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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4) OF THE SECURITIES
EXCHANGE ACT OF 1934
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ASCENT ENTERTAINMENT GROUP, INC.
(Name of Subject Company)
ASCENT ENTERTAINMENT GROUP, INC.
(Name of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
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043628106
(CUSIP Number of Class of Securities)
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DAVID EHRLICH, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
ASCENT ENTERTAINMENT GROUP, INC.
1225 SEVENTEENTH STREET, SUITE 1800
DENVER, COLORADO 80202
TELEPHONE: (303) 308-7000
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person(s) filing statement).
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With a copy to:
JEFFREY W. TINDELL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NY 10036-6522
(212) 735-3000
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ITEM 1. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is Ascent Entertainment Group, Inc., a
Delaware corporation ("Ascent" or the "Company"). The address of the principal
executive offices of Ascent is 1225 Seventeenth Street, Suite 1800, Denver,
Colorado 80202. The telephone number of the principal executive offices of
Ascent is (303) 308-7000.
(b) The title of the class of equity securities to which this statement
relates is the common stock, par value $0.01 per share, of Ascent (the "Common
Stock"), including the associated Preferred Share Purchase Rights (the "Rights"
and, together with the Common Stock, "Shares") issued pursuant to the Rights
Agreement, dated as of June 27, 1997, as amended (the "Rights Agreement"),
between Ascent and The Bank of New York, as Rights Agent. There were 29,755,600
Shares outstanding as of February 28, 2000.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) Name and Address. The name, address and telephone number of Ascent,
which is the person filing the Schedule 14D-9, are set forth in Item 1(a) above.
(b) Tender Offer. This Statement relates to the tender offer by Liberty AEG
Acquisition Inc., a Delaware Corporation ("Merger Sub" or "Purchaser") and an
indirect wholly owned subsidiary of Liberty Media Corporation, a Delaware
corporation ("Parent"), disclosed in a Tender Offer Statement on Schedule TO
(the "Schedule TO"), dated February 29, 2000, to purchase all outstanding Shares
at a purchase price of $15.25 per Share, net to the seller in cash, without
interest (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated February 29, 2000 (the "Offer to Purchase")
and the related Letter of Transmittal (which, together with any amendments or
supplements collectively constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
February 22, 2000 (as such agreement may be amended and supplemented from time
to time, the "Merger Agreement"), by and among Ascent, Parent and Merger Sub.
The Merger Agreement provides, among other things, that as soon as practicable
after the satisfaction or waiver of the conditions set forth in the Merger
Agreement, in accordance with the relevant provisions of the Delaware General
Corporation Law, as amended (the "DGCL"), Merger Sub will be merged with and
into Ascent (the "Merger" and, together with the Offer, the "Transaction").
Following consummation of the Merger, Ascent will continue as the surviving
corporation (the "Surviving Entity") and will be an indirect wholly owned
subsidiary of Parent. Capitalized terms used in this Schedule 14D-9 and not
defined in this Schedule 14D-9 have the meanings given such terms in the Merger
Agreement. A copy of the Merger Agreement is attached hereto as Exhibit 1 hereto
and is incorporated by reference herein.
Parent's and Merger Sub's principal executive offices as set forth in
Merger Sub's Schedule TO are located at 9197 South Peoria Street, Englewood,
Colorado 80112. The telephone number at the principal executive offices of
Purchaser is (720) 875-5400.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as set forth in the response to this Item 3 or in Schedule I
attached hereto or as incorporated by reference herein, to the knowledge of
Ascent, there are no material agreements, arrangements or understandings and no
actual or potential conflicts of interest between Ascent or its affiliates and
(1) Ascent's executive officers, directors or affiliates, or (2) Parent or
Merger Sub, or their respective executive officers, directors or affiliates.
Certain contracts, arrangements or understandings between the Company or
its affiliates and certain of the Company's directors, executive officers and
affiliates are described in the Information Statement of the Company attached to
this statement as Schedule I (the "Information Statement"). The Information
Statement is being furnished to the Company's stockholders pursuant to Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 issued under the Exchange Act in connection with Merger Sub's
right (after acquiring a majority of the Shares pursuant to the Offer) to
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designate persons to the Board of Directors of the Company (the "Ascent Board")
other than at a meeting of the stockholders of the Company. The Information
Statement is incorporated by reference.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
In June 1999, Charles M. Neinas became Chairman of the Ascent Board and
Acting Chief Executive Officer and President of the Company. In connection with
the resignation of Mr. Neinas as Acting Chief Executive Officer and President of
the Company in December 1999, the resignation of James A. Cronin, III as
Executive Vice President, Chief Financial Officer and Chief Operating Officer of
the Company in January 2000 and the continued efforts by the Company to explore
its strategic alternatives regarding a disposition of its assets, in January
2000 the Company amended and restated the employment agreements of Arthur M.
Aaron, Executive Vice President, Business Affairs, and David A. Holden,
Executive Vice President, Finance and Chief Financial Officer. In addition, the
Company entered into an employment agreement with David Ehrlich, Vice President,
General Counsel and Secretary.
Under Mr. Aaron's amended and restated employment agreement: (i) Mr.
Aaron's base salary was increased to $300,000 per year, subject to increases at
the discretion of the Ascent Board; (ii) he is eligible for an annual bonus
based on performance measures determined by the Compensation Committee of the
Ascent Board (the "Compensation Committee") with a target bonus equal to 50% of
his base salary; (iii) the term of the agreement was extended by one year to
expire June 27, 2003; (iv) he was promoted to the position of Executive Vice
President, Business Affairs for the term of the agreement; and (v) the
provisions regarding severance and change-of-control were revised, as described
further below.
Mr. Holden's amended and restated employment agreement is on substantially
the same terms as Mr. Aaron's, except that (i) Mr. Holden was promoted to the
position of Executive Vice President, Finance and Chief Financial Officer and
(ii) his base salary was increased to $250,000.
Under Mr. Ehrlich's employment agreement: (i) Mr. Ehrlich's base salary was
increased to $150,000 per year, subject to increases at the discretion of the
Ascent Board; (ii) he is eligible for an annual bonus based on performance
measures determined by the Compensation Committee with a target bonus equal to
25% of his base salary; (iii) the term of the agreement expires on January 25,
2002; (iv) he was promoted to the position of Vice President, General Counsel
and Secretary for the term of the agreement; and (v) provisions regarding
severance and change-of-control were included, as described further below.
Messrs. Aaron's, Holden's and Ehrlich's agreements also each set forth the
terms of the grant on January 25, 2000, of options to purchase 100,000, 100,000,
and 40,000 Shares, respectively, at an exercise price of $11.9063 per Share.
The employment agreements for each of Messrs. Aaron, Holden and Ehrlich
(each an "executive") contain provisions related to change-of-control and
severance. If an executive is terminated without "cause" (as defined in the
agreements) or upon certain events defined in the agreements which have the
effect of a constructive termination (including a "Change of Control Event")
then: (i) there will be no forfeiture of any rights or interests related to
fringe benefits granted under the agreement, including, without limitation, any
stock-based incentives, all of which will fully vest, to the extent not
previously vested, immediately upon the effective date of such termination; (ii)
the executive will receive his current base salary, fringe benefits and the
annual bonus outlined in the agreement for the longer of (a) the remainder of
the employment period under the agreement or (b) three years, in the case of
Messrs. Aaron and Holden, and eighteen months, in the case of Mr. Ehrlich, with
no obligation to seek other employment and no offset to the amounts paid by the
Company if other employment is obtained, provided that the executives and the
Company shall explore alternatives to minimize any excise tax pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended, that would
otherwise be payable; and (iii) all other benefits provided pursuant to the
agreement shall be received by the executive. The Company is obligated to fund a
"rabbi" trust no later than one day prior to a Change in Control Event with
amounts sufficient to pay its obligations under these employment agreements, and
severance amounts must be paid in a lump sum following the executive's
termination for any reason, including, at the election of the executive, during
the 180-day period following a Change in Control
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Event. For purposes of the employment agreements, a "Change of Control Event"
would include consummation of the Offer.
On January 1, 2000, the Company's subsidiary, Ascent Sports Holdings, Inc.,
entered into an employment agreement with Donald M. Elliman to employ Mr.
Elliman as its President. The agreement expires on August 31, 2000. Pursuant to
the agreement, Mr. Elliman's base salary is $50,000 per month. He reports
directly to the Ascent Board and, except as otherwise provided in existing
employment agreements, all other employees of the Company's sports-related
businesses, the Colorado Avalanche, Denver Nuggets and the Pepsi Center, and
their respective subsidiaries, report directly or indirectly to him. His
agreement does not contain "change-of-control" provisions.
In addition, Mr. Elliman's agreement provides that if he is terminated
without "cause" (as defined in his agreement) or upon his death or physical or
mental incapacity, then he will receive a lump sum payment from Ascent Sports
Holdings, Inc. equal to the lesser of three months salary or the aggregate base
salary otherwise payable to him through the end of the term of the agreement.
On January 7, 2000, On Command Corporation, the Company's approximately 57%
owned subsidiary ("On Command" or "OCC"), entered into an employment agreement
with Alan Goodson to employ Mr. Goodson as Executive Vice President and Chief
Operating Officer of On Command. The agreement expires on January 7, 2002.
Pursuant to the agreement, his initial base salary is $300,000 per year, subject
to increases at the discretion of the Board of Directors of On Command. Under
the agreement, Mr. Goodson is eligible for annual bonuses based on performance
measures determined by the On Command Compensation Committee with a target bonus
equal to 70% of his base salary for achieving 100% of the target level for the
performance measures. In addition, he has been granted an option to purchase
100,000 shares of On Command common stock, exercisable at a per-share price
equal to $15.90625. His agreement does not contain "change-of-control"
provisions.
In addition, Mr. Goodson's agreement provides that if he is terminated
without "cause" (as defined in the agreement) or upon any substantial reduction
by On Command of his responsibilities as Executive Vice President and Chief
Operating Officer of On Command (except in connection with the termination of
his employment voluntarily by Mr. Goodson, or by On Command for "cause"), or On
Command is in material default of the agreement, then: (i) there will be no
forfeiture of any rights or interests related to fringe benefits granted under
the agreement, including, without limitation, his options and any other
stock-based incentives, except that half of his 100,000 options will vest, to
the extent not previously vested, and the other half of which will be cancelled
immediately upon such termination becoming effective and final; (ii) Mr. Goodson
will receive current base salary, fringe benefits and the annual bonus outlined
in the agreement for the longer of (a) the remainder of the employment period
under the agreement or (b) one year following the date of such termination, with
no obligation to seek other employment and no offset to the amounts paid by On
Command if other employment is obtained; and (iii) all other benefits provided
pursuant to the agreement shall be received by him.
Copies of the employment agreements for each of Messrs. Aaron, Holden,
Ehrlich, Elliman and Goodson are filed as Exhibits 13, 14, 15, 16 and 17,
respectively, to this Schedule 14D-9 and are incorporated herein in their
entirety.
Treatment of Options
Messrs. Aaron, Holden and Ehrlich were awarded options to purchase 100,000,
100,000 and 40,000 Shares, respectively, pursuant to Ascent's 1995 Key Employee
Stock Plan. Mr. Neinas and Charles M. Lillis, members of the Ascent Board, were
awarded options to purchase 12,000 and 4,000 Shares, respectively, pursuant to
Ascent's 1995 Non-Employee Director Stock Plan. Pursuant to the Merger
Agreement, Ascent will take all actions necessary prior to the initial
expiration of the Offer so that upon the Effective Time (as defined in the
Merger Agreement) each outstanding stock option to purchase Shares granted under
any Ascent plan or arrangement, whether or not exercisable or vested, will be
cancelled. The Merger Agreement further provides that Ascent will pay to each
holder of a cancelled option, in consideration for the cancellation of such
option, an amount in cash equal to the product of (i) the excess, if any, of the
Offer Price over the per
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Share exercise price of the option and (ii) the number of Shares subject to the
option. Cash payments will be net of any applicable withholding taxes. Copies of
Ascent's 1995 Key Employee Stock Plan and Ascent's 1995 Non-Employee Director
Stock Plan have been filed as Exhibits 8 and 9, respectively, to this Schedule
14D-9 and are incorporated herein by reference in their entirety.
Treatment of Stock Appreciation Rights
Messrs. Aaron, Holden and Ehrlich were awarded stock appreciation rights
with respect to 100,000 Shares (all of which were converted from options),
50,000 Shares (10,000 of which were converted from options) and 7,500 Shares
(2,500 of which were converted from options), respectively, pursuant to Ascent's
1995 Key Employee Stock Plan. Messrs. Neinas, Lillis, Paul Gould and Peter May,
members of the Ascent Board, were awarded stock appreciation rights with respect
to 100,000 shares each pursuant to Ascent's 1997 Non-Employee Director Stock
Appreciation Rights Plan. Pursuant to the Merger Agreement, Ascent will take all
actions necessary prior to the initial expiration of the Offer so that upon the
Effective Time each outstanding stock appreciation right granted pursuant to
Ascent's 1995 Key Employee Stock Plan or Ascent's 1997 Non-Employee Directors
Stock Appreciation Rights Plan, whether or not exercisable or vested, will be
cancelled. The Merger Agreement further provides that Ascent will pay to each
holder of a cancelled stock appreciation right, in consideration for the
cancellation of such stock appreciation right, an amount in cash equal to the
product of (i) the excess, if any, of the Offer Price over the per Share
exercise price of the stock appreciation right and (ii) the number of Shares
subject to the stock appreciation right. Cash payments will be net of any
applicable withholding taxes. A copy of Ascent's 1997 Non-Employee Director
Stock Appreciation Rights Plan has been filed as Exhibit 10 to this Schedule
14D-9 and is incorporated herein by reference in its entirety.
RELATED PARTY TRANSACTIONS
Paul Gould, a director of the Company, is also a director of Parent. In
order to minimize any conflict of interest, Mr. Gould recused himself from
Ascent Board meetings at times that a transaction with Parent was discussed. Mr.
Gould attended the start of the February 21, 2000 Ascent Board meeting but soon
thereafter Mr. Gould recused himself from the meeting. The meeting continued
without Mr. Gould and the Ascent Board approved the Merger Agreement, the Offer,
the Merger and the other transactions contemplated by the Merger Agreement.
In addition, Mr. Gould is a Managing Director and Executive Vice President
of Allen & Company Incorporated ("Allen & Co."), an investment banking firm that
has performed financial advisory services for the Company since 1995, including
(i) serving as the managing underwriter for the Company's initial public
offering in 1995; (ii) advising the Company with respect to the acquisition of
SpectraVision in 1996 and (iii) serving as financial advisor to the Company in
connection with the Company's disposition of its sports and arena related
assets.
Ascent retained Allen & Co. as Ascent's financial advisor in connection
with the sale of Ascent's sports-related businesses. Allen & Co. will not
receive any payment in connection with the Offer or the Merger, but Allen & Co.
continues to be retained with respect to the sale of the Company's
sports-related businesses. At the request of Parent, Ascent is continuing its
marketing efforts to sell the Company's sports-related assets. Although any sale
of the sports-related assets is expected to occur only after consummation of the
Merger and would be on terms and conditions negotiated between Parent and the
proposed purchaser, as the Company has retained and is using Allen & Co. in
connection with such marketing efforts, Allen & Co. would be entitled to payment
upon sale of the sports-related assets. Pursuant to its engagement letter with
the Company, Allen & Co. would be entitled to a fee of 1.0% of the cash
consideration to be received by the Company plus 0.5% of the Company's debt
assumed, recapitalized or restructured in connection with such sale
(collectively, the "Transaction Fee"). If an opinion as to fairness is requested
by the Company and delivered by Allen & Co., 40% of the Transaction Fee would
payable upon delivery of the opinion and 60% of the Transaction Fee would be
payable upon the consummation of the transaction. In addition, the Company has
agreed to reimburse Allen & Co. for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel and other consultants
and advisors) and to indemnify Allen & Co. and certain related parties against
certain
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liabilities, including liabilities under the federal securities laws, relating
to or arising out of Allen & Co.'s engagement in connection with such
representation.
In November 1998, three new directors were elected to the On Command Board
of Directors, Richard Goldstein, J.C. Sparkman and J. David Wargo. Mr. Sparkman
and Mr. Wargo have or had relationships with Parent or its affiliates. Mr.
Sparkman served as Executive Vice President and Chief Operating Officer of Tele-
Communications, Inc. ("TCI") from 1987 until his retirement in 1995. He also
served as a director of TCI until its acquisition by AT&T in May 1999. Mr. Wargo
is President of Wargo & Company, Inc., an investment banking and financial
advisory firm that has provided services to Parent and its affiliates. Mr. Wargo
is a director of two of Parent's affiliates, Liberty Digital Inc. and TV Guide
Inc.
INDEMNIFICATION
Pursuant to Section 6.10 of the Merger Agreement, from and after the
Effective Time, Parent and the Surviving Entity will jointly and severally
indemnify, defend and hold harmless the present and former officers, directors
and employees of Ascent and any of its subsidiaries (each an "Indemnified Party"
and collectively the "Indemnified Parties"), against (i) any costs or expenses,
judgments or liabilities arising out of, or in connection with, any claim,
action, suit, proceeding or investigation based in whole or in part on the fact
that the Indemnified Party is or was an officer, director or employee of Ascent
or any of its Subsidiaries, or is or was serving at the request of Ascent as an
officer, director or employee or agent of another person, pertaining to any
matter existing or occurring before or at the Effective Time and whether
asserted or claimed before, at or after the Effective Time (the "Indemnified
Liabilities") and (ii) all Indemnified Liabilities based in whole or in part on,
arising in whole or in part out of, or pertaining to the Merger Agreement, the
Offer, the Merger, or any other transactions contemplated thereby, in each case
to the fullest extent permitted under the DGCL, notwithstanding the charter,
by-laws or similar organizational documents of the Company, the Surviving Entity
or Parent.
Additionally, the Merger Agreement requires that the certificate of
incorporation and by-laws of the Surviving Entity contain provisions with
respect to indemnification substantially to the same effect as those set forth
in the certificate of incorporation of Ascent (the "Ascent Charter") and by-laws
of Ascent (the "Ascent Bylaws") on the date of the Merger Agreement, which
provisions shall not be amended, modified or otherwise repealed for a period of
three years after the Effective Time in any manner that would adversely affect
the rights thereunder as of the Effective Time of individuals who at the
Effective Time were directors, officers, employees or agents of Ascent, unless
such modification is required after the Effective Time by applicable law.
Accordingly, rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action, suit or proceeding,
whether civil, criminal, administrative or investigative (each a "Claim")
existing in favor of the Indemnified Parties as provided in the Ascent Charter
or Ascent Bylaws or pursuant to other agreements, or certificates of
incorporation or bylaws or similar documents of any subsidiary of Ascent, as in
effect on February 22, 2000, with respect to matters occurring through the
Effective Time, will survive the Merger and will continue in full force and
effect.
In the event of any Claim arising before or after the Effective Time, and
subject to the specific terms of any indemnification contract, (i) any counsel
retained by the Indemnified Parties for any period after the Effective Time
shall be reasonably satisfactory to the Surviving Entity, (ii) after the
Effective Time, the Surviving Entity shall pay the reasonable fees and the
expenses of such counsel, promptly after statements therefor are received and
(iii) the Surviving Entity will cooperate in the defense of any such matter;
provided, however, that the Surviving Entity shall not be liable for any
settlement effected without its written consent (which consent will be not
unreasonably withheld or delayed); and provided, further, that in the event that
any Claim for indemnification is asserted or made within such three years
period, all rights to indemnification in respect of any such Claim shall
continue until the disposition of any such Claim.
The Indemnified Parties as a group may retain only one law firm to
represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the position of any two or more Indemnities Parties, in which case
each Indemnified Party with respect to whom such a conflict exists (or group of
such Indemnified Parties who among them have no
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conflict) may retain one separate law firm. In addition, under the Merger
Agreement, Parent will provide, or cause the Surviving Entity, to provide for a
period of not less than three years after the Effective Time, Ascent's current
directors and officers an insurance and indemnification policy that provides
coverage for events occurring at or prior to the Effective Time that is not less
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; provided, however, that
Parent and the Surviving Entity shall not be required to pay an annual premium
for such insurance in excess of one and one-half of the annual premium currently
paid by Ascent for such insurance, but in such case shall purchase as much
coverage as possible for such amount.
The indemnification and insurance provisions of the Merger Agreement shall
survive the consummation of the Merger at the Effective Time and are intended to
benefit Ascent, the Surviving Entity and the Indemnified Parties and are binding
on all successors and assigns of the Surviving Entity and are enforceable by the
Indemnified Parties.
The foregoing description of the indemnification provided to the directors
and officers of Ascent pursuant to the Merger Agreement is qualified by
reference to the complete text of Section 6.10 of the Merger Agreement, which is
incorporated by reference herein in its entirety. The Merger Agreement has been
filed as Exhibit 1 to this Schedule 14D-9.
Article VIII of the Ascent Charter provides that no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (c)
pursuant to Section 174 of the DGCL or (d) for any transaction from which the
director received an improper personal benefit. A copy of such Article VIII has
been filed as Exhibit 11 to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
Article VIII of the Ascent Bylaws requires that Ascent indemnify any
director or officer of Ascent, or any person serving at the request of Ascent as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans maintained or sponsored by Ascent, to the fullest extent
authorized by the DGCL as the same exists or may be amended. The indemnification
and advancement of expenses permitted by law shall continue as to a person who
has ceased to be a director, officer, employee or agent of Ascent and inure to
the benefit of his or her heirs, executors and administrators. A copy of such
Article VIII has been filed as Exhibit 12 to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
CONFIDENTIALITY AGREEMENTS
On April 12, 1999, Parent entered into customary confidentiality agreements
(the "Confidentiality Agreements") with each of the Company and On Command.
The Confidentiality Agreements provide that Parent will not, and will cause
its officers, employees, counsel, accountants, agents and advisors to not,
disclose to any third party any Confidential Information and that Parent will
use the Confidential Information solely for the purpose of evaluating a possible
transaction involving Ascent or On Command. "Confidential Information" includes
all information (whether communicated in written form, orally, electronically or
otherwise) that is or has been furnished to Parent or Parent's representatives
by the Company or On Command which concerns the Company, On Command, their
affiliates or their respective assets, businesses and employees and which is
either confidential, proprietary or otherwise not generally available to the
public, subject to certain customary exceptions.
The Confidentiality Agreements provide for (i) the prompt notification to
Ascent and On Command of any request of disclosure of any Confidential
Information by Parent, in order to allow Ascent or On Command to seek an
appropriate protective order or to waive the compliance by Parent with the
provisions of the Confidentiality Agreements, (ii) the acknowledgment by Parent
that it is aware that the U.S. securities laws restrict persons with material
non-public information concerning a company obtained directly or indirectly from
that company from purchasing or selling securities of the company or its
affiliates, or from communicat-
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ing such information to any other person under any circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities and (iii) the prompt return by Parent of the written Confidential
Information upon the request of Ascent or On Command.
Additionally, Parent agreed that for a period of one year from the date of
the Confidentiality Agreements, Parent would not solicit for employment any of
the current employees of Ascent or On Command or its controlled affiliates so
long as they are employed by Ascent or On Command without the prior written
consent of Parent or On Command.
The summary set forth herein does not purport to be complete and is
qualified in its entirety by reference to the complete text of the
Confidentiality Agreements, copies of which are filed as Exhibits 6 and 7 hereto
and are incorporated herein by reference in their entirety.
MERGER AGREEMENT
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger," Merger Sub will
be merged with and into Ascent, and each issued and outstanding Share (other
than (i) Shares owned by Parent, Merger Sub, Ascent or any other direct or
indirect wholly owned subsidiary of Parent or Ascent, or (ii) dissenting Shares)
will be canceled and converted into the right to receive from the Surviving
Entity an amount in cash equal to the Offer Price. The "Surviving Entity" of the
Merger will be Ascent. Capitalized terms used in this section of the Schedule
14D-9 and not defined in this Schedule 14D-9 have the meanings given such terms
in the Merger Agreement.
Vote Required To Approve Merger. The DGCL requires the Ascent Board and a
majority of the outstanding stockholders of Ascent (including those owned by
Parent and Merger Sub) to approve the Merger and the Merger Agreement. The
Ascent Board has given its approval; consequently, only the approval by Ascent's
stockholders is required. Under the DGCL and the Ascent Charter, if Merger Sub
acquires, through the Offer or otherwise, at least a majority of the outstanding
Shares (which would be the case if the Minimum Condition were satisfied and
Merger Sub were to accept for payment Shares tendered pursuant to the Offer),
Merger Sub would have sufficient voting power to effect the Merger through its
sole written consent and without the affirmative vote of any other stockholder
of Ascent or the holding of a meeting of stockholders.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of each of Merger Sub, Parent and Ascent to effect the Merger are
subject to the satisfaction or waiver of the following conditions: (a) the
Merger Agreement and the Merger having been approved and adopted by the
requisite vote of the stockholders of Ascent to the extent required by the DGCL
and the Ascent Charter; (b) any applicable waiting period under the HSR Act
having expired or been terminated; (c) no injunction, restraining order or
decree issued or entered by any governmental authority, or other legal restraint
or prohibition, shall be in effect preventing or materially restraining
consummation of the Merger Agreement; and (d) Merger Sub shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer, provided,
however, that neither Parent nor Merger Sub may invoke this last condition if
Merger Sub fails to purchase any Shares validly tendered and not withdrawn
pursuant to the Offer in violation of the terms of the Merger Agreement or the
Offer.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the effective time of the Merger (the "Effective Time"),
notwithstanding any prior approval by the stockholders of Ascent:
(i) by mutual written consent duly authorized by the Board of
Directors of Parent, Merger Sub and the Ascent Board prior to the date of
the election or appointment of the Merger Sub Designees to the Ascent Board
as set forth below under "Board of Directors" ("Merger Sub's Election
Date"); or
(ii) by Parent or Ascent if:
(a) the Minimum Condition has not been satisfied during a ten
business day extension of the Offer following the initial expiration
date of the Offer, but all other conditions have been satisfied or,
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(b) any court of competent jurisdiction in the United States or
other governmental authority shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise
prohibiting acceptance for payment of, or payment for, Shares pursuant
to the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(iii) by Parent, if due to an occurrence or circumstance that results
in a failure to satisfy any condition of the Offer, Merger Sub shall have
(a) failed to commence the Offer within 10 days following the date of the
Merger Agreement or (b) terminated the Offer without having accepted any
Shares for payment thereunder, unless such failure was caused by or
resulted from the failure of Parent or Merger Sub to perform in any
material respect any material covenant or agreement of either of them
contained in the Merger Agreement or the material breach by Parent or
Merger Sub of any material representation or warranty of either of them
contained in the Merger Agreement; or
(iv) by Ascent, upon approval of the Ascent Board, if:
(a) Merger Sub shall have (A) failed to commence the Offer within
10 days following the date of the Merger Agreement or (B) terminated the
Offer without having accepted any Shares for payment thereunder, unless
such failure to pay for Shares shall have been caused by or be a result
of (i) any of the representations or warranties of Ascent set forth in
the Merger Agreement not being true and correct at the date of the
Merger Agreement, and as a result thereof there shall have been, or it
is reasonable to foresee that there will be, a Material Adverse Effect
on Ascent and its subsidiaries taken as a whole or (ii) Ascent having
failed to perform in any material respect any material obligation or
failing to comply in any material respect with any material agreement or
covenant of Ascent to be performed or complied with by it under the
Merger Agreement,
(b) prior to the purchase of Shares pursuant to the Offer, the
Ascent Board shall have withdrawn or modified in a manner adverse to
Parent or Merger Sub its approval or recommendation of the Offer, the
Merger or the Merger Agreement in order to approve any bona fide written
Alternative Proposal (as defined below) to acquire, directly or
indirectly, more than 50% of the Shares then outstanding or all or
substantially all the assets of Ascent and that the Ascent Board
determines in good faith, after taking into account the advice of a
financial advisor of nationally recognized reputation, and taking into
account all the terms and conditions of the Alternative Proposal, is
more favorable to Ascent's stockholders than the Offer and the Merger
and for which financing, to the extent required, is then fully committed
or reasonably determined to be available by the Ascent Board (a
"Superior Proposal"); provided, that (x) Ascent has made payment to
Parent of $18 million and (y) has deposited $2 million with a mutually
acceptable escrow agent for reimbursement of Parent's and Merger Sub's
expenses; or
(c) Parent or Merger Sub shall have breached in any material
respect any of their respective representations, warranties, covenants
or other agreements contained in the Merger Agreement, which failure to
perform is incapable of being cured or has not been cured within 20 days
after the giving of written notice to Parent or Merger Sub, as
applicable, except, in any case, such failures which are not reasonably
likely to affect adversely the ability of Parent or Merger Sub to
complete the Offer or the Merger.
No Solicitation. The Merger Agreement provides that Ascent will not,
directly or indirectly through any subsidiary, affiliate, officer, director,
employee, agent or representative or otherwise (a) solicit or initiate proposals
or offers from, furnish any non-public information to, or negotiate with, any
person in favor of, or (b) approve, vote for, recommend or execute, or permit
Ascent or any of its subsidiaries to execute, any agreements or understandings,
with respect to, any proposal (other than as contemplated by the Merger
Agreement or otherwise proposed by Parent or its affiliates) for (i) a merger,
consolidation, share exchange, reorganization, other business combination,
recapitalization or similar transaction involving Ascent or any of its
subsidiaries, (ii) the acquisition, directly or indirectly, of an equity
interest representing greater than 20% of the voting securities of Ascent or any
of its subsidiaries, (iii) the acquisition of a substantial portion of any of
the assets of Ascent or any of its subsidiaries (including without limitation
Ascent's interests in On
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Command), (iv) any transfer or sale of all or any material part of the assets
related to the Denver Nuggets, Colorado Avalanche and Pepsi Center or (v) any
transaction the effect of which would be reasonably likely to prohibit, restrict
or delay the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement (an "Alternative Proposal");
provided, however, that the foregoing provision does not prohibit Ascent or the
Ascent Board, to the extent the Ascent Board determines in its good faith
judgment that it is required by its fiduciary duties under applicable law after
taking into account the advice of Ascent's outside legal counsel, from providing
information to, participating in discussions or negotiating with any third party
that delivers a Superior Proposal that was not solicited in violation of the
foregoing. Upon execution of the Merger Agreement, the Company agreed to
immediately cease and terminate all activities, discussions or negotiations with
any persons with respect to any Alternative Proposal. In addition, the Ascent
Board agreed not to recommend that the stockholders of Ascent tender their
shares in connection with a tender offer except to the extent the Ascent Board
determines in its good faith judgment that such a recommendation is required to
comply with the fiduciary duties of the Ascent Board to stockholders under
applicable law, after taking into account the advice of outside legal counsel.
In addition, Ascent is required under the Merger Agreement to notify Parent
promptly after receipt of any Alternative Proposal or of certain requests for
non-public information relating to Ascent or any of its subsidiaries or for
access to the properties, books or records of Ascent or any subsidiary thereof
by any person who is known to be considering making, or has made, an Alternative
Proposal. Parent has requested Ascent continue to seek a qualified buyer of the
sports related assets, notwithstanding this provision. (See "Item 7. Purposes of
the Transaction and Plans or Proposals.")
The Company covenants and agrees with Parent that prior to the
effectiveness of the Merger, Ascent and its subsidiaries will not, and will not
agree with any person to (i) voluntarily sell, dispose of, tender or exchange
any shares of On Command Stock owned by Ascent or any subsidiary of Ascent (the
"Company OCC Stock") including in connection with a tender offer, exchange offer
or similar transaction, (ii) vote, or execute a written consent or proxy with
respect to Company OCC Stock, in favor of any acquisition by any person of On
Command, of any equity interest in On Command, or of a material portion of the
assets of On Command (an "OCC Alternative Transaction") or (iii) publicly
recommend any OCC Alternative Transaction or otherwise express an intention to
take any of such actions; provided that Ascent's obligations to cause its
representatives on the Board of Directors of On Command (or any committee
thereof) to take any action (or to refrain from taking any action) in compliance
with this provision shall be subject in all respects to such persons' fiduciary
duties under applicable law.
Termination Fee; Fees and Expenses. The Merger Agreement provides that
Ascent will pay Parent the sum of (x) Parent's expenses actually incurred in an
amount not to exceed $2 million and (y) $18 million (the "Termination Fee") upon
demand if (i) Parent or Merger Sub terminates the Merger Agreement pursuant to
subparagraph (iii) under "-- Termination of the Merger Agreement" as a result of
(X) the Ascent Board having withdrawn or modified in manner adverse to Parent or
Merger Sub the approval or recommendation of the Offer, the Merger or the Merger
Agreement or approved or recommended any Alternative Proposal or OCC Alternative
Transaction, or any other takeover proposal or any other acquisition of Shares
or On Command stock other than the Offer and the Merger, (Y) the Company having
entered into any agreement with respect to a Superior Proposal or (Z) the Ascent
Board having resolved to do anything referred to in (X) or (Y); or (ii) prior to
any termination of the Merger Agreement (other than by Ascent pursuant to (c) of
subparagraph (iv) under "-- Termination of the Merger Agreement") an Alternative
Proposal or OCC Alternative Transaction shall have been made and within 12
months of such termination, a transaction constituting an Alternative Proposal
or OCC Alternative Transaction is consummated or Ascent enters into or causes On
Command to enter into an agreement with respect to, approves or recommends or
takes any action to facilitate such proposal. Except as set forth above in this
paragraph, all other costs and expenses incurred in connection with the Merger
Agreement and the transactions are to be paid by the party incurring such
expenses, whether or not any transaction is consummated.
Conduct of Business. The Merger Agreement provides that from the date of
the Merger Agreement until Merger Sub's Election Date, Ascent will (and will
cause its subsidiaries to), conduct its business in the ordinary course of
business and consistent with past practices, preserve intact its business
organization,
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preserve in full force and effect its licenses, keep available the services of
its present officers and key employees, and preserve the goodwill of those
having business relationships with it. Ascent is obligated to confer on a
regular basis with Parent, report on operational matters and promptly advise
Parent of any material adverse change. The Merger Agreement also contains
specific restrictive covenants as to certain impermissible activities of Ascent
prior to Merger Sub's Election Date without the prior consent of Parent,
relating to among other things, amendments to its organizational documents,
issuances or sales of its securities, changes in capital structure, dividends
and other distributions, repurchases or redemptions of securities, changes to
material contracts, material acquisitions or dispositions, increases in
compensation or adoption of new benefit plans, changes in accounting methods,
tax elections, settlement of litigation, incurrence of certain indebtedness, and
certain other material events or transactions.
