more of the
outstanding Common Stock of the Corporation; (b) individuals who are
"Continuing Directors" (which shall mean those directors holding office as
of the date the indemnified party first took office (the "Incumbent
Directors") or a director who first took office subsequent thereto whose
election or nomination was approved by a majority of the Incumbent
Directors) cease to constitute a majority of any class of the Board of
Directors; (c) there occurs a reorganization, merger, consolidation or
other corporate transaction involving the Corporation (a "Corporate
Transaction"), in each case, with respect to which the stockholders of the
Corporation immediately prior to such Corporate Transaction do not,
immediately after the Corporate Transaction, own more than 60% of the
combined voting power of the Corporation resulting from such Corporate
Transaction; or (d) the stockholders of the Corporation approve a complete
liquidation or dissolution of the Corporation.
(B) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the matter in respect of
which indemnification is sought by the claimant.
(C) "Independent Counsel" means a law firm that is nationally
recognized for its experience in matters of Delaware Corporation law
and shall not include any person who, under the applicable standards
of professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or the claimant in
an action to determine the claimant's rights under this Article
VIII.
Section 11. Form and Delivery of Communications. Any notice, request
or other communication required or permitted to be given to the Corporation
under this Article VII shall be in writing and either delivered in person or
sent by telecopy, telex, telegram, overnight mail or courier service, or
certified or registered mail, postage prepaid, return receipt requested, to the
Secretary of the Corporation.
ARTICLE IX.
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors, provided notice of the proposed change was given in the notice of the
meeting and, in the case of a meeting of the Board of Directors, in a notice
given not less than two days prior to the meeting.
<PAGE>
EXHIBIT 4.1
ASCENT ENTERTAINMENT GROUP, INC.
and
THE BANK OF NEW YORK,
Rights Agent
Rights Agreement
Dated as of June 27, 1997
<PAGE>
TABLE OF CONTENTS
Page
Section 1.
Certain
Definitions.
. . . . . .
. . . . .1
Section 2. Appointment of Rights Agent. . . . . . . . 7
Section 3.
Issue of
Right
Certificates.
. . . . . .
.7
Section 4. Form of Right Certificates. . . . . . . . . 9
Section 5. Countersignature and Registration. . . . . 10
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates. . . . . . . . . 11
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. . . . . . . . . 12
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . . . 14
Section 9. Availability of Preferred Shares. . . . . 14
Section 10. Preferred Shares Record Date. . . . . . . 15
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. . . . . . . . 16
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. . . . . . . . . . . . 26
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . 26
Section 14. Fractional Rights and Fractional Shares. . 28
Section 15. Rights of Action. . . . . . . . . . . . . 29
Section 16. Agreement of Right Holders. . . . . . . . 30
Section 17. Right Certificate Holder Not Deemed a
Stockholder. . . . . . . . . . . . . . . . 31
Section 18. Concerning the Rights Agent. . . . . . . 31
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . 32
Section 20. Duties of Rights Agent. . . . . . . . . . 33
Section 21. Change of Rights Agent. . . . . . . . . . 36
Section 22. Issuance of New Right Certificates. . . . 37
Section 23. Redemption. . . . . . . . . . . . . . . . 37
Section 24. Exchange. . . . . . . . . . . . . . . . . 38
Section 25. Notice of Certain Events. . . . . . . . . 40
Section 26. Notices. . . . . . . . . . . . . . . . . . 42
Section 27. Supplements and Amendments. . . . . . . . 43
Section 28. Successors. . . . . . . . . . . . . . . . 43
Section 29. Benefits of this Rights Agreement. . . . . 43
Section 30. Severability. . . . . . . . . . . . . . . 44
Section 31. Governing Law. . . . . . . . . . . . . . . 44
<PAGE>
Section 32. Counterparts. . . . . . . . . . . . . . . 44
Section 33. Descriptive Headings. . . . . . . . . . . 44
Signatures.
. . . . . .
. . . . . .
. . . . . .
. . . . .45
Exhibit A - Form of Certificate of Designations. . .
Exhibit B - Form of Right Certificate. . . . . . . .
Exhibit C - Summary of Rights to Purchase Preferred Shares
Agreement, dated as of June 27, 1997, between Ascent Entertainment
Group, Inc., a Delaware corporation (the "Company"), and The Bank of New York
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
of the Company outstanding on July 10, 1997 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preferred Share, upon
the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares of the Company then outstanding, but shall
not include the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares Beneficially
Owned by such Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Rights Agreement.
(c) "Associate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Rights Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent
<PAGE>
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to Beneficially Own hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that, if such date is not a
Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the preamble
hereof.
(i) "current per share market price" shall have the meaning set
forth in Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "equivalent preferred shares" shall have the meaning set forth
in Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(m) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(n) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(p) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company having the rights
and preferences set forth in the Form of Certificate of Designations attached to
this Rights Agreement as Exhibit A.
(r) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(s) "Record Date" shall have the meaning set forth in the second
paragraph hereof.
(t) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(u) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(v) "Right" shall have the meaning set forth in the second
paragraph hereof.
(w) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(x) "Rights Agent" shall have the meaning set forth in the
preamble hereof.
(y) "Security" shall have the meaning set forth in Section
11(d)(i) hereof.
(z) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(aa) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(ab) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ac) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall, prior to the Distribution
Date, also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the tenth day after the Shares Acquisition Date or (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan)
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares (including any such date which is
after the date of this Rights Agreement and prior to the issuance of the Rights;
the earlier of such dates being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between Ascent Entertainment
Group, Inc. and The Bank of New York, dated as of June 27, 1997 (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of Ascent Entertainment Group, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Ascent Entertainment Group, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. Under certain circumstances, as set forth in
the Rights Agreement, Rights issued to any Person who becomes an Acquiring
Person (as defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or automated quotation system on which the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Section
22 hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-hundredths of a Preferred Share as shall be set forth
therein at the price per one one-hundredth of a Preferred Share set forth
therein, but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate although at the date of the execution of this Rights Agreement any
such Person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
<PAGE>
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on July 10, 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date") or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price (the "Purchase Price") for each one
one-hundredth of a Preferred Share purchasable pursuant to the exercise of a
Right shall initially be $40.00, and shall be subject to adjustment from time to
time as provided in Section 11 or 13 hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof; (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder; and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and, in such case,
shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
<PAGE>
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement, in the event
any Person becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Rights Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market price of the Company's
Common Shares (determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall not take any
action which would eliminate or diminish the benefits intended to be afforded by
the Rights.
From and after the occurrence of such event, any Rights that are or
were acquired or Beneficially Owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Rights Agreement. No Right Certificate shall be issued pursuant to Section
3 that represents Rights Beneficially Owned by an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be canceled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case, as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the NASDAQ or such other system then in use, or, if on
any such date the Security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one hundred. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one-millionth of a
Preferred Share or one ten- thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one millionth of a Preferred Share)
obtained by (A) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(B) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that, it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly- owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Rights Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such issuer; and
(iv) such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable upon
the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case, as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as Beneficial Owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of the obligations of any Person subject to,
this Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Rights Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Rights Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
<PAGE>
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30-days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30-days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of New York (or of any other state of the United States
so long as such corporation is authorized to do business as a banking
institution in the State of New York, in good standing, having an office in the
State of New York, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors of the Company to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors of the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors of the Company, in its sole discretion, may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors of the
Company ordering the redemption of the Rights, the Company shall mail a notice
of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof such that the current per share market
price of one Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
THE BANK OF NEW YORK 101 Barclay Street New York, NY 10286
<PAGE>
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Ascent Entertainment Group, Inc.
One Tabor Center
1200 Seventeenth Street, Suite 1000
Denver, Colorado 80202
Attention: Corporate Secretary
Notices or demands authorized by this Rights Agreement to be given
or made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions with respect
to the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Rights Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to lower
the thresholds set forth in Sections 1(a) and 3(a) to not less than the greater
of (i) the sum of .001% and the largest percentage of the outstanding Common
Shares then known by the Company to be Beneficially Owned by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan) and (ii) 10%.
Section 28. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
<PAGE>
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person, other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
ATTEST: ASCENT ENTERTAINMENT GROUP, INC.
By______________________ By_______________________
Name: Name:
Title: Title:
ATTEST: THE BANK OF NEW YORK
By______________________ By_____________________________
Name: Name:
Title: Title:
<PAGE>
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ASCENT ENTERTAINMENT GROUP, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Ascent Entertainment Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on June 27,
1997:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock of the Corporation, par value $.01 per share (the "Preferred Stock"), and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 600,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock,
par value $.01 per share (the "Common Stock"), of the Corporation, and of
any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non- cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event. (B) The Corporation shall declare a
dividend or distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
<PAGE>
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chief Executive Officer and attested by its
Secretary this 27th day of June, 1997.
ATTEST:
By:________________________
Arthur M. Aaron Charles
Lyons
Vice President,
Business & Legal
Chairman, President
Affairs and Secretary
and CEO
<PAGE>
Form of Right Certificate
Certificate No. R- Rights
NOT EXERCISABLE AFTER JULY 10, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
ASCENT ENTERTAINMENT GROUP, INC.
This certifies that , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 27, 1997 (the "Rights Agreement"), between Ascent
Entertainment Group, Inc., a Delaware corporation (the "Company"), and The Bank
of New York (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M., New York time, on July 10, 2007 at the principal office of
the Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock of the Company, par value $.01 per share (the
"Preferred Shares"), at a purchase price of $40.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of July 10, 1997, based on the Preferred Shares as constituted
at such date. As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged, in whole or in
part, for Preferred Shares or shares of the Company's Common Stock, par value
$.01 per share.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in, lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
<PAGE>
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of , 1997.
ATTEST: ASCENT ENTERTAINMENT GROUP, INC.
By
Name: Name:
Title: Title:
COUNTERSIGNED:
THE BANK OF NEW YORK
By
Name:
Title:
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
Signature__________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- ------------------------------------------------------------
<PAGE>
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature__________________________
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: ASCENT ENTERTAINMENT GROUP, INC.
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- -------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
- -------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
<PAGE>
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On June 27, 1997, the Board of Directors of Ascent Entertainment
Group, Inc. (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock of the Company, par
value $.01 per share (the "Common Shares"). The dividend is payable on July 10,
1997 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock of the Company, par
value $.01 per share (the "Preferred Shares"), at a price of $40.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Bank of New York
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors of the Company prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of this Summary
of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on July 10, 2007 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares; or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
anti-dilution provisions.
<PAGE>
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights, in whole but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis with such conditions as the Board of Directors, in its sole discretion,
may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated July 1, 1997. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT made as of December 18, 1995, and
amended as of November 18, 1996 and June 27, 1997, by and between Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent" or the "Company"),
and Charles Lyons, a resident of the State of Colorado(the "Executive").
WHEREAS, effective on June 27, 1997 (the "Distribution Date"), COMSAT
Corporation ("COMSAT") distributed its remaining 80.67% interest in Ascent to
COMSAT's shareholders; 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;
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 June 27,
1997(the "Effective Date") and continuing thereafter for a term of five years
until June 27, 2002 unless terminated in accordance with the provisions of this
Agreement. In the event that Ascent desires to extend the employment of the
Executive, it must give written notice of such desire by the fourth 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 and Chairman 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. Executive shall be a member and the chairman of any
senior executive or management committees which are not committees of the Board
which may be established from time to time by the Board. 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
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. 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. Subject to the
authority and responsibility set forth in this Section 1(b), the Executive's
management of Ascent shall be (x) in accordance with the written 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 Ascent 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 , to the extent so required
under Ascent's Policies and Procedures.
(c) Devotion to Interests of Ascent. During the Employment Period,
the Executive shall render his business services solely in the performance of
his duties hereunder. The Executive shall use his best efforts to promote the
interests and welfare of Ascent. Notwithstanding the foregoing, the Executive
shall be entitled to undertake such outside activities (e.g., charitable,
educational, personal interests, board of directors membership, and so forth,
that do not compete with the business of Ascent) 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 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 in the entertainment industry. Such benefits shall
include reimbursement of (i) documented expenses reasonably incurred in
connection with travel and entertainment related to Ascent's business and
affairs, (ii) Executive's reasonable legal fees and costs incurred in connection
with the drafting, negotiation and execution of this Agreement, Irell &
Manella's 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 Agrossed 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. 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.
(d) Financial Planning. The Executive shall be entitled to
receive financial counseling and planning services provided by Ascent at a cost
to be approved annually by the Compensation Committee.