Board of Directors. The Merger Agreement provides that promptly upon the
purchase of and payment for Shares by Merger Sub pursuant to the Offer, Merger
Sub shall be entitled to designate up to such number of directors, rounded up to
the next whole number, on the Ascent Board as will give Merger Sub
representation on the Ascent Board equal to the product of the total number of
directors on the Ascent Board (giving effect to the directors elected pursuant
to this provision) multiplied by the percentage that the aggregate number of
Shares beneficially owned by Merger Sub and its affiliates bears to the total
number of Shares then outstanding. Ascent has agreed that it will promptly take
all actions necessary to cause the Merger Sub Designees to be so elected as
directors of Ascent, including increasing the size of the Ascent Board or
securing the resignations of incumbent directors or both. The Merger Agreement
provides that at such times, Ascent shall also use its best efforts to cause
persons designated by Merger Sub to constitute the same percentage as persons
designated by Merger Sub shall constitute of the Ascent Board of (i) each
committee of the Ascent Board (some of whom may be required to be independent as
required by applicable law), (ii) each board of directors of each domestic
subsidiary (including On Command, realizing that Ascent has the right to appoint
only a majority of the On Command board) and (iii) each committee of each such
board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, the Merger Agreement provides that until the time
Merger Sub acquires a majority of the then outstanding Shares on a fully diluted
basis, Ascent shall use its best efforts to ensure that all the members of the
Ascent Board and each committee of the Ascent Board and such boards and
committees of the domestic subsidiaries as of the date hereof who are not
employees of Ascent shall remain members of the Ascent Board and of such boards
and committees.
Stock Options; Stock Appreciation Rights. At the Effective Time, each
outstanding option to purchase Shares or other similar interest (collectively,
the "Options") granted under any Ascent stock plans, whether or not then
exercisable or vested, will be canceled and, in exchange therefor, each holder
of such Option shall receive an amount in cash in respect thereof, if any, equal
to the product of (i) the excess, if any, of $15.25 over the per share exercise
price thereof and (ii) the number of Shares subject thereto. At the Effective
Time, each outstanding stock appreciation right ("SAR") granted under any Ascent
stock plan, whether or not then exercisable or vested, will be cancelled and, in
exchange therefor, each holder of such SAR shall receive an amount in cash in
respect thereof, if any, equal to the product of (i) the excess, if any, of
$15.25 over the per Share exercise price thereof and (ii) the number of Shares
subject thereto.
Employee Benefit Matters. The Merger Agreement provides that neither Parent
nor the Surviving Entity will be required to maintain any Ascent benefit plan
after the Effective Time. Parent agrees to cause the Surviving Entity to assume
and honor without modification the severance and cash severance payment
provisions of certain specified employment agreements and the change of control
severance plan of Ascent (the "Employee Severance Agreements"), with any cash
severance payments pursuant thereto to be made in a lump sum not later than the
Effective Time. Each of Parent and Ascent acknowledges that the consummation of
the Offer as provided herein will constitute a "Change of Control" for purposes
of the Employee Severance Agreements and, accordingly, as of the Effective Time,
each of the individuals party to such agreements will be entitled to (x) a cash
severance payment as provided in such agreements in the manner described in the
previous sentence, (y) provision of the other fringe benefits provided in such
agreements and (z) accelerated vesting of the SARs and Options with respect to
Shares held by such individuals as provided in such agreements. Prior to the
Closing, Ascent will take such action as is necessary in
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accordance with the terms of the Employee Severance Agreements to terminate all
individuals covered by such agreements, effective as of the Effective Time,
subject to the making of the cash severance payments and provisions for the
other benefits referred to earlier in this paragraph.
Indemnification, Exculpation and Insurance. The Merger Agreement provides
that from and after the Effective Time, Parent and the Surviving Entity will
jointly and severally indemnify, defend and hold harmless the present and former
officers, directors and employees of Ascent and any of its subsidiaries, and any
person who is or was serving at the request of Ascent as an officer, director or
employee or agent of another person (each, an "Indemnified Party" and together,
the "Indemnified Parties") (and will also advance expenses as incurred to the
fullest extent permitted under the DGCL, provided that the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification),
against (i) all losses, costs, expenses, claims, damages, judgments or
liabilities in connection with any claim, action, suit, proceeding or
investigation based on the fact that the Indemnified Party is or was an officer,
director or employee of Ascent or any of its subsidiaries pertaining to any
matter existing or occurring before or at the Effective Time (the "Indemnified
Liabilities") and (ii) all Indemnified Liabilities pertaining to the
transactions contemplated by the Merger Agreement, in each case to the fullest
extent permitted under the DGCL; provided, however, that such indemnification
will be provided only to the extent any directors' and officers' liability
insurance policy of Ascent or its subsidiaries does not provide coverage and
actual payment thereunder with respect to the matters that would otherwise be
subject to indemnification hereunder. The Surviving Entity shall, and Parent
shall cause the Surviving Entity to, maintain in effect for not less than three
years after the Effective Time the current policies of directors' and officers'
liability insurance maintained by Ascent and Ascent's subsidiaries with respect
to matters occurring prior to or at the Effective Time; provided, however, that
(i) the Surviving Entity may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to the
Indemnified Parties and (ii) the Surviving Entity shall not be required to pay
an annual premium for such insurance in excess of three times the last annual
premium paid prior to the Merger date, but in such case will purchase the
maximum coverage for such amount. Neither Parent nor the Surviving Entity will
be liable for any settlement effected without its prior written consent, which
consent, however, will not be unreasonably withheld or delayed. (See also
"-- Indemnification.")
Reasonable Efforts; Notification. The Merger Agreement provides that each
of Ascent, Parent and Merger Sub agree to use reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated by the Merger Agreement as soon as reasonably
practicable. These obligations include, among other things and subject to
certain exceptions, cooperating with and providing reasonable assistance to each
other in (i) the preparation and filing of any documents with the Commission;
(ii) using commercially reasonable efforts to obtain all necessary consents,
approvals, waivers, licenses or permits, and giving all necessary notices to and
making all necessary filings with any governmental entity or other person
required to be obtained or made by Parent, Merger Sub, Ascent or any of their
subsidiaries in connection with the taking of any action contemplated by the
Merger Agreement; (iii) using commercially reasonable efforts to lift certain
types of permanent or preliminary injunctions or restraining orders or decrees;
and (iv) providing information and making all applications and filings as may be
necessary or reasonably requested in connection with the Merger Agreement.
Competitor Transaction. The Merger Agreement contains a covenant
prohibiting Parent and its controlled subsidiaries from effecting or entering
into any agreement to effect a merger, consolidation, asset disposition,
recapitalization or another transaction resulting in the transfer of securities
or assets of LodgeNet Entertainment Corporation ("LodgeNet").
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties from each of the parties.
Amendment; Extension; Waiver. The Merger Agreement may be amended by the
Boards of Directors of all the parties, at any time before or after approval and
adoption of the Merger Agreement and the Merger by the stockholders of Ascent,
but, after any such approval by the stockholders of Ascent, no amendment may be
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made which by law requires further approval by such stockholders of Ascent
without such further approval. At any time prior to the Effective Time, the
parties, by action taken or authorized by each such party's Board of Directors,
may, to the extent legally allowed, (i) extend the time specified herein for the
performance of any of the obligations of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
in the Merger Agreement, (iii) waive compliance by the other party with any of
the agreements or covenants of such other party contained in the Merger
Agreement or (iv) waive compliance with any condition to such waiving party's
obligation to consummate the transactions contemplated by the Merger Agreement
or to any other obligation of such party.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit 1 to
this Schedule 14D-9 and is incorporated by reference herein in its entirety. The
Merger Agreement should be read in its entirety for a more complete description
of the matters summarized above.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. At a meeting held on February 21, 2000, the Ascent
Board, (a) determined the Offer and the Merger were fair to, and in the best
interests of, Ascent's stockholders, (b) approved the Merger Agreement and the
transactions contemplated by the Merger Agreement, including the Offer and the
Merger, and (c) recommended that Ascent's stockholders accept the Offer and
tender their Shares thereunder and approve and adopt the Merger Agreement and
the Merger.
A letter to the stockholders communicating the Ascent Board's
recommendation and a press release announcing the commencement of the Offer are
filed herewith as Exhibits 2 and 3, respectively, and are incorporated by
reference herein in their entirety.
(b) Reasons.
BACKGROUND OF THE TRANSACTION
Prior to June 27, 1997, COMSAT Corporation ("COMSAT") owned over 80% of the
outstanding Shares. On June 27, 1997, COMSAT distributed its Shares of Ascent
stock to its stockholders in a tax-free distribution pursuant to a Distribution
Agreement (the "Distribution Agreement") between the Company and COMSAT dated
June 3, 1997. The Distribution Agreement included certain restrictions to
protect the tax-free status of the distribution, including a restriction on
Ascent (a) selling or otherwise issuing to any person, or redeeming or otherwise
acquiring from any person, any Shares or securities exercisable or convertible
into Shares or any instruments that afford any person the right to acquire
Shares, (b) soliciting any person to make a tender offer for Shares,
participating in or supporting any unsolicited tender offer for Shares, or
approving any proposed business combination or any transaction which would
result in any person owning 20% or more of the Shares, (c) selling, transferring
or otherwise disposing of assets that, in the aggregate, constitute more than
60% of its gross assets as of distribution provided for in the Distribution
Agreement and (d) voluntarily dissolving or liquidating or engaging in any
merger, consolidation or other reorganization. The last of these restrictions
terminated on the second anniversary of the date of the Distribution Agreement.
As a result, during 1997 and most of 1998, the Company's focus was on improving
the operating performance of all of its businesses, and in late 1997 securing
long-term financing in the form of the Company's Senior Secured Discount Notes.
In August 1997, Fox Sports Rocky Mountain ("Fox Sports"), a partnership
between Parent and Fox News Corporation, entered into a seven year agreement
with Ascent for the local television rights (over-the-air and cable) commencing
with the 1997-1998 playing season for the Denver Nuggets and Colorado Avalanche,
two sports teams wholly owned by subsidiaries of Ascent.
In November 1997, Liberty Denver Arena, LLC ("LDA"), a subsidiary of
Parent, invested $15,000,000 in Ascent Arena Company, LLC ("Arena Company"), the
Ascent subsidiary that owns and operates the Pepsi Center. Through that
investment, LDA acquired an interest in the capital of the Arena Company and a
profits interest of approximately 6.5% representing the right to receive
distributions from the Arena Company
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measured by defined distributions received from the Nuggets and Avalanche. LDA
has no management or operating rights with respect to the Arena Company, the
Nuggets or the Avalanche. LDA has certain put rights beginning in July 2005 to
require Ascent to purchase from LDA its then current ownership interest at its
fair market value. Likewise, Ascent has certain call rights beginning in July
2005 to purchase the LDA ownership interest at its then fair market value.
Beginning in the spring of 1998, the Company's management, in consultation
with the Company's directors and with the assistance of Allen & Co., began to
explore various strategic alternatives to focus the Company's direction and
improve stockholder value. (See "Item 3. Past Contacts, Transactions,
Negotiations and Agreements -- Related Party Transactions.") These strategic
alternatives generally included, among others, various methods of monetizing the
Company's interests in its operating companies, primarily through selling some
or all of the Company's interests in its operating companies; business
combinations involving its operating companies; combining the Company and On
Command through some form of a merger or other corporate reorganization; the
sale to potential investors of equity interests in the Company; or the sale of
the Company.
During 1998 and early 1999, Allen & Co. and representatives of the Company
identified or were approached by several parties who indicated that they might
be interested in acquiring all or some portion of the Company's sports-related
businesses. The Company's management met with several of these parties and
provided certain of them with confidential information regarding the
sports-related businesses. These parties included, among others, William and
Nancy Laurie (the "Lauries"). However, due to several factors, including the
National Basketball Association ("NBA") lock-out of its players which commenced
in July 1998 and was resolved in January 1999, none of the discussions with any
of these parties resulted in any meaningful transaction proposals. Also during
late 1998 and early 1999, representatives of the Company and Allen & Co. engaged
in meetings and discussions regarding the possibility of either combining the
Company and On Command through some form of merger or other corporate
reorganization, or selling some or all of the Company's interest in OCC.
During the first several months of 1999, the Company eventually entered
into an exclusive negotiating period with the Lauries and on April 25, 1999,
entered into a definitive agreement for their purchase of the sports-related
businesses for $400 million in cash and assumed indebtedness. Under the
agreement with the Lauries, Ascent would purchase the interest of LDA in Arena
Company.
During late 1998 and early 1999, Parent and Ascent discussed the
possibility of entering into various business transactions that would involve
certain of Parent's programming capabilities and On Command's hotel operations.
In early 1999, representatives of Parent contacted members of the Company's
management and indicated that if the Company no longer owned the sports-related
businesses, then Parent might be interested in acquiring the Company and/or its
interest in OCC. On March 31, 1999, a representative of Parent sent to the
Company a request for information regarding On Command and the Company's Ascent
Network Services division ("ANS"). In April 1999, Parent executed the
Confidentiality Agreements with Ascent and On Command in furtherance of such
discussions. (See "Item 3. Past Contacts, Transactions, Negotiations and
Agreements -- Confidentiality Agreements.") During April and early May of 1999,
representatives of Parent had meetings and telephone conversations with
representatives of the Company and On Command in order to provide Parent with
certain requested information regarding On Command and ANS.
On May 11, 1999, representatives of Parent met with members of the
Company's management to describe a proposal pursuant to which Parent would
acquire the Company in a taxable stock-for-stock transaction. On May 13, 1999,
Parent submitted a written proposal that contemplated a transaction in which
each Share would be exchanged for .3786 (split-adjusted) shares of Class A
Liberty Media Group common stock ("LMGA"), or a value of approximately $11.63
per Share at that time. The proposed exchange ratio would have been subject to
adjustment based upon actual cash remaining after consummation of the sale of
Ascent's sports-related businesses. The proposal was conditioned on the
completion of due diligence and negotiation and execution of a definitive
agreement, and contemplated that the definitive agreement would
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permit Ascent to entertain unsolicited offers for the purchase of its stock or
assets for a period of 30 days after execution of the definitive agreement.
On or about May 13, 1999, the Company contacted Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") about advising the Company in its
response to Parent's proposal and DLJ was formally engaged on May 24, 1999. In
addition, in the end of May, the Company retained Skadden, Arps, Slate, Meagher
& Flom LLP as the Company's legal advisor. During late May and early June, 1999,
representatives of DLJ had telephone conversations with representatives of
Parent to discuss terms of the proposal made by Parent.
At a meeting of the Ascent Board on June 8, 1999, representatives of DLJ
and management discussed the status of the discussions on the proposal from
Parent. Also at this meeting, the Ascent Board was advised about recent
developments in a lawsuit brought by certain of the Company's stockholders in
Delaware Chancery Court challenging the Company's agreement with the Lauries.
(See "Item 8. Additional Information -- Certain Litigation.") After discussing
all of these matters at length, the Ascent Board instructed management to
continue to negotiate with Parent regarding a possible transaction seeking, in
particular, an improvement in the price being offered and in the Company's
ability to seek other acquirors after signing an agreement with Parent. Later in
June 1999, the Company settled the shareholder litigation by agreeing, among
other things, to conduct an auction for the Company's sports-related businesses.
During late June and early July, representatives of DLJ had telephone
conversations with representatives of Parent. DLJ also had conversations with
another party about their interest in an acquisition of the Company. On July 14,
1999, Parent sent a letter to the Company outlining a revised proposal. That
revised proposal contemplated a tax-free stock-for-stock transaction in which
each Share would be exchanged for .4399 shares of LMGA, or a value of
approximately $16.24 per Share at that time. The exchange ratio was still
subject to adjustment based upon actual cash remaining after consummation of the
sale of Ascent's sports-related businesses. The revised proposal was still
conditioned on the completion of due diligence and negotiation and execution of
a definitive agreement, but now contemplated that the definitive agreement would
permit Ascent to solicit offers for the purchase of Ascent's stock or assets for
a period of 60 days after execution of the definitive agreement. The revised
proposal also provided that Parent would be paid a break-up fee of $15 million,
if Ascent terminated the definitive agreement to pursue an alternative
transaction.
At a meeting of the Ascent Board on July 26, 1999, the Ascent Board
recognized a bid by The Sturm Group, a private investment firm owned by Denver
businessman Donald L. Sturm, as the superior bid in the first round of the
auction for the Company's sports-related businesses. The Ascent Board also
discussed the terms and conditions of the recently proposed transaction with
Parent. Subsequently, the Lauries chose not to bid against The Sturm Group and
as a result, on July 27, 1999, the Company and LDA entered into a definitive
agreement with The Sturm Group to sell the sports-related businesses to The
Sturm Group for $461 million in cash and assumed indebtedness.
During late July and August 1999, management, DLJ and the Company's legal
advisors continued negotiations with Parent. During this period, DLJ also had
conversations with another party about their interest in a possible acquisition
of the Company or On Command. On August 19, 1999, Parent sent a revised term
sheet to the Company describing a transaction that contemplated a tax-free
stock-for-stock transaction in which each Share would be exchanged for that
number of shares of LMGA equal to $16.45 divided by the average closing price
for LMGA over a specified trading period. The exchange ratio was not subject to
adjustment based upon actual cash remaining after consummation of the sale of
Ascent's sports-related businesses, but the term sheet contemplated that Ascent
would make a representation as to the amount of such cash. The term sheet
proposal was still conditioned on the completion of due diligence and
negotiation and execution of a definitive agreement. The term sheet provided
that Ascent could solicit third party offers for a period of 60 days after
execution of the definitive agreement, and provided that Parent would be paid a
break-up fee of $10 million if Ascent terminated the definitive agreement to
pursue an alternative transaction, subject to a decrease if the merger was not
approved by Ascent's stockholders after a significant decline in the market
price of LMGA shares.
At a meeting of the Ascent Board on August 20, 1999, management, DLJ and
the Company's legal advisors described the terms and conditions of the
transaction set forth on the term sheet. After discussion of
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the advantages of the transaction to the Company's stockholders, the Ascent
Board authorized the execution of the term sheet and instructed management, and
the Company's legal advisors to negotiate a definitive merger agreement as
expeditiously as possible, with DLJ assisting on negotiations of the financial
terms.
On August 23, 1999, Parent sent to the Company an extensive financial and
operating information request list. During late August and early September, the
Company, with the assistance of management of OCC, assembled all of the
requested material and made it available to Parent. In early September,
representatives of Parent also met with members of management of the Company and
On Command to discuss the financial and operating condition and prospects of On
Command and ANS.
In early September 1999, Parent's legal advisors provided the Company with
a draft merger agreement generally based on the executed term sheet.
Representatives of each of the Company, DLJ and the Company's legal advisors
commenced negotiating the terms of the merger agreement with Parent and its
legal advisors.
On September 18, 1999, a representative of Parent contacted the Company and
indicated that they would not finalize negotiations of the definitive merger
agreement on the terms contemplated by the term sheet. They indicated that
Parent desired to pursue a transaction to acquire a significant competitor of
OCC, and therefore Parent would not agree to a merger agreement on the
previously contemplated terms.
On September 21, 1999, a representative of Parent contacted the Company to
indicate that Parent might still be willing to pursue a transaction under two
new alternative proposals. The first proposal was to keep the current
transaction structure as between Parent and the Company, but Parent would have
30 days after entering into a definitive agreement to pursue an agreement with
LodgeNet, On Command's competitor. The second proposal was to keep the current
transaction structure but to increase the certainty for Parent by eliminating
the Company's ability to solicit other acquirors, and by providing a lock-up
agreement with 10% of the Company's stockholders, an option for Parent to
purchase 10% of the Company's common stock at the deal price and retention of
the proposed break-up fee.
At a meeting of the Ascent Board on September 21, 1999, the Ascent Board
was informed of the revised proposals by Parent. The Ascent Board discussed the
revised proposals with management, DLJ and the Company's legal advisors. The
Ascent Board instructed DLJ to undertake a limited solicitation of potentially
interested third parties. Negotiations between representatives of Parent and the
Company continued during the following week. Subsequent to the Ascent Board
meeting, DLJ consulted with management of Ascent regarding potentially
interested third parties.
On September 28, 1999, Parent sent a letter to the Company outlining a
revised proposal to acquire the Company. This revised proposal contemplated that
Parent and Ascent would complete the merger agreement substantially as
negotiated prior to September 21, with the following principal exceptions: (i)
the price per Share used to determine the exchange ratio was increased from
$16.45 to $17.00; (ii) Ascent would only be permitted to respond to unsolicited
third party offers as may be required to comply with the board's fiduciary
duties with respect to a superior proposal; (iii) Ascent would represent that
before the date of the merger agreement, the On Command board of directors (the
"OCC Board") had approved Parent as an "interested stockholder" of On Command
within the meaning of Section 203 of the DGCL; and (iv) Ascent would grant
Parent an option to purchase approximately 10% of the Shares on a fully diluted
basis.
At a meeting on October 1, 1999, the Ascent Board reviewed the most recent
proposal by Parent. DLJ reported on the status of its efforts to contact other
parties, and indicated that no such contacts had led to any firm proposals by a
third party. After reviewing the revised proposal and the other alternatives
available to the Company, the Ascent Board rejected Parent's request for an
option at market price, and proposed limiting all consideration if Ascent were
to terminate the merger agreement to pursue another transaction to 3% of the
proposed equity value. On this basis, the Ascent Board instructed management and
the Company's legal advisors to meet with Parent and negotiate a definitive
merger agreement as expeditiously as possible. During October 1999, management
and the Company's legal advisors negotiated with representatives of Parent, AT&T
and their respective legal advisors.
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Also during October 1999, representatives of the Company and DLJ provided
requested financial and business information regarding On Command and ANS to a
third party and engaged in meetings and discussions. The other party still did
not make a proposal to acquire the Company.
At a meeting of the Ascent Board on October 20, 1999, the board analyzed
and reviewed, with the Company's management, DLJ and the Company's legal
advisors, the various strategic, financial and legal considerations concerning
the proposed transaction with Parent, the potential impact on the Company's
stockholders of receiving Parent stock at the exchange ratio being proposed and
the other terms and conditions of the definitive merger agreement (the "October
Merger Agreement"). DLJ delivered to the Ascent Board its opinion that the
consideration to be received by the stockholders of Ascent pursuant to the
October Merger Agreement was fair to such stockholders from a financial point of
view. After further discussion, the Ascent Board approved the October Merger
Agreement, and thereafter AT&T, Parent and Ascent executed the October Merger
Agreement. The October Merger Agreement was conditioned on the sale of the
sports-related businesses to The Sturm Group pursuant to the agreement with The
Sturm Group.
After the execution of the October Merger Agreement, the agreement between
the Company and The Sturm Group was first renegotiated on October 31, 1999, then
eventually terminated on December 1, 1999. In connection with the initial
renegotiation of the agreement with The Sturm Group, on October 31, 1999, Parent
agreed not to exercise its right to terminate the October Merger Agreement while
Parent and the Company continued to renegotiate the October Merger Agreement in
light of the changes to the sale of the sports-related businesses. In late
November, as the likelihood increased that the sale of the sports-related
businesses would not occur, representatives of Parent and the Company attempted
to negotiate a mutually acceptable transaction in which Parent could acquire On
Command even if Ascent did not sell the sports-related businesses.
At a meeting of the Ascent Board on the morning of November 29, 1999, the
Ascent Board reviewed the status of the negotiations between Parent and the
Company. Later on November 29, Parent terminated the October Merger Agreement.
On December 21, 1999, the Company announced that it was continuing to seek
a qualified buyer for its sports-related businesses with the continued
assistance of Allen & Co. and Wasserstein Perella & Co. Inc. ("Wasserstein").
The Company also announced that it was exploring other strategic alternatives in
response to the termination of the October Merger Agreement, which alternatives
could include a sale of OCC or ANS, other transactions involving OCC or other
transactions involving the entire company with the continued assistance of DLJ.
On January 28, 2000, the Company's announcement of the resignations of Mr.
Cronin and another director again referred to the Company's continued
exploration of its strategic alternatives and sales processes.
On Friday, February 18, 2000, representatives of Parent met with
representatives of the Company, including Charles Neinas, the Company's
chairman, and DLJ. Parent's representatives delivered a letter outlining a
transaction in which Parent would acquire all of the outstanding common stock of
the Company for $14.00 in cash in a two-step transaction contemplating a first
step tender offer. Parent's representatives also said that if the Company was
not prepared to negotiate a definitive merger agreement on the terms set forth
in the proposal by the opening of the public markets on Tuesday, February 22,
2000 (Monday being a holiday), then Parent would announce a tender offer for up
to 14% of the Company's outstanding common stock. DLJ and the Company's
representatives continued discussions with Parent's representatives but were
unable to reach an agreement that both parties were prepared to accept. Parent's
representatives departed and indicated that they would be available over the
weekend if the Company wanted to reopen the negotiations.
During the evening of February 18 and the morning of February 19, DLJ and
the Company continued discussing Parent's proposal. As a result of these
discussions, on February 19, representatives of Ascent requested an increase in
the cash consideration being offered and also requested that Parent's offer to
purchase not be conditioned on the absence of a subsequent material adverse
change to the Company. Parent agreed to increase the consideration to $15.25 per
share and stated that there would not be a material adverse change condition.
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On February 20 and 21, 2000, the parties negotiated a definitive merger
agreement that was presented to the Ascent Board on the evening of February 21.
The board analyzed and reviewed, with the Company's management, DLJ and the
Company's legal advisors, among other things, the various strategic, financial
and legal considerations set forth below under "Reasons for the Transaction;
Factors Considered by the Company's Board." The definitive merger agreement (the
"Merger Agreement") was approved by the Ascent Board (with Mr. Gould having
recused himself and Mr. Lillis not available to attend the meeting).
REASONS FOR THE TRANSACTION; FACTORS CONSIDERED BY THE ASCENT BOARD
In approving the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby and recommending that all holders of Shares
accept the Offer and tender their Shares pursuant to the Offer, the Ascent Board
considered a number of factors including those presented below:
1. The presentations and views expressed by management of the Company
regarding, among other things: (a) the financial condition, results of
operations, cash flows, business and prospects of the Company; (b) the fact
that the structure of the transaction proposed by Parent should result in a
rapid consummation of the transaction; (c) the continued cash funding
requirements of each of the Denver Nuggets and Colorado Avalanche as well
as OCC's requirement for additional financing in order to support its
capital requirements under its proposed 2000 operating and capital budget;
(d) the opportunities and risks presented to OCC related to new services
for hotels, especially the provision of internet services, and the
competition to provide such services to major hotel chains; (e) the ongoing
renegotiations of three of OCC's largest customer contracts and the
opportunities and risks associated with such negotiations; (f) the recent
hiring of Mr. Elliman and Mr. Goodson, and the recent resignations of Mr.
Cronin and certain officers at On Command, as well as employee retention
issues at On Command in light of, among other things, the booming job
market in Silicon Valley; (g) the fact that several parties had expressed
an interest in acquiring the sports-related businesses, though none had yet
made any specific proposals, and after the Merger, the risks and
opportunities associated with such sale would be borne by Parent; (h) the
fact that no party had submitted to the Company a proposal for the Company
other than Parent; (i) the fact that in view of the absence of any serious
interest expressed to management by any other parties, management of the
Company believed it was unlikely that in the near term any other party
would propose an acquisition or strategic business combination that would
be more favorable to the Company and its stockholders than the Offer and
the Merger; (j) the fact that the transaction proposed by Parent was not
conditioned on the consent of the NBA, NHL or the City and County of
Denver; (k) the fact that Parent agreed that it would not pursue a
transaction with LodgeNet during the pendency of the Offer; and (l) the
recommendation of the Offer; and the Merger by the management of the
Company.
2. The presentation of DLJ at the meeting of the Ascent Board held on
February 21, 2000, and the opinion of DLJ, dated February 22, 2000, to the
effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the proposed cash consideration to be received by
the holders of Shares pursuant to the Offer and the Merger was fair to such
holders from a financial point of view. The full text of the written
opinion dated February 22, 2000, which sets forth the assumptions made,
matters considered and limitations on the review undertaken, is attached
hereto as Exhibit 4, and is incorporated herein by reference. The opinion
of DLJ is directed only to the fairness, from a financial point of view, of
the cash consideration to be received in the Offer and the Merger by
holders of Shares and is not intended to constitute, and does not
constitute, a recommendation as to whether any stockholder should tender
Shares pursuant to the Offer or as to whether to vote to adopt the Merger
Agreement. Holders of Shares are urged to read such opinion carefully in
its entirety.
3. The historical market prices, price to earnings ratios, recent
trading activity and trading range of the Shares, including that the Offer
Price represents a premium of approximately 50% over the $10.125 closing
price of the Shares on the NASDAQ on February 18, 2000, the last full
trading day preceding the public announcement of the execution of the
Merger Agreement.
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4. Valuations based on premiums paid in comparable acquisition
transactions, discounted cash flow analysis, and a comparison based upon
the value of LodgeNet.
5. The arm's-length negotiations between the Company and DLJ on behalf
of the Company and Parent leading to the belief of the Ascent Board that
$15.25 per Share represented the highest price per Share that could be
negotiated with Parent.
6. That the Offer and the Merger provide for a prompt cash tender
offer for all Shares to be followed by a merger for the same consideration,
thereby enabling the Company's stockholders to obtain the benefits of the
transaction in exchange for their Shares at the earliest possible time.
7. The fact that Parent's and Merger Sub's obligations under the Offer
are not subject to any financing condition, and the representation of
Parent and Merger Sub that they have sufficient funds available to them to
consummate the Offer and the Merger.
8. That pursuant to the Merger Agreement, between the execution of the
Merger Agreement and the closing of the Offer, the Company is required to
obtain Parent's consent before it can take certain actions.
9. The limited ability of Parent and Merger Sub to terminate the Offer
or the Merger Agreement.
10. That, in the Merger Agreement, Parent is required to extend the
Offer up to August 31, 2000 if all conditions other than the Minimum
Condition are not satisfied, and that Parent is required to extend the
Offer up to ten business days from the Initial Expiration Date if all
conditions to the Offer have been satisfied other than the Minimum
Condition.
11. That pursuant to the Merger Agreement, the Company and its
representatives may not (i) furnish to a third party who has submitted an
unsolicited acquisition proposal information concerning the Company's
business properties or assets, or (ii) participate in discussions or
negotiations with such a third party concerning an unsolicited acquisition
proposal.
12. That pursuant to the Merger Agreement, the Ascent Board has the
right to terminate the Merger Agreement if, prior to the purchase of Shares
by Parent, the Company has received a Superior Proposal and the Ascent
Board has determined, in its good faith judgment, after consultation with
and based upon the advice of legal counsel, to approve or recommend such
Superior Proposal in order to comply with its fiduciary duties under
applicable law.
13. The circumstances under the Merger Agreement upon which the $18
million Termination Fee and the $2 million expense reimbursement becomes
payable by the Company to Parent.
14. The provision under the Merger Agreement for vesting and payment
of all outstanding Company options and SARs in connection with the
Transaction, and the termination and payment of severance obligations under
existing agreements.
15. The conditions to the Offer, including the definition of Material
Adverse Effect and the fact that the absence of a subsequent Material
Adverse Change of the Company was not a condition to closing the Offer or
the Merger.
16. The other provisions of the Offer and the Merger Agreement.
17. That the only consents and approvals required to consummate the
Merger were under the HSR Act and the Communications Act (as defined) and
the favorable prospects for receiving all such consents and approvals. (See
"Item 8. Additional Information -- Antitrust" and "-- FCC Approvals.")
18. That, while the Offer gives the Company's stockholders the
opportunity to realize a premium over the price at which the Shares traded
immediately prior to the public announcement of the Offer and the Merger,
the consummation of the Offer and the Merger would eliminate the
opportunity for stockholders to participate in the future growth and
profits of the Company.
19. The approval of the Merger Agreement by the Board of Directors of
On Command.
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The foregoing discussion of information and factors considered and given
weight by the Ascent Board is not intended to be exhaustive, but is believed to
include all of the material factors considered by the Ascent Board. In view of
the variety of factors considered in connection with its evaluation of the Offer
and the Merger, the Ascent Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determinations and recommendations. In addition, individual
members of the Ascent Board may have given different weights to different
factors.
(c) Intent to Tender. To Ascent's knowledge after reasonable inquiry,
Ascent and all of Ascent's executive officers, directors, affiliates and
subsidiaries currently intend to tender all Shares held of record or
beneficially (other than Shares held directly or indirectly by other public
companies, as to which Ascent has no knowledge) by them pursuant to the Offer or
to vote in favor of the Merger. The foregoing does not include any Shares over
which, or with respect to which, any such executive officer, director, affiliate
or subsidiary acts in a fiduciary or representative capacity or is subject to
the instructions of a third party with respect to such tender.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
DLJ was retained pursuant to the terms of a letter agreement dated as of
May 24, 1999, as amended as of February 20, 2000 (the "DLJ Engagement Letter"),
and Wasserstein Perella & Co., Inc. ("Wasserstein") was retained pursuant to the
terms of a letter agreement dated as of July 14, 1999, as amended as of February
21, 2000 (the "Wasserstein Engagement Letter"). DLJ's engagement was initially
to serve as the Company's financial advisor with respect to a possible sale,
merger, consolidation or any other business combination of the Company assuming
the prior sale of the sports related businesses. Wasserstein's engagement was to
serve as the Company's financial advisor with respect to a sale of the Company's
sports-related assets. (See "Item 3. Past Contacts, Transactions, Negotiations
and Agreements -- Related Party Transactions.")
DONALDSON, LUFKIN & JENRETTE
Pursuant to the DLJ Engagement Letter, the Company has agreed to pay DLJ
cash compensation of $100,000 as a retainer fee (which amount has already been
paid), cash compensation of $500,000 at the time DLJ notifies the Ascent Board
that DLJ is prepared to deliver an opinion requested by the Company regarding
the fairness of any Sale Transaction (as defined) pursuant to which DLJ has been
paid $500,000 with respect to the October Merger Agreement, and an additional
$500,000 to be paid with respect to the Merger Agreement (the "New Opinion Fee")
and $75,000 for each update of such opinion (the New Opinion Fee will be
credited against the Additional Fee); and cash compensation of $3,750,000 (the
"Additional Fee") if the Company consummates a sale, merger, consolidation or
any other business combination, in one or a series of transactions, involving
all or substantially all of the businesses, securities or assets of the Company
(excluding those businesses, securities and assets then classified as
discontinued operations) (a "Sale Transaction"). The foregoing fees will be
payable upon the occurrence of a Sale Transaction, during the term of the DLJ
Engagement Letter or (i) within nine months of the termination by the Company of
the DLJ Engagement Letter if a Sale Transaction is consummated with Parent or
any other party with which DLJ or the Company had any discussions relating to a
Sale Transaction during the term of the DLJ Engagement Letter or (ii) within
twelve months of the termination by the Company of the DLJ Engagement Letter if
a Sale Transaction is consummated with Parent or any other party and the Company
had entered into an agreement with respect to any Sale Transaction during the
term of the DLJ Engagement Letter.
On October 20, 1999, the Ascent Board requested that DLJ issue an opinion
with respect to the October Merger Agreement. On such date, DLJ delivered to the
Ascent Board its opinion that the consideration to be received by the
stockholders of Ascent in the merger contemplated by the October Merger
Agreement was fair to such stockholders from a financial point of view. As a
result of the delivery of that opinion, Ascent paid DLJ $500,000. On February
21, 2000, prior to executing the Merger Agreement, the Company requested that
DLJ deliver an additional opinion with respect to the fairness of the
Transaction. In response, DLJ delivered its oral opinion (later confirmed in
writing) to the Company to the effect that the consideration to be received by
the stockholders of the Company pursuant to the Merger Agreement is fair to such
stockholders from a
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financial point of view. As a result of the delivery of the second opinion,
Ascent became obligated to deliver the New Opinion Fee described above. The New
Opinion Fee will be credited against the Additional Fee, if and when the
Additional Fee becomes payable.
Under the DLJ Engagement Letter, Ascent has also agreed to reimburse DLJ
for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel and other consultants and advisors) and to indemnify
DLJ and certain related parties against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of
DLJ's engagement.
A copy of DLJ's opinion is filed as Exhibit 5 to this Schedule 14D-9 and is
incorporated herein in its entirety.
WASSERSTEIN PERELLA & CO., INC.
Pursuant to the Wasserstein Engagement Letter, Ascent has agreed to pay
Wasserstein sports-related business cash compensation of $3,400,000 plus 5.0% of
the Aggregate Consideration (as defined in the Wasserstein Engagement Letter),
if any, in excess of $461,000,000 in connection with any sale of substantially
all the equity securities, assets or businesses of the sports-related business,
or $3,400,000 in connection with the sale or disposition of all or substantially
all of the equity securities of the Company (regardless of the form of the
transaction) and cash compensation of $500,000 if, upon the request of the
Company, Wasserstein delivers an opinion with respect to the adequacy or
fairness to the Company, from a financial point of view, of the consideration to
be received in a sale of the sports-related businesses.
The foregoing fees will be payable upon the occurrence of a sale, during
the term of the Wasserstein Engagement Letter or within twelve months of the
termination by the Company of the Wasserstein Engagement Letter if an agreement
in principle or definitive agreement to effect a sale is entered into and
concurrently therewith or at any time thereafter such sale is consummated.
Under the Wasserstein Engagement Letter, Ascent has also agreed to
reimburse Wasserstein for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel and other consultants and advisors)
and to indemnify Wasserstein and certain related parties against certain
liabilities, including liabilities under the federal securities laws, relating
to or arising out of Wasserstein's engagement.
Ascent did not request that Wasserstein render an opinion in connection
with either the Offer or the Merger and consequently, as of the date of this
Schedule 14D-9, no opinions were rendered by Wasserstein.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Prior to his resignation, on January 28, 2000, James A. Cronin, III, the
Company's former Executive Vice President, Chief Financial Officer and Chief
Operating Officer, exercised a portion of his vested stock appreciation rights
with respect to 74,375 shares. The exercise price of such stock appreciation
rights was $9.525 per Share and the price per Share recognized by Mr. Cronin was
$12.375, thus resulting in a net cash payment of $2.85 per Share and an
aggregate cash payment of $211,968.
Other than as set forth above, no transactions in Shares have been effected
during the past 60 days by Ascent or, to the best of Ascent's knowledge, by any
executive officer, director, affiliate or subsidiary of Ascent.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(1)(i) Except as indicated in Items 3 and 4 above, no negotiations are
being undertaken or are underway by Ascent in response to the Offer which relate
to a tender offer or other acquisition of Ascent's securities by Ascent, any
subsidiary of Ascent or any other person.
(ii) Except as indicated below or in Items 3 and 4 above, no negotiations
are being undertaken or are underway by Ascent in response to the Offer which
relate to, or would result in, (1) any extraordinary transaction, such as a
merger, reorganization or liquidation, involving Ascent or any subsidiary of
Ascent, (2) any purchase, sale or transfer of a material amount of assets by
Ascent or any subsidiary of Ascent, or
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(3) any material change in the present dividend rate or policy, or indebtedness
or capitalization of Ascent. At the request of Parent, Ascent is continuing its
marketing efforts to sell the Company's sports-related assets. It is expected
that any sale of the sports-related assets would occur only after consummation
of the Merger and would be on terms and conditions negotiated between Parent and
the proposed purchaser.
(2) Except as indicated in Items 3 and 4 above, there are no transactions,
Ascent Board resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
DGCL 203
Section 203 of the DGCL purports to regulate certain business combinations
involving a corporation organized under Delaware law, such as Ascent, with a
stockholder beneficially owning 15% or more of the outstanding voting stock of
such corporation (an "Interested Stockholder"). Section 203 provides, in
relevant part, that the corporation shall not engage in any business combination
with any Interested Stockholder for a period of three years following the date
such stockholder became an Interested Stockholder unless (i) prior to such date,
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, or (iii) on or subsequent to
such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least two-thirds of the outstanding voting stock which is not owned
by the Interested Stockholder. The Ascent Board and the On Command Board of
Directors each approved the Merger Agreement and the Transaction prior to Parent
becoming an Interested Stockholder; therefore, Section 203 of the DGCL is
inapplicable to the Offer and the Merger.
DGCL 253
Under Section 253 of the DGCL, if Merger Sub acquires, pursuant to the
Offer or otherwise, at least 90% of the outstanding Shares, Merger Sub will be
able to effect the Merger after consummation of the Offer without a vote by
Ascent's stockholders. However, if Merger Sub does not acquire at least 90% of
the outstanding Shares pursuant to the Offer or otherwise, a vote by Ascent's
stockholders will be required under the DGCL in order to affect the merger.
SECTION 14(f) INFORMATION STATEMENT
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by Parent, pursuant to the Merger
Agreement, of certain persons to be appointed to the Ascent Board other than at
a meeting of Ascent's stockholders.
ANTITRUST
Under the HSR Act, and the rules that have been promulgated thereunder by
the Federal Trade Commission (the "FTC"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by Parent pursuant to the Offer is subject
to such requirements.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a 15
calendar day waiting period following the filing by Parent of a Notification and
Report Form with respect to the Offer. Such filing was made on February 28,
2000. The Antitrust Division or the FTC may extend the waiting periods of such
filing by requesting additional information and documentary material relevant to
the acquisition. If such a request is made, the waiting
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period will be extended until 11:59 P.M., New York City time, on the tenth day
after Parent has substantially complied with such request. Thereafter, such
waiting periods can be extended only by court order or consent. Although Ascent
is required to file certain information and documentary material with the
Antitrust Division and the FTC in connection with the Offer, neither Ascent's
failure to make such filings nor a request to Ascent from the Antitrust Division
for additional information or documentary material will extend the waiting
period. However, if the Antitrust Division or the FTC raises substantive issues
in connection with the Transaction, Parent and Ascent may engage in negotiations
with the relevant governmental agency concerning possible means of addressing
these issues and may agree to delay consummation of the Transaction while such
negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of acquisition transactions. At any time before or after the
consummation of any such transactions, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including, in the case of the Transaction, seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of Shares so acquired or
divestiture of substantial assets of Parent or Ascent or any of their respective
subsidiaries. State attorneys general may also bring legal actions under the
antitrust laws, and private parties may bring such actions under certain
circumstances. While Ascent does not believe that the acquisition of Shares by
Parent will violate the antitrust laws, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made, or if such a
challenge is made, what the result will be.
FCC APPROVALS
Ascent holds a number of Federal Communications Commission ("FCC") licenses
in connection with its ANS operations and is therefore subject to regulation by
the FCC. The Communications Act of 1934 (the "Communications Act") prohibits the
transfer of control of a corporation holding such licenses without the prior
approval of the FCC. The consummation of the Offer would constitute a change of
control that requires such prior approval. Accordingly, to satisfy the
conditions of the Offer, Parent and Ascent must either (i) obtain from the FCC a
Special Temporary Authorization (an "STA"), on terms and conditions satisfactory
to Merger Sub and Parent, permitting Merger Sub to consummate the Offer and
permitting Merger Sub to operate the licensed facilities on a temporary basis
pending approval of a "long form" application for FCC consent to Merger Sub's
acquisition of control of Ascent ("Long Form Approval"), or (ii) if such STA is
not granted, obtain Long Form Approval. Parent and Ascent have submitted to the
FCC an application for Long Form Approval, as well as a request for an STA. If
by the initial expiration date of the Offer, the FCC has not granted the
parties' request for an STA, Merger Sub will extend the Offer, subject to the
terms of the Offer and the Merger Agreement (in which case the acceptance for
payment and payment for tendered Shares would be delayed), and Merger Sub will
attempt to obtain Long Form Approval. If such Long Form Approval is not
obtained, Merger Sub will not purchase the Shares, unless Parent is otherwise
satisfied, in its sole discretion, that the Shares can be purchased without
violating the Communications Act.
APPRAISAL RIGHTS
No appraisal rights are available to holders of Shares in connection with
the Offer. However, if the Merger is consummated, holders of Shares may have
certain rights under Section 262 of the DGCL to dissent and demand appraisal of,
and payment in cash for the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from accomplishment or
expectation of the Merger) required to be paid in cash to such dissenting
holders for their Shares. Any such judicial determination of the fair value of
Shares could be based upon considerations in addition to the applicable offer
price and the market value of Shares, including asset values and the investment
value of Shares. The value so determined could be more or less than the Offer
Price.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his or her right to
appraisal, as provided in the DGCL, each of the Shares of such holder will be
converted into the Offer Price in accordance with the Merger Agreement. A
stockholder
22
<PAGE> 24
may withdraw his or her demand for appraisal by delivering to Parent a written
withdrawal of his or her demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
STOCKHOLDER RIGHTS PLAN
On June 27, 1997, the Ascent Board authorized and declared a dividend
distribution of one Right for each outstanding Share. Each Right entitles the
registered holder thereof to purchase from Ascent one one-hundredth of a share
of Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of Ascent at a purchase 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 Ascent and The Bank of New York, as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the tenth day following a public
announcement (the day of such announcement, a "Shares Acquisition Date") that
any individual, corporation or other entity (a "Person") or group of affiliated
or associated Persons has acquired beneficial ownership of 15% or more of the
outstanding Shares (such a Person, an "Acquiring Person") or (ii) the tenth
business day (or such later date as may be determined by action of the Ascent
Board 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 affiliated or
associated Persons of 15% or more of the outstanding Shares (the earlier of such
dates being the "Distribution Date"), the Rights will be evidenced, with respect
to any of the certificates representing the Shares outstanding as of July 10,
1997 (the "Record Date"), by such certificate with a copy of a summary of Rights
attached thereto.
The Rights are not exercisable until the Distribution Date and 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 Ascent, in
each case, as described below.
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 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 Share. Each Preferred Share
will have 100 votes, voting together with the Shares. Finally, in the event of
any merger, consolidation or other transaction in which Shares are exchanged,
each Preferred Share will be entitled to receive 100 times the amount received
per 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
Share.
In the event that Ascent 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 Shares having a market value of two
times the exercise price of the Right.
23
<PAGE> 25
At any time after any Person or group of affiliated or associated Persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of affiliated or associated Persons of 50% or more of the outstanding Shares,
the Ascent Board may exchange the Rights (other than Rights owned by such Person
or group of Persons which will have become void), in whole or in part, at an
exchange ratio of one Share, or one one-hundredth of a Preferred Share (or of a
share of a class or series of Ascent's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
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 Ascent Board 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 Ascent Board, 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 Ascent Board 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 Shares then known to Ascent 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 Ascent, including, without limitation, the right to
vote or to receive dividends.
The Rights Agreement specifying the terms of the Rights is filed as Exhibit
18 to this Schedule 14D-9 and is incorporated by reference herein in its
entirety. The foregoing description of the Rights is qualified in its entirety
by reference to such exhibit.
On February 22, 2000, in connection with the execution and delivery of the
Merger Agreement, the Ascent Board approved an amendment to the Rights Agreement
(the "Amendment to the Rights Agreement"), in order to, among other things, (i)
prevent Parent or Merger Sub from becoming or being deemed an Acquiring Person,
and (ii) prevent a Distribution Date or Shares Acquisition Date from occurring,
in each case, as a result of (a) the approval, execution or delivery of the
Merger Agreement or any amendments thereof approved in advance by the Ascent
Board or (b) the commencement or, prior to termination of the Merger Agreement,
the consummation of any of the transactions contemplated by the Merger Agreement
in accordance with the provisions of the Merger Agreement, including the Offer
and the Merger.
CERTAIN LITIGATION
In June 1999, the Company and certain of its present and former directors
were named as defendants in lawsuits filed by shareholders of the Company (the
"Shareholder lawsuits") in the Delaware Court of Chancery. These purported class
actions asserted that the Company's agreement to sell the Company's
sports-related businesses to entities controlled by the Lauries constituted a
sale of substantially all assets of the Company, thereby requiring a shareholder
vote, and resulted from breaches of fiduciary duties by the director defendants.
On June 23, 1999, the Company, the director defendants and the Laurie-controlled
purchasing entities that were also named as defendants, entered into an
agreement with the shareholder plaintiffs to settle the lawsuits. Under the
settlement agreement, the Company, the director defendants, and the Laurie-
controlled entities agreed, among other things, to amend the terms of the
proposed sale to the Laurie entities to permit the Company to conduct a new
process in which the Company would solicit additional offers for the purchase of
the sports-related businesses. The Company and the director defendants also
agreed, among other things, to engage Wasserstein to assist in the new auction
process, and to add Peter W. May to the Ascent Board. On July 27, 1999, as a
result of the new auction process, the Company entered into a definitive
agreement to sell the sports-related businesses to The Sturm Group. The
settlement of the Shareholder lawsuits is subject to the approval of the
Delaware Court of Chancery after a hearing. If approved by the Court, the
settlement would result in, among other things, the dismissal with prejudice of
the claims asserted
24
<PAGE> 26
in the Shareholder lawsuits and the payment by the Company of plaintiff attorney
fees and expenses in an amount to be approved by the Court.
ITEM 9. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1. Agreement and Plan of Merger, dated February 22, 2000, by
and among Ascent Entertainment Group, Inc., Liberty Media
Corporation and Liberty AEG Acquisition, Inc.
2. Letter to Stockholders from Charles M. Neinas, dated
February 29, 2000*
3. Joint Press Release issued by Ascent Entertainment Group,
Inc. and Liberty Media Corporation on February 22, 2000
4. Joint Press Release issued by Ascent Entertainment Group,
Inc. and Liberty Media Corporation on February 28, 2000
5. Opinion of Donaldson, Lufkin & Jenrette, dated February 22,
2000*
6. Confidentiality Agreement, dated as of April 12, 1999,
between Liberty Media Corporation and Ascent
Entertainment Group, Inc.
7. Confidentiality Agreement, dated as of April 12, 1999,
between Liberty Media Corporation and On Command
Corporation
8. Ascent 1995 Key Employee Stock Plan
9. Ascent 1995 Non-Employee Director Stock Plan
10. Ascent 1997 Non-Employee Director Stock Appreciation Rights
Plan
11. Article VIII of the Amended and Restated Certificate of
Incorporation of Ascent Entertainment Group, Inc.
12. Article VIII of the Amended and Restated Bylaws of Ascent
Entertainment Group, Inc.
13. Amended and Restated Employment Agreement of Arthur M. Aaron
14. Amended and Restated Employment Agreement of David A. Holden
15. Employment Agreement of David Ehrlich
16. Employment Agreement of Donald M. Elliman
17. Employment Agreement of Allan Goodson
18. Rights Agreement, dated as of June 27, 1997, between Ascent
Entertainment Group, Inc. and The Bank of New York
</TABLE>
- ---------------
* Copy attached to, or enclosed with, copies of this Schedule mailed to
stockholders.
25
<PAGE> 27
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
/s/ ARTHUR M. AARON, ESQ.
------------------------------------
Name: Arthur M. Aaron
Title: Executive Vice President,
Business Affairs
Dated: February 29, 2000.
26
<PAGE> 28
SCHEDULE I
ASCENT ENTERTAINMENT GROUP, INC.
1225 SEVENTEENTH STREET, SUITE 1800
DENVER, COLORADO 80202
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
GENERAL
This information statement (the "Information Statement") is being mailed on
or about February 29, 2000, as part of the Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") to holders of record of shares of
common stock, par value $0.01 per share (the "Shares"), of Ascent Entertainment
Group, Inc., a Delaware corporation ("Ascent" or the "Company"). You are
receiving this Information Statement in connection with the possible election of
persons designated by Merger Sub (as defined below) to a majority of the seats
on the Board of Directors of Ascent (the "Ascent Board").
On February 22, 2000, Ascent, Liberty Media Corporation, a Delaware
corporation (the "Parent"), and Liberty AEG Acquisition, Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Parent ("Merger Sub"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which (i) Parent shall cause Merger Sub to commence a cash tender offer (the
"Offer") for all the outstanding Shares at a price of $15.25 per Share, and (ii)
Merger Sub shall be merged with and into Ascent (the "Merger"). As a result of
the Offer and the Merger, Ascent will become an indirect, wholly owned
subsidiary of Parent.
The Merger Agreement provides that, promptly after the purchase of a
majority of the outstanding Shares pursuant to the Offer, Merger Sub shall be
entitled to designate such number of directors (the "Merger Sub Designees") to
the Ascent Board as will give Merger Sub representation proportionate to its
ownership interest. The Merger Agreement requires Ascent to take such action as
Merger Sub may request to cause the Merger Sub Designees to be elected to the
Ascent Board under the circumstances described therein. This Information
Statement is required by Section 14(f) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used and not otherwise
defined shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning Parent
and Merger Sub has been furnished to Ascent by Parent. Ascent assumes no
responsibility for the accuracy or completeness of such information.
RIGHT TO DESIGNATE DIRECTORS; MERGER SUB DESIGNEES
Pursuant to Section 6.11 of the Merger Agreement, promptly upon the
purchase by Merger Sub of Shares pursuant to the Offer, and from time to time
thereafter, Merger Sub shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Ascent Board as shall
give Merger Sub representation on the Ascent Board equal to the product of the
total number of directors on the Ascent Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Merger Sub or any affiliate of
Merger Sub at such time bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Merger Sub's designees to be elected as directors of the Company,
including increasing the size of the Ascent Board or securing the resignations
of incumbent directors or both. At such times, the Company shall use its best
efforts to cause persons designated by Merger Sub to constitute the same
percentage as persons designated by Merger Sub shall constitute of the Ascent
Board of (i) each committee of
S-1
<PAGE> 29
the Ascent Board (some of whom may be required to be independent as required by
applicable law), (ii) each board of directors of each domestic subsidiary
(including On Command, realizing that the Company has the right to appoint only
a majority of the On Command board) and (iii) each committee of each such board,
in each case only to the extent permitted by applicable law. Notwithstanding the
foregoing, until the time Merger Sub acquires a majority of the then outstanding
Shares on a fully diluted basis, the Company shall use its best efforts to
ensure that all the members of the Ascent Board and each committee of the Ascent
Board and such boards and committees of the domestic subsidiaries as of the date
hereof who are not employees of the Company shall remain members of the Ascent
Board and of such boards and committees (the "Continuing Directors").
Merger Sub's right to appoint the Merger Sub Designees to the Ascent Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Ascent shall promptly take all actions, as Section 14(f) and Rule
14f-1 require, in order to fulfill its obligations under the Merger Agreement.
Merger Sub has supplied to Ascent in writing information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
Following the election or appointment of the Merger Sub Designees and until
the Effective Time, the approval of the Continuing Directors is required to
authorize any termination of the Merger Agreement by Ascent, any amendment of
the Merger Agreement requiring action by the Ascent Board, any amendment of the
certificate of incorporation or bylaws of Ascent, any extension of time for
performance of any obligation or action under the Merger Agreement by Parent or
Merger Sub, any waiver of compliance with any of the agreements or conditions in
the Merger Agreement for the benefit of Ascent and any material transaction with
Parent, Ascent or any affiliate thereof and such authorization shall constitute
the authorization of the Ascent Board and no other action on the part of Ascent,
including any action by any other director of Ascent, shall be required to
authorize.
The following table sets forth certain information with respect to the
individuals Merger Sub may choose to designate as the Merger Sub Designees
serving as directors of Ascent (including current principal occupation or
employment and five years employment history). Unless otherwise noted, each
individual is a citizen of the United States. Unless otherwise noted, the
business address of each is 9197 South Peoria Street,
S-2
<PAGE> 30
Englewood, Colorado 80112. The information is based solely on information
supplied to Ascent by Merger Sub and Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
Robert R. Bennett.................... President and Chief Executive Officer and a director of
Parent since April 1997. Mr. Bennett served as Executive
Vice President of TCI from April 1997 to March 1999. Mr.
Bennett served as Executive Vice President and Chief
Financial Officer, Secretary and Treasurer of Parent from
June 1995 through March 1997, and as Senior Vice President
of Parent from September 1991 to June 1995. Mr. Bennett also
served as acting Chief Financial Officer of Liberty Digital,
Inc. from June 1997 to July 1997. Mr. Bennett is a director
of TV Guide, Inc., Teligent, Inc. and USA Networks, Inc. and
is Chairman of the Board of Liberty Digital, Inc.
Gary S. Howard....................... Executive Vice President, Chief Operating Officer and a
director of Parent since July 1998. Mr. Howard has also
served as Chief Executive Officer of TCI Satellite
Entertainment, Inc. since December 1996. Mr. Howard served
as Executive Vice President of TCI from December 1997 to
March 1999; as Chief Executive Officer, Chairman of the
Board and a director of TV Guide, Inc. from June 1997 to
March 1999; and as President and Chief Executive Officer of
TCI Ventures Group, LLC from December 1997 to March 1999.
Mr. Howard served as President of TV Guide, Inc. from June
1997 to September 1997; as President of TCI Satellite
Entertainment, Inc. from February 1995 through August 1997;
as Senior Vice President of TCI Communications, Inc.
("TCIC") from October 1994 to December 1996; and as Vice
President of TCIC from December 1991 through October 1994.
Mr. Howard is a director of TV Guide, Inc., Liberty Digital,
Inc., TCI Satellite Entertainment, Inc. and Teligent, Inc.
Charles Y. Tanabe.................... Senior Vice President and General Counsel of Parent since
January 1999. Prior to joining Parent, Mr. Tanabe was a
member of Sherman & Howard L.L.C., a law firm based in
Denver, Colorado, for more than five years.
David J.A. Flowers................... Vice President and Treasurer of Parent since April 1997. Mr.
Flowers served as Vice President -- Portfolio Manager of
Parent from June 1995 to April 1997. Prior to joining
Parent, Mr. Flowers held several positions at Toronto
Dominion Bank from August 1989 to June 1995, including
Managing Director in its Media Finance Group.
Jerome H. Kern....................... Director of Parent since March 1999. Mr. Kern served as Vice
Chairman and as a consultant of TCI from June 1998 to March
1999. Prior to joining TCI, Mr. Kern was Special Counsel
with the law firm of Baker & Botts L.L.P. from July 1996 to
June 1998 and a senior partner of Baker & Botts L.L.P. from
September 1992 to July 1996. Mr. Kern served as a director
of TCIC from December 1993 to August 1994. Mr. Kern is a
director of TCI.
</TABLE>
Based solely on the information set forth in the Offer, none of the Merger
Sub Designees (i) is currently a director of, or holds any position with Ascent,
(ii) has a familial relationship with any directors or executive officers of
Ascent, or (iii) to the best knowledge of Parent and Merger Sub, beneficially
owns any securities (or any rights to acquire such securities) of Ascent. Ascent
has been advised by Parent and Merger Sub that, to the best of Parent's and
Merger Sub's knowledge, none of the Merger Sub Designees has been involved in
S-3
<PAGE> 31
any transactions with Ascent or any of its directors, officers, or affiliates
which are required to be disclosed pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"), except as may be disclosed
herein.
CERTAIN INFORMATION CONCERNING ASCENT
The Shares constitute the only class of voting securities of Ascent. The
holders of common stock are entitled to one vote per Share. As of February 29,
2000, there were 29,755,600 shares issued and outstanding.
DIRECTORS OF ASCENT
The Ascent Board currently consists of four directors divided into three
classes, of which one class is elected annually by the stockholders for terms of
three years or until their successors have been elected and qualified. In
accordance with the Delaware General Corporation Law, directors are removable by
a majority vote of the Company's stockholders only for cause. The Ascent Board
met twenty seven times in 1999, the Compensation Committee of the Ascent Board
met two times in 1999 and the Audit Committee of the Ascent Board met two times
in 1999. Each director attended seventy-five percent or more of the meetings of
the Ascent Board held while each was a director during 1999 and of the meetings
of Committees of which he was a member during 1999.
The following table sets forth certain information with respect to the
individuals who are currently serving as Directors of Ascent (including age as
of the date hereof, current principal occupation or employment and employment
history). Unless otherwise noted, each individual is a citizen of the United
States.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ---- --- --------------
<S> <C> <C>
Charles M. Neinas (Chairman)................................ 67 1995
Paul Gould.................................................. 54 1997
Charles M. Lillis........................................... 57 1997
Peter May................................................... 57 1999
</TABLE>
Mr. Charles M. Neinas. President of Neinas Sport Services, Inc. since July
1997. Mr. Neinas became Chairman in June 1999 and from August 1999 through
December 1999, Mr. Neinas served as Acting President and Chief Executive Officer
of the Company. Prior thereto, Mr. Neinas was Executive Director of the College
Football Association from 1980 through June 1997. Mr. Neinas served as a member
of the board of directors of the National Association of Collegiate Directors of
Athletics from 1990 to 1993. His principal business address is Neinas Sports
Services, Inc., 6688 Gunpark Drive, Suite 201, Boulder, Colorado 80301.
Mr. Paul Gould. Managing Director and Executive Vice President of Allen &
Company, Incorporated, an investment banking firm for over 10 years. Mr. Gould
has been with Allen & Company for over 25 years and is a director of Liberty
Media Corporation and Sunburst Hospitality Corporation. His principal business
address is Allen & Company, Incorporated, 711 Fifth Avenue, New York, New York
10022.
Mr. Charles M. Lillis. Chairman and Chief Executive Officer of MediaOne
Group. Prior thereto, Mr Lillis was President and Chief Executive Officer of
MediaOne Group from April 1995 to May 1997, and prior to that time, was
President of US WEST Diversified Group from 1991 to 1994 and was Executive Vice
President and Chief Planning Officer of US WEST, Inc., from 1987 to 1991. Mr.
Lillis joined US WEST in 1985 as Vice President of Strategic Marketing. Mr.
Lillis is a member of the board of directors of SuperValu, Inc. His principal
business address is MediaOne Group, 188 Inverness Drive West, 5th Floor,
Englewood, Colorado 80112.
Mr. Peter May. President and Chief Operating Officer of Triarc Companies,
Inc. Mr. May was President and Chief Operating Officer of Triangle Industries,
Inc. from 1983 to 1988. Mr. May is a trustee of the University of Chicago and a
member of the Advisory Council on the Graduate School of Business of the
University of Chicago. His principal business address is Triarc Companies, Inc.,
280 Park Avenue, New York, New York 10017.
S-4
<PAGE> 32
OTHER INFORMATION CONCERNING CURRENT DIRECTORS
Committees
As of February 2000, the Ascent Board has two standing committees,
described below.
The Audit Committee consists of Messrs. Lillis (Chairman) and May. The
Audit Committee makes recommendations to the Ascent Board concerning the
selection of independent public accountants; reviews with the independent
accountants the scope of their audit; reviews the financial statements with the
independent accountants; reviews with the independent accountants and the
Company's management the Company's accounting and audit practices and
procedures, its internal controls and its compliance with laws and regulations;
and reviews the Company's policies regarding community and governmental
relations, conflicts of interest, business conduct, ethics and other social,
political and public matters, and the administration of such policies. In
addition, the Audit Committee considers and makes recommendations to the Ascent
Board with respect to the financial affairs of the Company, including matters
relating to capital structure and requirements, financial performance, dividend
policy, capital and expense budgets and significant capital commitments, and
such other matters as may be referred to it by the Ascent Board, the Chairman of
the Board or the Chief Executive Officer. The Audit Committee met two times in
1999.
The Compensation Committee consists of Messrs. Gould (Chairman) and Neinas.
The Compensation Committee approves long-term compensation for senior
executives; considers and makes recommendations to the Ascent Board with respect
to: programs for human resources development and management organization and
succession; salary and bonus for senior executives; and compensation matters and
policies and employee benefit and incentive plans and exercises authority
granted to it to administer such plans. In addition, the Compensation Committee
recommends to the Ascent Board qualified candidates for election as directors
and as Chairman of the Board, and considers, acts upon or makes recommendations
to the Ascent Board with respect to such other matters as may be referred to it
by the Ascent Board, the Chairman of the Board or the Chief Executive Officer.
The Compensation Committee will consider candidates for election as directors
recommended by stockholders, if the recommendations are submitted in writing to
the Secretary of the Company. The Compensation Committee met two times during
1999.
Directors Compensation
The Company does not pay its current directors any cash compensation.
Directors who were not employees of the Company or its subsidiaries have been
granted stock appreciation rights ("SARs") with respect to 100,000 shares each
of Ascent Common Stock pursuant to the 1997 Non-Employee Directors Stock
Appreciation Rights Plan. These SARs will vest 25% on the first anniversary of
grant, and 25% and 50%, respectively, on the second and third anniversaries.
Prior to May 1997, the Company granted Shares and options to its
non-employee directors pursuant to the 1995 Non-Employee Directors Stock Plan.
Pursuant to this plan, Mr. Neinas was granted options to purchase 12,000 Shares
at exercise prices ranging from $10.50 to $17.625, and Mr. Lillis was granted
options to purchase 4,000 Shares at an exercise price of $10.50. The 1995
Non-employee Directors Stock Plan was canceled on May 13, 1997.
Certain Relationships and Related Party Transactions; Compensation Committee
Interlocks and Insider Participation
Mr. Paul Gould, a director of the Company, is a Managing Director and
Executive Vice President of Allen & Company, Incorporated, an investment banking
firm that has performed financial advisory services for the Company since 1995,
including (i) serving as the managing underwriter for the Company's initial
public offering in 1995; (ii) advising the Company with respect to the
acquisition of SpectraVision in 1996 and (iii) serving as financial advisor to
the Company in connection with the Company's disposition of its sports and arena
related assets.
S-5
<PAGE> 33
Mr. Charles Neinas, a director of the Company and Chairman of the
Compensation Committee, served as Acting President and Chief Executive Officer
of the Company from June 1999 through December 1999. Mr. Neinas did not serve on
the Compensation Committee during this period.
EXECUTIVE OFFICERS OF ASCENT
The names of the executive officers who are not also directors of Ascent,
their ages and certain information about them are set forth below:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATIONS AND
NAME AGE WITH ASCENT EMPLOYMENT DURING PAST 5 YEARS
- ---- --- ---------------------------- ---------------------------------------
<S> <C> <C> <C>
Arthur M. Aaron......... 42 Executive Vice President, Mr. Aaron has been Executive Vice
Business Affairs President, Business Affairs of the
Company since January 2000, prior to
which he was Vice President, Business
and Legal Affairs and Secretary of
the Company since April 1995. Prior
thereto, he was a General Attorney at
COMSAT Corporation since July 1993.
Mr. Aaron has also served as Acting
General Counsel of On Command
Corporation since April 1998.
David A. Holden......... 40 Executive Vice President, Mr. Holden has been Executive Vice
Finance and Chief President, Finance and Chief
Financial Officer Financial Officer of the Company
since January 2000, prior to which he
was Vice President, Finance and
Controller of the Company since May
1996. Prior thereto, he was employed
by Deloitte & Touche LLP for more
than five years.
David Ehrlich........... 34 Vice President, General Mr. Ehrlich has been Vice President,
Counsel and Secretary General Counsel and Secretary of the
Company since January 2000, prior to
which he was Assistant General
Counsel of the Company since June
1996. Prior thereto, he was an
associate at the Denver law firm,
Sherman & Howard L.L.C. since
February 1995.
Donald Elliman.......... 55 President, Ascent Sports Mr. Elliman has been President of
Holdings, Inc. Ascent Sports Holdings, Inc. since
January 2000. Prior thereto he was
Executive Vice President of Time,
Inc. from 1995 through 1999 and
President of Sports Illustrated from
1995 through 1997.
Allan Goodson........... 42 Executive Vice President and Mr. Goodson has been Executive Vice
Chief Operating Officer of President and Chief Operating Officer
On Command Corporation of OCC since January 2000. Prior
thereto, Mr. Goodson served as a
founding partner and Chief Operating
Officer of STC Cable Corp. from April
1998 to June 1999. Prior to that he
held the position of Executive Vice
President and Chief Operating Officer
for TCI Great Lakes, Inc. from August
1992 to November 1995.