(e) Stock Appreciation Rights. Ascent hereby grants to Executive as
of the Effective Date stock appreciation rights ("SARs"), exercisable only for
cash, with respect to 297,500 shares of Ascent's common stock, par value $0.01
per share, each such SAR exercisable at the per-share price equal to the average
of the high and low sale prices of the Common Stock on the five trading days
commencing on the Distribution Date (the "Exercise Price"). The SARs shall be
exercisable by Executive according to the following schedule:
(i) 10% of the SARs on or after June 27, 1997;
(ii) 15% of the SARs on or after December 18, 1997;
(iii)25% of the SARs on or after December 18, 1998;
(iv) 25% of the SARs on or after December 18, 1999; and
(v) 25% of the SARs on or after December 18, 2000.
Notwithstanding the foregoing, 100% of the SARs shall immediately
vest and become immediately exercisable, without any further action by the
Executive, upon the occurrence of any "Change of Control Event" 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 so-called "going private" transaction with
Ascent). Such SARs shall be represented by a SAR agreement containing
appropriate terms consistent with the provisions of this Agreement. The SARs, to
the extent they remain unexercised, shall automatically and without further
notice terminate and become of no further force and effect only 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) December 18, 2005.
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 SARs, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised SARs shall be
adjusted in order to make such SARs, as nearly as may be practicable, equivalent
in nature and value to the SARs that would have existed had such change not
taken place. In addition, if Ascent adopts a stock-based incentive 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 SARs, other than with respect to
the vesting schedule thereof, but in no event will any term(s) applicable to the
SARs be less favorable to Executive than those set forth above.
During the Employment Period, the Executive shall be granted additional
stock-based incentives as determined by the Compensation Committee in its sole
discretion. Notwithstanding any other provision of this Agreement except Section
5(b), the Compensation Committee may in its discretion provide that any
stock-based incentives 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 December 18, 1995, 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 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, and, in the case of stock options,
terminate three months after the later of either (x) the Distribution Date, with
respect to such stock options which are fully vested as of the Distribution
Date, and (y) the date such stock options become fully vested; provided,
however, that subject to the approval of the COMSAT Compensation Committee, all
of the Executive's COMSAT stock options shall not terminate until three months
after the last such options fully vest.
(g) Consulting Compensation. If the Executive is still
employed by Ascent on the date preceding the fifth 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
(which shall be of a type and scope that would not interfere with the
Executive's rendering for a third party the type of full-time, exclusive
services rendered by the Executive for the Company hereunder), 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 stock-based
incentives previously awarded to the Executive, but the Executive shall not be
entitled to receive any Base Salary increases, bonuses, or further awards of
stock-based incentives. 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 fifth 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) Conflicting Provisions. 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 SARs), 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.
(i) Compensation Review. The Compensation Committee shall conduct a
review of the total compensation payable under this Agreement, including salary,
bonus opportunities and Fringe Benefits, based on such factors and
considerations as the Committee deems reasonable and appropriate in its sole
discretion, and the parties agree to negotiate in good faith an amendment to
this Agreement reflecting the results of such compensation review, which
amendment shall not be in the aggregate less favorable to the Executive than
currently provided in this Agreement.
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 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 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 and COMSAT,
shall, as between the Executive and Ascent and COMSAT, be presumed to have been
made during the Executive's employment by Ascent.
5. Termination. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with Ascent
may be terminated only as follows:
(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, including, without limitation, the
SARs and any other stock-based incentives, 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 (x) the remainder of the Employment Period as if this
Agreement had remained in effect until the end of such five-year Employment
Period and (y) three years 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. The
Executive shall have no obligation to seek other employment in the event of his
termination pursuant to this paragraph (a), and there shall be no offset against
amounts due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain. 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).
If Ascent exercises such option, Ascent shall have no further compensation
payment obligations under clauses (i) and (ii) above. Upon any termination of
the Executive's employment under this Section 5(a), Ascent shall establish a
"rabbi" trust, i.e., a trust for the benefit of the Executive which is
irrevocable by Ascent, but whose assets will be available to Ascent's general
creditors upon Ascent's insolvency, with terms and provisions reasonably
acceptable to the Executive, and shall contribute to such trust an amount equal
to the sum of all payments to be made to the Executive by reason of such
termination of employment, including, but not limited to, the amounts set forth
in Sections 5(a)(i), (ii) and (iii), and the amount which the Executive would
receive if he exercised all of his SARs and stock-based incentives on the date
of his termination of employment. Ascent shall at all times remain liable to
carry out its obligations under this Agreement, but such obligations may be
satisfied with the assets of such trust distributed pursuant to the terms of the
trust, and any such distribution shall reduce Ascent's obligations under this
Agreement. In all circumstances of termination under this Section 5(a), Ascent
shall remain obligated under clause (iii) and all stock-based
incentives(including the SARs) will remain exercisable for the maximum period
provided in each applicable grant, and the COMSAT Stock Awards will remain
outstanding for the period set forth in this Agreement.
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 amounts payable to the Executive under this Section 5(a) will be
contributed to the "rabbi" trust as provided above no later than one day before
such change of control becomes effective, whether or not the Executive has given
notice of termination at such time, and payable to the Executive in a lump sum
upon the effectiveness of his termination as a result of a Change in Control
Event; (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 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, which is not subject to further appeal, 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 SARs 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 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, and Ascent's payment obligations to the Executive under
Sections 2(a) and (b) shall terminate with the payment of the Executive's Base
Salary for the month in which the Employment Period terminates 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; provided that the SARs 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 in accordance with their terms,
but in no event less than one year after such termination, notwithstanding the
limitations of Section 2(e) of this Agreement. 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 SARs 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) by giving notice either prior to such Change of Control Event
becoming effective or up to 180 days following such Change of Control Event, but
termination pursuant to such notice shall not take effect in accordance with
Section 5(a)(V) in any event prior to 120 days following such Change of Control
Event, however payment to the Executive shall be made as set forth in Section
5(a)(V). The expiration of such 180-day period shall not affect the Executive's
right to give notice under Section 5(a) with respect to any other Executive
Election Event. A "Change of Control Event" shall mean and include either the
occurrence of any of the following with respect to Ascent, or any of the
following becoming highly likely to occur, in the determination of the Board:
(i) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A)
the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this clause (i), the following acquisitions shall not constitute
a Change of Control: (1) any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition by any corporation pursuant to
a transaction which complies with clauses (1), (2) and (3) of clause (iii)
below; or (ii) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or (iii) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (1) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (3) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or (iv) approval by the stockholders of
the Company of a complete liquidation or dissolution of the Company.
(b) In the event that Ascent adopts any "change of control"
provisions applicable to any Ascent benefits plans, respectively, providing for
the accelerated vesting and/or payment of any benefits for its senior management
group, solely to the extent that such provisions give Executive greater rights
than those provided in paragraph (a) above, such better provisions shall apply
to the Executive to the same extent as other Ascent senior executives on a
favored nations basis with respect to the benefits affected by such 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, 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.
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) substantially similar to (A) any service or
product currently provided by Ascent during the Employment Period; (B) any
service or product which directly evolves from or directly 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 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; provided, that the foregoing prohibition shall not preclude the
Executive from hiring any such person who responds to a general solicitation on
behalf of the Executive or an entity with whom the Executive is associated at
such time.
(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 reasonable as an inducement to Ascent to enter into this Agreement, 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 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. 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 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 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) 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. Indemnification and Gross-up for Excise Taxes.
(a) The Company hereby indemnifies the Executive and holds the Executive
harmless from and against any and all liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) the
Executive may incur as a result of the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any similar provision
of state or local income tax law (the "Excise Tax"), to the end that the
Executive shall be placed in the same tax position with respect to all payments
under this Agreement and all other payments from the Company to the Executive in
the nature of compensation as the Executive would have been in if the Excise Tax
had never been enacted. In furtherance of such indemnification, the Company
shall pay to the Executive a payment (the "Gross-Up Payment") in an amount such
that, after payment by the Executive of all taxes, including income taxes and
the Excise Tax imposed on the Gross-Up Payment and any interest or penalties
(other than interest and penalties imposed by reason of the Executive's failure
to file timely tax returns or to pay taxes shown due on such returns and any tax
liability, including interest and penalties, unrelated to the Excise Tax or the
Gross-Up Amount), the Executive shall be placed in the same tax position with
respect to all payments under this Agreement and all other payments from the
Company to the Executive in the nature of compensation as the Executive would
have been in if the Excise Tax had never been enacted. At such time or times
necessary to carry out the purposes of this Section 12 in view of the
withholding requirement of Section 4999(c)(1) of the Code, but in no event later
than December 31 of each year in which the Executive receives a payment from the
Company under this Agreement or in the nature of compensation, the Company shall
pay to the Executive one or more Gross-Up Payments for all payments under this
Agreement and any other payments in the nature of compensation which the Company
determines are "excess parachute payments" under Section 280G(b)(1) of the Code
("Excess Parachute Payments"). If, through a determination of the Internal
Revenue Service or any state or local taxing authority (a "Taxing Authority"),
or a judgment of any court, the Executive becomes liable for an amount of Excise
Tax not covered by the Gross-Up Payment payable pursuant to the preceding
sentence, the Company shall pay the Executive an additional Gross-up Payment to
make the Executive whole for such additional Excise Tax; provided, however,
that, pursuant to Section 12, the Company shall have the right to require the
Executive to protest, contest, or appeal any such determination or judgment. For
purposes of this Section 12, any amount which the Company is required to
withhold under Sections 3402 or 4999 of the Code or under any other provision of
law shall be deemed to have been paid to the Executive.
(b) Upon payment to the Executive of a Gross-Up Payment, the Company shall
provide the Executive with a written statement showing the Company's computation
of such Gross-Up Payment and the Excess Parachute Payments and Excise Tax to
which it relates, and setting forth the Company's determination of the amount of
gross income the Executive is required to recognize as a result of such payments
and the Executive's liability for the Excise Tax. The Executive shall cause the
Executive's federal, state, and local income tax returns for the period in which
the Executive receives such Gross-Up Payment to be prepared and filed in
accordance with such statement, and upon such filing, the Executive shall
certify in writing to the Company that such returns have been so prepared and
filed. At the Executive's request, the Company shall furnish to the Executive,
at no cost to the Executive, assistance in preparing the Executive's federal,
state, and local income tax returns for the period in which the Executive
receives such Gross-Up Payment in accordance with such statement.
Notwithstanding the provisions of Section 12(a), the Company shall not be
obligated to indemnify the Executive from and against any tax liability, cost or
expense (including, without limitation, any liability for the Excise Tax or
attorney's fees or costs) to the extent such tax liability, cost or expense is
attributable to the Executive's failure to comply with the provisions of the
Section 12(b).
(c) If any controversy arises between the Executive and a Taxing Authority
with respect to the treatment on any return of the Gross-Up Amount, or of any
payment the Executive receives from the Company as an Excess Parachute Payment,
or with respect to any return which a Taxing Authority asserts should show an
Excess Parachute Payment, including, without limitation, any audit, protest to
an appeals authority of a Taxing Authority or litigation (a "Controversy"), the
Company shall have the right, solely with respect to a Controversy, to direct
the Executive to protest or contest any proposed adjustment or deficiency,
initiate an appeals procedure with any Taxing Authority, commence any judicial
proceeding, make any settlement agreement, or file a claim for refund of tax,
and the Executive shall not take any of such steps without the prior written
approval of the Company. If the Company elects, the Executive shall be
represented in any Controversy by attorneys, accountants, and other advisors
selected by the Company, and the Company shall pay the fees, costs and expenses
of such attorneys, accountants, or advisors, and any tax liability the Executive
may incur as a result of such payment. The Executive shall promptly notify the
Company of any communication with a Taxing Authority, and the Executive shall
promptly furnish to the Company copies of any written correspondence, notices,
or documents received from a Taxing Authority relating to a Controversy. The
Executive shall cooperate fully with the Company in the handling of any
Controversy by furnishing to the Company any information or documentation
relating to or bearing upon the Controversy; provided, however, that the
Executive shall not be obligated to furnish to the Company copies of any portion
of the Executive's tax returns which do not bear upon, and are not affected by,
the Controversy.
(d) The Executive shall pay over to the Company, within ten (10) days
after the Executive's receipt thereof, any refund the Executive receives from
any Taxing Authority of all or any portion of the Gross-Up Payment or the Excise
Tax, together with any interest the Executive receives from such Taxing
Authority on such refund. For purposes of this Section 12(d), a reduction in the
Executive's tax liability attributable to the previous payment of the Gross-Up
Amount or the Excise Tax shall be deemed to be a refund. If the Executive would
have received a refund of all or any portion of the Gross-Up Payment or the
Excise Tax, except the a Taxing Authority offset the amount of such refund
against other tax liabilities, interest, or penalties, the Executive shall pay
the amount of such offset over to the Company together with the amount of
interest the Executive would have received from the Taxing Authority if such
offset had been an actual refund, within ten (10) days after receipt of notice
from the Taxing Authority of such offset.
13. 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.
14. 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.
15. 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:
Charles Lyons
4681 W. Hanoverian Way
Littleton, Colorado 80123
With a copy to:
Irell & Manella
Suite 900
1800 Avenue of the Stars
Los Angeles, California 90067
Attention: Ed Zeldow, Esq.
Telecopier No.: (310) 203-7199
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Denver, Colorado 80202
Attention: James A. Cronin, III
Telecopier No. (303) 595-0823
With a copy to:
Ascent Entertainment Group
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Arthur M. Aaron
Telecopier No. (303) 595-0127
16. Miscellaneous. This Agreement constitutes the entire agreement, and
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The validity, interpretation,
performance and enforcement of the Agreement shall be governed by the laws of
the State of Colorado. The headings contained herein are for reference purposes
only and shall not in any way affect the
meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
/s/ Charles Lyons
Charles Lyons, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: Charles Neinas
Title: Chairman, Compensation Committee
<PAGE>
EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT made as of June 3, 1996, and amended
as of June 27, 1997, by and between Ascent Entertainment Group, Inc., a Delaware
corporation ("Ascent"), a Delaware corporation, and James A. Cronin, III, a
resident of the State of Colorado(the "Executive").
WHEREAS, Ascent desires to employ the Executive as Executive Vice
President, Chief Financial Officer and Chief Operating Officer of Ascent, and
the Executive desires to accept such employment, on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, Ascent and the
Executive agree as follows:
1. Employment; Duties.
(a) Employment and Employment Period. Ascent shall employ the
Executive pursuant to this Agreement for a period (the "Employment Period")
commencing on June 27, 1997(the "Effective Date") and continuing thereafter for
a term of five years until June 27, 2002 to serve as Executive Vice President,
Chief Financial Officer and Chief Operating Officer of Ascent or its successor
entity unless terminated in accordance with the provisions of this Agreement. In
the event that Ascent desires to extend the employment of the Executive, it must
give written notice of such desire by the third anniversary of the Effective
Date, and after such notice the parties shall enter into an exclusive
negotiation period of not less than six months, unless otherwise mutually agreed
upon by the parties in writing. Each 12 month period ending on the anniversary
date of the Effective Date is sometimes referred to herein as a "year of the
Employment Period."
(b) Offices, Duties and Responsibilities. Effective on June
27, 1997, Executive shall be elected Executive Vice President, Chief Financial
Officer and Chief Operating Officer of Ascent. The Executive shall report
directly and solely to the Chief Executive Officer and the Board of Directors of
Ascent (the "Board"); provided that so long as Charlie Lyons is Chief Executive
Officer and/or Chairman of the Board, the Executive shall report solely to Mr.
Lyons and the Board. Throughout the Employment Period, Ascent shall cause the
Executive to be a member of the Board. The Executive's offices shall be located
at Ascent's headquarters, which are presently located in Denver, Colorado. The
Executive shall have all duties and authority customarily accorded a chief
operating officer, including, without limitation, the lead responsibility with
full autonomy, subject to the customary authority and direction of the Board and
the Chief Executive Officer, to direct and develop the operating capabilities
and performance of Ascent. The Executive shall be a member of any senior
executive or management committees which are not committees of the Board which
may be established from time to time by the Board. The Executive shall not be
required to perform services other than those comparable in scope, dignity and
stature to those customarily performed by chief operating officers and chief
financial officers of companies similar to Ascent.
(c) Devotion to Interests of Ascent. During the Employment
Period, the Executive shall render his business services solely in the
performance of his duties hereunder. The Executive shall use his best efforts to
promote the interests and welfare of Ascent. Notwithstanding the foregoing, the
Executive shall be entitled to undertake such outside activities (e.g.,
charitable, educational, personal interests, board of directors membership, and
so forth, that do not compete with the business of Ascent as it exist on the
Effective Date or do not unreasonably or materially interfere with the
performance of his duties hereunder as reasonably determined by the Board in
consultation with the Executive.
2. Compensation and Fringe Benefits.
(a) Base Compensation. Ascent shall pay the
Executive a base salary ("Base Salary") at the rate of $400,000 per year
during the Employment Period with payments made in installments in accordance
with Ascent's regular practice for compensating executive personnel, provided
that in no event shall such payments be made less frequently than twice per
month. The Base Salary for the Executive shall be reviewed for increases each
year during the Employment Period commencing the second year of the Employment
Period. Any Base Salary increases shall be approved by the Board in its sole
discretion.
(b) Bonus Compensation. The Executive will be eligible to
receive bonuses ("Annual Bonus") during the Employment Period in accordance with
the following parameters: (i) the target bonus for each year during the
Employment Period shall be 75% of Base Salary for achieving 100% of the target
level for the performance measures; and (ii) the performance measures, the
relative weight to be accorded each performance measure and the amount of bonus
payable in relation to the target bonus for achieving more or less than 100% of
the target level for the performance measures shall be determined for each year
during the Employment Period by the Compensation Committee after consultation
with the Executive. As part of the consultation process set forth in the
preceding sentence, the Executive shall assist Ascent's Chief Executive Officer
in preparing, before the end of each fiscal year ending during the Employment
Period, a business plan for Ascent with respect to at least the following three
year period. The Board shall consider and approve such plans on an annual basis,
subject to such modifications as are otherwise consistent with this Agreement,
and each fiscal year the current plan shall be considered by the Compensation
Committee as the basis for establishing the bonus standards for such year with
such reasonable modifications as the Compensation Committee may reasonably
determine and which are consistent with this Agreement. During the final partial
fiscal year of the Employment Period, the Annual Bonus shall be based on the
standards set by the Compensation Committee for that fiscal year and pro rated
for the period during which the Executive is employed.
(c) Fringe Benefits. The Executive also shall be entitled to
participate in group health, dental and disability insurance programs, and any
group profit sharing, deferred compensation, supplemental life insurance or
other benefit plans as are generally made available by Ascent to the senior
executives of Ascent on a favored nations basis, which benefits shall be
comparable, in the aggregate, to the benefits available to senior executives of
similarly situated companies in the entertainment industry. Such benefits shall
include reimbursement of (i) documented expenses reasonably incurred in
connection with travel and entertainment related to Ascent's business and
affairs, (ii) Executive's reasonable legal fees and costs incurred in connection
with the drafting, negotiation and execution of this Agreement; provided that
such fees and costs shall not exceed $5,000, and (iii) a monthly payment for or
reimbursement of automobile and other transportation related expenses of $1,100
per month. All benefits described in the foregoing (i) and (ii) that are
reportable as earned or unearned income will be "grossed up" by Ascent in
connection with federal and state tax obligations to provide Executive with
appropriate net tax coverage so that the benefits received by the Executive from
the foregoing clauses (i) and (ii) shall be net of income and employment taxes
thereon. 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.
(d) Stock Appreciation Rights. Ascent hereby grants to
Executive as of the Effective Date stock appreciation rights ("SARs"),
exercisable only for cash, with respect to 297,500 shares of Ascent's common
stock, par value $0.01 per share, each such SAR exercisable at the per-share
price equal to the average of the high and low sale prices of the Common Stock
on the five trading days commencing on the Distribution Date (the "Exercise
Price"). The SARs shall be exercisable by Executive according to the following
schedule:
(i) 10% of the SARs on or after June 27, 1997;
(ii) 15% of the SARs on or after June 3, 1998;
(iii)25% of the SARs on or after June 3, 1999;
(iv) 25% of the SARs on or after June 3, 2000;
(v) 25% of the SARs on or after June 3, 2001. Notwithstanding
the foregoing, 100% of the SARs shall immediately vest and become immediately
exercisable, without any further action by the Executive, upon the occurrence of
any "Change of Control Event" 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
so-called Agoing private@ transaction with Ascent). Such SARs shall be
represented by a SAR agreement containing appropriate terms consistent with the
provisions of this Agreement. The SARs, to the extent they remain unexercised,
shall automatically and without further notice terminate and become of no
further force and effect only 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) December 18, 2005.
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 SARs, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised SARs shall be
adjusted in order to make such SARs , as nearly as may be practicable,
equivalent in nature and value to the SARs that would have existed had such
change not taken place. In addition, if Ascent adopts a stock-based incentive
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 SARs, other than
with respect to the vesting schedule thereof, but in no event will any term(s)
applicable to the SARs be less favorable to Executive than those set forth
above.
During the Employment Period, the Executive shall be granted additional
stock-based incentives as determined by the Compensation Committee in its sole
discretion. Notwithstanding any other provision of this Agreement except Section
5(b), the Compensation Committee may in its discretion provide that any
stock-based incentives granted to the Executive which have not vested prior to
his termination of employment shall continue to vest in accordance with their
original terms as if the Executive's employment had not terminated.
(e) Consulting Compensation. If the Executive is still
employed by Ascent on the date preceding the fifth 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
(which shall be of a type and scope that would not interfere with the
Executive's rendering for a third party the type of full-time, exclusive
services rendered by the Executive for the Company hereunder), 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 stock-based
incentives previously awarded to the Executive, but the Executive shall not be
entitled to receive any Base Salary increases, bonuses, or further awards of
stock-based incentives. 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 fifth 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.
(f) Conflicting Provisions. 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 Ascent and/or any of its
affiliated or related entities, on the other hand, relating to stock options
(including the SARs), life insurance, health insurance, any other employee
equity participation, profit sharing or retirement plan, group health plan or
other employee benefits (individually and collectively referred to herein as the
"Fringe Benefits"), the provisions of this Agreement will control.
(g) Financial Planning. The Executive shall be entitled to
receive financial counseling and planning services provided by Ascent at an
annual cost to be approved by the Compensation Committee.
(h) Compensation Review. The Compensation Committee shall
conduct a review of the total compensation payable under this Agreement,
including salary, bonus opportunities and Fringe Benefits, based on such factors
and considerations as the Committee deems reasonable and appropriate in its sole
discretion, and the parties agree to negotiate in good faith an amendment to
this Agreement reflecting the results of such compensation review, which
amendment shall not be in the aggregate less favorable to the Executive than
currently provided in this Agreement.
3. Trade Secrets; Return of Documents and Property.
(a) Executive acknowledges that during the course of his
employment he will receive secret, confidential and proprietary information
("Trade Secrets") of Ascent and of other companies with which Ascent does
business on a confidential basis and that Executive will create and develop
Trade Secrets for the benefit of Ascent. Trade Secrets shall include, without
limitation, (i) literary, dramatic or other works, screenplays, stories,
adaptations, scripts, treatments, formats, "bibles," scenarios, characters,
titles of any kind and any rights therein, custom databases, "know-how,"
formulae, secret processes or machines, inventions, computer programs (including
documentation of such programs) (collectively, "Technical Trade Secrets"), and
(ii) matters of a business nature, such as customer data and proprietary
information about costs, profits, markets and sales, customer databases, and
other information of a similar nature to the extent not available to the public,
and plans for future development (collectively, "Business Trade Secrets"). All
Trade Secrets disclosed to or created by Executive shall be deemed to be the
exclusive property of Ascent (as the context may require). Executive
acknowledges that Trade Secrets have economic value to Ascent due to the fact
that Trade Secrets are not generally known to the public or the trade and that
the unauthorized use or disclosure of Trade Secrets is likely to be detrimental
to the interests of Ascent and its subsidiaries. Executive therefore agrees to
hold in strict confidence and not to disclose to any third party any Trade
Secret acquired or created or developed by Executive during the term of this
Agreement except (i) when Executive is required to use or disclose any Trade
Secret in the proper course of the Executive's rendition of services to Ascent
hereunder, (ii) when such Trade Secret becomes public knowledge other than
through a breach of this Agreement, or (iii) when Executive is required to
disclose any Trade Secret pursuant to any valid court order in which the
Executive is compelled to disclose such Trade Secret. The Executive shall notify
Ascent immediately of any such court order in order to enable Ascent to contest
such order's validity. For a period of two (2) years after termination of the
Employment Period for all Business Trade Secrets and for a period of five (5)
years after termination of the Employment Period for all Technical Trade
Secrets, the Executive shall not use or otherwise disclose Trade Secrets unless
such information (x) becomes public knowledge or is generally known in the
entertainment or sports industry among executives comparable to the Executive
other than through a breach of this Agreement, (y) is disclosed to the Executive
by a third party who is entitled to receive and disclose such Trade Secret, or
(z) is required to be disclosed pursuant to any valid court order, in which case
the Executive shall notify Ascent immediately of any such court order in order
to enable Ascent to contest such order's validity.