</TABLE>
S-6
<PAGE> 34
COMMON STOCK OWNERSHIP OF MANAGEMENT AND OTHER BENEFICIAL HOLDERS
The following table sets forth information regarding the beneficial
ownership of the Shares and the Common Stock of On Command Corporation, as of
December 31, 1999, by all directors and nominees, by each of the executive
officers named in the Summary Compensation Table and by all directors and
executive officers as a group and by all persons known to the Company to
beneficially own more than five percent (5%) of the Shares. Under the rules of
the SEC, beneficial ownership includes any shares over which an individual has
sole or shared voting power or investment power, and also any shares that the
individual has the right to acquire within 60 days through the exercise of any
stock option or other right.
MANAGEMENT:
<TABLE>
<CAPTION>
ASCENT SHARES ON COMMAND SHARES*
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
NAME(1) BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP(2)
- ------- -------------------- -----------------------
<S> <C> <C>
Arthur M. Aaron........................................ 1,519 0
Timothy J. Romani...................................... 0 0
Charles Lyons(3)....................................... 19,551 0
Paul Gould............................................. 0 0
Brian A.C. Steel(4).................................... 0 73,851
Charles M. Lillis...................................... 4,000 0
Peter May(5)........................................... 0 0
Charles M. Neinas...................................... 12,000 0
James A. Cronin, III(6)................................ 0 0
All directors and executive officers as a group (9
persons)............................................. 37,070 73,851
</TABLE>
- ---------------
* On Command is a subsidiary of the Company, based on the Company's beneficial
ownership of approximately 57% of the currently issued and outstanding
shares of On Command, including shares which may be purchased on the
exercise of warrants.
(1) Unless otherwise indicated, each person has sole voting and investment power
over the shares listed, and no director or executive officer beneficially
owns more than 1.0% of the Common Stock of the Company or OCC.
(2) Each number in this column has been rounded down to the nearest whole share.
Beneficial ownership of Ascent common stock includes 12,000 Shares that may
be acquired by Mr. Neinas and 4,000 Shares that may be acquired by Mr.
Lillis, each within 60 days after December 31, 1999, through the exercise of
stock options.
(3) Mr. Lyons resigned as Chairman, President and Chief Executive Officer of the
Company effective August 17, 1999.
(4) Beneficial ownership of On Command common stock includes 73,851 shares that
may be acquired by Mr. Steel within 60 days after December 31, 1999, through
the exercise of stock options. Mr. Steel resigned from On Command on August
6, 1999.
(5) Mr. May disclaims beneficial ownership of 2,876,700 Shares which are held by
Ascent Acquisition Group, LLC, an entity which is 50% owned by Triarc
Companies, Inc. ("Triarc"). Mr. May is a director, President and Chief
Operating Officer of Triarc.
(6) Mr. Cronin resigned as director, Executive Vice President, Chief Financial
Officer and Chief Operating Officer of the Company on January 28, 2000. Mr.
Cronin has continued in his role as Chairman of On Command Corporation.
S-7
<PAGE> 35
FIVE PERCENT HOLDERS
<TABLE>
<CAPTION>
% OF
SHAREHOLDER VOTING # OF SHARES
----------- ------ -----------
<S> <C> <C>
Snyder Capital Management, LP(1)............................ 13.7% 4,069,690
350 California Street
San Francisco, CA 94104
Gabelli Asset Management, Inc.(2)........................... 12.73% 3,788,733
One Corporate Center
Rye, New York 10580
Ascent Acquisition Group, LLC(3)............................ 9.7% 2,876,700
280 Park Avenue
New York, NY 10017
Leon G. Cooperman(4)........................................ 5.9% 1,746,900
88 Pine Street
Wall Street Plaza, 31st Floor
New York, NY 10005
</TABLE>
- ---------------
(1) Based on information contained in Schedule 13D/A filed with the Commission
and dated June 1, 1999, Snyder Capital Management, LP ("SCMLP") and Snyder
Capital Management, Inc. ("SCMI") are the beneficial owners of 4,069,690
shares (13.7%) of Common Stock (sole voting power: none; sole dispositive
power: none; shared voting power: 3,597,590 shares; and shared dispositive
power: 4,069,690 shares). SCMI is the sole general partner of SCMLP, and
both entities are wholly-owned by Nvest Companies, Inc., a publicly traded
limited partnership. All voting and investment decisions regarding advisory
accounts managed by SCMLP are made by SCMI and SCMLP and accordingly, SCMI
and SCMLP do not consider Nvest Companies or any entity controlling Nvest
Companies to have any direct or indirect control over the securities held in
managed accounts.
(2) Based on information contained in Schedule 13D filed with the Commission and
dated February 8, 2000. The aggregate number and percentage of Common Stock
which Gabelli Asset Management, Inc. and its subsidiaries beneficially owns
is 3,788,733 shares (12.73%) of Common Stock, as follows: (a) Gabelli Funds,
LLC, as agent, 1,114,230 shares (3.74%) of Common Stock (sole voting power:
1,114,230 shares; sole dispositive power: 1,114,230 shares; and shared
voting or dispositive power: none); (b) GAMCO Investors, Inc., as agent,
2,551,003 shares (8.57%) of Common Stock (sole voting power: 2,551,003
shares; sole dispositive power: 2,551,003 shares; and shared voting and
dispositive power: none); (c) Gemini Capital Management Limited, 82,000
shares (0.28%) of Common Stock (sole voting power: 82,000 shares; sole
dispositive power: 82,000 shares; and shared voting and dispositive power:
none); (d) Gabelli International II Limited, 5,000 shares (0.02%) of Common
Stock (sole voting power: 5,000 shares; sole dispositive power: 5,000
shares; and shared voting and dispositive power: none); and (e) Gabelli
Associates Fund, 36,500 shares (0.12%) of Common Stock (sole voting power:
36,500 shares; sole dispositive power: 36,500 shares; and shared voting and
dispositive power: none.)
(3) Based on information contained in Schedule 13D/A jointly filed with the
Commission and dated February 28, 1999 by Triarc Companies Inc. ("Triarc"),
CP International Management Services Ltd. ("CP"), Consolidated Press
International Holdings Limited ("CPI") and Ascent Acquisition Group, LLC
("AAG"). Peter May, a director of the Company is also director, President
and Chief Operating Officer of Triarc. Mr. May disclaims beneficial
ownership of the 2,876,700 Shares which are directly held by Ascent
Acquisition Group, LLC, an entity which is 50% owned by Triarc.
(4) Based on information contained in Schedule 13G filed with the Commission and
dated on February 8, 2000. Mr. Cooperman is the Managing Member of Omega
Associates, L.L.C. ("Associates"). Associates is the general partner of
Omega Capital Partners, L.P. ("Capital LP"), Omega Institutional Partners,
L.P. ("Institutional LP"), and Omega Capital Investors, L.P. ("Investors
LP"). Mr. Cooperman is also the President and majority stockholder of Omega
Advisors, Inc. ("Advisors"), and Advisors serves as the investment manager
to Omega Overseas Partners, Ltd. ("Overseas").
S-8
<PAGE> 36
Advisors also serves as a discretionary investment advisor to a limited
number of institutional clients (the "Managed Accounts"). Capital LP owns
545,318 Shares, Institutional LP owns 30,376 Shares, Investors LP owns
62,560 Shares, Overseas owns 660,259 Shares and Managed Accounts own 448,387
Shares. Mr. Cooperman has the sole power as to all of these shares other
than those owned by Managed Accounts, as to which Mr. Cooperman possesses
shared power.
EXECUTIVE COMPENSATION
The following table shows the compensation received by the Company's former
Chief Executive Officer and former Acting Chief Executive Officer and the other
four most highly compensated executive officers of the Company (the "Named
Executive Officers") for the three fiscal years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------------
ANNUAL COMPENSATION SECURITIES
-------------------------------------------- UNDERLYING
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED STOCK OPTIONS/ ALL OTHER
POSITION(1) YEAR SALARY($) BONUS($)(2) COMPENSATION($)(3) AWARD(S)($) SARS(#)(4) COMPENSATION($)(5)
- ------------------ ---- --------- ----------- ------------------ ---------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles Lyons............ 1999 $408,653 (5) (5) $0 0 $ 3,633,118
Former Chairman, 1998 623,557 $350,000 $64,831 0 0 138,726
President and Chief 1997 500,000 350,000 19,530 0 297,500* 70,649
Executive Officer
Charles M. Neinas........ 1999 $216,346 0 0 0 0 13,798
Chairman, Former Acting
President and Former
Acting Chief Executive
Officer
James A. Cronin, III..... 1999 500,000 TBD 0 0 0 33,699
Former Executive 1998 498,846 375,000 0 0 0 16,069
Vice President, 1997 400,000 350,000 0 0 297,500* 13,177
Chief Financial Officer
and Chief Operating
Officer
Brian A. C. Steel........ 1999 360,833 406,791 0 0 0 18,365
Former President and 1998 294,617 250,000 0 0 0 6,320
Chief Operating 1997 290,000 203,000 172,467 0 0 483,894
Officer, On Command
Arthur M. Aaron.......... 1999 200,000 100,000 0 0 0 21,136
Executive Vice
President, 1998 196,009 95,000 0 0 0 8,403
Business Affairs 1997 175,000 61,250 0 0 100,000* 8,992
Timothy J. Romani........ 1999 220,000 213,000 0 0 0 20,814
President, Ascent Arena 1998 202,615 260,000 0 0 0 28,769
Company, LLC 1997 159,999 200,000 0 0 50,000** 2,291
</TABLE>
- ---------------
(1) Mr. Lyons resigned as Chairman, CEO and President of the Company effective
August 17, 1999. Mr. Neinas served as Acting CEO and President of the
Company from June 1999 through December 1999 and has received (i) a grant of
100,000 SARs; (ii) three grants of 400 Shares; and (iii) and three grants of
4,000 options to purchase Shares as compensation for his role as a director
of the Company since 1995. Mr. Cronin resigned from the Company on January
28, 2000. Mr. Steel resigned from On Command on August 6, 1999. Mr. Aaron
became Executive Vice President, Business Affairs of the Company on January
25, 2000. (See "Employment and Severance Arrangements").
(2) For 1998, Mr. Aaron's bonus includes his annual bonus of $70,000 and a
special bonus paid in recognition of his efforts on the arena financing. For
1998 and 1999 Mr. Romani's bonus includes his annual bonus compensation for
that year of $60,000 with the remainder of the bonus compensation related to
the
S-9
<PAGE> 37
achievement of certain benchmarks set out in Mr. Romani's employment
agreement in connection with the construction of the Pepsi Center.
(3) Other Annual Compensation shown for 1997, 1998 and 1999 does not include
perquisites and other personal benefits because the aggregate amount of such
compensation does not exceed the lesser of (i) $50,000 or (ii) 10 percent of
individual combined salary and bonus for the Named Executive Officer in each
year. Other Annual Compensation in 1998 for Mr. Lyons includes membership
fees and insurance premium related tax reimbursements and in 1997 includes
for Mr. Lyons and Mr. Steel amounts reimbursed in each case for the payment
of taxes associated with relocation expenses.
(4) Ascent Stock Appreciation Rights (SARs) that were issued in exchange for
Ascent employee stock options are marked with a (*) and other Ascent SARs
are marked with a (**). (See "Employment and Severance Arrangements").
(5) All Other Compensation for 1999 includes the following elements: (i) unused
credits under the Company's cafeteria plan that were paid in cash to the
Named Executive Officers; (ii) contributions on behalf of the Named
Executive Officers by the Company to the Company's 401(k) Plan, and in the
case of Mr. Steel, by On Command to OCV's 401(k) Plan; (iii) automobile
allowance; and (iv) above-market interest accrued for Mr. Lyons and Mr.
Romani under Ascent's Deferred Compensation Plan and for Mr. Steel and Mr.
Lyons the payment of life insurance premiums.
<TABLE>
<CAPTION>
UNUSED 401(K) PLAN AUTOMOBILE INSURANCE
CREDITS CONTRIBUTION ALLOWANCE PREMIUM TOTAL
------- ------------ ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Mr. Lyons............................ $16,754 $4,875 $ 9,807 $ 3,890 $35,326
Mr. Neinas........................... 13,798 0 0 0 13,798
Mr. Aaron............................ 8,199 4,384 8,999 0 21,136
Mr. Romani........................... 8,814 0 12,000 0 20,814
Mr. Steel............................ 0 5,000 13,200 165 18,365
Mr. Cronin........................... 20,500 0 13,199 0 33,699
</TABLE>
All Other Compensation for 1999 for Mr. Lyons includes $3,600,000 paid by
the Company to Mr. Lyons pursuant to a Settlement Agreement between Mr.
Lyons and the Company effective August 17, 1999.
OPTION/SAR GRANTS
There were no SARs or options granted to the Named Executive Officers in
1999.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information on (1) options exercised by the
Named Executive Officers in 1999, and (2) the number and value of their
unexercised options or SARs as of December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN 1999,
AND 12/31/99 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
UNDERLYING OPTIONS/SARS AT 12/31/99 OPTIONS/SARS AT 12/31/99
OPTIONS VALUE --------------------------------- ---------------------------------
NAME EXERCISED(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---- ------------ ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
ASCENT OPTIONS/SARS
Charles Lyons............. 0 0 0 0 0 0
Charles Neinas............ 0 0 62,000 50,000 $370,000 $350,000
Arthur M. Aaron........... 0 0 75,000 25,000 $237,225 $ 79,075
Timothy J. Romani......... 0 0 30,000 20,000 $ 94,890 $ 63,260
Brian A.C. Steel.......... 0 0 0 0 0 0
James A. Cronin, III...... 0 0 148,750 148,750 $470,496 $470,496
ON COMMAND OPTIONS
Brian A.C. Steel.......... 175,000 $511,000 73,851 0 0 0
</TABLE>
S-10
<PAGE> 38
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
In connection with the resignation of Mr. Neinas as Acting Chief Executive
Officer and President of the Company, the resignation of Mr. Cronin as Executive
Vice President, Chief Financial Officer and Chief Operating Officer of the
Company and the continued efforts by the Company to explore its strategic
alternatives regarding a disposition of its assets, in January 2000 the Company
amended and restated Messrs. Aaron and Holden's employment agreements. The
Company's subsidiary Ascent Sports Holdings, Inc. ("ASH"), also entered into an
employment agreement with Mr. Elliman in January 2000.
Under his amended and restated employment agreement: (i) Mr. Aaron's base
salary was increased to $300,000 per year, subject to increases at the
discretion of the Ascent Board (for 1998 and 1999 his base salary was $200,000);
(ii) Mr. Aaron is eligible for an annual bonus based on performance measures
determined by Ascent's Compensation Committee with a target bonus equal to 50%
of his base salary; (iii) the term of the agreement was extended by one year to
expire June 27, 2003; (iv) Mr. Aaron will be promoted to the position of
Executive Vice President, Business Affairs for the term of the agreement; and
(v) the provisions regarding severance and change-of-control were revised, as
described further below. Mr. Holden's amended and restated employment agreement
is on substantially the same terms as Mr. Aaron's, other than (iv) above in that
Mr. Holden was promoted to the position of Executive Vice President, Finance and
Chief Financial Officer and except that Mr. Holden's base salary was increased
to $250,000 (for 1998 and 1999 his base salary was $165,000). Mr. Aaron's and
Mr. Holden's agreements also each set forth the terms of their additional grant
on January 28, 2000, of options to purchase 100,000 Shares.
Mr. Elliman's employment agreement expires on August 31, 2000. Pursuant to
the agreement, Mr. Elliman's base salary is $50,000 per month. Mr. Elliman will
report directly to the Ascent Board and, except as otherwise provided in
existing employment agreements, all other employees of the Company's
sports-related businesses, the Colorado Avalanche, Denver Nuggets and the Pepsi
Center, and their respective subsidiaries, will report directly or indirectly to
Mr. Elliman. Mr. Elliman's agreement does not contain "change-of-control"
provisions.
In addition, Mr. Elliman's agreement provides that if Mr. Elliman is
terminated without "cause" (as defined in his agreement) or upon Mr. Elliman's
death or physical or mental incapacity, then he will receive a lump sum payment
from the Company equal to the lesser of three months salary or the aggregate
base salary otherwise payable to Mr. Elliman through the end of the term of the
agreement.
The employment agreements for each of Messrs. Aaron and Holden (each an
"executive") contain provisions related to change-of-control and severance. If
an executive is terminated without "cause" (as defined in the agreements) or
upon certain events defined in the agreements which have the effect of a
constructive termination (including a "Change of Control Event") then: (i) there
shall be no forfeiture of any rights or interests related to fringe benefits
granted under the agreement, including, without limitation, any stock-based
incentives, all of which will fully vest, to the extent not previously vested,
immediately upon such termination becoming effective and final; (ii) the
executive shall receive current base salary, fringe benefits and the annual
bonus outlined in the agreement for the longer of (a) the remainder of the
employment period under the agreement or (b) three years following the date of
such termination, with no obligation to seek other employment and no offset to
the amounts paid by the Company if other employment is obtained, provided that
each of the executives and the Company shall explore alternatives to minimize
any excise tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, that would otherwise be payable; and (iii) all other benefits provided
pursuant to the agreement shall be received by the executive. The Company is
obligated to fund a "rabbi" trust no later than one day prior to a Change of
Control Event with amounts sufficient to pay its obligations under these
employment agreements, and severance amounts must be paid in a lump sum
following the executive's termination for any reason, including, at the election
of the executive, during the 180-day period following a Change of Control Event.
For purposes of the employment agreements, 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 Ascent Board: (i) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership
S-11
<PAGE> 39
(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 or by the Company, (2) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (3) 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 of the agreements,
constitute the Ascent Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Ascent Board; provided, however, that any
individual becoming a director subsequent to January 27, 2000, whose election,
or nomination for election by the Company's stockholders, 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 Ascent 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 75% 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 Ascent Board, providing for such
Business Combination; or (iv) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
On January 7, 2000, On Command and Alan Goodson entered into an employment
agreement that expires on January 7, 2002. Pursuant to the agreement, Mr.
Goodson's initial base salary under the agreement is $300,000 per year, subject
to increases at the discretion of the Board of Directors of On Command. Under
the agreement, Mr. Goodson is eligible for annual bonuses based on performance
measures determined by the On Command Compensation Committee with a target bonus
equal to 70% of Mr. Goodson's base salary for achieving 100% of the target level
for the performance measures. In addition, Mr. Goodson has been granted options
to purchase 100,000 shares of On Command Common Stock, exercisable at a
per-share price equal to $15.90625. The options vest 50% on January 7, 2001 and
50% on January 2002. The options will expire at the earlier of (i) three months
after the date upon which Mr. Goodson is terminated for "cause" (as defined in
the employment agreement); (ii) one year after Mr. Goodson's employment
agreement is terminated as a result of death or (iii) on January 7, 2010. Mr.
Goodson's agreement does not contain "change-of-control" provisions.
In addition, Mr. Goodson's agreement provides that if Mr. Goodson is
terminated without "cause" (as defined in the agreement) or upon any substantial
reduction (except in connection with the termination of his employment
voluntarily by Mr. Goodson, or by On Command for "cause") by On Command of
S-12
<PAGE> 40
Mr. Goodson's responsibilities as Executive Vice President and Chief Operating
Officer of On Command, or On Command is in material default of the agreement,
then: (i) there shall be no forfeiture of any rights or interests related to
fringe benefits granted under the agreement, including, without limitation, the
SARs and any other stock-based incentives, except that half of his 100,000
options will vest, to the extent not previously vested, and the other half of
which will be cancelled, immediately upon such termination becoming effective
and final; (ii) the executive shall receive current base salary, fringe benefits
and the annual bonus outlined in the agreement for the longer of (a) the
remainder of the employment period under the agreement or (b) one year following
the date of such termination, with no obligation to seek other employment and no
offset to the amounts paid by On Command if other employment is obtained; and
(iii) all other benefits provided pursuant to the agreement shall be received by
the executive.
On December 28, 1999, On Command and Mr. Steel entered into an amendment to
Mr. Steel's employment agreement. Pursuant to the amendment, Mr. Steel assumed
the title of President and Chief Operating Officer of On Command through
September 11, 2000, while reporting directly to the Chief Executive Officer and
Board of Directors of On Command, and if there was no Chief Executive Officer,
then to the Chairman. In addition, under the terms of the amendment (i) Mr.
Steel's base salary was increased to $375,000 per year and (ii) if On Command
failed to review Mr. Steel's compensation prior to June 1, 1999 or revise such
compensation prior to August 1, 1999, then Mr. Steel would be entitled to
terminate his employment with On Command and receive (a) his then base salary
for a year from such termination, (b) a pro-rated annual bonus for the year in
which employment was terminated and (iii) a pro-rated portion of the options
previously granted to Mr. Steel under On Command's stock option plans that were
scheduled to vest during the year of such termination, which shall vest as of
the date of such termination. Although On Command and Mr. Steel entered into
negotiations regarding his position and compensation at On Command during the
above time periods, Mr. Steel's compensation was not revised prior to August 1
and on August 6, 1999, Mr. Steel resigned from On Command pursuant to the terms
of his amended employment agreement.
On January 28, 2000, Mr. Cronin terminated his employment agreement and
resigned as director, Executive Vice President, Chief Financial Officer and
Chief Operating Officer of the Company. Mr. Cronin and the Ascent Board have not
yet agreed on the terms of his annual bonus for 1999.
Finally, on August 22, 1999, Mr. Lyons and the Company executed a
Settlement Agreement pursuant to which Mr. Lyons received $3,677,347 in full
settlement of the provisions of the Settlement Agreement and all outstanding
obligations of the Company to Mr. Lyons.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and
administering the Company's executive compensation philosophy. Through June
1997, the Compensation Committee was composed of Mr. Gould and Mr. Neinas as
Chairman of the Committee. In June 1999 when Mr. Neinas was elected Chairman of
the Board and Acting President and Chief Executive Officer, he left the
Compensation Committee, Peter Barton was elected to the Committee and Mr. Gould
became Chairman of the Committee. In December 1999, Mr. Neinas resigned as
Acting President and Chief Executive Officer and again became a member of the
Committee. For a description of each of Mr. Gould's and Mr. Neinas' relationship
to the Company, see "Other Information Concerning Current Directors -- Certain
Relationships and Related Party Transactions; Compensation Committee Interlocks
and Insider Participation."
Set forth below is the Committee's report on the 1999 compensation of the
Named Executive Officers. This report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Schedule
14D-9 into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
Compensation Philosophy and Guiding Principles
The Company or its subsidiaries has or had employment agreements with each
of Messrs. Aaron, Cronin, Elliman, Goodson, Holden, Lyons, Romani and Steel. The
Compensation Committee has determined that the
S-13
<PAGE> 41
executive compensation philosophy of the Company should be consistent with such
agreements and guided by the following principles:
Attract and retain talented management;
Closely align management's interests and actions with those of stockholders
through the establishment and/or enhancement of appropriate equity
incentive programs;
Appropriately reward employees for enhancing stockholder value through
improvement in financial performance and pursuit of strategic alternatives;
and
Emphasize risk-based performance incentives as a key component of both
annual and long-term compensation.
Pursuit of Strategic Alternatives and Operating Improvements
During 1999, the Company's Board of Directors was evaluating and pursuing
various strategic alternatives for the purpose of enhancing shareholder value,
and at the same time continuing to seek improvements in the operating
performance of the Company's subsidiaries. This resulted in several agreements
during 1999. In January 1999, the Company sold 90% of its Beacon Communications
Corp. ("Beacon") motion picture production subsidiary to an investor group that
included Beacon management. In April 1999, Ascent entered into an agreement to
sell the Colorado Avalanche, Denver Nuggets and the Pepsi Center (the "sports
related businesses") to a third party for $400 million and the Board agreed to
permit Mr. Lyons to participate with the buyers and leave the Company on
consummation the sale. That sale was challenged by shareholders in a lawsuit
filed against the Company in May 1999 seeking a injunction preventing the sale.
The Company settled the shareholder litigation and, as one of the conditions to
the settlement, conducted a public auction for the sports-related businesses. In
July 1999, the auction resulted in a new buyer agreeing to purchase the sports-
related businesses for $461 million. However, this new buyer did not obtain the
necessary consents and releases from the City and County of Denver, and on
December 1, 1999 the Company terminated that agreement. Finally, in October
1999, Ascent entered into an Agreement and Plan of Merger with AT&T Corp. and
Liberty Media Corporation, pursuant to which each share of Ascent common stock
would be converted into .4626 shares of Liberty stock. The merger was
conditioned upon, among other things, the consummation of the sale of the
Company's sports related businesses. When the agreement to sell the
sports-related businesses was terminated, AT&T and Liberty Media Corporation
exercised their right to terminate the Agreement and Plan of Merger because the
condition to closing (the sale of the sports-related assets on the terms and
conditions set forth in that sale agreement) was incapable of being satisfied.
In December 1999, the Ascent Board announced that it would continue to seek
qualified purchasers for the sports related businesses and, in response to the
termination by Liberty Media Corporation of its merger agreement with the
Company, would continue to examine the Company's strategic alternatives, which
alternatives could include a sale of the Company's majority interest in On
Command and its Ascent Network Services division, other transactions involving
On Command or other transactions involving the entire company.
In January 2000, the Company, through its subsidiary ASH, entered into an
employment agreement with Mr. Elliman to act as President of ASH, with primary
operational responsibility for the Company's sports related businesses.
Subsequently, On Command entered into an employment agreement with Allan Goodson
to act as Executive Vice President and Chief Operating Officer with primary
operational responsibility for On Command. Then, on January 25, 2000, in
connection with the resignations of Mr. Neinas as Acting President and Chief
Executive Officer and Mr. Cronin as Executive Vice President, Chief Financial
Officer and Chief Operating Officer of the Company, the Ascent Board promoted
Mr. Aaron to the position of Executive Vice President, Business Affairs and Mr.
Holden to the position of Executive Vice President, Finance and Chief Financial
Officer of the Company. Mr. Aaron and Mr. Holden have the primary executive
responsibility for managing the Company's ownership of its operating entities
and evaluation of its strategic alternatives. (See "Employment and Severance
Arrangements").
S-14
<PAGE> 42
Annual Compensation
None of the Named Executive Officers or Mr. Holden received salary
increases in 1999 other than Messrs. Steel and Romani. Mr. Steel's salary
increase was approved by the On Command Board of Directors in connection with an
amendment to his employment agreement, and Mr. Romani's salary increase for 1999
was as set forth in his employment agreement.
In recognition of their efforts during 1999 in the management of the
Company's operating entities and in the evaluation and pursuit of the Company's
strategic alternatives and in recognition of their increased role in both areas
in the year 2000, the Compensation Committee recommended and the Ascent Board
approved an annual bonus for 1999 of $100,000 each for Messrs. Aaron and Holden.
The Compensation Committee will review the amount of annual bonus payable to Mr.
Cronin for his efforts on behalf of the Company in 1999.
Under the terms of his amended employment agreement and his severance
arrangement with On Command, Mr. Steel is entitled to receive a pro-rated annual
bonus for 1999 in an amount to be determined by the On Command Board of
Directors.
In connection with his service to the Company as Acting Chief Executive
Officer and President, Mr. Neinas' salary for 1999 was based on Mr. Lyons'
salary for such positions in 1999 on a pro-rated basis. The Compensation
Committee did not consider a bonus for Mr. Neinas in light of his membership on
the Compensation Committee.
Long Term Compensation
During 1999, none of the Named Executive Officers or Mr. Holden were
granted any additional equity incentives. In August of 1999 in connection with
his resignation from the Company, Mr. Lyons' outstanding SARs were terminated.
Pursuant to the terms of his amended employment agreement and in connection with
his resignation from On Command in August of 1999, Mr. Steel retained 369,257 of
his 385,312 On Command options with one year from his resignation date to
exercise such options. As a result of Mr. Cronin's resignation from Ascent, the
223,125 SARs that will remain outstanding for ninety days and are expected to
vest and be paid in connection with the Offer.
In January 2000, each of Messrs. Aaron and Holden were granted options to
purchase 100,000 shares of the Company's common stock and Mr. Goodson received
options to purchase 100,000 shares of On Command common stock. In each case, the
grant reflected the intention of the Company (and On Command in Mr. Goodson's
case) to align senior management's interests with those of stockholders through
appropriate equity incentives and reflected the Company's recognition of the
participation required of each of Messrs. Aaron, Holden and Goodson in the
managing of the Company's operating entities and continuing process of
evaluating and pursuing the Company's strategic alternatives.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
U.S. Treasury Regulations relating thereto (collectively, "Section 162(m)")
restrict publicly traded companies from claiming or receiving a tax deduction on
compensation paid to certain executive officers in excess of $1 million, unless
such compensation is performance based. The Company's policy with respect to the
deductibility limit of Section 162(m) is generally to preserve the deductibility
of compensation paid when it is appropriate and in the best interests of the
Company and its stockholders.
Compensation Committee
Paul Gould (Chairman)
and Charles M. Neinas
S-15
<PAGE> 43
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers and persons who own more than 10% of the common stock of the Company to
file initial reports of ownership and reports of changes in ownership of common
stock and other equity securities of the Company with the SEC and Nasdaq Stock
Market and to furnish the Company with copies of all Section 16(a) reports they
file. Based on its review of the copies of such reports received by it, the
Company believes that during 1999, its directors, officers and ten percent
beneficial owners complied with all applicable reporting requirements.
S-16
<PAGE> 44
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1. Agreement and Plan of Merger, dated February 22, 2000, by
and among Ascent Entertainment Group, Inc., Liberty Media
Corporation and Liberty AEG Acquisition, Inc.
2. Letter to Stockholders from Charles M. Neinas, dated
February 29, 2000*
3. Joint Press Release issued by Ascent Entertainment Group,
Inc. and Liberty Media Corporation on February 22, 2000
4. Joint Press Release issued by Ascent Entertainment Group,
Inc. and Liberty Media Corporation on February 28, 2000
5. Opinion of Donaldson, Lufkin & Jenrette, dated February 22,
2000*
6. Confidentiality Agreement, dated as of April 12, 1999,
between Liberty Media Corporation and Ascent
Entertainment Group, Inc.
7. Confidentiality Agreement, dated as of April 12, 1999,
between Liberty Media Corporation and On Command
Corporation
8. Ascent 1995 Key Employee Stock Plan
9. Ascent 1995 Non-Employee Director Stock Plan
10. Ascent 1997 Non-Employee Director Stock Appreciation Rights
Plan
11. Article VIII of the Amended and Restated Certificate of
Incorporation of Ascent Entertainment Group, Inc.
12. Article VIII of the Amended and Restated Bylaws of Ascent
Entertainment Group, Inc.
13. Amended and Restated Employment Agreement of Arthur M. Aaron
14. Amended and Restated Employment Agreement of David A. Holden
15. Employment Agreement of David Ehrlich
16. Employment Agreement of Donald M. Elliman
17. Employment Agreement of Allan Goodson
18. Rights Agreement, dated as of June 27, 1997, between Ascent
Entertainment Group, Inc. and The Bank of New York
</TABLE>
- ---------------
* Copy attached to, or enclosed with, copies of this Schedule mailed to
stockholders.
<PAGE> 1
EXHIBIT 1
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
LIBERTY AEG ACQUISITION, INC.,
LIBERTY MEDIA CORPORATION
AND
ASCENT ENTERTAINMENT GROUP, INC.
DATED AS OF FEBRUARY 22, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS AND CONSTRUCTION.................................................................2
1.1 Certain Definitions..................................................................2
1.2 Terms Generally......................................................................6
ARTICLE II THE OFFER AND RELATED MATTERS................................................................7
2.1 The Offer............................................................................7
2.2 Company Action.......................................................................9
ARTICLE III THE MERGER AND RELATED MATTERS..............................................................11
3.1 The Merger..........................................................................11
3.2 Closing.............................................................................12
3.3 Conversion of Securities............................................................12
3.4 Options; SARs.......................................................................13
3.5 Dissenting Shares...................................................................13
3.6 Surrender of Shares; Stock Transfer Books...........................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................15
4.1 Organization and Qualification......................................................15
4.2 Authorization and Validity of Agreement.............................................16
4.3 Capitalization......................................................................16
4.4 Reports and Financial Statements....................................................17
4.5 No Approvals or Notices Required; No Conflict with Instruments......................18
4.6 Absence of Certain Changes or Events................................................20
4.7 Information Supplied................................................................20
4.8 Legal Proceedings...................................................................21
4.9 Licenses; Compliance with Regulatory Requirements...................................21
4.10 Brokers or Finders..................................................................22
4.11 Tax Matters.........................................................................23
4.12 Employee Matters....................................................................24
4.13 Fairness Opinion....................................................................26
4.14 Recommendation of the Company Board.................................................26
4.15 Vote Required.......................................................................27
4.16 Intangible Property; Copyrights.....................................................27
4.17 Investment Securities...............................................................27
4.18 Transactions with Affiliates and Certain Agreements.................................27
4.19 No Investment Company...............................................................28
4.20 State Takeover Statutes.............................................................28
4.21 Rights Agreement....................................................................28
4.22 Sale of Entertainment Assets........................................................28
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB..............................................................................29
5.1 Organization and Qualification......................................................29
5.2 Authorization and Validity of Agreement.............................................29
5.3 No Prior Activities of Merger Sub...................................................29
5.4 Information Supplied................................................................29
5.5 Brokers.............................................................................30
5.6 Financing...........................................................................30
ARTICLE VI COVENANTS AND AGREEMENTS....................................................................30
6.1 Stockholders Meetings...............................................................30
6.2 Access to Information Concerning Properties and Records.............................32
6.3 Confidentiality.....................................................................32
6.4 Public Announcements................................................................33
6.5 Conduct of the Company's Business Pending Merger Sub's
Election Date.......................................................................33
6.6 No Solicitation.....................................................................36
6.7 Reasonable Efforts..................................................................38
6.8 Rights Agreement....................................................................39
6.9 Certain Litigation..................................................................39
6.10 Indemnification of Directors and Officers...........................................40
6.11 Directors...........................................................................42
6.12 Stock Options; SARs.................................................................42
6.13 Employee Matters....................................................................43
6.14 Severance Obligations...............................................................43
6.15 Competitor Transaction..............................................................43
ARTICLE VII CONDITIONS TO THE MERGER....................................................................44
7.1 Conditions to the Merger............................................................44
ARTICLE VIII TERMINATION.................................................................................44
8.1 Termination and Abandonment.........................................................44
8.2 Termination Fee; Effects of Termination.............................................45
ARTICLE IX MISCELLANEOUS...............................................................................46
9.1 No Waiver or Survival of Representations, Warranties,
Covenants and Agreements............................................................46
9.2 Notices.............................................................................47
9.3 Entire Agreement....................................................................48
9.4 Assignment; Binding Effect; Benefit.................................................48
9.5 Amendment...........................................................................48
9.6 Extension; Waiver...................................................................48
9.7 Headings............................................................................49
9.8 Counterparts........................................................................49
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
9.9 Applicable Law......................................................................49
9.10 No Remedy in Certain Circumstances..................................................49
9.11 Severability........................................................................49
9.12 Disclosure Schedule.................................................................50
9.13 Enforcement.........................................................................50
</TABLE>
EXHIBITS
Exhibit 3.1(a) Form of Certificate of Merger
SCHEDULES
Company Disclosure Schedules
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of this
22nd day of February, 2000, by and among Liberty AEG Acquisition, Inc., a
Delaware corporation ("Merger Sub"), Liberty Media Corporation, a Delaware
corporation ("Parent"), and Ascent Entertainment Group, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is in the best interests of their respective
stockholders for Parent, through Merger Sub, to acquire the Company upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that Merger Sub
shall make a cash tender offer (the "Offer") to acquire all the issued and
outstanding shares of Common Stock, par value $.01 per share, of the Company and
the associated Rights ("Company Common Stock"; shares of Company Common Stock
being hereinafter collectively referred to as the "Shares"), at a purchase price
of $15.25 per Share (such amount, or any greater amount per Share paid pursuant
to the Offer, being hereinafter referred to as the "Per Share Amount") net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of Parent and Merger Sub have approved the
making of the Offer and the transactions related thereto; and
WHEREAS, the Board of Directors of the Company (the "Board") has approved
the making of the Offer and resolved and agreed, subject to the terms and
conditions contained herein, to recommend that holders of Shares tender their
Shares pursuant to the Offer; and
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company in accordance with the General
Corporation Law of the State of Delaware following the consummation of the Offer
and upon the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to the Merger, all Shares that remain outstanding after
the expiration of the Offer will be converted into and exchangeable for $15.25
in cash per Share.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings unless the context otherwise requires:
An "Affiliate" of any Person shall mean any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person. A Person shall be deemed to "control," be "controlled by" or
be "under common control with" any other Person if such other Person possesses,
directly or indirectly, power to direct or cause the direction of the management
or policies of such Person whether through the ownership of voting securities or
partnership interests, by contract or otherwise. Notwithstanding the foregoing,
for purposes of this Agreement, neither AT&T Corp. nor any of its Affiliates
shall be deemed an Affiliate of Parent or any of its Affiliates.