(b) Upon the effective date of notice of the Executive's or
Ascent's election to terminate this Agreement, or at any time upon the request
of Ascent, the Executive (or his heirs or personal representatives) shall
deliver to Ascent (i) all documents and materials containing or otherwise
relating to Trade Secrets or other information relating to Ascent's business and
affairs, and (ii) all documents, materials and other property belonging to
Ascent, which in either case are in the possession or under the control of the
Executive (or his heirs or personal representatives). The Executive shall be
entitled to keep his personal records relating to Ascent's business and affairs
except to the extent those contain documents or materials described in clause
(i) or (ii) of the preceding sentence, in which case Executive may retain copies
for his personal and confidential use.
4. Discoveries and Works. All discoveries and works made or
conceived by the Executive during his employment by Ascent pursuant to this
Agreement, jointly or with others, that relate to Ascent's activities
("Discoveries and Works") shall be owned by Ascent. Discoveries and Works shall
include, without limitation, literary, dramatic or other works, screenplays,
stories, adaptations, scripts, treatments, formats, "bibles," scenarios,
characters, titles of any kind and any rights therein, other works of
authorship, inventions, computer programs (including documentation of such
programs), technical improvements, processes and drawings. The Executive shall
(i) promptly notify, make full disclosure to, and execute and deliver any
documents reasonably requested by, Ascent to evidence or better assure title to
such Discoveries and Works in Ascent, (ii) assist Ascent in obtaining or
maintaining for itself at its own expense United States and foreign copyrights,
trade secret protection or other protection of any and all such Discoveries and
Works, and (iii) promptly execute, whether during his employment by Ascent or
thereafter, all applications or other endorsements necessary or appropriate to
maintain copyright and other rights for Ascent and to protect their title
thereto. Any Discoveries and Works which, within sixty days after the
termination of the Executive's employment by Ascent, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to practice
by the Executive and which pertain to work performed by the Executive while with
Ascent shall, as between the Executive and Ascent be presumed to have been made
during the Executive's employment by Ascent.
5. Termination. This Agreement shall remain in effect during
the Employment Period, and this Agreement and Executive's employment with
Ascent may be terminated only as follows:
(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, including, without
limitation, the SARs and any other stock-based incentives, all of which will
fully vest, to the extent not previously vested, immediately upon such
termination becoming effective and final. Without limiting the foregoing, in the
event of an Executive Election or if the Executive's employment is terminated
without "cause," the Executive shall be entitled to receive the following
benefits through the longer of (a) the remainder of the Employment Period as if
this Agreement had remained in effect until the end of such four-year Employment
Period and (B) three years following the date of such termination (the "Duration
Period"): (i) his then current Base Salary; (ii) an Annual Bonus equal to
seventy-five percent (75%) of his then current Base Salary; and (iii) all other
benefits provided pursuant to Sections 2(c), (d) and (e) of this Agreement. The
Executive shall have no obligation to seek other employment in the event of his
termination pursuant to this paragraph (a), and there shall be no offset against
amounts due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain. 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).
If Ascent exercises such option, Ascent shall have no further compensation
payment obligations under clauses (i) and (ii) above. Upon any termination of
the Executive's employment under this Section 5(a), Ascent shall establish a
"rabbi" trust, i.e., a trust for the benefit of the Executive which is
irrevocable by Ascent, but whose assets will be available to Ascent's general
creditors upon Ascent's insolvency, with terms and provisions reasonably
acceptable to the Executive, and shall contribute to such trust an amount equal
to the sum of all payments to be made to the Executive by reason of such
termination of employment, including, but not limited to, the amounts set forth
in Sections 5(a)(i), (ii) and (iii), and the amount which the Executive would
receive if he exercised all of his SARs and stock-based incentives on the date
of his termination of employment. Ascent shall at all times remain liable to
carry out its obligations under this Agreement, but such obligations may be
satisfied with the assets of such trust distributed pursuant to the terms of the
trust, and any such distribution shall reduce Ascent's obligations under this
Agreement. In all circumstances of termination under this Section 5(a), Ascent
shall remain obligated under clause (iii) and all stock-based
incentives(including the SARs) will remain exercisable for the maximum period
provided in each applicable grant.
An "Executive Election Event" shall be any of the following: (I) any
substantial reduction (except in connection with the termination of his
employment voluntarily by the Executive or by Ascent for "cause" as defined
below) by Ascent, without the Executive's express written consent, of his
responsibilities as Executive Vice President, Chief Financial Officer and Chief
Operating Officer of Ascent; (II) any change in the reporting structure set
forth in Section 1(b) above; (III) any reduction in Executive's title such that
he is no longer the chief operating officer nor chief financial officer , or the
functional equivalent thereof; (IV) a "Change of Control Event" (as defined in
Section 7(a) below); provided that in such event, the amounts payable to the
Executive under this Section 5(a) will be contributed to the "rabbi" trust as
provided above no later than one day before such change of control becomes
effective, whether or not the Executive has given notice of termination at such
time, and payable to the Executive in a lump sum upon the effectiveness of his
termination as a result of a Change in Control Event; (V) any other material
default of this Agreement which continues for ten (10) business days following
Ascent's receipt of written notice from the Executive specifying the manner in
which Ascent is in default of this Agreement; (VI) the Board=s requiring
Executive to be based at any office location other than the principal offices of
Ascent, or the relocation, without Executive=s consent, of such principal
offices to a location outside the greater Denver area prior to the second
anniversary of the Effective Date; or (VII) any purported termination of
Executive=s 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, which is not subject to further appeal, of
the Executive of commission of a felony, whether or not such felony was
committed in connection with Ascent's business, or (iv) any material breach by
the Executive of Section 8 hereof. If Ascent shall terminate the Executive's
employment for "cause," there will be no forfeiture, penalty, reduction or other
adverse effect upon any vested rights or interests relating to any Fringe
Benefits. In such event, Ascent, in full satisfaction of all of Ascent's
obligations under this Agreement and in respect of the termination of the
Executive's employment with Ascent, shall pay the Executive his Base Salary, a
prorated Annual Bonus and all other compensation, benefits and reimbursement
through the date of termination of his employment, provided that the SARs and
any other stock options granted to the Executive under the Ascent option or any
successor plan shall terminate three months after the date of termination of his
employment for "cause".
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, and Ascent's payment obligations to the
Executive under Section 2(a) and (b) shall terminate with the payment of the
Executive's Base Salary for the month in which the Employment Period terminates
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; provided that the SARs 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 in accordance with their
terms, but in no event less than one year after such termination,
notwithstanding the limitations of Section 2(e) of this Agreement. 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 SARs 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) by giving notice either prior to such Change of Control Event
becoming effective or up to 180 days following such Change of Control Event, but
termination pursuant to such notice shall not take effect in accordance with
Section 5(a)(IV) in any event prior to 120 days following such Change of Control
Event, provided, however, payment to the Executive shall be made as set forth in
Section 5(a)(IV). The expiration of such 180-day period shall not affect the
Executive's right to give notice under Section 5(a) with respect to any other
Executive Election Event. A "Change of Control Event" shall mean and include
either the occurrence of any of the following with respect to Ascent, or any of
the following becoming highly likely to occur, in the determination of the
Board: (i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this clause (i), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of clause
(iii) below; or (ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or (iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(b) In the event that Ascent adopts any "change of control"
provisions applicable to any Ascent benefits plans, respectively, providing for
the accelerated vesting and/or payment of any benefits for its senior management
group, solely to the extent that such provisions give Executive greater rights
than those provided in paragraph (a) above, such better provisions shall apply
to the Executive to the same extent as other Ascent senior executives on a
favored nations basis with respect to the benefits affected by such 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, 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.
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) substantially similar to (A)
any service or product currently provided by Ascent during the Employment
Period; (B) any service or product which directly evolves from or directly
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
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; provided, that the foregoing prohibition shall not
preclude the Executive from hiring any such person who responds to a general
solicitation on behalf of the Executive or an entity with whom the Executive is
associated at such time.
(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 reasonable as an inducement to Ascent to enter into this
Agreement, 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
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. 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 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 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) 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. Indemnification and Gross-up for Excise Taxes.
(a) The Company hereby indemnifies the Executive and holds the Executive
harmless from and against any and all liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) the
Executive may incur as a result of the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any similar provision
of state or local income tax law (the "Excise Tax"), to the end that the
Executive shall be placed in the same tax position with respect to all payments
under this Agreement and all other payments from the Company to the Executive in
the nature of compensation as the Executive would have been in if the Excise Tax
had never been enacted. In furtherance of such indemnification, the Company
shall pay to the Executive a payment (the "Gross-Up Payment") in an amount such
that, after payment by the Executive of all taxes, including income taxes and
the Excise Tax imposed on the Gross-Up Payment and any interest or penalties
(other than interest and penalties imposed by reason of the Executive's failure
to file timely tax returns or to pay taxes shown due on such returns and any tax
liability, including interest and penalties, unrelated to the Excise Tax or the
Gross-Up Amount), the Executive shall be placed in the same tax position with
respect to all payments under this Agreement and all other payments from the
Company to the Executive in the nature of compensation as the Executive would
have been in if the Excise Tax had never been enacted. At such time or times
necessary to carry out the purposes of this Section 12 in view of the
withholding requirement of Section 4999(c)(1) of the Code, but in no event later
than December 31 of each year in which the Executive receives a payment from the
Company under this Agreement or in the nature of Compensation, the Company shall
pay to the Executive one or more Gross-Up Payments for all payments under this
Agreement and any other payments in the nature of compensation which the Company
determines are "excess parachute payments" under Section 280G(b)(1) of the Code
("Excess Parachute Payments"). If, through a determination of the Internal
Revenue Service or any state or local taxing authority (a "Taxing Authority"),
or a judgment of any court, the Executive becomes liable for an amount of Excise
Tax not covered by the Gross-Up Payment payable pursuant to the preceding
sentence, the Company shall pay the Executive an additional Gross-up Payment to
make the Executive whole for such additional Excise Tax; provided, however,
that, pursuant to Section 12, the Company shall have the right to require the
Executive to protest, contest, or appeal any such determination or judgment. For
purposes of this Section 12, any amount which the Company is required to
withhold under Sections 3402 or 4999 of the Code or under any other provision of
law shall be deemed to have been paid to the Executive.
(b) Upon payment to the Executive of a Gross-Up Payment, the Company shall
provide the Executive with a written statement showing the Company's computation
of such Gross-Up Payment and the Excess Parachute Payments and Excise Tax to
which it relates, and setting forth the Company's determination of the amount of
gross income the Executive is required to recognize as a result of such payments
and the Executive's liability for the Excise Tax. The Executive shall cause the
Executive's federal, state, and local income tax returns for the period in which
the Executive receives such Gross-Up Payment to be prepared and filed in
accordance with such statement, and upon such filing, the Executive shall
certify in writing to the Company that such returns have been so prepared and
filed. At the Executive's request, the Company shall furnish to the Executive,
at no cost to the Executive, assistance in preparing the Executive's federal,
state, and local income tax returns for the period in which the Executive
receives such Gross-Up Payment in accordance with such statement.
Notwithstanding the provisions of Section 12(a), the Company shall not be
obligated to indemnify the Executive from and against any tax liability, cost or
expense (including, without limitation, any liability for the Excise Tax or
attorney's fees or costs) to the extent such tax liability, cost or expense is
attributable to the Executive's failure to comply with the provisions of the
Section 12(b).
(c) If any controversy arises between the Executive and a Taxing Authority
with respect to the treatment on any return of the Gross-Up Amount, or of any
payment the Executive receives from the Company as an Excess Parachute Payment,
or with respect to any return which a Taxing Authority asserts should show an
Excess Parachute Payment, including, without limitation, any audit, protest to
an appeals authority of a Taxing Authority or litigation (a "Controversy"), the
Company shall have the right, solely with respect to a Controversy, to direct
the Executive to protest or contest any proposed adjustment or deficiency,
initiate an appeals procedure with any Taxing Authority, commence any judicial
proceeding, make any settlement agreement, or file a claim for refund of tax,
and the Executive shall not take any of such steps without the prior written
approval of the Company. If the Company elects, the Executive shall be
represented in any Controversy by attorneys, accountants, and other advisors
selected by the Company, and the Company shall pay the fees, costs and expenses
of such attorneys, accountants, or advisors, and any tax liability the Executive
may incur as a result of such payment. The Executive shall promptly notify the
Company of any communication with a Taxing Authority, and the Executive shall
promptly furnish to the Company copies of any written correspondence, notices,
or documents received from a Taxing Authority relating to a Controversy. The
Executive shall cooperate fully with the Company in the handling of any
Controversy by furnishing to the Company any information or documentation
relating to or bearing upon the Controversy; provided, however, that the
Executive shall not be obligated to furnish to the Company copies of any portion
of the Executive's tax returns which do not bear upon, and are not affected by,
the Controversy.
(d) The Executive shall pay over to the Company, within ten (10) days
after the Executive's receipt thereof, any refund the Executive receives from
any Taxing Authority of all or any portion of the Gross-Up Payment or the Excise
Tax, together with any interest the Executive receives from such Taxing
Authority on such refund. For purposes of this Section 12(d), a reduction in the
Executive's tax liability attributable to the previous payment of the Gross-Up
Amount or the Excise Tax shall be deemed to be a refund. If the Executive would
have received a refund of all or any portion of the Gross-Up Payment or the
Excise Tax, except the a Taxing Authority offset the amount of such refund
against other tax liabilities, interest, or penalties, the Executive shall pay
the amount of such offset over to the Company together with the amount of
interest the Executive would have received from the Taxing Authority if such
offset had been an actual refund, within ten (10) days after receipt of notice
from the Taxing Authority of such offset.
13. 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.
14. 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.
15. 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:
James A. Cronin, III
18947 E. Hinsdale Ave.
Aurora, Colorado 80016
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Charlie Lyons
Telecopier No. (303) 595-0823
With a copy to:
Ascent Entertainment Group
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Arthur M. Aaron
Telecopier No. (303) 595-0127
16. Miscellaneous. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or representations
made by either party other than those contained herein. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The validity,
interpretation, performance and enforcement of the Agreement shall be governed
by the laws of the State of Colorado. The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
/s/ James A. Cronin, III
James A. Cronin, III, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ Charles Lyons
Charles Lyons, President and Chief
Executive Officer
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This AGREEMENT made as of June 27, 1997, by and between Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent" or the "Company"),
and Arthur M. Aaron, a resident of the State of Colorado(the "Executive").
WHEREAS, effective on June 27, 1997 (the "Distribution Date"), COMSAT
Corporation ("COMSAT") distributed its remaining 80.67% interest in Ascent to
COMSAT's shareholders; and
WHEREAS, Ascent desires to employ the Executive as Vice President,
Business and Legal Affairs and Corporate Secretary of Ascent, and the Executive
desires to accept such employment, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, Ascent and the Executive
agree as follows:
1. Employment; Duties.
(a) Employment and Employment Period. Ascent shall employ the
Executive to serve as Vice President, Business and Legal Affairs and Corporate
Secretary of Ascent or its successor entity for a period (the "Employment
Period") commencing on June 27, 1997 (the "Effective Date") and continuing
thereafter for a term of five years until June 27, 2002 unless terminated in
accordance with the provisions of this Agreement. 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. The Executive shall
report directly to the President and Chief Executive Officer of Ascent (the
"CEO"). 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 customarily accorded a senior legal officer,
general counsel and corporate secretary.
(c) Devotion to Interests of Ascent. During the Employment Period,
the Executive shall render his business services solely in the performance of
his duties hereunder. The Executive shall use his best efforts to promote the
interests and welfare of Ascent. Notwithstanding the foregoing, the Executive
shall be entitled to undertake such outside activities (e.g., charitable,
educational, personal interests, board of directors membership, and so forth,
that do not compete with the business of Ascent as do not unreasonably or
materially interfere with the performance of his duties hereunder as reasonably
determined by the CEO 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 $175,000
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 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 35% of Base Salary for achieving 100% of the target level for
the performance measures; and (ii) the performance measures, the relative weight
to be accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the target
level for the performance measures shall be determined for each year during the
Employment Period by the Compensation Committee after consultation with the CEO
and the Executive.
(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. Such benefits shall include
reimbursement of documented expenses reasonably incurred in connection with
travel and entertainment related to Ascent's business and affairs. All benefits
described in the foregoing sentence 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 sentence shall be net of
income and employment taxes thereon. 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.
(d) Stock Appreciation Rights. Ascent hereby grants to Executive as
of the Effective Date stock appreciation rights ("SARs"), exercisable only for
cash, with respect to 100,000 shares of Ascent's common stock, par value $0.01
per share, each such SAR exercisable at the per-share price equal to the average
of the high and low sale prices of the Common Stock on the five trading days
commencing on the Distribution Date (the "Exercise Price"). The SARs shall be
exercisable by Executive according to the following schedule:
(i) 10% of the SARs on or after June 27, 1997;
(ii) 15% of the SARs on or after December 18, 1997;
(iii)25% of the SARs on or after December 18, 1998;
(iv) 25% of the SARs on or after December 18, 1999;
(v) 25% of the SARs on or after December 18, 2000.
Notwithstanding the foregoing, 100% of the SARs shall immediately
vest and become immediately exercisable, without any further action by the
Executive, upon the occurrence of any "Change of Control Event" 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 so-called "going private" transaction with
Ascent). Such SARs shall be represented by a SAR agreement containing
appropriate terms consistent with the provisions of this Agreement. The SARs, to
the extent they remain unexercised, shall automatically and without further
notice terminate and become of no further force and effect only 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) December 18, 2005.
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 SARs, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised SARs shall be
adjusted in order to make such SARs, as nearly as may be practicable, equivalent
in nature and value to the SARs that would have existed had such change not
taken place. In addition, if Ascent adopts a stock-based incentive 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 SARs, other than with respect to
the vesting schedule thereof, but in no event will any term(s) applicable to the
SARs be less favorable to Executive than those set forth above.
During the Employment Period, the Executive shall be granted additional
stock-based incentives as determined by the Compensation Committee in its sole
discretion. Notwithstanding any other provision of this Agreement except Section
5(b), the Compensation Committee may in its discretion provide that any
stock-based incentives granted to the Executive which have not vested prior to
his termination of employment shall continue to vest in accordance with their
original terms as if the Executive's employment had not terminated.
(e) Conflicting Provisions. 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 Ascent and any of its
affiliated or related entities, on the other hand, relating to stock-based
incentives (including the SARs), life insurance, health insurance, any other
employee equity participation, profit sharing or retirement plan, group health
plan or other employee benefits (individually and collectively referred to
herein as the "Fringe Benefits"), the provisions of this Agreement will control.
(f) Compensation Review. The Compensation Committee shall
conduct a review of the total compensation payable under this Agreement,
including salary, bonus opportunities and Fringe Benefits, based on such factors
and considerations as the Committee deems reasonable and appropriate in its sole
discretion, and the parties agree to negotiate in good faith an amendment to
this Agreement reflecting the results of such compensation review, which
amendment shall not be in the aggregate less favorable to the Executive than
currently provided in this Agreement.
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, ATechnical 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, ABusiness Trade Secrets@). All
Trade Secrets disclosed to or created by Executive shall be deemed to be the
exclusive property of Ascent (as the context may require). Executive
acknowledges that Trade Secrets have economic value to Ascent due to the fact
that Trade Secrets are not generally known to the public or the trade and that
the unauthorized use or disclosure of Trade Secrets is likely to be detrimental
to the interests of Ascent and its subsidiaries. Executive therefore agrees to
hold in strict confidence and not to disclose to any third party any Trade
Secret acquired or created or developed by Executive during the term of this
Agreement except (i) when Executive is required to use or disclose any Trade
Secret in the proper course of the Executive's rendition of services to Ascent
hereunder, (ii) when such Trade Secret becomes public knowledge other than
through a breach of this Agreement, or (iii) when Executive is required to
disclose any Trade Secret pursuant to any valid court order in which the
Executive is compelled to disclose such Trade Secret. The Executive shall notify
Ascent immediately of any such court order in order to enable Ascent to contest
such order's validity. For a period of two (2) years after termination of the
Employment Period for all Business Trade Secrets and for a period of five (5)
years after termination of the Employment Period for all Technical Trade
Secrets, the Executive shall not use or otherwise disclose Trade Secrets unless
such information (x) becomes public knowledge or is generally known in the
entertainment or sports industry among executives comparable to the Executive
other than through a breach of this Agreement, (y) is disclosed to the Executive
by a third party who is entitled to receive and disclose such Trade Secret, or
(z) is required to be disclosed pursuant to any valid court order, in which case
the Executive shall notify Ascent immediately of any such court order in order
to enable Ascent to contest such order's validity.
(b) Upon the effective date of notice of the Executive's or
Ascent's election to terminate this Agreement, or at any time upon the request
of Ascent, the Executive (or his heirs or personal representatives) shall
deliver to Ascent (i) all documents and materials containing or otherwise
relating to Trade Secrets or other information relating to Ascent's business and
affairs, and (ii) all documents, materials and other property belonging to
Ascent, which in either case are in the possession or under the control of the
Executive (or his heirs or personal representatives). The Executive shall be
entitled to keep his personal records relating to Ascent's business and affairs
except to the extent those contain documents or materials described in clause
(i) or (ii) of the preceding sentence, in which case Executive may retain copies
for his personal and confidential use.
4. Discoveries and Works. All discoveries and works made or conceived by
the Executive during his employment by Ascent pursuant to this Agreement,
jointly or with others, that relate to Ascent's activities ("Discoveries and
Works") shall be owned by Ascent. Discoveries and Works shall include, without
limitation, literary, dramatic or other works, screenplays, stories,
adaptations, scripts, treatments, formats, "bibles," scenarios, characters,
titles of any kind and any rights therein, other works of authorship,
inventions, computer programs (including documentation of such programs),
technical improvements, processes and drawings. The Executive shall (i) promptly
notify, make full disclosure to, and execute and deliver any documents
reasonably requested by, Ascent to evidence or better assure title to such
Discoveries and Works in Ascent, (ii) assist Ascent in obtaining or maintaining
for itself at its own expense United States and foreign copyrights, trade secret
protection or other protection of any and all such Discoveries and Works, and
(iii) promptly execute, whether during his employment by Ascent or thereafter,
all applications or other endorsements necessary or appropriate to maintain
copyright and other rights for Ascent and to protect their title thereto. Any
Discoveries and Works which, within sixty days after the termination of the
Executive's employment by Ascent, are made, disclosed, reduced to a tangible or
written form or description, or are reduced to practice by the Executive and
which pertain to work performed by the Executive while with Ascent and COMSAT,
shall, as between the Executive and Ascent and COMSAT, be presumed to have been
made during the Executive's employment by Ascent.
5. Termination. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with Ascent
may be terminated only as follows:
(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, including, without limitation, the
SARs and any other stock-based incentives 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 (x) the remainder of the Employment Period as if this
Agreement had remained in effect until the end of such five-year Employment
Period and (y) one year following the date of such termination (the "Duration
Period"): (i) his then current Base Salary; (ii) an Annual Bonus equal to
thirty-five percent (35%) of his then current Base Salary; and (iii) all other
benefits provided pursuant to Sections 2(c) and (d) of this Agreement. The
Executive shall have no obligation to seek other employment in the event of his
termination pursuant to this paragraph (a), and there shall be no offset against
amounts due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain. 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).
If Ascent exercises such option, Ascent shall have no further compensation
payment obligations under clauses (i) and (ii) above. Upon any termination of
the Executive's employment under this Section 5(a), Ascent shall establish a
"rabbi" trust, i.e., a trust for the benefit of the Executive which is
irrevocable by Ascent, but whose assets will be available to Ascent's general
creditors upon Ascent's insolvency, with terms and provisions reasonably
acceptable to the Executive, and shall contribute to such trust an amount equal
to the sum of all payments to be made to the Executive by reason of such
termination of employment, including, but not limited to, the amounts set forth
in Sections 5(a)(i), (ii) and (iii), and the amount which the Executive would
receive if he exercised all of his SARs and stock-based incentives on the date
of his termination of employment. Ascent shall at all times remain liable to
carry out its obligations under this Agreement, but such obligations may be
satisfied with the assets of such trust distributed pursuant to the terms of the
trust, and any such distribution shall reduce Ascent's obligations under this
Agreement. In all circumstances of termination under this Section 5(a), Ascent
shall remain obligated under clause (iii) and all stock-based
incentives(including the SARs) 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 Vice President, Business and Legal Affairs 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 senior legal officer or general counsel of
comparably sized companies in the entertainment industry; (IV) a "Change of
Control Event" (as defined in Section 7(a) below); provided that in such event,
the amounts payable to the Executive under this Section 5(a) will be contributed
to the "rabbi" trust as provided above no later than one day before such change
of control becomes effective, whether or not the Executive has given notice of
termination at such time, and payable to the Executive in a lump sum upon the
effectiveness of his termination as a result of a Change in Control Event; (V)
any other material default of this Agreement which continues for ten (10)
business days following Ascent's receipt of written notice from the Executive
specifying the manner in which Ascent is in default of this Agreement; (VI) the
Board=s requiring Executive to be based at any office location other than the
principal offices of Ascent, or the relocation, without Executive=s consent, of
such principal offices to a location outside the greater Denver area prior to
the second anniversary of the Effective Date; or (VII) any purported termination
of Executive=s 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 CEO 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 CEO 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 CEO
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 SARs and any other stock options granted to the Executive
under the Ascent option or any successor plan shall terminate three months after
the date of termination of his employment for "cause".