"Agreement" shall mean this Agreement and Plan of Merger, including all
Exhibits and Schedules hereto.
"Alternative Proposal" shall mean any proposal, other than as
contemplated by this Agreement or otherwise proposed by Parent or its
Affiliates, for (A) a merger, consolidation, share exchange, reorganization,
other business combination, recapitalization or similar transaction involving
the Company or any of its Subsidiaries, (B) the acquisition, directly or
indirectly, of an equity interest representing greater than 20% of the voting
securities of the Company or any of its Subsidiaries, (C) the acquisition of a
substantial portion of any of the assets of the Company or any of its
Subsidiaries (including without limitation the Company's interests in OCC), (D)
any transfer or sale of all or any material part of the Entertainment Assets or
any interest therein; or (E) any transaction the effect of which would be
reasonably likely to prohibit, restrict or delay the consummation of the Offer
or the Merger or any of the other transactions contemplated by this Agreement.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the date on which the Closing occurs pursuant
to Section 3.2.
"Commission" shall mean the Securities and Exchange Commission and the
staff of the Securities and Exchange Commission.
"Company Common Stock" shall have the meaning specified in the preamble
hereto.
"Company Disclosure Schedule" shall mean the disclosure schedule, dated
as of the date of this Agreement, delivered by the Company to Parent.
2
<PAGE> 7
"Company Stock Plans" shall mean the following: (i) the Ascent
Entertainment Group, Inc. 1995 Non-Employee Directors Stock Plan; (ii) the
Ascent Entertainment Group, Inc. 1995 Key Employee Stock Plan; and (iii) the
Ascent Entertainment Group, Inc. 1997 Non-Employee Directors Stock Appreciation
Rights Plan.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") shall have the meaning given to such term in Rule
405 under the Securities Act.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Effective Time" shall mean the time when the Merger of Merger Sub with
and into the Company becomes effective under applicable law as provided in
Section 3.1(a).
"Entertainment Assets" shall mean the assets of, or the interests of
the Company in, the following entities: (i) The Denver Nuggets Limited
Partnership; (ii) Colorado Avalanche, LLC; (iii) Ascent Sports, Inc.; (iv)
Ascent Arena and Development Corporation; (v) Ascent Sports Holdings, Inc.; (vi)
Ascent Arena Company, LLC; (vii) Ascent Arena Operating Company, LLC; (viii) The
Denver Arena Trust; (ix) NBG Arena LLC; and (x) NBG Sports LLC.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder.
"GAAP" shall mean generally accepted accounting principles as accepted
by the accounting profession in the United States as in effect from time to
time.
"Hart-Scott Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the rules and regulations thereunder.
"Indebtedness" shall mean, with respect to any Person, without
duplication (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (i) every liability of such
Person (excluding intercompany accounts between the Company and any wholly owned
Subsidiary of the Company or between wholly owned Subsidiaries of the Company)
(A) for borrowed money, (B) evidenced by notes, bonds, debentures or other
similar instruments (whether or not negotiable), (C) for reimbursement of
amounts drawn under letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (D) issued or assumed as the
deferred purchase price of property or services (excluding contingent payment
obligations and accounts payable) and (E) relating to a capitalized lease
obligation and all debt attributable to sale/leaseback transactions of such
Person; and (ii) every liability of others of the kind described in the
preceding clause (i) which such Person has guaranteed or which is otherwise its
legal liability, in either case to the extent required pursuant to GAAP to be
set forth as a liability on a balance sheet of such Person.
3
<PAGE> 8
"Indenture" shall mean the Indenture, dated as of December 22, 1997,
between the Company and The Bank of New York, as trustee, pursuant to which the
Company issued its 11-7/8% Senior Secured Discount Notes Due 2004.
"Injunction" shall mean any permanent or preliminary injunction or
restraining order or decree or other similar order or decree issued or entered
by any court or Governmental Entity.
"Lien" shall mean any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest,
assignment, deposit arrangement, encumbrance, restriction, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Material Adverse Effect" on any Person shall mean a material adverse
effect on such Person's business, assets, result of operations or financial
condition, provided that any effects of changes, either individually or in the
aggregate, that are generally applicable to (A) such Person's primary industry,
(B) the United States economy or (C) the United States securities markets, shall
not be considered a Material Adverse Effect.
"Merger" shall have the meaning specified in the preamble hereto.
"OCC" shall mean On Command Corporation, a Delaware corporation.
"OCC Stock" shall mean the Common Stock, par value $0.01 per share, of
OCC.
"OCC Stock Plans" shall mean the following (i) the On Command
Corporation 1996 Key Employee Stock Plan; (ii) the On Command Corporation 1997
Employee Stock Purchase Plan; and (iii) the On Command Corporation 1997
Non-Employee Directors Stock Plan.
"OCC Warrants" shall mean the SpectraVision Warrants, the Series A
Warrants and the Series C Warrants, collectively, as such terms are defined in
the Warrant Agreement, dated as of October 8, 1996, between OCC and The Bank of
New York, as warrant agent.
"Permitted Encumbrances" shall mean the following Liens with respect to
the properties and assets of the Company: (a) Liens for taxes, assessments or
other governmental charges or levies not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on the Company's books; (b) Liens of carriers, warehousemen,
mechanics, materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on the Company's books; (c) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure performance of
tenders, statutory
4
<PAGE> 9
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds; (d) purchase money security interests or Liens on property acquired or
held by the Company in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness incurred solely for the purpose
of financing the acquisition of such property; (e) easements, restrictions and
other defects of title which are not, in the aggregate, material and which do
not, individually or in the aggregate, materially and adversely affect the
Company's use or occupancy of the property affected thereby; (f) Liens incurred
under the Company's $50 million Amended and Restated Credit Facility, dated as
of December 22, 1997, among the Company, the Lenders named therein and
NationsBank, N.A., as Administrative Agent, as amended through January 15, 1999;
(g) Liens incurred under OCC's $200 million First Amended and Restated Credit
Facility, dated as of November 24, 1997, among OCC, the Lenders named therein
and NationsBank, N.A., as Administrative Agent; (h) Liens incurred under the
$139,835,000 Denver Arena Trust 6.94% Arena Revenue Backed Notes, dated as of
July 29, 1998, among Ascent Arena Company, LLC, the Denver Arena Trust,
Wilmington Trust Company, as Owner Trustee, and The Bank of New York, as
Indenture Trustee; and (i) Liens related to the Company's holdings of OCC Stock
incurred in connection with the Indenture.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, or joint
venture or a government, agency, political subdivision, or instrumentality
thereof.
"Proxy Statement" shall mean the proxy statement, as amended and
supplemented, to be sent to the stockholders of the Company in connection with
the Stockholders Meeting (as defined in Section 6.1).
"Restriction", with respect to any capital stock or other security,
shall mean any voting or other trust or agreement, option, warrant, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other Contract, or
any law, rule, regulation, order, judgment or decree which, conditionally or
unconditionally: (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to purchase or sell or otherwise acquire,
dispose of or issue, or otherwise results in or, whether upon the occurrence of
any event or with notice or lapse of time or both or otherwise, may result in,
any Person acquiring, (A) any of such capital stock or other security; (B) any
of the proceeds of, or any distributions paid or which are or may become payable
with respect to, any of such capital stock or other security; or (C) any
interest in such capital stock or other security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien affecting such capital stock or other
security, proceeds or distributions.
"Rights" shall mean the rights issued under the Rights Agreement.
5
<PAGE> 10
"Rights Agent" shall mean The Bank of New York or its successor, in its
capacity as Rights Agents under the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated June 27,
1997, between the Company and The Bank of New York, as amended through the date
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Subsidiary," when used with respect to any Person, shall mean any
corporation or other organization, whether incorporated or unincorporated, of
which such Person or any other Subsidiary of such Person is a general partner or
at least 50% of the securities or other interests having by their terms ordinary
voting power to elect at least 50% of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person, by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries. Notwithstanding the foregoing, for purposes of this Agreement, the
Company's Subsidiaries shall be deemed to include OCC, whether or not it
otherwise would be a Subsidiary of the Company under the foregoing definition.
"Superior Proposal" shall mean any bona fide written Alternative
Proposal to acquire, directly or indirectly, more than 50% of the shares of
Company Common Stock then outstanding or all or substantially all the assets of
the Company and that the Company Board determines in good faith, after taking
into account the advice of a financial advisor of nationally recognized
reputation, and taking into account all the terms and conditions of the
Alternative Proposal, is more favorable to the Company's stockholders than the
Offer and the Merger and for which financing, to the extent required, is then
fully committed or reasonably determined to be available by the Company Board.
"Surviving Entity" shall mean the Company as the surviving entity in
the Merger as provided in Section 3.1(a).
"Tender Offer Acceptance Date" shall mean the date on which Merger Sub
shall have accepted for payment all Shares validly tendered and not withdrawn
pursuant to the expiration date with respect to the Offer.
1.2 TERMS GENERALLY. The definitions set forth or referenced in this
Agreement shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Agreement (including the Exhibits and Schedules) in its
entirety and not to any part hereof unless the context shall otherwise require.
As used herein, the term "to the Company's knowledge" or any similar term
relating to the knowledge of the Company means the actual knowledge of any of
the officers (determined in accordance with Rule 16a-1(f) under the Exchange Act
as in effect on the
6
<PAGE> 11
date hereof) or directors of the Company. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any successor provisions). Any reference in this Agreement to
a "day" or number of "days" (without the explicit qualification of "business")
shall be interpreted as a reference to a calendar day or number of calendar
days. If any action or notice is to be taken or given on or by a particular
calendar day, and such calendar day is not a business day, then such action or
notice shall be deferred until, or may be taken or given on, the next business
day. References to the term "business day" shall mean any day which is not a
Saturday, Sunday or day on which banks in New York, New York are authorized or
required by law to close. As applied to Parent, the phrases "as soon as
reasonably practicable," "as promptly as practicable" and similar phrases shall
mean "reasonably promptly under the circumstances, in light of the other burdens
on the time and attention of the directors, officers, employees and agents of
Parent and the relative benefits to Parent of this Agreement and such other
burdens."
ARTICLE II
THE OFFER AND RELATED MATTERS
2.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VIII and none of the events set forth in Annex A shall
have occurred or be existing (unless such event shall have been waived by Merger
Sub), Parent shall cause Merger Sub to commence, and Merger Sub shall commence,
the Offer at the Per Share Amount as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the public
announcement of Merger Sub's intention to commence the Offer. The Offer will be
made pursuant to an Offer to Purchase and related Letter of Transmittal
containing the terms and conditions set forth in this Agreement. The initial
expiration date of the Offer shall be the twentieth business day from and after
the date the Offer is commenced (the "Initial Expiration Date"). The obligation
of Merger Sub to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject only to (i) the condition (the "Minimum Condition") that
at least the number of Shares that, when combined with the Shares already owned
by Parent and its direct or indirect Subsidiaries, constitute a majority of the
then outstanding Shares on a fully diluted basis, including, without limitation,
all Shares issuable upon the conversion of any convertible securities or upon
the exercise of any options, warrants or rights (other than the Rights (as
defined in the Rights Agreement)) shall have been validly tendered and not
withdrawn prior to the expiration of the Offer and (ii) the satisfaction or
waiver of the other conditions set forth in Annex A hereto. Merger Sub expressly
reserves the right to waive any such condition (other than the Minimum
Condition), to increase the price per Share payable in the Offer, and to make
any other changes in the terms and
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conditions of the Offer; provided, however, that (notwithstanding Section 9.5)
no change may be made which (A) decreases the price per Share payable in the
Offer, (B) reduces the maximum number of Shares to be purchased in the Offer,
(C) imposes conditions to the Offer in addition to those set forth in Annex A,
(D) amends or changes the terms and conditions of the Offer in any manner
adverse to the holders of Shares (other than Parent and its Subsidiaries), (E)
changes or waives the Minimum Condition, (F) changes the form of consideration
payable in the Offer or (G) except as provided below or required by any rule,
regulation, interpretation or position of the Commission applicable to the
Offer, changes the expiration date of the Offer. Notwithstanding the foregoing,
Merger Sub may, without the consent of the Company, (A) extend the Offer, if at
the scheduled expiration date of the Offer any of the conditions set forth in
Annex A (the "Offer Conditions") shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, (B) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission applicable to the Offer and (C) extend the Offer to provide for a
subsequent offering period pursuant to Rule 14d-11 under the Exchange Act for an
aggregate period of not more than 20 business days (for all such extensions)
beyond the latest expiration date that would otherwise be permitted under clause
(A) or (B) of this sentence. In addition, Parent and Merger Sub agree that
Merger Sub shall from time to time extend the Offer, if requested by the
Company, (i) if at the Initial Expiration Date (or any extended expiration date
of the Offer, if applicable), any of the conditions to the Offer other than the
Minimum Condition shall not have been waived or satisfied, and the Minimum
Condition shall have been satisfied, until (taking into account all such
extensions) the earlier of August 31, 2000 or such earlier date upon which any
such condition shall not be reasonably capable of being satisfied prior to
August 31, 2000; or (ii) if at the Initial Expiration Date (or any extended
expiration date of the Offer, if applicable), all of the conditions to the Offer
other than the Minimum Condition shall have been waived or satisfied and the
Minimum Condition shall not have been satisfied, until the earlier of ten (10)
business days after such expiration date or August 31, 2000. Upon the prior
satisfaction or waiver of all the conditions to the Offer, and subject to the
terms and conditions of this Agreement, Merger Sub will, and Parent will cause
Merger Sub to, accept for payment, purchase and pay for, in accordance with the
terms of the Offer, all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as reasonably practicable after the
expiration of the Offer. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions of the Offer. Subject to the terms
and conditions of the Offer (including, without limitation, the Minimum
Condition), Merger Sub shall accept for payment and pay, as promptly as
practicable after expiration of the Offer, for all Shares validly tendered and
not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Merger Sub shall file with the Commission and disseminate to holders
of Shares to the extent required by law a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer and the other Transactions (as hereinafter defined). The
Schedule TO shall contain or shall incorporate by reference an offer to purchase
(the "Offer to Purchase") and forms of the related letter of transmittal and any
related summary advertisement (the Schedule TO, the Offer to Purchase and such
other documents, together
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with all supplements and amendments thereto, being referred to herein
collectively as the "Offer Documents"). Parent, Merger Sub and the Company agree
to correct promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading, and Parent and Merger Sub
further agree to take all steps necessary to cause the Schedule TO as so
corrected to be filed with the Commission and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given an opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the
Commission. Parent and Merger Sub will provide the Company and its counsel with
a copy of any written comments or telephonic notification of any verbal comments
Parent or Merger Sub may receive from the Commission with respect to the Offer
Documents promptly after the receipt thereof and will provide the Company and
its counsel with a copy of any written responses and telephonic notification of
any verbal response of Parent, Merger Sub or their counsel. In the event that
the Offer is terminated or withdrawn by Merger Sub, Parent and Merger Sub shall
cause all tendered Shares to be returned to the registered holders of the Shares
represented by the certificate or certificates surrendered to the Paying Agent.
2.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents that (i) the Board, at a meeting duly called and held on February 21,
2000 (the "February 21 Meeting"), has unanimously (with one director having
recused himself) (A) determined that this Agreement and the transactions
contemplated hereby, including, without limitation, each of the Offer and the
Merger (the "Transactions"), are fair to and in the best interests of the
holders of Shares, (B) approved and adopted this Agreement and the Transactions,
(C) resolved to recommend, subject to the conditions set forth herein, that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the Transactions and (D) took all action necessary to render the
limitations on business combinations contained in Section 203 of the DGCL
inapplicable to this Agreement and the transactions contemplated hereby; (ii)
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has delivered to the
Board a written opinion that the consideration to be received by the holders of
Shares pursuant to each of the Offer and the Merger is fair to such holders from
a financial point of view; and (iii) the Board, at the February 21 Meeting,
determined upon receipt of the opinion referred to in clause (ii) of this
sentence that the terms of the Offer (including the Per Share Amount) are fair
to, and in the best interests of, the Company and the holders of Shares. The
Company has been authorized by DLJ, subject to prior review by such financial
advisor, to include such fairness opinion (or references thereto) in the Offer
Documents and in the Schedule 14D-9 (as defined in paragraph (b) of this Section
2.2), the Proxy Statement and the Section 14(c) Information Statement (as
defined in Section 4.7). Subject to the fiduciary duties of the Board under
applicable law after taking into account the advice of the Company's outside
legal counsel, the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described above. The Company has
been advised by each of its directors and executive officers that they intend
either to tender all Shares beneficially owned by them to Merger Sub pursuant to
the Offer or to vote such Shares in favor of the approval and adoption by the
stockholders of the
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<PAGE> 14
Company of this Agreement and the Transactions; provided, however, that such
directors and executive officers shall have no obligation under this Agreement
to so tender or vote their Shares if this Agreement is terminated.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject
only to the fiduciary duties of the Board under applicable law after taking into
account the advice of the Company's outside legal counsel, the recommendation of
the Board described in Section 2.2(a) and shall disseminate the Schedule 14D-9
to the extent required by Rule 14d-9 promulgated under the Exchange Act and any
other applicable federal securities laws. The Company, Parent and Merger Sub
agree to correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the Commission and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Parent, Merger Sub and their counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the Commission. The Company will provide Parent and Merger
Sub and their counsel with a copy of any written comments or telephonic
notification of any verbal comments the Company may receive from the Commission
with respect to the Offer Documents promptly after the receipt thereof and will
provide Parent and Merger Sub and their counsel with a copy of any written
responses and telephonic notification of any verbal response of the Company or
its counsel.
(c) The Company shall promptly furnish Merger Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of the
most recent date reasonably practicable, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and non-objecting beneficial owners of Shares as of
the most recent date reasonably practicable. The Company shall furnish Merger
Sub with such additional information, including, without limitation, updated
listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Parent, Merger Sub or their
agents may reasonably request. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Parent
and Merger Sub shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Article VIII, shall deliver promptly to the Company all copies
of such information then in their possession and shall certify in writing to the
Company its compliance with this Section 2.2(c).
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ARTICLE III
THE MERGER AND RELATED MATTERS
3.1 THE MERGER.
(a) Merger; Effective Time. At the Effective Time and subject to and
upon the terms and conditions of this Agreement, Merger Sub shall, and Parent
shall cause Merger Sub to, merge with and into the Company in accordance with
the provisions of the DGCL, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the Surviving Entity. The Effective Time
shall occur upon the filing with the Secretary of State of the State of Delaware
a Certificate of Merger (the "Certificate of Merger") substantially in the form
of Exhibit 3.1(a) and executed in accordance with the applicable provisions of
the DGCL, or at such later time as may be agreed to by Parent and the Company
and specified in the Certificate of Merger. Provided that this Agreement has not
been terminated pursuant to Article VIII, the parties will cause the Certificate
of Merger to be filed as soon as practicable after the Closing. At the election
of Parent, any direct or indirect wholly owned subsidiary of Parent may be
substituted for Merger Sub as a constituent corporation in the Merger, provided
that no such substitution shall be made if it would delay or impede the
transactions contemplated hereby. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
(b) Effects of the Merger. The Merger shall have the effect set forth
in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving Entity,
and all debts, liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving Entity. If, at any time after
the Effective Time, the Surviving Entity considers or is advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Entity its right, title or interest in, to or under any of the rights,
properties, or assets of either the Company or Merger Sub, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of the
Surviving Entity will be authorized to execute and deliver, in the name and on
behalf of each of the Company and Merger Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Company and Merger Sub, all such other actions and things as the Board of
Directors of the Surviving Entity may determine to be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Entity or otherwise to carry
out the intent and purposes of this Agreement.
(c) Certificate of Incorporation and Bylaws of Surviving Entity. At the
Effective Time, the Company's Amended and Restated Certificate of Incorporation
("Company Charter") shall be amended pursuant to the Certificate of Merger to be
identical to the Certificate of Incorporation of Merger Sub in effect
immediately prior to the Effective Time, except that Article I thereof shall
read as follows: "The name of the corporation is: Ascent Entertainment Group,
Inc." Such Company
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Charter as so amended shall be the Certificate of Incorporation of the Surviving
Entity until thereafter duly amended in accordance with the terms thereof and
the DGCL. At the Effective Time, the Company's Amended and Restated Bylaws
("Company Bylaws") shall be amended to be identical to the bylaws of Merger Sub
in effect immediately prior to the Effective Time and, in such amended form,
shall be the bylaws of the Surviving Entity until thereafter duly amended in
accordance with the terms thereof, the terms of the Certificate of Incorporation
of the Surviving Entity and the DGCL.
(d) Directors and Officers of Surviving Entity. At the Effective Time,
the directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Entity, and all such directors will hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of Incorporation
and Bylaws of the Surviving Entity, or as otherwise provided by applicable law.
At the Effective Time, the officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Entity, and all such
officers will hold office until their respective successors are duly appointed
and qualify in the manner provided in the Bylaws of the Surviving Entity, or as
otherwise provided by applicable law.
3.2 CLOSING. The Closing shall take place (i) at 10:00 a.m. (New York time)
at the offices of Baker Botts L.L.P., 599 Lexington Avenue, New York, New York
10022, on the first business day following the date on which the last of the
conditions set forth in Article VII (other than the filing of the Certificate of
Merger and other than any such conditions which by their terms are not capable
of being satisfied until the Closing Date) is satisfied or, if permissible,
waived, or (ii) on such other date and at such other time or place as is
mutually agreed by Parent and the Company.
3.3 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section 3.3(b)
and any Dissenting Shares (as hereinafter defined)) shall be cancelled and shall
be converted automatically into the right to receive an amount equal to the Per
Share Amount in cash (the "Merger Consideration") payable, without interest, to
the holder of such Share, upon surrender, in the manner provided in Section 3.6,
of the certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share owned
by Merger Sub, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
cancelled without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(c) Each share of common stock, par value $.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for
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one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Entity.
3.4 OPTIONS; SARS.
(a) Company Stock Options. Prior to the Initial Expiration Date, the
Company shall take all actions necessary and appropriate to provide that, upon
the Effective Time, each outstanding option to purchase Shares or other similar
interest (collectively, the "Options") granted under any Company Stock Plan,
whether or not then exercisable or vested, shall be cancelled and, in exchange
therefor, each holder of such Option shall receive an amount in cash in respect
thereof, if any, equal to the product of (i) the excess, if any, of the Merger
Consideration over the per share exercise price thereof and (ii) the number of
shares subject thereto.
(b) Stock Appreciation Rights. Prior to the Initial Expiration Date,
the Company shall take all actions necessary and appropriate to provide that,
upon the Effective Time, each outstanding stock appreciation right ("SAR")
granted under any Company Stock Plan, whether or not then exercisable or vested,
shall be cancelled and, in exchange therefor, each holder of such SAR shall
receive an amount in cash in respect thereof, if any, equal to the product of
(i) the excess, if any, of the Merger Consideration over the per share exercise
price thereof and (ii) the number of shares subject thereto.
3.5 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
Shares that are outstanding immediately prior to the Effective Time and which
are held by stockholders who shall have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such Shares in accordance with Section 262 of the DGCL (insofar as
such Section is applicable to the Merger and provides for appraisal rights with
respect to it) (collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of Section 262 of the DGCL
(insofar as such Section is applicable to the Merger and provides for appraisal
rights with respect to it), except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under the DGCL shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon, upon surrender, in the manner provided in Section
3.6, of the certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Section 262 of the DGCL in respect of Dissenting
Shares and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
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under the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
(c) The right of any stockholder to receive the Merger Consideration
shall be subject to and reduced by the amount of any required tax withholding
obligation.
3.6 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Prior to the Effective Time, Merger Sub shall designate a bank or
trust company reasonably satisfactory to the Company to act as agent (the
"Paying Agent") for the holders of Shares in connection with the Merger to
receive the funds to which holders of Shares shall become entitled pursuant to
Section 3.3(a). Immediately prior to the Effective Time, Parent shall cause
Surviving Entity to have sufficient funds to deposit, and shall cause Surviving
Entity to deposit in trust with the Paying Agent, cash in the aggregate amount
equal to the product of (i) the number of shares outstanding immediately prior
to the Effective Time (other than Shares owned by Parent or Merger Sub and
Shares as to which dissenters' rights have been exercised as of the Effective
Time) and (ii) the Per Share Amount.
(b) Promptly after the Effective Time, Parent shall cause the Surviving
Entity to mail to each Person who was, at the Effective Time, a holder of record
of Shares entitled to receive the Merger Consideration pursuant to Section
3.6(a) a form of letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the certificates evidencing such
Shares (the "Certificates") shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each Share formerly evidenced
by such Certificate, and such Certificate shall then be cancelled. No interest
shall accrue or be paid on the Merger Consideration payable upon the surrender
of any Certificate for the benefit of the holder of such Certificate. If payment
of the Merger Consideration is to be made to a Person other than the Person in
whose name the surrendered Certificate is registered on the stock transfer books
of the Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the Person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the Merger
Consideration to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Entity that such taxes either have been paid or are not applicable. The
Surviving Entity shall pay all charges and expenses, including those of the
Paying Agent, in connection with the distribution of the Merger Consideration.
Until surrendered as contemplated by this Section 3.6, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 3.3.
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(c) At any time following the twelfth month after the Effective Time,
the Surviving Entity shall be entitled to require the Paying Agent to deliver to
it any funds which had been made available to the Paying Agent and not disbursed
to holders of Shares (including, without limitation, all interest and other
income received by the Paying Agent in respect of all funds made available to
it) and, thereafter, such holders shall be entitled to look to the Surviving
Entity (subject to abandoned property, escheat and other similar laws) only as
general creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them. Notwithstanding the
foregoing, neither the Surviving Entity nor the Paying Agent shall be liable to
any holder of a Share for any Merger Consideration delivered in respect of such
Share to a public official pursuant to any abandoned property, escheat or other
similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
4.1 ORGANIZATION AND QUALIFICATION. Each of the Company and each of its
Subsidiaries (i) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite
corporate, partnership or limited liability company power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted and (iii) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of its activities makes such qualification necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing has not had and is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. Section 4.1 of the Company Disclosure Schedule
sets forth a complete and accurate list of each of the Company's Subsidiaries
and reflects the percentage and nature of the Company's ownership of each such
Subsidiary.
The Company owns 17,159,085 shares of OCC Stock and OCC Warrants
exercisable for 1,123,823 shares of OCC Stock. The shares of OCC Stock owned by
the Company have been validly issued, fully paid and non-assessable and are not
and, from the date hereof through and including the Effective Time, will not be
subject to any Liens or Restrictions, except as created by this Agreement or as
set forth on Section 4.1 of the Company Disclosure Schedule. The foregoing
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representations regarding the Company's ownership of shares of OCC Stock are
made subject to any changes that may affect the holders of OCC Stock generally.
The Company has delivered to Parent true and complete copies of the
Company Charter and Company Bylaws in effect on the date hereof. The Company's
minute books, true and complete copies of which have been made available to
Parent, contain the minutes (or draft copies of the minutes) of all meetings of
directors and stockholders of the Company since January 1, 1996.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to
obtaining the approval of its stockholders specified in Section 4.15, to perform
its obligations hereunder and consummate the Merger. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Merger have been duly and validly authorized by the Company Board and by
all other necessary corporate action on the part of the Company, subject to the
approval of the Company's stockholders specified in the previous sentence. This
Agreement has been duly executed and delivered by the Company and is a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
4.3 CAPITALIZATION. The authorized capital stock of the Company consists of
60,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.01 per share (the "Company Preferred Stock"). As of the date
hereof, (i) 29,755,600 shares of Company Common Stock were issued and
outstanding and no shares were issued and held by the Company in its treasury or
by Subsidiaries of the Company and (ii) no shares of Company Preferred Stock
were issued and outstanding or were issued and held by the Company in its
treasury or by Subsidiaries of the Company. All issued and outstanding shares of
Company Common Stock have been validly issued and are fully paid and
non-assessable, and have not been issued in violation of any preemptive rights
or of any federal or state securities laws. There are no issued or outstanding
bonds, debentures, notes or other Indebtedness of the Company or any of its
Subsidiaries which have the right to vote (or which are convertible into other
securities having the right to vote) on any matters on which stockholders may
vote ("Voting Debt"). Section 4.3 of the Company Disclosure Schedule describes
all outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character to or by which the Company
or any of its Subsidiaries is a party or is bound which, directly or indirectly,
obligate the Company or any of its Subsidiaries to issue, deliver or sell or
cause to be issued, delivered or sold any additional shares of Company Common
Stock or any other capital stock, equity interest or Voting Debt of the Company
or any Subsidiary of the Company, any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for any
such shares, interests or Voting Debt, or any phantom shares, phantom equity
interests or stock or equity appreciation rights, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such subscription,
option, warrant, call or right (collectively, "Convertible Securities"). Neither
the Company nor any
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<PAGE> 21
Subsidiary thereof is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
Neither the Company nor any of its Subsidiaries has adopted, authorized or
assumed any plans, arrangements or practices for the benefit of its officers,
employees or directors which require or permit the issuance, sale, purchase or
grant of any capital stock, other equity interests or Voting Debt of the Company
or any Subsidiary of the Company, any other securities convertible into, or
exercisable or exchangeable for, any such stock, interests or Voting Debt, or
any phantom shares, phantom equity interests or stock or equity appreciation
rights, other than the Company Stock Plans and the OCC Stock Plans. Other than
Permitted Encumbrances, all shares of capital stock of and all partnership or
other equity interests in each Subsidiary of the Company are owned free and
clear of any Lien or Restriction and the shares of capital stock of each
corporate Subsidiary of the Company are validly issued, fully paid and
non-assessable. Except as set forth on Section 4.3 of the Company Disclosure
Schedule, there are not, and immediately after the Effective Time, there will
not be, any outstanding or authorized subscriptions, options, warrants, calls,
rights, commitments or other agreements of any character to or by which the
Company or any of its Subsidiaries is a party or is bound that, directly or
indirectly, (x) call for or relate to the sale, pledge, transfer or other
disposition by the Company or any Subsidiary of the Company of any shares of
capital stock, any partnership or other equity interests or any Voting Debt of
any Subsidiary of the Company or (y) relate to the voting or control of such
capital stock, partnership or other equity interests or Voting Debt.
4.4 REPORTS AND FINANCIAL STATEMENTS. (a) The Company has filed all forms,
reports and documents, including all Reports on Form 10-K, Form 10-Q and Form
8-K, registration statements and proxy statements required to be filed with the
Commission since January 1, 1997 (collectively, the "Company SEC Reports"). None
of the Company SEC Reports, as of their respective dates, contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related financial statements (including the related
notes) included in the Company SEC Reports present fairly, in all material
respects, the results of operations and the changes in financial position of the
Company and its Subsidiaries for the respective periods or as of the respective
dates set forth therein, all in conformity with GAAP consistently applied during
the periods involved, except as otherwise noted therein and subject, in the case
of the unaudited interim financial statements, to normal year-end adjustments.
All of the Company SEC Reports, as of their respective dates, complied as to
form in all material respects with the requirements of the Exchange Act, the
Securities Act and the applicable rules and regulations thereunder.
(b) OCC has filed all forms, reports and documents, including all
Reports on Form 10-K, Form 10-Q and Form 8-K, registration statements and proxy
statements required to be filed with the Commission since January 1, 1997
(collectively, the "OCC SEC Reports"). None of the OCC SEC Reports, as of their
respective dates, contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements
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therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the related
notes) included in the OCC SEC Reports presents fairly, in all material
respects, the consolidated financial position of OCC and its Subsidiaries as of
the respective dates thereof, and the other related statements (including the
related notes) included in the OCC SEC Reports present fairly, in all material
respects, the results of operations and the changes in financial position of OCC
and its Subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise noted therein and subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments. All
of the OCC SEC Reports, as of their respective dates, complied as to form in all
material respects with requirements of the Exchange Act, the Securities Act and
the applicable rules and regulations thereunder.