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, and Ascent's payment obligations to the Executive under Section
2(a) and (b) shall terminate with the payment of the Executive's Base Salary for
the month in which the Employment Period terminates 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; provided that the SARs 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 in accordance with their terms, but in no event less
than one year after such termination, notwithstanding the limitations of Section
2(d) of this Agreement. 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 SARs 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(d) 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) by giving notice either prior to such Change of Control Event
becoming effective or up to 180 days following such Change of Control Event, but
termination pursuant to such notice shall not take effect in accordance with
Section 5(a)(IV) in any event prior to 120 days following such Change of Control
Event, provided, however, payment to the Executive shall be made as set forth in
Section 5(a)(IV). The expiration of such 180-day period shall not affect the
Executive's right to give notice under Section 5(a) with respect to any other
Executive Election Event. A "Change of Control Event" shall mean and include
either the occurrence of any of the following with respect to Ascent, or any of
the following becoming highly likely to occur, in the determination of the
Board: (i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this clause (i), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of clause
(iii) below; or (ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or (iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(b) In the event that Ascent adopts any "change of control"
provisions applicable to any Ascent benefits plans, respectively, providing for
the accelerated vesting and/or payment of any benefits for its senior management
group, solely to the extent that such provisions give Executive greater rights
than those provided in paragraph (a) above, such better provisions shall apply
to the Executive to the same extent as other Ascent senior executives on a
favored nations basis with respect to the benefits affected by such 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, 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.
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) substantially similar to (A) any service or
product currently provided by Ascent during the Employment Period; (B) any
service or product which directly evolves from or directly 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 served by Ascent
during the Non-Competition Period.
(b) Non-Solicitation of Employees. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of any
person or entity other than Ascent) solicit, or assist any person or entity
other than Ascent to solicit, any officer, director, executive or employee
(other than an administrative or clerical employee) of Ascent to leave his or
her employment.
(c) Reasonableness; Interpretation. The Executive acknowledges and
agrees, solely for purposes of determining the enforceability of this Section 8
(and not for purposes of determining the amount of money damages or for any
other reason), that (i) the markets served by Ascent are national and
international and are not dependent on the geographic location of executive
personnel or the businesses by which they are employed; (ii) the length of the
Non-Competition Period is linked to the term of the Employment Period and the
severance benefit provided for in Section 5(a); and (iii) the above covenants
are reasonable as an inducement to Ascent to enter into this Agreement, 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 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. 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 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 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) 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. Indemnification and Gross-up for Excise Taxes.
(a) The Company hereby indemnifies the Executive and holds the Executive
harmless from and against any and all liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) the
Executive may incur as a result of the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any similar provision
of state or local income tax law (the "Excise Tax"), to the end that the
Executive shall be placed in the same tax position with respect to all payments
under this Agreement and all other payments from the Company to the Executive in
the nature of compensation as the Executive would have been in if the Excise Tax
had never been enacted. In furtherance of such indemnification, the Company
shall pay to the Executive a payment (the "Gross-Up Payment") in an amount such
that, after payment by the Executive of all taxes, including income taxes and
the Excise Tax imposed on the Gross-Up Payment and any interest or penalties
(other than interest and penalties imposed by reason of the Executive's failure
to file timely tax returns or to pay taxes shown due on such returns and any tax
liability, including interest and penalties, unrelated to the Excise Tax or the
Gross-Up Amount), the Executive shall be placed in the same tax position with
respect to all payments under this Agreement and all other payments from the
Company to the Executive in the nature of compensation as the Executive would
have been in if the Excise Tax had never been enacted. At such time or times
necessary to carry out the purposes of this Section 12 in view of the
withholding requirement of Section 4999(c)(1) of the Code, but in no event later
than December 31 of each year in which the Executive receives a payment from the
Company under this Agreement or in the nature of compensation, the Company shall
pay to the Executive one or more Gross-Up Payments for all payments under this
Agreement and any other payments in the nature of compensation which the Company
determines are "excess parachute payments" under Section 280G(b)(1) of the Code
("Excess Parachute Payments"). If, through a determination of the Internal
Revenue Service or any state or local taxing authority (a "Taxing Authority"),
or a judgment of any court, the Executive becomes liable for an amount of Excise
Tax not covered by the Gross-Up Payment payable pursuant to the preceding
sentence, the Company shall pay the Executive an additional Gross-up Payment to
make the Executive whole for such additional Excise Tax; provided, however,
that, pursuant to Section 12, the Company shall have the right to require the
Executive to protest, contest, or appeal any such determination or judgment. For
purposes of this Section 12, any amount which the Company is required to
withhold under Sections 3402 or 4999 of the Code or under any other provision of
law shall be deemed to have been paid to the Executive.
(b) Upon payment to the Executive of a Gross-Up Payment, the Company shall
provide the Executive with a written statement showing the Company's computation
of such Gross-Up Payment and the Excess Parachute Payments and Excise Tax to
which it relates, and setting forth the Company's determination of the amount of
gross income the Executive is required to recognize as a result of such payments
and the Executive's liability for the Excise Tax. The Executive shall cause the
Executive's federal, state, and local income tax returns for the period in which
the Executive receives such Gross-Up Payment to be prepared and filed in
accordance with such statement, and upon such filing, the Executive shall
certify in writing to the Company that such returns have been so prepared and
filed. At the Executive's request, the Company shall furnish to the Executive,
at no cost to the Executive, assistance in preparing the Executive's federal,
state, and local income tax returns for the period in which the Executive
receives such Gross-Up Payment in accordance with such statement.
Notwithstanding the provisions of Section 12(a), the Company shall not be
obligated to indemnify the Executive from and against any tax liability, cost or
expense (including, without limitation, any liability for the Excise Tax or
attorney's fees or costs) to the extent such tax liability, cost or expense is
attributable to the Executive's failure to comply with the provisions of the
Section 12(b).
(c) If any controversy arises between the Executive and a Taxing Authority
with respect to the treatment on any return of the Gross-Up Amount, or of any
payment the Executive receives from the Company as an Excess Parachute Payment,
or with respect to any return which a Taxing Authority asserts should show an
Excess Parachute Payment, including, without limitation, any audit, protest to
an appeals authority of a Taxing Authority or litigation (a "Controversy"), the
Company shall have the right, solely with respect to a Controversy, to direct
the Executive to protest or contest any proposed adjustment or deficiency,
initiate an appeals procedure with any Taxing Authority, commence any judicial
proceeding, make any settlement agreement, or file a claim for refund of tax,
and the Executive shall not take any of such steps without the prior written
approval of the Company. If the Company elects, the Executive shall be
represented in any Controversy by attorneys, accountants, and other advisors
selected by the Company, and the Company shall pay the fees, costs and expenses
of such attorneys, accountants, or advisors, and any tax liability the Executive
may incur as a result of such payment. The Executive shall promptly notify the
Company of any communication with a Taxing Authority, and the Executive shall
promptly furnish to the Company copies of any written correspondence, notices,
or documents received from a Taxing Authority relating to a Controversy. The
Executive shall cooperate fully with the Company in the handling of any
Controversy by furnishing to the Company any information or documentation
relating to or bearing upon the Controversy; provided, however, that the
Executive shall not be obligated to furnish to the Company copies of any portion
of the Executive's tax returns which do not bear upon, and are not affected by,
the Controversy.
(d) The Executive shall pay over to the Company, within ten (10) days
after the Executive's receipt thereof, any refund the Executive receives from
any Taxing Authority of all or any portion of the Gross-Up Payment or the Excise
Tax, together with any interest the Executive receives from such Taxing
Authority on such refund. For purposes of this Section 12(d), a reduction in the
Executive's tax liability attributable to the previous payment of the Gross-Up
Amount or the Excise Tax shall be deemed to be a refund. If the Executive would
have received a refund of all or any portion of the Gross-Up Payment or the
Excise Tax, except the a Taxing Authority offset the amount of such refund
against other tax liabilities, interest, or penalties, the Executive shall pay
the amount of such offset over to the Company together with the amount of
interest the Executive would have received from the Taxing Authority if such
offset had been an actual refund, within ten (10) days after receipt of notice
from the Taxing Authority of such offset.
13. 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.
14. 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.
15. 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:
Arthur M. Aaron
5911 E. Crestline Dr.
Greenwood Village, Colorado 80111
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Denver, Colorado 80202
Attention: James A. Cronin, III
Telecopier No. (303) 595-0823
With a copy to:
Ascent Entertainment Group
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Assistant General Counsel
Telecopier No. (303) 595-0127
16. Miscellaneous. This Agreement constitutes the entire agreement, and
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The validity, interpretation,
performance and enforcement of the Agreement shall be governed by the laws of
the State of Colorado. The headings contained herein are for reference purposes
only and shall not in any way affect the
meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
/s/ Arthur M. Aaron
Arthur M. Aaron, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ James A Cronin, III
Title: Executive Vice President,
Chief Financial Officer and Chief
Operating Officer
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This AGREEMENT made as of June 27, 1997, by and between Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent" or the "Company"),
and David A. Holden, a resident of the State of Colorado(the "Executive").
WHEREAS, effective on June 27, 1997 (the "Distribution Date"), COMSAT
Corporation ("COMSAT") distributed its remaining 80.67% interest in Ascent to
COMSAT's shareholders; and
WHEREAS, Ascent desires to employ the Executive as Vice President, Finance
and Controller of Ascent, and the Executive desires to accept such employment,
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, Ascent and the Executive
agree as follows:
1. Employment; Duties.
(a) Employment and Employment Period. Ascent shall employ the
Executive to serve as Vice President, Finance and Controller of Ascent or its
successor entity for a period (the "Employment Period") commencing on June 27,
1997 (the "Effective Date") and continuing thereafter for a term of five years
until June 27, 2002 unless terminated in accordance with the provisions of this
Agreement. 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. The Executive shall
report directly to the Chief Financial Officer of Ascent (the "CFO"). 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 customarily accorded the principal accounting officer and
controller, and such other duties as determined by the CFO from time to time.
(c) Devotion to Interests of Ascent. During the Employment Period,
the Executive shall render his business services solely in the performance of
his duties hereunder. The Executive shall use his best efforts to promote the
interests and welfare of Ascent. Notwithstanding the foregoing, the Executive
shall be entitled to undertake such outside activities (e.g., charitable,
educational, personal interests, board of directors membership, and so forth,
that do not compete with the business of Ascent as do not unreasonably or
materially interfere with the performance of his duties hereunder as reasonably
determined by the CEO 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 $150,000
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 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 35% of Base Salary for achieving 100% of the target level for
the performance measures; and (ii) the performance measures, the relative weight
to be accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the target
level for the performance measures shall be determined for each year during the
Employment Period by the Compensation Committee after consultation with the CFO
and the Executive.
(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. Such benefits shall include
reimbursement of documented expenses reasonably incurred in connection with
travel and entertainment related to Ascent's business and affairs, which shall
be deemed to include expenses related to Executive's membership in a Denver area
country club on substantially the same basis as paid by Ascent on the date
hereof. All benefits described in the foregoing sentence that are reportable as
earned or unearned income will be Agrossed 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
sentence shall be net of income and employment taxes thereon. 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.
(d) Stock Appreciation Rights. Ascent hereby grants to Executive as
of the Effective Date stock appreciation rights ("SARs"), exercisable only for
cash, with respect to 50,000 shares of Ascent's common stock, par value $0.01
per share, each such SAR exercisable at the per-share price equal to the average
of the high and low sale prices of the Common Stock on the five trading days
commencing on the Distribution Date (the "Exercise Price"). The SARs shall be
exercisable by Executive according to the following schedule:
(i) 2,500 SARs on or after June 27, 1997;
(ii) an additional 2,500 SARs on or after April 1, 1998;
(iii) an additional 10,000 SARs on or after June 27, 1998;
(iv) an additional 5,000 SARs on or after April 1, 1999;
(v) an additional 10,000 SARs on or after June 27, 1999;
and
(vi) an additional 20,000 SARs on or after June 27, 2000.