(c) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, the Company and its Subsidiaries have not made any misstatements of
fact, or omitted to disclose any fact, to any Governmental Entity, or taken or
failed to take any action, which misstatements or omissions, actions or failures
to act, individually or in the aggregate, subject or would subject any Licenses
held by the Company or any of its Subsidiaries to revocation or failure to
renew, except where such revocation or failure to renew, individually or in the
aggregate, does not and would not be reasonably likely to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
(d) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has guaranteed or
otherwise agreed to become responsible for any Indebtedness of any other Person.
(e) Except as set forth on Section 4.4 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary of the Company has any
obligation to contribute any additional capital to, or acquire any additional
interest in, any of its Affiliates.
(f) Except as and to the extent set forth in the Company SEC Reports or
in any Section of the Company Disclosure Schedules, neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance sheet
of the Company and its Subsidiaries (including the notes thereto), except for
liabilities or obligations incurred in the ordinary course of business since
September 30, 1999, that would not, individually or in the aggregate, have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
4.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS. The
execution and delivery by the Company of this Agreement do not, and the
performance by the Company of its obligations hereunder and the consummation by
the Company of the Offer and Merger will not:
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(i) assuming approval by the Company's stockholders as contemplated by
Section 4.15, conflict with or violate the Company Charter or Company Bylaws or
the charter or bylaws of any corporate Subsidiary of the Company or the
partnership agreement of any partnership Subsidiary of the Company;
(ii) require any consent, approval, order or authorization of or other
action by any Governmental Entity (a "Governmental Consent") or any
registration, qualification, declaration or filing with or notice to any
Governmental Entity (a "Governmental Filing"), in each case on the part of the
Company or any Subsidiary of the Company, except for (A) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (B) the Governmental Consents and
Governmental Filings with foreign, state and local governmental authorities set
forth on Section 4.5 of the Company Disclosure Schedule (the "Local Approvals"),
(C) the Governmental Filings required to be made pursuant to the pre-merger
notification requirements of the Hart-Scott Act, (D) the filing with the
Commission of (1) the Schedule 14D-9 and the Proxy Statement and (2) such
reports under Section 13(a), 13(d), 14(c), 15(d) or 16(a) of the Exchange Act as
may be required in connection with this Agreement or the transactions
contemplated hereby and (E) such other Governmental Consents and Government
Filings the absence or omission of which will not, either individually or in the
aggregate, have a material adverse effect on the Transactions or a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or the
Surviving Entity and its Subsidiaries taken as a whole;
(iii) except as set forth on Section 4.5 of the Company Disclosure
Schedule, require, on the part of the Company or any Subsidiary of the Company,
any consent by or approval or authorization of (a "Contract Consent") or notice
to (a "Contract Notice") any other Person (other than a Governmental Entity),
under any License or other Contract, except for such Contract Consents and
Contract Notices the absence or omission of which will not, either individually
or in the aggregate, have a material adverse effect on the Transactions or a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole or
the Surviving Entity and its Subsidiaries taken as a whole;
(iv) assuming that the Contract Consents and Contract Notices
described on Section 4.5 of the Company Disclosure Schedule are obtained and
given, conflict with or result in any violation or breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, suspension, modification or acceleration of any
obligation or any increase in any payment required by, or the impairment, loss
or forfeiture of any material benefit, rights or privileges under, or the
creation of a Lien or other encumbrance on any assets pursuant to (any such
conflict, violation, breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation"), any "Contract" (which term shall
mean and include any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument, employee
benefit plan or practice, or other agreement, obligation, commitment or
concession of any nature to which the Company or any Subsidiary of the Company
is a party, by which the Company, any Subsidiary of the Company or any of their
respective assets or properties
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<PAGE> 24
is bound or affected or pursuant to which the Company or any Subsidiary of the
Company is entitled to any rights or benefits (including the Licenses)), except
for such Violations which would not, individually or in the aggregate, be
reasonably likely to have a material adverse effect on the transactions
contemplated hereby or a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or the Surviving Entity and its Subsidiaries taken
as a whole; or
(v) assuming that the Governmental Consents and Governmental Filings
specified in clause (ii) of this Section 4.5 are obtained, made and given,
result in a Violation of, under or pursuant to any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary of the Company or
by which any of their respective properties or assets are bound, except for such
Violations which would not, individually or in the aggregate, be reasonably
likely to have a material adverse effect on the transactions contemplated hereby
or a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole or the Surviving Entity and its Subsidiaries taken as a whole. As used
herein, the term "Governmental Entity" means and includes any court,
arbitrators, administrative, regulatory or other governmental department,
agency, commission, authority or instrumentality, domestic or foreign.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as otherwise disclosed
in the Company SEC Reports or the OCC SEC Reports filed with the Commission
prior to the date hereof or as set forth on Section 4.6 of the Company
Disclosure Schedule, since September 30, 1999 through the date of this
Agreement, (i) there has not been any adverse change in, and no event has
occurred and no condition exists which, individually or together with all other
such changes, events and conditions, has had or, insofar as the Company can
reasonably foresee, is reasonably likely to have, a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole; and (ii) through the date
hereof, other than actions that in the ordinary course of the Company's business
consistent with prior practice would not have required, and would have been
taken without, the approval of the Company Board, no action has been taken by
the Company or any Subsidiary of the Company which, if Section 6.5 had then been
in effect, would have been prohibited by such Section without the consent or
approval of Parent, and no agreements, understandings, obligations or
commitments, whether in writing or otherwise, to take any such action were
entered into during such period.
(b) Prior to the date hereof, the Company delivered to Parent a
schedule setting forth a detailed estimate of the amount of cash which the
Company expects to have retained after giving effect to, among other things, the
payment of the severance obligations contemplated by Section 6.14 hereof and the
other transactions contemplated hereby, and the Company has no reason to believe
that such estimate is materially inaccurate.
4.7 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in any
documents filed or to be filed with the Commission or any other Governmental
Entity in connection with the transactions contemplated hereby, including (i)
the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be filed
by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the
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Exchange Act (the "Information Statement"), (iv) the Proxy Statement and (v) the
information to be filed by the Company in connection with the Merger pursuant to
Section 14(c) of the Exchange Act (the "Section 14(c) Information Statement"),
will, at the respective times such documents are filed, and also in the case of
the Offer Documents, the Schedule 14D-9, the Information Statement and the
Section 14(c) Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9, the Information Statement and the Section 14(c)
Information Statement are first published, sent or given to the Company's
stockholders, and also, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading (or
necessary to correct any statement in any earlier communication), except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Merger Sub in writing specifically for inclusion or incorporation by
reference therein. The Schedule 14D-9, the Information Statement, the Proxy
Statement and the Section 14(c) Information Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder and will comply in all respects with the applicable
requirements of the DGCL.
4.8 LEGAL PROCEEDINGS. As of the date hereof, there is no (i) suit, action
or proceeding pending of which the Company has received notice or, to the
knowledge of the Company, any investigation pending or any suit, action,
proceeding or investigation threatened, against, involving or affecting the
Company, any Subsidiary of the Company or any of its or their properties or
rights (including without limitation the Company's interests in OCC), which, if
adversely determined, is, insofar as the Company can reasonably foresee,
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; (ii)
judgment, order, decree, Injunction or order of any Governmental Entity entered
against and binding on the Company or any Subsidiary of the Company of which the
Company has received notice, which, insofar as the Company can reasonably
foresee, is reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole;
(iii) suit, action or proceeding pending of which the Company has received
notice or, to the knowledge of the Company, any investigation pending or any
suit, action, proceeding or investigation threatened, against the Company or any
Subsidiary of the Company which seeks to restrain, enjoin or delay the
consummation of the Merger, the Offer or any of the other transactions
contemplated hereby or which seeks damages in connection therewith; and (iv)
Injunction of any type referred to in Section 7.1(c) of which the Company has
received notice which has been entered or issued and is in effect.
4.9 LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS. The Company and its
Subsidiaries hold all licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, concessions, leases, rights of way,
easements, instruments, orders and approvals, domestic or foreign required for
the ownership of the assets and operation of the businesses of the Company or
any of its Subsidiaries, except for the failure to hold any of the foregoing as
would not be reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect on
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the Company and its Subsidiaries taken as a whole (collectively, the
"Licenses"). Each of the Company and its Subsidiaries is in compliance with, and
has conducted its business so as to comply with, the terms of their respective
Licenses and with all applicable laws, rules, regulations, ordinances and codes,
except where the failure so to comply has not had and, insofar as reasonably can
be foreseen by the Company, in the future is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole. Without limiting the generality
of the foregoing, the Company and its Subsidiaries, (i) have all Licenses of
foreign, state and local governmental authorities required for the operation of
the facilities being operated on the date hereof by the Company or any of its
Subsidiaries (the "Permits"), (ii) have duly and currently filed all reports and
other information required to be filed by any other Governmental Entity in
connection with such Permits and (iii) are not in violation of any of such
Permits, other than the lack of Permits, delays in filing reports or possible
violations which have not had and, insofar as can reasonably be foreseen by the
Company, in the future are not reasonably likely to have, a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole. Without limiting
the generality of the foregoing, to the knowledge of the Company, the Company
and its Subsidiaries have duly complied with, and the operation of their
respective businesses, equipment and other assets and the facilities owned or
leased by them are in compliance with the provisions of all applicable federal,
state and local environmental, health and safety laws, statutes, ordinances,
rules and regulations of any governmental or a quasi governmental authority
relating to (i) errors or omissions, (ii) discharges to surface water or ground
water, (iii) solid or liquid waste disposal, (iv) the use, storage, generation,
handling, transport, discharge, release or disposal of toxic or hazardous
substances or waste, (v) the emission of non-ionizing electromagnetic radiation
or (vi) other environmental, health or safety matters, including without
limitation all matters set forth in the Comprehensive Environmental Response
Compensation and Liability Act of 1980 as amended by the Superfund Amendments
and Authorization Act of 1986, the Occupational Safety and Health Act, the
Resource Conservation Recovery Act of 1976, the Federal Water Pollution Control
Act of 1970, the Safe Drinking Water Act of 1974, the Toxic Substances Control
Act of 1976, the Emergency Planning Community Right to Know Act of 1986, as
amended, and the Clean Air Act, as amended (collectively "Environmental and
Health Laws"); except, with respect to any of the foregoing, where the failure
to be or have been in such compliance would not be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole. To the knowledge of the Company,
there are no investigations, administrative proceedings, judicial actions,
orders, claims or notices that are pending or threatened against the Company or
any of its Subsidiaries relating to violations of the Environmental and Health
Laws, except for such matters as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole.
4.10 BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other Person is or will be entitled, by reason of any agreement, act
or statement by the Company or any of its Subsidiaries, directors, officers,
employees or Affiliates, to any financial advisory, broker's, finder's or
similar fee or commission, to reimbursement of expenses or to indemnification or
contribution in connection with any of the transactions contemplated by this
Agreement, except DLJ, Allen & Company Incorporated and Wasserstein Perella &
Co., Inc., whose fees and expenses will
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<PAGE> 27
be paid by the Company in accordance with the Company's agreement with such
firms (a schedule which has been delivered by the Company to Parent prior to the
date of this Agreement), and the Company agrees to indemnify and hold Parent and
Merger Sub harmless from and against any and all claims, liabilities or
obligations with respect to any other such fees, commissions, expenses or claims
for indemnification or contribution asserted by any Person on the basis of any
act or statement made or alleged to have been made by the Company or any of its
Subsidiaries, directors, officers, employees or Affiliates.
4.11 TAX MATTERS. (a) Except as set forth on Section 4.11, paragraph 1
of the Company Disclosure Schedule, (i) there has been duly filed by or on
behalf of the Company and each of its Subsidiaries (and each of their respective
predecessors, if any), or filing extensions from the appropriate federal, state,
foreign and local Governmental Entities have been obtained with respect to, all
material federal, state, foreign and local tax returns and reports required to
be filed on or prior to the date hereof; (ii) payment in full or adequate
provision for the payment of all material taxes required to be paid in respect
of the periods covered by such tax returns and reports has been made; (iii) a
reserve which the Company reasonably believes to be adequate has been set up for
the payment of all such material taxes anticipated to be payable in respect of
periods through the most recent fiscal quarter end; (iv) none of the income tax
returns required to be filed by or on behalf of the Company and each of its
Subsidiaries consolidated in such returns (the "Company Consolidated Returns")
or by or on behalf of OCC and each of its Subsidiaries consolidated in such
returns (the "OCC Consolidated Returns") have been examined by or settled with
the Internal Revenue Service ("IRS") or other Governmental Entity; (v) there are
no material "deferred intercompany transactions" or "intercompany transactions"
the gain or loss in which has not yet been taken into account under the Company
Consolidated Returns or the OCC Consolidated Returns; (vi) there are no Liens
for material taxes on the assets of the Company and each of its Subsidiaries,
except for statutory liens for current taxes not yet due and payable; and (vii)
there have been no claims or assessments against the Company or any of its
Subsidiaries asserted in writing by any Governmental Entity with respect to any
alleged deficiency in any tax, other than those claims or assessments that would
not have a Material Adverse Effect on the Company or its Subsidiaries taken as a
whole. For the purpose of this Agreement, the term "tax" (including, with
correlative meaning, the terms "taxes" and "taxable") shall include all federal,
state, local and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, value added, alternative or added
minimum, ad valorem, transfer, excise and other taxes, duties or assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts. The term "tax return" means a report,
return or other information required to be supplied to or filed with a
Governmental Entity with respect to any tax including an information return,
claim for refund, amended tax return or declaration of estimated tax.
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(b) Except as set forth on Section 4.11, paragraph 2 of the Company
Disclosure Schedule, the Company Plans and other Company employee compensation
arrangements in effect as of the date of this Agreement have been designed so
that the disallowance of a material deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amounts paid or payable by the
Company or any of its Subsidiaries under any such plan or arrangement and, to
the best knowledge of the Company, no fact or circumstance exists that could
reasonably be expected to cause such disallowance to apply to any such amounts.
(c) Except as set forth on Section 4.11, paragraph 3 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries (i) is a
party to any tax allocation or tax sharing agreement, (ii) has been a member of
an affiliated group filing a consolidated federal income tax return other than a
group the common parent of which was the Company or (iii) has any liability for
taxes of any Person (other than the Company and its Subsidiaries) under Reg.
ss.1.1502-6 (or any similar provision of state, local or foreign law), as
transferee or successor, by contract or otherwise.
4.12 EMPLOYEE MATTERS.
(a) Section 4.12(a) of the Company Disclosure Schedule contains a true
and complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization,
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to at any
time since January 1, 1997 by the Company or by any trade or business, whether
or not incorporated ("ERISA Affiliate"), that together with the Company would be
deemed a "controlled group" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for the benefit of
any employee or former employee of the Company, including any such type of plan
established, maintained or contributed to under the laws of any foreign country
(the "Company Plans"). Section 4.12(a) of the Company Disclosure Schedule
identifies each Company Plan that is an "employee benefit plan," as defined in
Section 3(3) of ERISA. Except as set forth on Section 4.12(a) of the Company
Disclosure Schedule, the Company has heretofore delivered to Parent true and
complete copies of each Company Plan and, if the Company Plan is funded through
a trust or any third party funding vehicle, a copy of the trust or other funding
document, the most recent determination letter issued by the IRS with respect to
each Company Plan for which such a letter has been obtained, annual reports on
Form 5500 required to be filed with any Governmental Entity for each Company
Plan which is an employee pension benefit plan for the three most recent plan
years and all required actuarial reports for the last two plan years of each
Company Plan.
(b) No Company Plan is subject to Title IV of ERISA or Section 412 of
the Code and neither the Company nor any ERISA Affiliate made, or was required
to make, contributions to any employee benefit plan subject to Title IV of ERISA
during the five year period ending on the Effective Time.
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(c) Except as set forth on Section 4.12(c) of the Company Disclosure
Schedule, each Company Plan that utilizes a funding vehicle described in Section
501(c)(9) of the Code or is subject to the provisions of Section 505 of the Code
has been the subject of a notification by the IRS that such funding vehicle
qualifies for tax-exempt status under Section 501(c)(9) of the Code and/or such
Company Plan complies with Section 505 of the Code, unless the IRS does not as a
matter of policy issue such notification with respect to that particular type of
plan. To the Company's knowledge, each such Company Plan satisfies, where
appropriate, the requirements of Sections 501(c)(9) and 505 of the Code.
(d) There has been no event or circumstance which has resulted in any
liability being asserted by any Company Plan, the Pension Benefit Guaranty
Corporation ("PBGC") or any other Person or entity under Title IV of ERISA
against the Company or any ERISA Affiliate nor, except as would not have a
material adverse effect on the business, assets, results of operations,
financial condition or prospects of the Company and its Subsidiaries taken as a
whole, is there or has there been any event or circumstance which could
reasonably be expected to result in such liability.
(e) Except for the NBA Collective Bargaining Agreement dated September
1995 and the NHL Collective Bargaining Agreement dated September 16, 1993, as
delivered to Parent, neither the Company nor any Subsidiary of the Company is a
party to or bound by the terms of any collective bargaining agreement. The
Company and each of its Subsidiaries is in compliance in all material respects
with all applicable laws respecting the employment and employment practices,
terms and conditions of employment and wage and hours of its employees and is
not engaged in any unfair labor practice. There is no labor strike or labor
disturbance pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary of the Company, and during the past five years neither
the Company nor any Subsidiary of the Company has experienced a work stoppage.
(f) Each Company Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including,
but not limited to, Section 406 of ERISA and Section 4975 of the Code.
(g) To the Company's knowledge, each Company Plan which is intended to
be "qualified" within the meaning of Section 401(a) of the Code is so qualified
and the trusts maintained thereunder are exempt from taxation under Section
501(a) of the Code.
(h) No Company Plan provides welfare benefits, including without
limitation death or medical benefits, with respect to current or former
employees or consultants of the Company or any Subsidiary of the Company beyond
their retirement or other termination of service (other than coverage mandated
by applicable law).
(i) There are no material pending, threatened or anticipated claims by
or on behalf of any Company Plan, by any employee or beneficiary covered under
any such Company Plan
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with respect to such Company Plan, or otherwise involving any such Company Plan
(other than routine claims for benefits).
(j) Section 4.12(j) of the Company Disclosure Schedule sets forth a
true and complete list as of the date hereof of each of the following
agreements, arrangements and commitments to which the Company or any of its
Subsidiaries is a party or by which any of them may be bound (true and complete
copies of which have been made available to Parent): (i) each employment,
consulting, agency or commission agreement not terminable without liability to
the Company or any of its Subsidiaries upon 60 days' or less prior notice to the
employee, consultant or agent and involving compensation or remuneration of more
than $200,000 per annum; (ii) each agreement with any executive officer or other
key employee of the Company or any Subsidiary of the Company the benefits of
which are contingent, or the terms of which are materially altered, upon the
consummation of the transactions contemplated by this Agreement; (iii) each
agreement with respect to any officer or other key employee of the Company or
any Subsidiary of the Company providing any term of employment or compensation
guarantee extending for a period longer than one year; and (iv) each other
material agreement or Company Plan any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(k) No employee of the Company or any of its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Company Plan as a result of the
consummation of the transactions contemplated by this Agreement or otherwise.
Except as set forth in Section 4.12(k) of the Company Disclosure Schedule, no
amount payable, or economic benefit provided, by the Company or any of its
Subsidiaries (including any acceleration of the time of payment or vesting of
any benefit) could be considered an "excess parachute payment" under Section
280G of the Code as a result of the consummation of the transactions
contemplated by this Agreement. No Person is entitled to receive any additional
payment from the Company or any of its Subsidiaries or any other Person (a
"Parachute Gross-Up Payment") in the event that the excise tax of Section 4999
of the Code is imposed on such Person. Other than as disclosed in a schedule to
this Agreement, neither the Company nor any of its Subsidiaries has granted to
any Person any right to receive any Parachute Gross-Up Payment.
4.13 FAIRNESS OPINION. The Company Board has received the oral opinion of
DLJ to the effect that, as of the date hereof, the consideration to be received
in the Offer and the Merger by the Company's stockholders is fair, from a
financial point of view, to the stockholders of the Company (the "Fairness
Opinion"). The Company has provided Parent with a true and complete copy of the
executed Fairness Opinion. In addition, the Company will include an executed
copy of the Fairness Opinion in or as an annex to the Offer Documents, the
Schedule 14D-9, the Proxy Statement and the Section 14(c) Information Statement.
4.14 RECOMMENDATION OF THE COMPANY BOARD. The Company Board, by vote at a
meeting duly called and held, has approved the Offer, the Merger and this
Agreement, and has
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determined that the consideration to be paid to the Company's stockholders is
fair to and in the best interests of the Company's stockholders and has adopted
resolutions recommending approval and adoption of this Agreement and the
transactions contemplated hereby to the stockholders of the Company.
4.15 VOTE REQUIRED. The only vote of stockholders of the Company required
under the DGCL, NASDAQ Stock Market requirements and the Company Charter and
Company Bylaws in order to approve the Merger is the affirmative vote of a
majority of the total number of votes entitled to be cast by the holders of the
issued and outstanding shares of Company Common Stock voting as a single class,
and no other vote or approval of or other action by the holders of any capital
stock of the Company is required for such approval and adoption.
4.16 INTANGIBLE PROPERTY; COPYRIGHTS. The Company and its Subsidiaries own
or have adequate rights to use all patents, trademarks, trade names, service
marks, brands, logos, copyrights, trade secrets, customer lists and other
proprietary intellectual property rights required for, used in or incident to
the businesses of the Company and its Subsidiaries as now conducted, except
where the failure to so own or have such rights to use, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. Except as set forth on
Section 4.16 of the Company Disclosure Schedule, the Company does not have
knowledge, and the Company has not received any notice alleging, that it or any
of its Subsidiaries is infringing upon or otherwise violating, or has in the
past infringed upon or otherwise violated, the rights of any third party with
respect to any patent, trademark, trade name, service mark or copyright.
4.17 INVESTMENT SECURITIES. Section 4.17 of the Company Disclosure Schedule
sets forth a complete and accurate list of each capital, participating, equity
or other interest owned of record or beneficially by the Company in any
corporation, partnership, joint venture or other Person, other than the
Subsidiaries of the Company listed on Section 4.1 of the Company Disclosure
Schedule (each, an "Investment Security" and collectively, the "Investment
Securities"). Section 4.17 of the Company Disclosure Schedule includes, with
respect to each Investment Security, the name of the corporation, partnership,
joint venture or other Person in respect of which such Investment Security
relates, the amount and nature of such interest, and a description of the
material terms of any Liens and Restrictions with respect to such Investment
Securities. The Company's representations in this Section 4.17 with respect to
any such Investment Securities are made subject to any events, Liens and
Restrictions that affect the holders of the applicable class(es) or series of
such Investment Securities generally.
4.18 TRANSACTIONS WITH AFFILIATES AND CERTAIN AGREEMENTS. Section 4.18 of
the Company Disclosure Schedule sets forth an accurate and complete listing, (a)
as of the date hereof, of all contracts, leases, agreements or understandings,
whether written or oral, to which the Company or any of its Subsidiaries is a
party, or by which the Company, any of its Subsidiaries or any of their
respective assets is bound, which contain any material restrictions or
limitation on the ability of the Company or any of its Subsidiaries or
Affiliates to engage in any business anywhere in the world,
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and (b) of all contracts, leases, agreements or understandings, whether written
or oral, giving any Person the right to require the Company to register under
the Securities Act any securities of the Company or to participate in any
registration of such securities. Each of the Company SEC Reports and the OCC SEC
Reports complies as to form in all material respects with Item 404 of Regulation
S-K promulgated under the Securities Act and is true and correct in all material
respects with regard to its disclosure of any relationships or transactions
involving the Company or any Subsidiary or Affiliate of the Company of a type
required to be disclosed in the Company SEC Reports or the OCC SEC Reports, as
applicable, pursuant to such item.
4.19 NO INVESTMENT COMPANY. The Company is not an "investment company"
subject to the registration requirements of, and regulation as an investment
company under, the Investment Company Act of 1940, as amended.
4.20 STATE TAKEOVER STATUTES. The Boards of Directors of the Company and
OCC have approved the Offer, the Merger and this Agreement and the Transactions,
and such approvals are sufficient to render inapplicable to the Offer, the
Merger and this Agreement and the Transactions the provisions of Section 203 of
the DGCL. To the best of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Offer, the Merger, this Agreement or any of the Transactions.
4.21 RIGHTS AGREEMENT. The Company has heretofore provided Parent with a
complete and correct copy of the Rights Agreement, including all amendments and
exhibits thereto. The amendment to the Rights Agreement attached hereto as
Section 4.21 to the Company Disclosure Schedule has been duly authorized by the
Board of Directors of the Company and has been duly executed by the Company,
and, accordingly, the execution of this Agreement, the announcement or making of
the Offer, the acquisition of Shares pursuant to the Offer and the Merger and
the other transactions contemplated in this Agreement will not cause the Rights
to become exercisable or result in either Parent or Merger Sub or any of their
Affiliates being considered to be an "Acquiring Person" (as defined in the
Rights Agreement) or the occurrence of a "Distribution Date" (as such term is
defined in the Rights Agreement) or an event described in Sections 11(a)(ii) or
13 of the Rights Agreement.
4.22 SALE OF ENTERTAINMENT ASSETS. Except as heretofore disclosed to Parent
in the Company Disclosure Schedules, (i) the Company is not a party to any
agreement which provides for the sale of the Entertainment Assets and (ii) no
broker, investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the sale of the Entertainment Assets.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted and (iii) is duly qualified or licensed and is
in good standing to do business in each jurisdiction in which the properties
owned, leased or operated by it or the nature of its activities makes such
qualification necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing has not had and is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been duly
executed and delivered by Parent and Merger Sub. Each of Parent and Merger Sub
has all requisite corporate power and authority to enter into this Agreement and
each of Parent and Merger Sub has all requisite corporate power and authority to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and
Merger Sub of this Agreement and the consummation by each of Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub (including in the case of Merger Sub, approval and adoption of this
Agreement and the Merger by Parent, as the sole stockholder of Merger Sub). This
Agreement is a legal, valid and binding obligation of Parent and Merger Sub,
enforceable in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
5.3 NO PRIOR ACTIVITIES OF MERGER SUB. Merger Sub was formed by Parent
solely for the purpose of engaging in the transactions contemplated hereby, and
has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
5.4 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in any
documents filed or to be filed with the Commission or any other Governmental
Entity in connection with the transactions contemplated hereby, including (i)
Offer Documents, (ii) the Schedule 14D-9, (iii) the Information Statement, (iv)
the Proxy Statement and (v) the Section 14(c) Information Statement, will, at
the respective times such documents are filed, and also, in the case of the
Offer Documents, the Schedule 14D-9, the Information Statement and the Section
14(c) Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9, the Information Statement and the Section 14(c) Information
Statement are first published, sent or given to the Company's stockholders, and
also, in the case of
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the Proxy Statement, at the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the meeting of the Company's
stockholders held to vote upon the approval and adoption of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
(or necessary to correct any statement in any earlier communication), except
that no representation is made by Parent or Merger Sub with respect to
information supplied by the Company in writing specifically for inclusion or
incorporation by reference therein. The Offer Documents comply as to form in all
material respects with the Exchange Act and the rules and regulations
promulgated thereunder.
5.5 BROKERS. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Merger
Sub.
5.6 FINANCING. Parent has, or will have available to it at the time Merger
Sub is required to pay for Shares under the terms of the Offer, and will make
available to Merger Sub, sufficient funds to permit Merger Sub to acquire all
the outstanding Shares in the Offer and the Merger. Parent has obtained
commitments for such funds.
5.7 SALE OF ENTERTAINMENT ASSETS. Parent is not a party to any agreement
which provides for the sale of the Entertainment Assets.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 STOCKHOLDERS MEETINGS. (a) If the Company Stockholder Approval (as
hereinafter defined) is required by law, the Company will, at Parent's request,
subject to the fiduciary duties of the Board of Directors of the Company under
applicable law, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of approving and adopting this Agreement
and the Transactions (the "Company Stockholder Approval"). The Company will,
through its Board of Directors, recommend to its stockholders that the Company
Stockholder Approval be given. Notwithstanding the foregoing, (1) if Merger Sub
or any other Subsidiary of Parent shall acquire at least a majority of the
outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to be approved by a written
consent of stockholders pursuant to Section 228 of the DGCL, the Company Charter
and the Company Bylaws (the "Written Consent") and for the Merger to become
effective as soon as practicable as permitted by applicable law after purchase
of such Shares in the Offer without a Stockholders Meeting in accordance with
Sections 228 and 251 of the DGCL, and (2) if Merger Sub or any other subsidiary
of Parent shall acquire at least 90% of the outstanding Shares, the parties
shall, at the request of
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Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 253 of the DGCL. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 6.1(a) shall not be
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal or (ii) the withdrawal
or modification by the Board of Directors of the Company of its approval or
recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the Company
will, at Parent's request, as soon as practicable following the expiration of
the Offer, prepare and file a preliminary Proxy Statement with the Commission
and will use its best efforts to respond to any comments of the Commission and
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after responding to all such comments to the
satisfaction of the Commission. The Company will notify Parent promptly of the
receipt of any comments from the Commission and of any request by the Commission
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the Commission, on
the other hand, with respect to the Proxy Statement or the Merger. If at any
time prior to the Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects after being afforded the
opportunity to review the same.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any Subsidiary of Parent to be voted in
favor of the Company Stockholder Approval.
(d) If Merger Sub or any other Subsidiary of Parent shall acquire at
least a majority of the outstanding Shares, the Company will, at Parent's
request, as soon as practicable following purchase of such Shares in the Offer,
prepare and file a preliminary Section 14(c) Information Statement with the
Commission and will use its best efforts to respond to any comments of the
Commission and to cause the Section 14(c) Information Statement to be mailed to
the Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the Commission. The Company will notify
Parent promptly of the receipt of any comments from the Commission and of any
request by the Commission for amendments or supplements to the Section 14(c)
Information Statement or for additional information and will supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the Commission, on the other hand, with respect to the
Section 14(c) Information Statement or the Merger. If at any time prior to the
effective date of the Written Consent there shall occur any event that should be
set forth in an amendment or supplement to the Section 14(c) Information
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The Company will not mail any Section 14(c)
Information Statement,
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or any amendment or supplement thereto, to which Parent reasonably objects after
being afforded the opportunity to review the same.
6.2 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, upon reasonable notice, the
Company will (and will use reasonable efforts to cause each of its Subsidiaries
to) afford to the officers, employees, counsel, accountants and other authorized
representatives of Parent reasonable access during normal business hours to all
its properties, personnel, books and records and furnish promptly to such
Persons such financial and operating data and other information concerning its
business, properties, personnel and affairs as such Persons will from time to
time reasonably request and instruct the officers, directors, employees, counsel
and financial advisors of the Company to discuss the business operations,
affairs and assets of the Company and otherwise fully cooperate with the other
party in its investigation of the business of the Company. Parent agrees that it
will not, and will cause its officers, employees, counsel, accountants and other
authorized representatives not to, use any information obtained pursuant to this
Section 6.2 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. No investigation pursuant to this Section 6.2
will affect any representation or warranty given by the Company to Parent
hereunder.
6.3 CONFIDENTIALITY. Except as otherwise agreed to in writing by the party
disclosing (or whose Representatives disclosed) the same (a "disclosing party"),
and unless and until Parent and Merger Sub shall have purchased a majority of
the outstanding Shares pursuant to this Offer, and notwithstanding the
termination of this Agreement, each party (a "receiving party") will, and will
cause its Affiliates, directors, officers, employees, agents and controlling
Persons (such Affiliates and other Persons with respect to any party being
collectively referred to as such party's "Representatives") to, (i) keep all
Confidential Information of the disclosing party confidential and not disclose
or reveal any such Confidential Information to any Person other than those
Representatives of the receiving party who are participating in effecting the
transactions contemplated hereby or who otherwise need to know such Confidential
Information, (ii) use such Confidential Information only in connection with
consummating the transactions contemplated hereby and enforcing the receiving
party's rights hereunder, and (iii) not use Confidential Information in any
manner detrimental to the disclosing party. In the event that a receiving party
is requested pursuant to, or required by, applicable law or regulation or by
legal process to disclose any Confidential Information of the disclosing party,
the receiving party will provide the disclosing party with prompt notice of such
request(s) to enable the disclosing party to seek an appropriate protective
order. A party's obligations hereunder with respect to Confidential Information
that (i) is disclosed to a third party with the disclosing party's written
approval, (ii) is required to be produced under order of a court of competent
jurisdiction or other similar requirements of a governmental agency, or (iii) is
required to be disclosed by applicable law or regulation, will, subject in the
case of clauses (ii) and (iii) above to the receiving party's compliance with
the preceding sentence, cease to the extent of the disclosure so consented to or
required, except to the extent otherwise provided by the terms of such consent
or covered by a protective order. If a receiving party uses a degree of care to
prevent disclosure of the Confidential Information that is at least as great as
the care it
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normally takes to preserve its own information of a similar nature, it will not
be liable for any disclosure that occurs despite the exercise of that degree of
care, and in no event will a receiving party be liable for any indirect,
punitive, special or consequential damages unless such disclosure resulted from
its willful misconduct or gross negligence in which event it will be liable in
damages for the disclosing party's lost profits resulting directly and solely
from such disclosure; provided, however, that notwithstanding the foregoing,
Parent will not be liable under any circumstances for damages other than direct
damages (and not lost profits or indirect, special, punitive or consequential
damages) resulting directly and solely from such wrongful disclosure by Parent.
In the event this Agreement is terminated, each party will, if so requested by
the other party, promptly return or destroy all of the Confidential Information
of such other party, including all copies, reproductions, summaries, analyses or
extracts thereof or based thereon in the possession of the receiving party or
its Representatives; provided, however, that the receiving party will not be
required to return or cause to be returned summaries, analyses or extracts
prepared by it or its Representatives, but will destroy (or cause to be
destroyed) the same upon request of the disclosing party.
For purposes of this Section 6.3, "Confidential Information" of a party
means all confidential or proprietary information about such party that is
furnished by it or its Representatives to the other party or the other party's
Representatives, regardless of the manner in which it is furnished.