Notwithstanding the foregoing, 100% of the SARs shall immediately
vest and become immediately exercisable, without any further action by the
Executive, upon the occurrence of any "Change of Control Event" 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 so-called "going private" transaction with
Ascent). Such SARs shall be represented by a SAR agreement containing
appropriate terms consistent with the provisions of this Agreement. The SARs, to
the extent they remain unexercised, shall automatically and without further
notice terminate and become of no further force and effect only 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) December 18, 2005.
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 SARs, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised SARs shall be
adjusted in order to make such SARs, as nearly as may be practicable, equivalent
in nature and value to the SARs that would have existed had such change not
taken place. In addition, if Ascent adopts a stock-based incentive 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 SARs, other than with respect to
the vesting schedule thereof, but in no event will any term(s) applicable to the
SARs be less favorable to Executive than those set forth above.
During the Employment Period, the Executive shall be granted additional
stock-based incentives as determined by the Compensation Committee in its sole
discretion. Notwithstanding any other provision of this Agreement except Section
5(b), the Compensation Committee may in its discretion provide that any
stock-based incentives granted to the Executive which have not vested prior to
his termination of employment shall continue to vest in accordance with their
original terms as if the Executive's employment had not terminated.
(e) Conflicting Provisions. 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 Ascent and/or any of its
affiliated or related entities, on the other hand, relating to stock-based
incentives (including the SARs), life insurance, health insurance, any other
employee equity participation, profit sharing or retirement plan, group health
plan or other employee benefits (individually and collectively referred to
herein as the "Fringe Benefits"), the provisions of this Agreement will control.
3. Trade Secrets; Return of Documents and Property.
(a) Executive acknowledges that during the course of his employment
he will receive secret, confidential and proprietary information ("Trade
Secrets") of Ascent and of other companies with which Ascent does business on a
confidential basis and that Executive will create and develop Trade Secrets for
the benefit of Ascent. Trade Secrets shall include, without limitation, (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, ATechnical 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, ABusiness Trade Secrets@). All Trade Secrets
disclosed to or created by Executive shall be deemed to be the exclusive
property of Ascent (as the context may require). Executive acknowledges that
Trade Secrets have economic value to Ascent due to the fact that Trade Secrets
are not generally known to the public or the trade and that the unauthorized use
or disclosure of Trade Secrets is likely to be detrimental to the interests of
Ascent and its subsidiaries. Executive therefore agrees to hold in strict
confidence and not to disclose to any third party any Trade Secret acquired or
created or developed by Executive during the term of this Agreement except (i)
when Executive is required to use or disclose any Trade Secret in the proper
course of the Executive's rendition of services to Ascent hereunder, (ii) when
such Trade Secret becomes public knowledge other than through a breach of this
Agreement, or (iii) when Executive is required to disclose any Trade Secret
pursuant to any valid court order in which the Executive is compelled to
disclose such Trade Secret. The Executive shall notify Ascent immediately of any
such court order in order to enable Ascent to contest such order's validity. For
a period of two (2) years after termination of the Employment Period for all
Business Trade Secrets and for a period of five (5) years after termination of
the Employment Period for all Technical Trade Secrets, the Executive shall not
use or otherwise disclose Trade Secrets unless such information (x) becomes
public knowledge or is generally known in the entertainment or sports industry
among executives comparable to the Executive other than through a breach of this
Agreement, (y) is disclosed to the Executive by a third party who is entitled to
receive and disclose such Trade Secret, or (z) is required to be disclosed
pursuant to any valid court order, in which case the Executive shall notify
Ascent immediately of any such court order in order to enable Ascent to contest
such order's validity.
(b) Upon the effective date of notice of the Executive's or
Ascent's election to terminate this Agreement, or at any time upon the request
of Ascent, the Executive (or his heirs or personal representatives) shall
deliver to Ascent (i) all documents and materials containing or otherwise
relating to Trade Secrets or other information relating to Ascent's business and
affairs, and (ii) all documents, materials and other property belonging to
Ascent, which in either case are in the possession or under the control of the
Executive (or his heirs or personal representatives). The Executive shall be
entitled to keep his personal records relating to Ascent's business and affairs
except to the extent those contain documents or materials described in clause
(i) or (ii) of the preceding sentence, in which case Executive may retain copies
for his personal and confidential use.
4. Discoveries and Works. All discoveries and works made or conceived by
the Executive during his employment by Ascent pursuant to this Agreement,
jointly or with others, that relate to Ascent's activities ("Discoveries and
Works") shall be owned by Ascent. Discoveries and Works shall include, without
limitation, literary, dramatic or other works, screenplays, stories,
adaptations, scripts, treatments, formats, "bibles," scenarios, characters,
titles of any kind and any rights therein, other works of authorship,
inventions, computer programs (including documentation of such programs),
technical improvements, processes and drawings. The Executive shall (i) promptly
notify, make full disclosure to, and execute and deliver any documents
reasonably requested by, Ascent to evidence or better assure title to such
Discoveries and Works in Ascent, (ii) assist Ascent in obtaining or maintaining
for itself at its own expense United States and foreign copyrights, trade secret
protection or other protection of any and all such Discoveries and Works, and
(iii) promptly execute, whether during his employment by Ascent or thereafter,
all applications or other endorsements necessary or appropriate to maintain
copyright and other rights for Ascent and to protect their title thereto. Any
Discoveries and Works which, within sixty days after the termination of the
Executive's employment by Ascent, are made, disclosed, reduced to a tangible or
written form or description, or are reduced to practice by the Executive and
which pertain to work performed by the Executive while with Ascent shall, as
between the Executive and Ascent, be presumed to have been made during the
Executive's employment by Ascent.
5. Termination. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with Ascent
may be terminated only as follows:
(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, including, without limitation, the
SARs and any other stock-based incentives, 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 (x) the remainder of the Employment Period as if this
Agreement had remained in effect until the end of such five-year Employment
Period and (y) one year following the date of such termination (the "Duration
Period"): (i) his then current Base Salary; (ii) an Annual Bonus equal to
thirty-five percent (35%) of his then current Base Salary; and (iii) all other
benefits provided pursuant to Sections 2(c) and (d) of this Agreement. The
Executive shall have no obligation to seek other employment in the event of his
termination pursuant to this paragraph (a), and there shall be no offset against
amounts due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain. 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).
If Ascent exercises such option, Ascent shall have no further compensation
payment obligations under clauses (i) and (ii) above. Upon any termination of
the Executive's employment under this Section 5(a), Ascent shall establish a
"rabbi" trust, i.e., a trust for the benefit of the Executive which is
irrevocable by Ascent, but whose assets will be available to Ascent's general
creditors upon Ascent's insolvency, with terms and provisions reasonably
acceptable to the Executive, and shall contribute to such trust an amount equal
to the sum of all payments to be made to the Executive by reason of such
termination of employment, including, but not limited to, the amounts set forth
in Sections 5(a)(i), (ii) and (iii), and the amount which the Executive would
receive if he exercised all of his SARs and stock-based incentives on the date
of his termination of employment. Ascent shall at all times remain liable to
carry out its obligations under this Agreement, but such obligations may be
satisfied with the assets of such trust distributed pursuant to the terms of the
trust, and any such distribution shall reduce Ascent's obligations under this
Agreement. In all circumstances of termination under this Section 5(a), Ascent
shall remain obligated under clause (iii) and all stock-based
incentives(including the SARs) 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 Vice President, Finance and Controller 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 principal accounting officer and controller of
comparably sized companies in the entertainment industry; (IV) a "Change of
Control Event" (as defined in Section 7(a) below); provided that in such event,
the amounts payable to the Executive under this Section 5(a) will be contributed
to the "rabbi" trust as provided above no later than one day before such change
of control becomes effective, whether or not the Executive has given notice of
termination at such time, and payable to the Executive in a lump sum upon the
effectiveness of his termination as a result of a Change in Control Event; (V)
any other material default of this Agreement which continues for ten (10)
business days following Ascent's receipt of written notice from the Executive
specifying the manner in which Ascent is in default of this Agreement; (VI) the
Board=s requiring Executive to be based at any office location other than the
principal offices of Ascent, or the relocation, without Executive=s consent, of
such principal offices to a location outside the greater Denver area prior to
the second anniversary of the Effective Date; or (VII) any purported termination
of Executive=s 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 CFO 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 CFO 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 CFO
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 SARs and any other stock options granted to the Executive
under the Ascent option or any successor plan shall terminate three months after
the date of termination of his employment for "cause".
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, and Ascent's payment obligations to the Executive under Section
2(a) and (b) shall terminate with the payment of the Executive's Base Salary for
the month in which the Employment Period terminates 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; provided that the SARs 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 in accordance with their terms, but in no event less
than one year after such termination, notwithstanding the limitations of Section
2(d) of this Agreement. 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 SARs 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(d) 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)(IV) by giving notice either prior to such Change of Control
Event becoming effective or up to 180 days following such Change of Control
Event, but termination pursuant to such notice shall not take effect in
accordance with Section 5(a) in any event prior to 120 days following such
Change of Control Event, however payment to the Executive shall be made as set
forth in Section 5(a)(IV). The expiration of such 180-day period shall not
affect the Executive's right to give notice under Section 5(a) with respect to
any other Executive Election Event. A "Change of Control Event" shall mean and
include either the occurrence of any of the following with respect to Ascent, or
any of the following becoming highly likely to occur, in the determination of
the Board: (i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this clause (i), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of clause
(iii) below; or (ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or (iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (2) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(b) In the event that Ascent adopts any "change of control"
provisions applicable to any Ascent benefits plans, respectively, providing for
the accelerated vesting and/or payment of any benefits for its senior management
group, solely to the extent that such provisions give Executive greater rights
than those provided in paragraph (a) above, such better provisions shall apply
to the Executive to the same extent as other Ascent senior executives on a
favored nations basis with respect to the benefits affected by such 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, 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.
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) substantially similar to (A) any service or
product currently provided by Ascent during the Employment Period; (B) any
service or product which directly evolves from or directly 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 served by Ascent
during the Non-Competition Period.
(b) Non-Solicitation of Employees. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of any
person or entity other than Ascent) solicit, or assist any person or entity
other than Ascent to solicit, any officer, director, executive or employee
(other than an administrative or clerical employee) of Ascent to leave his or
her employment.
(c) Reasonableness; Interpretation. The Executive acknowledges and
agrees, solely for purposes of determining the enforceability of this Section 8
(and not for purposes of determining the amount of money damages or for any
other reason), that (i) the markets served by Ascent are national and
international and are not dependent on the geographic location of executive
personnel or the businesses by which they are employed; (ii) the length of the
Non-Competition Period is linked to the term of the Employment Period and the
severance benefit provided for in Section 5(a); and (iii) the above covenants
are reasonable as an inducement for Ascent to enter into this Agreement, 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 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. 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 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 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) 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. Indemnification and Gross-up for Excise Taxes.
(a) The Company hereby indemnifies the Executive and holds the Executive
harmless from and against any and all liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) the
Executive may incur as a result of the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any similar provision
of state or local income tax law (the "Excise Tax"), to the end that the
Executive shall be placed in the same tax position with respect to all payments
under this Agreement and all other payments from the Company to the Executive in
the nature of compensation as the Executive would have been in if the Excise Tax
had never been enacted. In furtherance of such indemnification, the Company
shall pay to the Executive a payment (the "Gross-Up Payment") in an amount such
that, after payment by the Executive of all taxes, including income taxes and
the Excise Tax imposed on the Gross-Up Payment and any interest or penalties
(other than interest and penalties imposed by reason of the Executive's failure
to file timely tax returns or to pay taxes shown due on such returns and any tax
liability, including interest and penalties, unrelated to the Excise Tax or the
Gross-Up Amount), the Executive shall be placed in the same tax position with
respect to all payments under this Agreement and all other payments from the
Company to the Executive in the nature of compensation as the Executive would
have been in if the Excise Tax had never been enacted. At such time or times
necessary to carry out the purposes of this Section 12 in view of the
withholding requirement of Section 4999(c)(1) of the Code, but in no event later
than December 31 of each year in which the Executive receives a payment from the
Company under this Agreement or in the nature of compensation, the Company shall
pay to the Executive one or more Gross-Up Payments for all payments under this
Agreement and any other payments in the nature of compensation which the Company
determines are "excess parachute payments" under Section 280G(b)(1) of the Code
("Excess Parachute Payments"). If, through a determination of the Internal
Revenue Service or any state or local taxing authority (a "Taxing Authority"),
or a judgment of any court, the Executive becomes liable for an amount of Excise
Tax not covered by the Gross-Up Payment payable pursuant to the preceding
sentence, the Company shall pay the Executive an additional Gross-up Payment to
make the Executive whole for such additional Excise Tax; provided, however,
that, pursuant to Section 12, the Company shall have the right to require the
Executive to protest, contest, or appeal any such determination or judgment. For
purposes of this Section 12, any amount which the Company is required to
withhold under Sections 3402 or 4999 of the Code or under any other provision of
law shall be deemed to have been paid to the Executive.
(b) Upon payment to the Executive of a Gross-Up Payment, the Company shall
provide the Executive with a written statement showing the Company's computation
of such Gross-Up Payment and the Excess Parachute Payments and Excise Tax to
which it relates, and setting forth the Company's determination of the amount of
gross income the Executive is required to recognize as a result of such payments
and the Executive's liability for the Excise Tax. The Executive shall cause the
Executive's federal, state, and local income tax returns for the period in which
the Executive receives such Gross-Up Payment to be prepared and filed in
accordance with such statement, and upon such filing, the Executive shall
certify in writing to the Company that such returns have been so prepared and
filed. At the Executive's request, the Company shall furnish to the Executive,
at no cost to the Executive, assistance in preparing the Executive's federal,
state, and local income tax returns for the period in which the Executive
receives such Gross-Up Payment in accordance with such statement.
Notwithstanding the provisions of Section 12(a), the Company shall not be
obligated to indemnify the Executive from and against any tax liability, cost or
expense (including, without limitation, any liability for the Excise Tax or
attorney's fees or costs) to the extent such tax liability, cost or expense is
attributable to the Executive's failure to comply with the provisions of the
Section 12(b).
(c) If any controversy arises between the Executive and a Taxing Authority
with respect to the treatment on any return of the Gross-Up Amount, or of any
payment the Executive receives from the Company as an Excess Parachute Payment,
or with respect to any return which a Taxing Authority asserts should show an
Excess Parachute Payment, including, without limitation, any audit, protest to
an appeals authority of a Taxing Authority or litigation (a "Controversy"), the
Company shall have the right, solely with respect to a Controversy, to direct
the Executive to protest or contest any proposed adjustment or deficiency,
initiate an appeals procedure with any Taxing Authority, commence any judicial
proceeding, make any settlement agreement, or file a claim for refund of tax,
and the Executive shall not take any of such steps without the prior written
approval of the Company. If the Company elects, the Executive shall be
represented in any Controversy by attorneys, accountants, and other advisors
selected by the Company, and the Company shall pay the fees, costs and expenses
of such attorneys, accountants, or advisors, and any tax liability the Executive
may incur as a result of such payment. The Executive shall promptly notify the
Company of any communication with a Taxing Authority, and the Executive shall
promptly furnish to the Company copies of any written correspondence, notices,
or documents received from a Taxing Authority relating to a Controversy. The
Executive shall cooperate fully with the Company in the handling of any
Controversy by furnishing to the Company any information or documentation
relating to or bearing upon the Controversy; provided, however, that the
Executive shall not be obligated to furnish to the Company copies of any portion
of the Executive's tax returns which do not bear upon, and are not affected by,
the Controversy.
(d) The Executive shall pay over to the Company, within ten (10) days
after the Executive's receipt thereof, any refund the Executive receives from
any Taxing Authority of all or any portion of the Gross-Up Payment or the Excise
Tax, together with any interest the Executive receives from such Taxing
Authority on such refund. For purposes of this Section 12(d), a reduction in the
Executive's tax liability attributable to the previous payment of the Gross-Up
Amount or the Excise Tax shall be deemed to be a refund. If the Executive would
have received a refund of all or any portion of the Gross-Up Payment or the
Excise Tax, except the a Taxing Authority offset the amount of such refund
against other tax liabilities, interest, or penalties, the Executive shall pay
the amount of such offset over to the Company together with the amount of
interest the Executive would have received from the Taxing Authority if such
offset had been an actual refund, within ten (10) days after receipt of notice
from the Taxing Authority of such offset.
13. 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.
14. 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.
15. 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:
David A. Holden
5220 South Flower Street
Littleton, Colorado 80123
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1200 Seventeenth Street
Denver, Colorado 80202
Attention: James A. Cronin, III
Telecopier No. (303) 595-0823
With a copy to:
Ascent Entertainment Group
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Arthur M. Aaron
Telecopier No. (303) 595-0127
16. Miscellaneous. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or representations
made by either party other than those contained herein. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The validity,
interpretation, performance and enforcement of the Agreement shall be governed
by the laws of the State of Colorado. The headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
/s/ David A. Holden
David A. Holden, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ James A. Cronin, III
Title: Executive Vice President,
Chief Financial Officer
and Chief Operating Officer
<PAGE>
EXHIBIT 99.1
PRESS RELEASE
ASCENT ENTERTAINMENT GROUP, INC.
Ascent Entertainment Board Names Lyons Chairman; Elects Three New Directors
COMSAT-Appointed Members Resign as Spin-off Is Complete
For Release:
6:30 a.m. NYT Monday, June 30, 1997
Contact: Media Analysts Analysts
Paul Jacobson Karen Amrhine Jim Cronin
Ascent Sard, Verbinnen Ascent
(303) 626-7060 (212) 687-8080 (303) 626-7060
Denver, Colo. The Ascent Entertainment Group, Inc. (NASDAQ:GOAL) Board of
Directors on Friday named Ascent President and CEO Charlie Lyons Chairman of the
Board and elected as new Board members former Liberty Media President and CEO
Peter Barton, Ascent Executive Vice President of Finance and COO Jim Cronin and
Paul Gould, managing director and executive vice president of the New York
investment bank Allen & Company.
Lyons replaces Chairman Robert G. Schwartz, who was appointed by
COMSAT Corporation and resigned Friday along with three other COMSAT appointees,
Ed Colodny, Allen E. Flower and Allan G. Korobov, in connection with Ascent's
spin-off from COMSAT.
"We now have a superlative Board, one that knows our business," said
Lyons. "We have worked with Paul as our investment banker at Allen & Company and
Jim as our Executive VP of Finance and COO, while Peter brings his extraordinary
record of accomplishment in the television industry, having built Liberty Media
Corporation into one of TV's most respected programming entities. Along with
Chuck Lillis, president of US WEST Media Group and Chuck Neinas, formerly
executive director of the College Football Association, Ascent's Board is well
equipped to be totally focused on building value for Ascent stockholders." The
tax-free dividend of Ascent shares from COMSAT Corporation (NYSE:CQ) to its
shareholders became effective Friday afternoon at 3:00 mountain time. Under the
terms of the distribution, COMSAT Corporation shareholders received
approximately one-half share of Ascent stock for each share of COMSAT stock. As
a result of the spin-off, Ascent is now a fully publicly-traded, independent
Colorado-based media and entertainment company with all 29.8 million of its
common shares trading on the NASDAQ stock exchange under the ticker symbol of
GOAL.
"Our independence is a major milestone for Ascent," added Lyons.
"Now we must begin to build value for our stockholders through the combination
of solid operating performance and the accomplishment of some key goals that
will allow us to build value."
Barton is former president and chief executive officer of Liberty
Media Corporation and executive vice president of Tele-Communications, Inc.
(TCI). Prior to the TCI/Liberty merger of August 1994, Barton was president,
chief executive officer and a director at Liberty, then a separate,
publicly-held company, from its incorporation in 1991. He served in various
positions at TCI from 1984 to 1991. Barton is currently a media and
communications industry advisor and serves on the board of directors of First
Albany Corporation, Black Entertainment Television and HSN, Inc.
Gould has been managing director and executive vice president of
Allen & Company, Incorporated for over 10 years and has been with the company
for 20 years. Allen & Company is a financial advisor to Ascent and acted as lead
underwriter in the company's initial public offering in December, 1995. Gould is
a director of Tele-Communications, Inc. (TCI), United Video Satellite Group,
Choice Hotels International, Inc. and Tele-Communications International, Inc.
Cronin has been Executive Vice President of Finance and Chief
Operating Officer of Ascent since June 1996. Before that he was a financial and
management consultant and a partner in Alfred Checchi Associates. Cronin is a
director of On Command Corporation, Ascent's 57 percent-owned subsidiary, and
Landair Services, Inc.
Ascent Entertainment Group's principal business is providing
pay-per-view entertainment and information services through its majority-owned
On Command Corporation. In addition, Ascent is involved in other
entertainment-related businesses including ownership and operation of the NBA
Denver Nuggets and NHL Colorado Avalanche, and Beacon Communications, a motion
picture and television production company.
# # #
For a menu of Ascent Entertainment Group's news releases available by fax 24
hours (no charge) or to retrieve a specific release, please call 1-800-758-5804,
ext. 152850, or access the address http://www.prnewswire.com on the internet.
<PAGE>
PRESS RELEASE
ASCENT ENTERTAINMENT GROUP, INC.
Ascent Entertainment Group, Inc. Declares Dividend Distribution of Preferred
Share Purchase Rights - Adopts Changes to Corporate Bylaws
For Release:
6:30 a.m. NYT Monday, June 30, 1997
Contact: Media Analysts Analysts
Paul Jacobson Jim Cronin Karen Amrhine
Ascent Ascent Sard, Verbinnen
(303) 626-7060 (303) 626-7010 (212) 687-8080
Denver, Colo. In connection with the spin-off of Ascent Entertainment Group,
Inc. from COMSAT Corporation, the new Ascent Board of Directors on Friday
declared a dividend distribution of one Preferred Share Purchase Right on each
outstanding share of the Company's common stock and adopted several changes to
the company's bylaws.
Charlie Lyons, Chairman, President and CEO of the company, said "The
rights are designed to ensure that all of Ascent's stockholders receive fair and
equal treatment in the event of any proposed takeover of the company and to
guard against partial tender offers, squeeze-outs, open market accumulations and
other abusive tactics to gain control of Ascent without paying all stockholders
a control premium."
The rights will be exercisable if a person or group acquires 15
percent or more of the company's common stock or announces a tender offer the
consummation of which would result in ownership by a person or group of 15
percent or more of the common stock. Each right will entitle stockholders to buy
one one-hundredth of a share of a new series of junior participating preferred
stock at an exercise price of $40.00.
If a person or group acquires 15 percent or more of Ascent's
outstanding common stock, each right will entitle its holder (other than such
person or group) to purchase, at the right's then-current exercise price, a
number of the company's common shares having a market value of twice such price.
In addition, if Ascent is acquired in a merger or other business combination
transaction after a person has acquired 15 percent or more of the company's
outstanding common stock, each right will entitle its holder (other than such
person or group) to purchase, at the right's exercise price of $40.00, a number
of the acquiring company's common shares having a market value of twice such
price.
Following the acquisition by a person or group of beneficial
ownership of 15 percent or more of Ascent's common stock and prior to an
acquisition of up to 50 percent or more of the company's common stock, the Board
of Directors may exchange the rights (other than rights owned by such person or
group), in whole or part, at an exchange ratio of one share of common stock (or
one one-hundredth of a share of the new series of junior participating preferred
stock) per right.
Prior to the acquisition by a person or group of beneficial
ownership of 15 percent or more of the company's common stock, the rights are
redeemable for one cent per right at the option of the Board of Directors.
The Board of Directors is also authorized to reduce the 15 percent
threshold referred to above to not less than 10 percent.
The rights are intended to enable all Ascent stockholders to realize
the long-term value of their investment in the company. The rights will not
prevent a takeover, but should encourage anyone seeking to acquire the company
to negotiate with the Board of Directors prior to attempting a takeover.
The dividend distribution will be made on July 10, 1997 payable to
stockholders of record on that date. The rights will expire on July 10, 2007.
The rights distribution is not taxable to stockholders. A more detailed
description of the rights will be sent to stockholders.
On Friday, the Ascent Board adopted five changes to the company's
bylaws that, along with the stockholders rights plan, will guard against the
disruption caused by an unsolicited takeover attempt. The first change adds more
detailed provisions specifying the procedures by which stockholders may nominate
directors and introduce business to be considered at meetings of stockholders.
The second modifies procedures for scheduling and conducting the annual meeting
of stockholders. The third limits the ability of stockholders to call special
meetings. The fourth bylaw change refines the procedures by which stockholders
can act by written consent. The fifth and final change adds more detailed
provisions relating to director and officer indemnification.
Ascent Entertainment Group's principal business is providing
pay-per-view entertainment and information services through its majority-owned
On Command Corporation (NASDAQ:ONCO). In addition, Ascent (NASDAQ:GOAL) is
involved in other entertainment-related businesses including ownership and
operation of the NBA Denver Nuggets and NHL Colorado Avalanche, and Beacon
Communications, a motion picture and television production company.
# # #
For a menu of Ascent Entertainment Group's news releases available by fax 24
hours (no charge) or to retrieve a specific release, please call 1-800-758-5804,
ext. 152850, or access the address http://www.prnewswire.com on the internet.