"Confidential Information" does not include, however, information which (a) has
been or in the future is published or is now or in the future is otherwise in
the public domain through no fault of the receiving party or its
Representatives, (b) was available to the receiving party or its Representatives
on a non-confidential basis prior to its disclosure by the disclosing party, (c)
becomes available to the receiving party or its Representatives on a
non-confidential basis from a Person other than the disclosing party or its
Representatives who is not otherwise bound by a confidentiality agreement with
the disclosing party or its Representatives, or is not otherwise prohibited from
transmitting the information to the receiving party or its Representatives, or
(d) is independently developed by the receiving party or its Representatives
through Persons who have not had, either directly or indirectly, access to or
knowledge of such information.
6.4 PUBLIC ANNOUNCEMENTS. The Company and Parent shall use commercially
reasonable efforts to develop a joint communications plan and each party hereto
shall use reasonable efforts to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan. Unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the National Association of Securities Dealers, Inc.
or the NASDAQ Stock Market, each party shall use commercially reasonable efforts
to consult with, and use commercially reasonable efforts to accommodate the
comments of the other parties before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions
contemplated hereby.
6.5 CONDUCT OF THE COMPANY'S BUSINESS PENDING MERGER SUB'S ELECTION DATE.
Except as set forth on Section 6.5 of the Company Disclosure Schedule, the
Company will, and will use its commercially reasonable efforts to cause each of
its Subsidiaries to, except as permitted, required
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or specifically contemplated by this Agreement, including without limitation
Section 6.6 hereof, or consented to or approved in writing by Parent, during the
period commencing on the date hereof and ending at the election or appointment
or Merger Sub's designees to the Board pursuant to Section 6.11 upon the
purchase by Merger Sub of any shares pursuant to the Offer (the "Merger Sub's
Election Date"):
(a) conduct its business only in, and not take any action except
in, the ordinary and usual course of its business and consistent with past
practices;
(b) use reasonable efforts to preserve intact its business
organization, to preserve its Licenses in full force and effect, to keep
available the services of its present officers and key employees, and to
preserve the goodwill of those having business relationships with it;
(c) not (i) make any change or amendments in its charter, bylaws
or partnership agreement (as the case may be); (ii) issue, grant, sell or
deliver any shares of its capital stock or any of its other equity interests or
securities (other than shares of Company Common Stock issued upon the exercise
of any Company Stock Options or shares of OCC Stock issued upon the valid
exercise of any OCC Warrant or any options to purchase shares of OCC Stock
issued pursuant to any OCC Stock Plan or otherwise ("OCC Stock Options")), or
any Convertible Securities (other than OCC Stock Options to purchase up to an
aggregate of 300,000 shares of OCC Stock; provided, however, that OCC shall not
grant to any one Person OCC Stock Options to purchase in excess of 100,000
shares of OCC Stock without the prior written consent of Parent) or any phantom
shares, phantom equity interests or stock or equity appreciation rights; (iii)
split, combine or reclassify the outstanding shares of its capital stock or any
of its other outstanding equity interests or securities or issue any capital
stock or other equity interests or securities in exchange for any such shares or
interests; (iv) redeem, purchase or otherwise acquire, directly or indirectly,
any shares of capital stock or any other securities of the Company or any
Subsidiary of the Company; (v) amend or modify any outstanding options,
warrants, or rights to acquire, or securities convertible into shares of its
capital stock or other equity interests or securities, or any phantom shares,
phantom equity interests or stock or equity appreciation rights, or adopt or
authorize any other stock or equity appreciation rights, restricted stock or
equity, stock or equity purchase, stock or equity bonus or similar plan,
arrangement or agreement; (vi) make any changes in its equity capital structure;
(vii) declare, set aside, pay or make any dividend or other distribution or
payment (whether in cash, property or securities) with respect to its capital
stock or other securities, except for dividends by a Subsidiary of the Company
other than OCC paid ratably to its stockholders or the partners thereof, as the
case may be (provided in the case of any non-wholly owned Subsidiary of the
Company that the other stockholders of or partners in such Subsidiary are not
officers, directors, employees or Affiliates of the Company or any of its
Subsidiaries); (viii) sell, transfer or otherwise dispose of, or pledge any
stock, equity or partnership interest owned by it in any Subsidiary of the
Company, except for dispositions permitted by Section 6.5(f) hereof; (ix) sell,
transfer or otherwise dispose of any securities of OCC owned beneficially or of
record by the Company or any Subsidiary of the Company or create or permit to
exist any Lien or Restriction thereon not listed on Section 4.17 of the Company
Disclosure Schedule (other than any sale, Lien or Restriction arising from any
change
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or transaction affecting the holders of such securities generally); or (x) enter
into or assume any contract, agreement, obligation, commitment or arrangement
with respect to any of the foregoing;
(d) not (i) modify or change in any material respect any material
License or other material Contract, other than in the ordinary course of
business; (ii) enter into any new employment, consulting, agency or commission
agreement, make any amendment or modification to any existing such agreement or
grant any increases in compensation, (A) in each case other than in the ordinary
course of business and consistent with past practice and with or granted to
Persons who are not officers or directors of the Company or any Subsidiary of
the Company and which do not, in the aggregate, materially increase the
compensation or benefit expense of the Company or any Subsidiary of the Company,
and (B) other than the regular annual salary increase granted in the ordinary
course of business and consistent with past practice to employees of the Company
or its Subsidiaries who are not directors or executive officers of the Company;
and (iii) establish, amend or modify any employee benefit plan of any kind
referred to in Section 4.12(a), except to the extent required by any applicable
law, the existing terms of any such plan or the provisions of this Agreement;
(iv) secure any of its outstanding unsecured Indebtedness, provide additional
security for any of its outstanding secured Indebtedness or grant, create or
suffer to exist any Lien on or with respect to any property, assets or rights of
the Company or any Subsidiary of the Company, except in any such case for
Permitted Encumbrances; (v) pay, discharge or satisfy claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than any
payment, discharge or satisfaction in the ordinary course of business consistent
with past practice; (vi) cancel any Indebtedness or waive any claims or rights,
except in the ordinary course of business and consistent with past practice;
(vii) make any material capital expenditures (other than in accordance with the
capital expenditure budget for the year 2000 (the "2000 Budget") approved by the
OCC Board and in effect on the date hereof, a copy of which has been delivered
to Parent); (viii) accelerate the payment of, or otherwise prepay, any existing
outstanding Indebtedness except in the ordinary course of business consistent
with past practice; (ix) other than as contemplated or otherwise permitted by
this Agreement and other than the normal cash management practices of the
Company and its Subsidiaries conducted in the ordinary and usual course of their
business and consistent with past practice, make any advance or loan to or
engage in any material transaction with any director, officer, partner or
Affiliate not required by the terms of an existing Contract described in Section
4.18 of the Company Disclosure Schedule; (x) guarantee or otherwise become
responsible for any Indebtedness of any other Person; or (xi) enter into or
assume any contract, agreement, obligation, commitment or arrangement with
respect to any of the foregoing;
(e) not acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to otherwise acquire any assets which are material,
individually or in the aggregate, to the Company and its Subsidiaries taken as a
whole or OCC and its Subsidiaries taken as a whole;
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(f) except (i) as described on Section 6.5 of the Company Disclosure
Schedule and (ii) for dispositions in the ordinary course of business consistent
with prior practice, not sell, lease or encumber or otherwise voluntarily
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets which are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole or OCC and its Subsidiaries taken as
whole;
(g) not incur any Indebtedness;
(h) not take any action that would cause its representations and
warranties contained in Section 4.1 to be untrue in any respect or, except as
otherwise contemplated by this Agreement, make any changes to the corporate
structure of the Company and its Subsidiaries (including the structure of the
ownership by the Company of the direct and indirect interests in its
Subsidiaries and of the ownership by the Company and its Subsidiaries of their
respective businesses, properties and assets);
(i) not enter into any agreement that would (after the Effective Time)
purport to bind Parent or any of its Subsidiaries (other than the Company or any
of its Subsidiaries);
(j) not amend or modify in any respect the Corporate Agreement, dated
as of October 8, 1996, between the Company and OCC;
(k) not make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(l) not settle or comprise any pending or threatened suit, action or
claim which is material or which relates to any of the Transactions; and
(m) confer on a regular and frequent basis with Parent, report on
operational matters and promptly advise Parent orally and in writing of any
material adverse change; and promptly provide to Parent (or its counsel) copies
of all filings made by the Company with any federal, state, foreign or
supranational Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Notwithstanding this Section 6.5, but subject to the provisions of
Section 6.6 (to the extent applicable), the foregoing provisions of this Section
6.5 shall not prohibit or restrict in any way the Company from entering into an
agreement with respect to a Superior Proposal.
6.6 NO SOLICITATION. (a) After the date hereof and prior to the Effective
Time, the Company will not, directly or indirectly, through any Subsidiary,
Affiliate, officer, director, employee, agent or representative or otherwise (i)
solicit or initiate the submission of proposals or offers from any Person
relating to any Alternative Proposal, (ii) cooperate with, or furnish or cause
to be furnished any non-public information concerning the business, properties,
or assets of the Company or any of its Subsidiaries, to any Person in connection
with any Alternative Proposal,
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(iii) negotiate with any Person with respect to any Alternative Proposal, (iv)
approve, recommend or permit the Company or any Subsidiary to enter into an
agreement or understanding with any Person relating to any Alternative Proposal,
or (v) vote for, execute a written consent (or equivalent instrument) in favor
of, or otherwise approve or enter into any agreements or understandings with
respect to any of the foregoing; provided, however, that this Section 6.6(a)
shall not prohibit the Company or the Company Board, to the extent the Company
Board determines in its good faith judgment that it is required by its fiduciary
duties under applicable law after taking into account the advice of the
Company's outside legal counsel, from providing information to, participating in
discussions or negotiating with any third party that delivers a Superior
Proposal that was not solicited in violation of this Section 6.6(a). Nothing
contained in this Agreement shall prevent the Company Board from complying with
Rule 14e-2 and Rule 14d-9 under the Exchange Act with regard to an Alternative
Proposal, provided that the Company Board shall not recommend that the
stockholders of the Company tender their shares in connection with a tender
offer except to the extent the Company Board determines in its good faith
judgment that such a recommendation is required to comply with the fiduciary
duties of the Company Board to stockholders under applicable law, after taking
into account the advice of outside legal counsel (it being understood that
disclosure by the Company of its receipt of an Alternative Proposal and the
terms thereof shall not alone constitute a withdrawal or modification of such
position or an approval or recommendation of such Alternative Proposal).
(b) The Company will notify Parent promptly (but in no event later than
24 hours) after receipt by the Company (or any of its advisors) of any
Alternative Proposal or of any request (other than in the ordinary course of
business and not related to an Alternative Proposal) for non-public information
relating to the Company or any of its Subsidiaries or for access to the
properties, books or records of the Company or any Subsidiary thereof by any
Person who is known to be considering making, or has made, an Alternative
Proposal. The Company shall provide such notice orally and in writing and shall
identify the Person making, and the terms and conditions of, any such
Alternative Proposal, indication or request. The Company shall keep Parent fully
informed, on a prompt basis (but in any event no later than 24 hours), of the
status and details of any such Alternative Proposal, indication or request. The
Company shall, and shall cause its Subsidiaries and the directors, employees and
other agents of the Company and its Subsidiaries to, cease immediately and cause
to be terminated all activities, discussions or negotiations, if any, with any
Persons conducted prior to the date hereof with respect to any Alternative
Proposal.
(c) Except as set forth above in this Section 6.6, the Company
covenants and agrees with Parent that prior to the Effective Time the Company
will not, and will not cause or permit any Subsidiary of the Company to, (i)
voluntarily sell, dispose of, tender or exchange or agree to sell, dispose of,
tender or exchange any shares of OCC Stock owned by the Company or any
Subsidiary of the Company on the date hereof or hereafter acquired (including
without limitation any such sale or disposition in connection with a tender
offer, exchange offer or similar transaction) (the "Company OCC Shares"), (ii)
vote, or execute a written consent or proxy with respect to the Company OCC
Shares, which the Company or any such Subsidiary is entitled to vote, in favor
of any acquisition by any Person of OCC, of any equity interest in OCC, or of a
material portion of the
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assets of OCC (an "OCC Alternative Transaction") or agree with any other Person
to vote, or execute a written consent or proxy, with respect to any such Company
OCC Shares or (iii) publicly recommend any OCC Alternative Transaction or
otherwise express an intention to take any of the actions otherwise prohibited
by this Section 6.6(c) (it being understood that disclosure by the Company or
any of its Subsidiaries of the receipt of a proposal for an OCC Alternative
Transaction shall not alone constitute a recommendation of such OCC Alternative
Transaction or an expression of intent prohibited by this Section 6.6(c));
provided that the Company's obligations to cause its representatives on the
Board of Directors of OCC (or any committee thereof) to take any action (or to
refrain from taking any action) in compliance with this Section 6.6(c) shall be
subject in all respects to such Persons' fiduciary duties under applicable law.
6.7 REASONABLE EFFORTS. (a) Each of the Company, Parent and Merger Sub
agree to use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
to consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable, including such actions or things as any party
hereto may reasonably request in order to cause any of the conditions to any
other party's obligation to consummate such transactions specified in Article
VII and Annex A to be fully satisfied, and to promptly cooperate with and
furnish information to each other in connection with any requirements imposed
upon any of them with respect thereto. Without limiting the generality of the
foregoing, the parties shall (and shall cause their respective directors,
officers and Subsidiaries, and use their reasonable efforts to cause their
respective Affiliates, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide reasonable
assistance to each other in (i) the preparation and filing of any documents with
the Commission contemplated hereby (including any necessary amendments or
supplements); (ii) using commercially reasonable efforts to obtain all necessary
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permission or action by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other Person required to be obtained
or made by Parent, Merger Sub, the Company or any of their Subsidiaries in
connection with the Offer, the Merger or the taking of any action contemplated
thereby or by this Agreement; (iii) filing all pre-merger notification and
report forms required under the Hart-Scott Act and responding to any requests
for additional information made by any Governmental Entity pursuant to the
Hart-Scott Act; (iv) using commercially reasonable efforts to lift any
Injunction of any type referred to in Section 7.1(c); (v) providing all such
information about such party, its Subsidiaries and its officers, directors,
partners and Affiliates and making all applications and filings as may be
necessary or reasonably requested in connection with any of the foregoing; and
(vi) in general, using commercially reasonable efforts to consummate and make
effective the transactions contemplated thereby; provided, however, that in
making any such filing and in order to obtain any consent, approval, waiver,
license, permit, authorization, registration, qualification, or other permission
or action or the lifting of any Injunction referred to in this sentence, (A) no
party shall be required to pay any consideration, to divest itself of any of, or
otherwise rearrange the composition of, any of its assets or to agree to any of
the foregoing or any other condition or requirement that is materially adverse
or burdensome; (B) Parent shall not be required to take any action pursuant to
the foregoing if the taking of such action is reasonably likely
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to result in the imposition of a condition or restriction of the type referred
to in paragraphs (a), (b) or (c) of Annex A; and (C) without Parent's prior
consent, the Company shall not, and shall not permit any of its Subsidiaries to,
amend any material License or material Contract, pay any consideration or make
any agreement or reach any understanding or arrangement other than in the
ordinary course of business consistent with prior practice. Prior to making any
application to or filing with any Governmental Entity or other Person in
connection with this Agreement, each party shall provide the other party with
drafts thereof and afford the other party a reasonable opportunity to comment on
such drafts. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement then in office shall use
their reasonable best efforts to take all such action.
(b) In its capacity as the sole stockholder of Merger Sub, Parent will
cause Merger Sub to approve and adopt this Agreement and the Transactions and to
take all corporate action necessary on its part to consummate the Transactions
and its obligations under this Agreement. Except as contemplated by this
Agreement, Merger Sub will not conduct any other business, and will have no
other assets or liabilities.
(c) The Company shall not, and shall not permit any of its Subsidiaries
to, take any action that would result in (i) any of the representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the Offer Conditions not being satisfied (subject to the Company's right to
take actions specifically permitted by Section 6.6).
(d) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) the occurrence, or non-occurrence, of
any event the occurrence, or non- occurrence, of which would be likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company, Parent or Merger Sub, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
6.8 RIGHTS AGREEMENT. Except as otherwise provided in Section 4.21, the
Company shall not redeem the Rights or amend (other than to delay the
Distribution Date (as defined therein) or to render the Rights inapplicable to
the Offer and the Merger) or terminate the Rights Agreement prior to the
Effective Time unless required to do so by order of a court of competent
jurisdiction.
6.9 CERTAIN LITIGATION. (a) Each of the Company and Parent agrees to
vigorously defend against all actions, suits or proceedings in which such party
is named as a defendant which seek to enjoin, restrain or prohibit the
transactions contemplated hereby or seek damages with respect to such
transactions. The Company will not settle any such action, suit or proceeding or
fail to perfect
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on a timely basis any right to appeal any judgment rendered or order entered
against the Company therein without the consent of Parent (which consent will
not be withheld or delayed unreasonably). Each of Parent and the Company further
agrees to use its reasonable efforts to cause each of its Affiliates, directors
and officers to vigorously defend any action, suit or proceeding in which such
Affiliate, director or officer is named as a defendant and which seeks any such
relief to comply with this Section 6.9 to the same extent as if such Person were
a party hereto.
(b) The Company will not voluntarily cooperate with any third party
which has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Merger Sub to
resist any such effort to restrain or prohibit or otherwise oppose the Offer or
the Merger, unless the Board of Directors of the Company determines in good
faith, after consultation with counsel, that failing so to cooperate with such
third party or cooperating with Parent or Merger Sub, as the case may be, would
constitute a breach of the Board's fiduciary duties under applicable law.
6.10 INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) From and after the
Effective Time, Parent and the Surviving Entity will jointly and severally
indemnify, defend and hold harmless the present and former officers, directors
and employees of the Company and any of its Subsidiaries, and any Person who is
or was serving at the request of the Company as an officer, director or employee
or agent of another Person (each, an "Indemnified Party" and together, the
"Indemnified Parties") (and will also, subject to Section 6.10(b), advance
expenses as incurred to the fullest extent permitted under the DGCL, provided
that the Person to whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such Person is not entitled to
indemnification), against (i) all losses, costs, expenses, claims, damages,
judgments or liabilities arising out of, or in connection with, any claim,
action, suit, proceeding or investigation based in whole or in part on the fact
that the Indemnified Party is or was an officer, director or employee of the
Company or any of its Subsidiaries, or is or was serving at the request of the
Company as an officer, director or employee or agent of another Person,
pertaining to any matter existing or occurring before or at the Effective Time
and whether asserted or claimed before, at or after, the Effective Time (the
"Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement, the Offer, the Merger or any other transactions contemplated hereby
or thereby, in each case to the fullest extent permitted under the DGCL
(notwithstanding the charter, bylaws or similar organizational documents of the
Company, the Surviving Entity or Parent); provided, however, that such
indemnification will be provided only to the extent any directors' and officers'
liability insurance policy of the Company or its Subsidiaries does not provide
coverage and actual payment thereunder with respect to the matters that would
otherwise be subject to indemnification hereunder (it being understood that
Parent or the Surviving Entity shall, subject to Section 6.10(b), advance
expenses on a current basis as provided in this paragraph (a) notwithstanding
such insurance coverage to the extent that payments thereunder have not yet been
made, in which case Parent or the Surviving Entity, as the case may be, shall be
entitled to repayment of such advances from the proceeds of such insurance
coverage). Parent and Merger Sub agree that all rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action, suit or proceeding, whether civil, criminal, administrative
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or investigative (each, a "Claim"), existing in favor of the Indemnified Parties
as provided in the Company Charter or Company Bylaws or pursuant to other
agreements, or certificates of incorporation or bylaws or similar documents of
any Subsidiaries of the Company, as in effect as of the date hereof, with
respect to matters occurring through the Effective Time, will survive the Merger
and will continue in full force and effect. The Surviving Entity shall, and
Parent shall cause the Surviving Entity to, maintain in effect for not less than
three years after the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company and the Company's
Subsidiaries with respect to matters occurring prior to or at the Effective
Time; provided, however, that (i) the Surviving Entity may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous to the Indemnified Parties with an insurance company or
companies, the claims paying ability of which is substantially equivalent to the
claims paying ability of the insurance company or companies providing currently
such insurance coverage for directors and officers of the Company, and (ii) the
Surviving Entity shall not be required to pay an annual premium for such
insurance in excess of three times the last annual premium paid prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount.
(b) If any Claim relating hereto or to the transactions contemplated by
this Agreement is commenced before the Effective Time, the Company, Parent and
the Surviving Entity agree to cooperate and use their respective reasonable
efforts to vigorously defend against and respond thereto. Any Indemnified Party
wishing to claim indemnification under paragraph (a) of this Section 6.10, upon
learning of any such claim, action, suit, proceeding or investigation (whether
arising before, at or after the Effective Time), will promptly notify Parent
thereof (but the failure so to notify will not relieve the Company, Parent or
the Surviving Entity from any liability which it may have under this Section
6.10 except to the extent such failure materially prejudices such party),
whereupon Parent or the Surviving Entity will have the right, from and after the
Effective Time, to assume from such Indemnified Party and control the defense
thereof on behalf of such Indemnified Party, and upon such assumption, the
Surviving Entity will not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof. Notwithstanding the
foregoing, if counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between Parent or the Surviving Entity and the
Indemnified Parties, the Indemnified Parties may retain separate counsel and
Parent will pay or cause to be paid all reasonable fees and expenses of such
counsel; provided that Parent will not be obligated pursuant to this Section
6.10(b) to pay or cause to be paid for more than one firm or counsel to
represent all Indemnified Parties in any jurisdiction unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. Neither
Parent nor the Surviving Entity will be liable for any settlement effected
without its prior written consent, which consent, however, will not be
unreasonably withheld or delayed.
(c) This Section 6.10 is intended to benefit the Indemnified Parties
and will be enforceable by each Indemnified Party, his or her heirs and
representatives and will be binding on all successors and assigns of Parent,
Merger Sub and the Surviving Entity.
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6.11 DIRECTORS. (a) Promptly upon the purchase by Merger Sub of Shares
pursuant to the Offer, and from time to time thereafter, Merger Sub shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board as shall give Merger Sub representation on the Board
equal to the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Merger Sub
or any Affiliate of Merger Sub at such time bears to the total number of Shares
then outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause Merger Sub's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors or both. At such times, the Company shall use its best
efforts to cause Persons designated by Merger Sub to constitute the same
percentage as Persons designated by Merger Sub shall constitute of the Board of
(i) each committee of the Board (some of whom may be required to be independent
as required by applicable law), (ii) each board of directors of each domestic
Subsidiary (including OCC, realizing that the Company has the right to appoint
only a majority of the OCC board) and (iii) each committee of each such board,
in each case only to the extent permitted by applicable law. Notwithstanding the
foregoing, until the time Merger Sub acquires a majority of the then outstanding
Shares on a fully diluted basis, the Company shall use its best efforts to
ensure that all the members of the Board and each committee of the Board and
such boards and committees of the domestic Subsidiaries as of the date hereof
who are not employees of the Company shall remain members of the Board and of
such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.11 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Merger Sub shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of designees of Merger Sub
pursuant to this Section 6.11, prior to the Effective Time, any amendment of
this Agreement or the Company Charter or Company Bylaws, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Merger Sub or
waiver of any of the Company's rights hereunder shall require the concurrence of
a majority of the directors of the Company then in office who neither were
designated by Merger Sub nor are employees of the Company or if no such
directors are then in office, no such amendment, termination, extension or
waiver shall be effected which is materially adverse to the holders of Shares
(other than Parent and its Subsidiaries).
6.12 STOCK OPTIONS; SARS. Prior to the Effective Time, the parties to this
Agreement shall take all such actions as shall be necessary to effectuate the
provisions of Sections 3.4(a) and 3.4(b).
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6.13 EMPLOYEE MATTERS. Neither Parent nor the Surviving Entity shall be
required to maintain any Company Plan after the Effective Time. Each employee of
the Surviving Entity who was an employee of the Company immediately prior to the
Effective Time (i) shall be entitled to participate in the "employee benefit
plans", as defined in Section 3(3) of ERISA, maintained by Parent (the "Parent
Plans") to the same extent, if any, as similarly situated employees of Parent,
(ii) shall receive credit for such employee's past service with the Company as
of the Effective Time for purposes of eligibility and vesting under the Parent
Plans, including for purposes of eligibility and participation under Parent's
severance policies and plans, to the extent such service was credited under the
Company Plans on the Closing Date, and (iii) shall not be subject to any waiting
periods or limitations on benefits for pre-existing conditions under the Parent
Plans, including any group health and disability plans, except to the extent
such employees were subject to such limitations under the Company Plans;
provided, however, that clauses (ii) and (iii) shall not apply to employees who
become eligible to participate in Parent Plans as a result of transfer of
employment to Parent or one of its Subsidiaries other than the Surviving Entity.
6.14 SEVERANCE OBLIGATIONS. (a) Parent agrees to cause the Surviving Entity
to assume and honor without modification the severance and cash severance
payment provisions of the employment agreements and change of control severance
plan listed in Section 6.14 of the Company Disclosure Schedule (the "Employee
Severance Agreements"), with any cash severance payments pursuant thereto to be
made in a lump sum not later than the Effective Time. Each of Parent and the
Company acknowledges that the consummation of the Offer as provided herein will
constitute a "Change of Control" for purposes of the Employee Severance
Agreements and, accordingly, as of the Effective Time, each of the individuals
party to such agreements will be entitled to (x) a cash severance payment as
provided in such agreements in the manner described in the previous sentence,
(y) provision of the other fringe benefits provided in such agreements and (z)
accelerated vesting of the stock appreciation rights and options with respect to
the Company Common Stock held by such individuals as provided in such
agreements.
(b) Prior to the Closing, the Company shall take such action as is
necessary in accordance with the terms of the Employee Severance Agreements to
terminate all individuals covered by such agreements, effective as of the
Effective Time, subject to the making of the cash severance payments and
provisions for the other benefits referred to in Section 6.14(a).
6.15 COMPETITOR TRANSACTION. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, neither Parent nor any of its controlled Subsidiaries
will effect or enter into an agreement with any Person to effect, directly or
indirectly, a merger, consolidation, asset disposition, recapitalization or
another transaction resulting in the transfer of securities or assets of
LodgeNet Entertainment Corporation.
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ARTICLE VII
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO THE MERGER. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions and only the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
to the extent required by Delaware Law (including Section 203 thereof) and the
Company Charter;
(b) HSR Act. Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the Hart-Scott Act shall have expired or
been terminated;
(c) No Order. No permanent or preliminary Injunction or restraining
order by any court or other Government Entity of competent jurisdiction, or
other legal restraint or prohibition, shall be in effect preventing consummation
of the transactions contemplated hereby as provided herein, or permitting such
consummation only subject to any condition or restriction that has had or would
have (x) a material adverse effect on the transactions contemplated hereby or
(y) a Material Adverse Effect on Parent and its Subsidiaries taken as a whole or
the Surviving Entity and its Subsidiaries taken as a whole; and
(d) Offer. Merger Sub or its permitted assignee shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that neither Parent nor Merger Sub shall be entitled to assert the
failure of this condition if, in breach of this Agreement or the terms of the
Offer, Merger Sub fails to purchase any Shares validly tendered and not
withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION
8.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Merger Sub and the Company prior to Merger Sub's Election
Date; or
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(b) By Parent or the Company if (i) the Minimum Condition has not been
satisfied during a ten (10) business day extension of the Offer following the
Initial Expiration Date, but all other conditions have been satisfied or (ii)
any court of competent jurisdiction in the United States or other governmental
authority shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the acceptance for payment of,
or payment for, shares of Company Common Stock pursuant to the Offer or the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable; or
(c) By Parent, if due to an occurrence or circumstance that results in
a failure to satisfy any condition set forth in Annex A, Merger Sub shall have
(A) failed to commence the Offer within 10 days following the date of this
Agreement or (B) terminated the Offer without having accepted any Shares for
payment thereunder, unless any such failure listed above shall have been caused
by or resulted from the failure of Parent or Merger Sub to perform in any
material respect any material covenant or agreement of either of them contained
in this Agreement or the material breach by Parent or Merger Sub of any material
representation or warranty of either of them contained in this Agreement; or
(d) By the Company, upon approval of the Board, if (i) Merger Sub shall
have (A) failed to commence the Offer within 10 days following the date of this
Agreement or (B) terminated the Offer without having accepted any Shares for
payment thereunder, unless such failure to pay for Shares shall have been caused
by or resulted from the failure of the Company to satisfy the conditions set
forth in paragraphs (f) or (g) of Annex A, (ii) prior to the purchase of Shares
pursuant to the Offer, the Board shall have withdrawn or modified in a manner
adverse to Merger Sub or Parent its approval or recommendation of the Offer,
this Agreement or the Merger in order to approve a Superior Proposal; provided,
however, that such termination under this clause (ii) shall not be effective
until the Company has made payment to Parent of the Termination Fee (as
hereinafter defined) required to be paid pursuant to Section 8.2(a) and has
deposited with a mutually acceptable escrow agent $2 million for reimbursement
to Parent and Merger Sub of Expenses (as hereinafter defined) or (iii) Parent or
Merger Sub shall have breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in this
Agreement, which failure to perform is incapable of being cured or has not been
cured within 20 days after the giving of written notice to Parent or Merger Sub,
as applicable, except, in any case, such failures which are not reasonably
likely to affect adversely Parent's or Merger Sub's ability to complete the
Offer or the Merger.
The party desiring to terminate this Agreement pursuant to this Section 8.1
(other than pursuant to Section 8.1(a)) shall give notice of such termination to
the other party.
8.2 TERMINATION FEE; EFFECTS OF TERMINATION.
(a) The Company shall pay, or cause to be paid, in same day funds to
Parent the sum of (x) Parent's Expenses (as hereinafter defined) actually
incurred in an amount not to exceed $2 million and (y) $18 million (the
"Termination Fee") upon demand if (i) Parent or Merger Sub
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terminates this Agreement pursuant to Section 8.1(c), as a result of conditions
set forth in paragraph (e) (ii), (iii) or (iv) of Annex A; or (ii) prior to any
termination of this Agreement (other than by the Company pursuant to Section
8.1(d)(iii)), an Alternative Proposal or OCC Alternative Transaction shall have
been made and within 12 months of such termination, a transaction constituting
an Alternative Proposal or OCC Alternative Transaction is consummated or the
Company enters into or causes OCC to enter into an agreement with respect to,
approves or recommends or takes any action to facilitate such proposal.
(b) "Expenses" means all out-of-pocket expenses and fees (including,
without limitation, fees and expenses payable to all banks, investment banking
firms, other financial institutions and other Persons and their respective
agents and counsel for arranging, committing to provide or providing any
financing for the Transactions or structuring the Transactions and all fees of
counsel, accountants, experts and consultants to Parent and Merger Sub, and all
printing and advertising expenses) actually incurred or accrued by either of
them or on their behalf in connection with the Transactions, including, without
limitation, the financing thereof, and actually incurred or accrued by banks,
investment banking firms, other financial institutions and other Persons and
assumed by Parent and Merger Sub in connection with the negotiation,
preparation, execution and performance of this Agreement, the structuring and
financing of the Transactions and any financing commitments or agreements
relating thereto.
(c) Except as set forth in this Section 8.2, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(d) In the event that the Company shall fail to pay the Termination Fee
or any Expenses when due, the Company shall pay the costs and expenses
(including legal fees and expenses) incurred in connection with any action,
including the prosecution of any lawsuit or other legal action, taken to collect
payment.
(e) In the event of the termination of this Agreement pursuant to
Section 8.1, this Agreement shall forthwith become void, and there shall be no
liability on the part of any party hereto, except as set forth in (1) Sections
4.10, 5.5 and 8.2, (2) the penultimate sentence of Section 6.2, and (3) Article
IX, and nothing herein shall relieve any party from liability for any breach
hereof.
ARTICLE IX
MISCELLANEOUS
9.1 NO WAIVER OR SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The respective representations and warranties of Parent, Merger Sub,
and the Company contained herein or in any certificate or other instrument
delivered pursuant hereto prior to or at the Closing
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shall not be deemed waived or otherwise affected by any investigation made by
any party hereto. All representations and warranties made by each of the parties
herein shall expire at the Effective Time or termination of the Agreement, as
the case may be, and shall thereafter be of no further force or effect; provided
that the representations of the Company in Article IV and Parent and Merger Sub
in Article V shall expire upon acceptance for payment of, and payment for, the
Shares by Merger Sub pursuant to the Offer. The respective covenants and
agreements of the parties contained herein or in any other documents delivered
prior to or at the Closing shall survive execution and delivery of this
Agreement and shall only terminate in accordance their respective terms.
9.2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
(by courier service or otherwise) or mailed, certified or registered mail with
postage prepaid, or sent by confirmed telecopier, as follows:
(b) If to Parent or Merger Sub:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attention: Charles Y. Tanabe, Esq.
Facsimile: (720) 875-5382
with a copy to:
Baker Botts L.L.P.
910 Louisiana
Houston, Texas 77002
Attention: Joseph A. Cialone, II Esq.
Facsimile: (713) 229-1261
(c) If to the Company:
Ascent Entertainment Group, Inc.
1225 Seventeenth Street, Suite 1800
Denver, Colorado 80202
Attention: Arthur M. Aaron
Facsimile: (303) 308-0489
47
<PAGE> 52
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Jeffrey W. Tindell, Esq.
Facsimile: (212) 735-2000
or to such other Person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery if
delivered on a business day, on the business day following delivery if not
delivered on a business day, or on the third business day after the mailing
thereof, except that any notice of a change of address shall be effective only
upon actual receipt thereof.
9.3 ENTIRE AGREEMENT. This Agreement (including the Schedules, Annexes,
Exhibits and other documents referred to herein) constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
9.4 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor any of
the rights, benefits or obligations hereunder may be assigned by any party
(whether by operation of law or otherwise) without the prior written consent of
the other party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Except for the provisions of Section
6.10 (which may be enforced by the Indemnified Parties), nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.5 AMENDMENT. This Agreement may be amended by action of all the parties,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval and adoption of this Agreement and the Merger by
the stockholders of the Company, but, after any such approval by the
stockholders of the Company, no amendment shall be made which by law requires
further approval by such stockholders of the Company without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
9.6 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties, by action taken or authorized by each such party's Board of Directors,
may, to the extent legally allowed, (i) extend the time specified herein for the
performance of any of the obligations of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, (iii) waive compliance by
the other party with any of the agreements or covenants of such other party
contained herein or (iv) waive any condition to such waiving party's obligation
to consummate the transactions contemplated hereby or to any of such
48
<PAGE> 53
waiving party's other obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed by such party. Any such extension or waiver by any
party shall be binding on such party but not on the other party entitled to the
benefits of the provision of this Agreement affected unless such other party
also has agreed to such extension or waiver. No such waiver shall constitute a
waiver of, or estoppel with respect to, any subsequent or other breach or
failure to strictly comply with the provisions of this Agreement. The failure of
any party to insist on strict compliance with this Agreement or to assert any of
its rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies. Whenever this Agreement requires or permits
consent or approval by any party, such consent or approval shall be effective if
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 9.6.
9.7 HEADINGS. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
9.9 APPLICABLE LAW. This Agreement and the legal relations between the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to the conflict of laws rules thereof.
9.10 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that, should any
court or other competent governmental authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach thereof or of any other provision of this Agreement or
part hereof as a result of such holding or order.
9.11 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provisions of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such
49
<PAGE> 54
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12 DISCLOSURE SCHEDULE. The parties acknowledge that the Company
Disclosure Schedule to this Agreement (i) relates to certain matters concerning
the disclosures required and transactions contemplated by this Agreement, (ii)
is qualified in its entirety by reference to specific provisions of this
Agreement and (iii) is not intended to constitute and shall not be construed as
indicating that such matter is required to be disclosed, nor shall such
disclosure be construed as an admission that such information is material with
respect to the Company or any of its Subsidiaries or will have or is likely to
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole, OCC and its Subsidiaries taken as a whole, or Parent and its Subsidiaries
taken as a whole. Disclosure of the information contained in one section or part
of the Company Disclosure Schedule shall be deemed as proper disclosure for
other sections or parts of the Company Disclosure Schedule only if appropriately
cross-referenced or if the relevance thereof is reasonably apparent from the
context in which it appears.
9.13 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
in Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the non-exclusive jurisdiction of any Federal
court located in the State of Delaware or any Delaware state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, and (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court.
50
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
LIBERTY AEG ACQUISITION, INC.
By: /s/ GARY S. HOWARD
------------------------------------
Name: Gary S. Howard
Title: Vice President
LIBERTY MEDIA CORPORATION
By: /s/ GARY S. HOWARD
------------------------------------
Name: Gary S. Howard
Title: Executive Vice President &
Chief Operating Officer
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ ARTHUR M. AARON
------------------------------------
Name: Arthur M. Aaron
Title: Executive Vice President -
Business Affairs
<PAGE> 56
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the obligation of Merger Sub to pay for or return
tendered shares of Company Common Stock promptly after termination or withdrawal
of the Offer), pay for any Shares tendered pursuant to the Offer, and (subject
to any such rules or regulations and except as provided in the Agreement) may
terminate or amend the Offer and may postpone the acceptance for payment of and
payment for Shares tendered, if (i) the Minimum Condition shall not have been
satisfied, (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer or (iii) at any
time on or after the date of this Agreement, and prior to the acceptance for
payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any Governmental Entity (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Merger Sub
or any other Affiliate of Parent pursuant to the Offer, or the consummation
of the Merger, or seeking to obtain material damages in connection with the
Merger; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their Subsidiaries of all or any
material portion of the business or assets of the Company, or to compel the
Company, to dispose of or hold separate all or any material portion of the
business or assets of the Company, as a result of the Transactions; (iii)
seeking to impose or confirm limitations on the ability of Parent, Merger
Sub or any other Affiliate of Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to vote
any Shares acquired by Merger Sub pursuant to the Offer, or otherwise on
all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions, or making the holding of such Shares illegal or subject to
any materially burdensome requirement or condition; (iv) seeking to
prohibit Parent or any of its Subsidiaries from effectively controlling in
any material respect any material portion of the business or operations of
the Company and its Subsidiaries; (v) seeking to require divestiture by
Parent, Merger Sub or any other Affiliate of Parent of any Shares; (vi)
prohibiting or unreasonably delaying consummation of the Offer, the Merger
or increasing in any material respect the liabilities or obligations of
Parent arising out of this Agreement, the Offer or the Merger; or (vii)
otherwise is reasonably likely to materially adversely affect the Company
and its Subsidiaries taken as a whole;
(b) there shall have been issued any Injunction resulting from any
action or proceeding brought by any Person other than any Governmental
Entity that is reasonably
A-1
<PAGE> 57
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have been any statute, rule, regulation, order or
injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any Subsidiary or Affiliate
of Parent or the Company or (ii) the Offer or the Merger, by any
Governmental Entity, in the case of both (i) and (ii) other than (A) the
routine application of the waiting period provisions of the HSR Act to the
Offer or the Merger that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on a national securities exchange
in the U.S. (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, on
the extension of credit by banks or other lending institutions, (iv) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (v) in the case of any of the foregoing existing on the date hereof, a
material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Parent or Merger Sub
shall have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding Shares has been
acquired by any Person, other than Parent or any of its Affiliates; (ii)
the Board shall have withdrawn or modified in a manner adverse to Parent or
Merger Sub the approval or recommendation of the Offer, the Merger or this
Agreement or approved or recommended any Alternative Proposal or OCC
Alternative Transaction, or any other takeover proposal or any other
acquisition of Shares or OCC Shares other than the Offer and the Merger;
(iii) the Company shall have entered into any agreement with respect to a
Superior Proposal; or (iv) the Board shall have resolved to do any of the
foregoing;
(f) any of the representations and warranties of the Company set forth
in this Agreement shall not have been true and correct at the date of this
Agreement, and as a result thereof there shall have been, or it is
reasonable to foresee that there will be, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under this Agreement;
(h) this Agreement shall have been terminated in accordance with its
terms; and
A-2
<PAGE> 58
(i) Merger Sub and the Company shall have agreed that Merger Sub shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Merger Sub
or Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-3
<PAGE> 1
[ASCENT LOGO]
February 29, 2000
Dear Fellow Stockholders:
We are pleased to inform you that on February 22, 2000, Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Liberty Media
Corporation, a Delaware corporation ("Parent"), and Liberty AEG Acquisition,
Inc., a Delaware corporation ("Merger Sub") and an indirect wholly owned
subsidiary of Parent, pursuant to which Merger Sub has today commenced a tender
offer (the "Offer") to purchase all of the outstanding shares of common stock,
par value $.01 per share ("Shares"), of Ascent for $15.25 per Share in cash.
Under the Merger Agreement and subject to the terms thereof, following the
Offer, Merger Sub will be merged with and into Ascent (the "Merger") and all
Shares not purchased in the Offer (other than Shares held by Parent, Merger Sub
or Ascent, or Shares held by dissenting stockholders) will be converted into the
right to receive $15.25 per Share in cash.
YOUR BOARD OF DIRECTORS HAS (I) DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF ASCENT'S STOCKHOLDERS AND (II) APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER. THE ASCENT BOARD OF DIRECTORS RECOMMENDS THAT ASCENT'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Ascent Board gave careful
consideration to a number of factors described in the attached Schedule 14D-9
which has been filed today with the Securities and Exchange Commission,
including, among other things, the opinion, dated February 22, 2000, of
Donaldson, Lufkin & Jenrette, Ascent's financial advisor, to the effect that, as
of such date, the consideration to be received by holders of Shares pursuant to
the Merger Agreement was fair to such stockholders from a financial point of
view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated February 29, 2000, of Merger Sub,
together with related materials, including a Letter of Transmittal to be used
for tendering your Shares. These documents set forth the terms and conditions of
the Offer and the Merger and provide instructions as to how to tender your
Shares. We urge you to read the enclosed materials carefully.
Sincerely,
/s/ CHARLES M. NEINAS
Charles M. Neinas
Chairman of the Board of Directors
Ascent Entertainment Group, Inc.
1225 Seventeenth Street, Suite 1800
Denver, Colorado 80202
303.308.7000, fax 303.308.0485
<PAGE> 1
EXHIBIT 3
LIBERTY MEDIA SIGNS MERGER AGREEMENT
WITH ASCENT ENTERTAINMENT GROUP
DENVER, COLORADO, February 22, 2000 -- Liberty Media Corporation (NYSE: LMG.A,
LMG.B) and Ascent Entertainment Group, Inc. (Nasdaq: GOAL) announced today that
they have entered into a definitive merger agreement under which Liberty Media
will acquire Ascent Entertainment. Under the merger agreement, Ascent
stockholders will receive $15.25 in cash per share of Ascent Entertainment
Common Stock. The stock closed at $10.13 last Friday, February 18, 2000.
The total cost of the acquisition of Ascent's shares will be approximately $460
million, with a total transaction value, including assumed or refinanced debt,
of approximately $755 million. Following the acquisition, Liberty will continue
the process of finding a suitable buyer for the Pepsi Center, as well as the
professional sports teams included in the assets currently owned by Ascent.
"We are delighted to have agreed on terms for the purchase of Ascent
Entertainment," said Gary S. Howard, Liberty's Executive Vice President and
Chief Operating Officer. "From a corporate perspective, Liberty has had a
long-term interest in the consumer access offered through On Command
Corporation's (Nasdaq: ONCO) service. When completed, the purchase of Ascent
will provide us with a majority ownership position in that company. Given our
extensive relationships in video programming, interactive television and high
speed data services, the acquisition of On Command will position us perfectly to
offer even better and more comprehensive services for business and recreational
travelers.
"Like Ascent, we are a company with headquarters in Colorado. And, like Ascent,
we are committed to finding an ownership group for the Pepsi Center, the
Avalanche and the Nuggets that is committed to giving our sports community teams
that play at a championship level. We will continue that process until the right
group is identified and a deal can be consummated. Until that time, we will
continue to run our sports operations under the very able stewardship of Don
Elliman, Pierre Lacroix and Dan Issel."
In accordance with the merger agreement, Liberty expects to commence on or prior
to February 28, 2000, a tender offer for all shares of stock of Ascent at a net
cash price of $15.25 per share of Ascent Common Stock. The tender offer will be
conditioned on the tender of at least a majority of the Ascent shares, as well
as other customary conditions. J.P. Morgan will act as dealer manager for the
tender offer.
If a majority of the Ascent shares are purchased in the tender offer, it is
expected that a corporation controlled by Liberty will merge with Ascent, with
any remaining shares of Ascent converted into cash at the same price as offered
in the tender offer. The merger is expected to close in the second quarter of
2000.
-1-
<PAGE> 2
Ascent's Board of Directors has received an opinion letter from Donaldson,
Lufkin & Jenrette Securities Corporation that the consideration to be received
by Ascent's shareholders pursuant to the transaction is fair to such
shareholders from a financial point of view.
Liberty Media holds interests in a broad range of video programming,
communications, technology and internet businesses in the United States, Europe,
South America and Asia.
Ascent Entertainment's principal business is providing pay-per-view
entertainment and information services through its majority-owned On Command
Corporation. In addition, Ascent provides satellite service and maintenance to
the NBC television network in connection with its distribution of its national
television feed to its local affiliates. The company also is the owner of the
National Basketball Association's Denver Nuggets, the National Hockey League's
Colorado Avalanche, and the Pepsi Center, the new, state of the art
entertainment facility which is home to both the Nuggets and Avalanche.
**********
Investors and security holders are advised to read both the tender
offer statement and the solicitation/recommendation statement regarding the
tender offer referred to in this press release, when they become available,
because they will contain important information. The tender offer statement will
be filed by Liberty Media Corporation with the Securities and Exchange
Commission, and the solicitation/recommendation statement will be filed with the
Commission by Ascent Entertainment Group, Inc. Investors and security holders
may obtain a free copy of these statements (when available) and other documents
filed by Liberty Media Corporation and Ascent Entertainment Group, Inc. with the
Commission at the Commission's web site at www.sec.gov. The tender offer
statement and related offering materials may be obtained for free from Liberty
Media Corporation by directing such request to: Liberty Media Corporation, 9197
S. Peoria Street, Englewood, Colorado 80112, Attention: Vivian J. Carr,
telephone: (720) 875-5406, e-mail: [email protected]. The
solicitation/recommendation statement and such other documents may also be
obtained for free from Ascent Entertainment Group, Inc. by directing such
request to: Ascent Entertainment Group, Inc., 1225 Seventeenth Street, Suite
1800, Denver, Colorado 80202, Attention: Arthur M. Aaron, telephone: (303)
308-7040, e-mail: [email protected].
**********
CONTACT: LIBERTY MEDIA ASCENT ENTERTAINMENT
Vivian Carr MEDIA CONTACT: Arthur M. Aaron
720-875-5406 303-308-7040
INVESTOR CONTACT: David A. Holden
303-308-7033
-2-
<PAGE> 1
EXHIBIT 4
LIBERTY MEDIA AND ASCENT ENTERTAINMENT GROUP
ANNOUNCE NEW DATE FOR COMMENCEMENT OF TENDER OFFER
FOR STOCK OF ASCENT ENTERTAINMENT GROUP
DENVER, COLORADO, February 28, 2000 -- Liberty Media Corporation (NYSE: LMG.A,
LMG.B) and Ascent Entertainment Group, Inc. (Nasdaq: GOAL) announced today that
Liberty Media's tender offer for all shares of Ascent Entertainment is expected
to commence on Tuesday, February 29, 2000. The parties had previously announced
that the tender offer was expected to commence on Monday, February 28, 2000.
Pursuant to the tender offer, Liberty Media will offer to purchase all shares of
stock of Ascent Entertainment at a net cash price of $15.25 per share.
**********
Investors and security holders are advised to read both the tender
offer statement and the solicitation/recommendation statement regarding the
tender offer referred to in this press release, when they become available,
because they will contain important information. The tender offer statement will
be filed by Liberty Media Corporation with the Securities and Exchange
Commission, and the solicitation/recommendation statement will be filed with the
Commission by Ascent Entertainment Group, Inc. Investors and security holders
may obtain a free copy of these statements (when available) and other documents
filed by Liberty Media Corporation and Ascent Entertainment Group, Inc. with the
Commission at the Commission's web site at www.sec.gov. The tender offer
statement and related offering materials may be obtained for free from Liberty
Media Corporation by directing such request to: Liberty Media Corporation, 9197
S. Peoria Street, Englewood, Colorado 80112, Attention: Vivian J. Carr,
telephone: (720) 875-5406, e-mail: [email protected]. The
solicitation/recommendation statement and such other documents may also be
obtained for free from Ascent Entertainment Group, Inc. by directing such
request to: Ascent Entertainment Group, Inc., 1225 Seventeenth Street, Suite
1800, Denver, Colorado 80202, Attention: Arthur M. Aaron, telephone: (303)
308-7040, e-mail: [email protected].
**********
CONTACT: LIBERTY MEDIA ASCENT ENTERTAINMENT
Vivian Carr MEDIA CONTACT: Arthur M. Aaron
720-875-540 303-308-7040
INVESTOR CONTACT: David A. Holden
303-308-7033
<PAGE> 1
EXHIBIT 5
[DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION]
February 22, 2000
Board of Directors
Ascent Entertainment Group, Inc.
1225 Seventeenth Street, Suite 1800
Denver, Colorado 80202
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Ascent Entertainment Group, Inc. (the "Company") of
the consideration to be received by such stockholders pursuant to the terms of
the Agreement and Plan of Merger, dated as of February 22, 2000 (the
"Agreement"), by and among the Company, Liberty Media Corporation ("Liberty")
and AEG Acquisition, Inc., a wholly owned subsidiary of Liberty ("Merger Sub"),
pursuant to which Merger Sub will be merged (the "Merger") with and into the
Company.
Pursuant to the Agreement, Merger Sub will commence a tender offer (the
"Tender Offer") for any and all outstanding shares of Common Stock, par value
$.01 per share of the Company and the associated Rights at a price of $15.25 per
share. The Tender Offer will be followed by the Merger in which the shares of
all stockholders who did not tender in the Tender Offer will be converted into
the right to receive the same cash consideration per share as in the Tender
Offer.
In arriving at our opinion, we have reviewed the draft dated February 20,
2000 of the Agreement. We also have reviewed financial and other information
that was publicly available or furnished to us by the Company including
information provided during discussions with management. Included in the
information provided during discussions with Company management were certain
financial projections of the Company for the period beginning January 1, 2000
and ending December 31, 2002 prepared by the management of the Company. In
addition, we have compared certain financial and securities data of the Company
with various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of the common stock of
the Company, reviewed prices and premiums paid in certain other business
combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its
representatives or that was otherwise reviewed by us. With respect to the
financial projections supplied to us, we have relied on representations that
they have been reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of the Company as to the
future operating and financial performance of the Company, including the
proceeds from the possible sale of Ascent Sports Holdings. We have not assumed
any responsibility for making an independent evaluation of any assets or
liabilities or for making any independent verification of any of the information
reviewed by us. We have relied as to certain legal matters on advice of counsel
to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not address the relative
merits of the Merger and the other business strategies being considered by the
Company's Board of Directors, nor does it address the Board's decision to
proceed with the Merger. Our opinion does not constitute a recommendation to any
stockholder as to whether such stockholder should tender their shares in the
Tender Offer or as to how such stockholder should vote on the proposed
transaction.
<PAGE> 2
Ascent Entertainment Group, Inc.
Page 2
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for Liberty in the past and has been compensated for
such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the stockholders of the
Company pursuant to the Agreement is fair to such stockholders from a financial
point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ PAUL D'ADDARIO
------------------------------------
Paul D'Addario
Managing Director
<PAGE> 1
Exhibit 6
April 12, 1999
Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, CO 80111
Attention: David J. A. Flowers
Vice President
Dear Sir:
In connection with the evaluation by Liberty Media Corporation
("Liberty") of the possible acquisition of assets or securities owned by, or
other possible transactions involving, Ascent Entertainment Group, Inc. (the
"Company"), you have requested certain Confidential Information (as defined in
Section 4 hereof) relating to the businesses of the Company or its subsidiaries,
which Confidential Information has been, is being and will be furnished to you
or your affiliates or Representatives (as defined in Section 1 hereof) by the
Company or its subsidiaries or Representatives. In this Agreement, "you" and
"your" refers to Liberty, together with each of your affiliates to which you
provide Confidential Information.
As a condition to furnishing you such information, you agree as
follows:
1. Nondisclosure of Confidential Information. The Confidential
Information shall not be used other than for the purpose described above, shall
be kept confidential by you and your officers, employees, counsel, accountants,
agents, advisors and other representatives (collectively, "Representatives"),
and specifically shall not be disclosed by you or your Representatives to any
third parties, except that any of the Confidential Information may be disclosed
to your Representatives, but only to the extent such Representatives need to
know the Confidential Information for the purpose described above. It is
understood (i) that each such Representative shall be informed by you of the
confidential nature of the Confidential Information and the requirement that it
not be used other than for the purpose described above, (ii) that each such
Representative shall be required to agree to and be bound by the terms of this
Agreement as a condition to receiving the Confidential Information and (iii)
that, in any event, you shall be responsible for any breach of this Agreement by
any of your
<PAGE> 2
Liberty Media Corporation
April 12, 1999
Page 2
Representatives. You will not disclose the Confidential Information other than
as permitted hereby, and you will use the same care in keeping confidential the
Confidential Information as you would in safeguarding your own information, but
in no event less than reasonable care. The term "person" as used in this
Agreement shall be broadly interpreted to include, without limitation, any
corporation, company, partnership, entity, individual or group.
2. Notice Preceding Compelled Disclosure. If you or your
Representatives are requested or required (by oral question, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
otherwise) to disclose any Confidential Information, you will promptly notify
the Company of such request or requirement so that the Company may seek an
appropriate protective order or waive compliance by you with the provisions of
this Agreement. If, in the absence of a protective order or the receipt of a
waiver hereunder, you or your Representatives are compelled, in the opinion of
your counsel, to disclose the Confidential Information, you may disclose only
such of the Confidential Information to the party requiring disclosure as is
required by law or other regulatory requirement pursuant to such opinion and
will request that the party to whom the Confidential Information is furnished
agree in writing that the Confidential Information be kept confidential by that
party and its Representatives or, in the case of disclosure to a governmental
agency or court, will request that the Confidential Information be accorded
confidential treatment for reasons of personal or business privacy under the
Freedom of Information Act, as amended, other applicable governing law or in
equity. In any event, you will cooperate with the Company if it chooses to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
3. Purchase or Sale of Securities. You hereby acknowledge that you are
aware (and that your Representatives who are made aware of this matter have been
or will be advised) that the U.S. securities laws restrict persons with material
non-public information concerning a company obtained directly or indirectly from
that company from purchasing or selling securities of that company or its
affiliates, or from communicating such information to any other person under any
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
4. Definition of "Confidential Information". As used herein,
"Confidential Information" means all information (whether communicated in
written form, orally, electronically or otherwise) that is or has been furnished
to you or your Representatives by the Company which concerns the Company, its
controlled
<PAGE> 3
Liberty Media Corporation
April 12, 1999
Page 3
affiliates or their respective assets, businesses and employees and which is
either confidential, proprietary or otherwise not generally available to the
public. Any information furnished to you by us, our affiliates or our
Representatives shall be deemed for the purposes of this Agreement furnished by
us. Notwithstanding the foregoing, the following will not constitute
Confidential Information for purposes of this Agreement: (a) information which
is or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives not otherwise permitted by this
Agreement; (b) information which was already known to you on a nonconfidential
basis (except for Confidential Information provided to you by the Company or any
of its affiliates or Representatives prior to the date hereof, if any); or (c)
information which becomes available to you on a nonconfidential basis from a
source other than the Company if you have no knowledge, after reasonable
inquiry, that such source was subject to a prohibition against transmitting the
information to you.
5. Return of Information. The written Confidential Information,
including any Confidential Information that may be found in analyses,
compilations, studies or other documents prepared by or for you, will be
returned by you to the Company promptly upon the request of the Company, and no
copies shall be retained by you or your Representatives. For purposes of this
Agreement, "written" Confidential Information shall include, without limitation,
information contained in printed, electronic, magnetic or other tangible media,
or in information storage and retrieval systems. That portion of the
Confidential Information consisting of oral Confidential Information and written
Confidential Information not so requested to be returned will be held by you and
kept subject to the terms of this Agreement, or destroyed. The performance by
Liberty of its obligations under this paragraph 5 shall not relieve or otherwise
release Liberty from any of its other obligations under this Agreement.
6. No Other Rights. Nothing contained in this Agreement shall be
construed as (i) requiring the Company to disclose, or you to accept, any
particular information, or (ii) granting to you a license, either express or
implied, under any patent, copyright, trade secret or other intellectual
property rights now or hereafter owned, obtained or licensed by the Company. You
understand and acknowledge that any and all information being provided to you is
being provided without any representation or warranty, express or implied, as to
the accuracy or completeness of such information on the part of the Company or
any its affiliates or Representatives. You agree that none of the Company nor
any of its affiliates or Representatives shall have any liability to you or your
affiliates or Representatives by reason of the disclosure of any such
information, or the entering into of this Agreement.
<PAGE> 4
Liberty Media Corporation
April 12, 1999
Page 4
7. Nondisclosure of Discussions. Without the prior consent of the
Company, you will not, and will direct your Representatives not to, disclose to
any person either the fact that the Confidential Information is being made
available to you by the Company or that you have inspected any portion of the
Confidential Information provided to you by the Company, the fact that
discussions involving the Company with respect to the above purpose are taking
place or other facts with respect to the Company's involvement, if any, in these
discussions, including the status thereof.
8. No Waiver. No failure or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any right, power or privilege hereunder. Neither the waiver by the Company of
a breach of or default under any provisions of this Agreement, nor the failure
of the Company, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder shall thereafter
be construed as a waiver of any subsequent breach or default of a similar
nature, or as a waiver of such provisions, rights or privileges hereunder.
9. Remedies, Expenses, Jurisdiction, Governing Law. The parties agree
that any breach or threatened breach of this Agreement will cause the Company
irreparable harm, money damages would not be a sufficient remedy therefor, and
the Company shall be entitled to specific performance and injunctive relief as
remedies for any such breach, without the necessity of proving actual damages
and without posting a bond or other security. Such remedies shall not be deemed
to be the exclusive remedies for a breach but shall be in addition to all other
remedies at law or in equity. In the event a court of competent jurisdiction
determines in a final non-appealable order that this Agreement has or may be
breached by you or your Representatives, then you will reimburse the Company for
its costs and expenses (including, without limitation, reasonable legal fees and
expenses) incurred in connection with such litigation. You consent to personal
jurisdiction in any court, federal or state, withing the State of Colorado
having subject matter jurisdiction arising under this Agreement. This Agreement
shall be governed and construed in accordance with the internal laws of the
State of Colorado, without regard to the choice or conflicts of law doctrine
thereof.
10. Invalidity; Unenforceability; Entire Agreement. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of the other provisions of this Agreement, which
shall remain in full
<PAGE> 5
Liberty Media Corporation
April 12, 1999
Page 5
force and effect. If any provisions of this Agreement shall be found to be
invalid or unenforceable by reason of its extent, duration, scope or otherwise,
then the parties contemplate that the court making such determination shall
enforce the remaining provisions of this Agreement, shall reduce such extent,
duration, scope or other provision and shall enforce them in their reduced form
for all purposes contemplated by this Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements and understandings in respect
thereof, and shall not be modified except by a written instrument signed by
authorized representatives of the parties on or after the date hereof.
11. Contact with and Solicitation of Employees. You agree not to
contact any employee of the Company or its affiliates regarding the transactions
discussed above or the Confidential Information without the prior approval of
the Company's chief executive officer, chief operating officer or vice
president, business and legal affairs or their respective designees. You and
your Representatives agree that for a period of one year from the date of this
Agreement you and your Representatives will not solicit for employment any of
the current employees of the Company or its controlled affiliates so long as
they are employed by the Company without the prior written consent of the
Company. A general advertisement by you or your affiliates for solicitation of
employees shall not constitute a solicitation under this Agreement.
12. Termination. This Agreement will terminate one year from the date
first written above. You agree, however, to treat the Confidential Information
as confidential to the extent required by this Agreement for a period of two
years from the date of receipt thereof.
If the foregoing is acceptable, please sign and return the enclosed
copy of this letter.
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ ARTHUR M. AARON
-----------------------------
Name:
Title:
ACCEPTED AND AGREED
LIBERTY MEDIA CORPORATION
By: /s/ DAVID FLOWERS
- -----------------------------
Name:
Title:
<PAGE> 1
Exhibit 7
April 12, 1999
Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, CO 80111
Attention: David J. A. Flowers
Vice President
Dear Sir:
In connection with the evaluation by Liberty Media Corporation
("Liberty") of the possible acquisition of assets or securities owned by, or
other possible transactions involving, On Command Corporation (the "Company"),
you have requested certain Confidential Information (as defined in Section 4
hereof) relating to the businesses of the Company or its subsidiaries, which
Confidential Information has been, is being and will be furnished to you or your
affiliates or Representatives (as defined in Section 1 hereof) by the Company or
its subsidiaries or Representatives. In this Agreement, "you" and "your" refers
to Liberty, together with each of your affiliates to which you provide
Confidential Information.
As a condition to furnishing you such information, you agree as
follows:
1. Nondisclosure of Confidential Information. The Confidential
Information shall not be used other than for the purpose described above, shall
be kept confidential by you and your officers, employees, counsel, accountants,
agents, advisors and other representatives (collectively, "Representatives"),
and specifically shall not be disclosed by you or your Representatives to any
third parties, except that any of the Confidential Information may be disclosed
to your Representatives, but only to the extent such Representatives need to
know the Confidential Information for the purpose described above. It is
understood (i) that each such Representative shall be informed by you of the
confidential nature of the Confidential Information and the requirement that it
not be used other than for the purpose described above, (ii) that each such
Representative shall be required to agree to and be bound by the terms of this
Agreement as a condition to receiving the Confidential Information and (iii)
that, in any event, you shall be responsible for any breach of this Agreement by
any of your
<PAGE> 2
Liberty Media Corporation
April 12, 1999
Page 2
Representatives. You will not disclose the Confidential Information other than
as permitted hereby, and you will use the same care in keeping confidential the
Confidential Information as you would in safeguarding your own information, but
in no event less than reasonable care. The term "person" as used in this
Agreement shall be broadly interpreted to include, without limitation, any
corporation, company, partnership, entity, individual or group.
2. Notice Preceding Compelled Disclosure. If you or your
Representatives are requested or required (by oral question, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
otherwise) to disclose any Confidential Information, you will promptly notify
the Company of such request or requirement so that the Company may seek an
appropriate protective order or waive compliance by you with the provisions of
this Agreement. If, in the absence of a protective order or the receipt of a
waiver hereunder, you or your Representatives are compelled, in the opinion of
your counsel, to disclose the Confidential Information, you may disclose only
such of the Confidential Information to the party requiring disclosure as is
required by law or other regulatory requirement pursuant to such opinion and
will request that the party to whom the Confidential Information is furnished
agree in writing that the Confidential Information be kept confidential by that
party and its Representatives or, in the case of disclosure to a governmental
agency or court, will request that the Confidential Information be accorded
confidential treatment for reasons of personal or business privacy under the
Freedom of Information Act, as amended, other applicable governing law or in
equity. In any event, you will cooperate with the Company if it chooses to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
3. Purchase or Sale of Securities. You hereby acknowledge that you are
aware (and that your Representatives who are made aware of this matter have been
or will be advised) that the U.S. securities laws restrict persons with material
non-public information concerning a company obtained directly or indirectly from
that company from purchasing or selling securities of that company or its
affiliates, or from communicating such information to any other person under any
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
4. Definition of "Confidential Information". As used herein,
"Confidential Information" means all information (whether communicated in
written form, orally, electronically or otherwise) that is or has been furnished
to you or your Representatives by the Company which concerns the Company, its
controlled
<PAGE> 3
Liberty Media Corporation
April 12, 1999
Page 3
affiliates or their respective assets, businesses and employees and which is
either confidential, proprietary or otherwise not generally available to the
public. Any information furnished to you by us, our affiliates or our
Representatives shall be deemed for the purposes of this Agreement furnished by
us. Notwithstanding the foregoing, the following will not constitute
Confidential Information for purposes of this Agreement: (a) information which
is or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives not otherwise permitted by this
Agreement; (b) information which was already known to you on a nonconfidential
basis (except for Confidential Information provided to you by the Company or any
of its affiliates or Representatives prior to the date hereof, if any); or (c)
information which becomes available to you on a nonconfidential basis from a
source other than the Company if you have no knowledge, after reasonable
inquiry, that such source was subject to a prohibition against transmitting the
information to you.
5. Return of Information. The written Confidential Information,
including any Confidential Information that may be found in analyses,
compilations, studies or other documents prepared by or for you, will be
returned by you to the Company promptly upon the request of the Company, and no
copies shall be retained by you or your Representatives. For purposes of this
Agreement, "written" Confidential Information shall include, without limitation,
information contained in printed, electronic, magnetic or other tangible media,
or in information storage and retrieval systems. That portion of the
Confidential Information consisting of oral Confidential Information and written
Confidential Information not so requested to be returned will be held by you and
kept subject to the terms of this Agreement, or destroyed. The performance by
Liberty of its obligations under this paragraph 5 shall not relieve or otherwise
release Liberty from any of its other obligations under this Agreement.
6. No Other Rights. Nothing contained in this Agreement shall be
construed as (i) requiring the Company to disclose, or you to accept, any
particular information, or (ii) granting to you a license, either express or
implied, under any patent, copyright, trade secret or other intellectual
property rights now or hereafter owned, obtained or licensed by the Company. You
understand and acknowledge that any and all information being provided to you is
being provided without any representation or warranty, express or implied, as to
the accuracy or completeness of such information on the part of the Company or
any its affiliates or Representatives. You agree that none of the Company nor
any of its affiliates or Representatives shall have any liability to you or your
affiliates or Representatives by reason of the disclosure of any such
information, or the entering into of this Agreement.
<PAGE> 4
Liberty Media Corporation
April 12, 1999
Page 4
7. Nondisclosure of Discussions. Without the prior consent of the
Company, you will not, and will direct your Representatives not to, disclose to
any person either the fact that the Confidential Information is being made
available to you by the Company or that you have inspected any portion of the
Confidential Information provided to you by the Company, the fact that
discussions involving the Company with respect to the above purpose are taking
place or other facts with respect to the Company's involvement, if any, in these
discussions, including the status thereof.
8. No Waiver. No failure or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any right, power or privilege hereunder. Neither the waiver by the Company of
a breach of or default under any provisions of this Agreement, nor the failure
of the Company, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder shall thereafter
be construed as a waiver of any subsequent breach or default of a similar
nature, or as a waiver of such provisions, rights or privileges hereunder.
9. Remedies, Expenses, Jurisdiction, Governing Law. The parties agree
that any breach or threatened breach of this Agreement will cause the Company
irreparable harm, money damages would not be a sufficient remedy therefor, and
the Company shall be entitled to specific performance and injunctive relief as
remedies for any such breach, without the necessity of proving actual damages
and without posting a bond or other security. Such remedies shall not be deemed
to be the exclusive remedies for a breach but shall be in addition to all other
remedies at law or in equity. In the event a court of competent jurisdiction
determines in a final non-appealable order that this Agreement has or may be
breached by you or your Representatives, then you will reimburse the Company for
its costs and expenses (including, without limitation, reasonable legal fees and
expenses) incurred in connection with such litigation. You consent to personal
jurisdiction in any court, federal or state, withing the State of Colorado
having subject matter jurisdiction arising under this Agreement. This Agreement
shall be governed and construed in accordance with the internal laws of the
State of Colorado, without regard to the choice or conflicts of law doctrine
thereof.
10. Invalidity; Unenforceability; Entire Agreement. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of the other provisions of this Agreement, which
shall remain in full
<PAGE> 5
Liberty Media Corporation
April 12, 1999
Page 5
force and effect. If any provisions of this Agreement shall be found to be
invalid or unenforceable by reason of its extent, duration, scope or otherwise,
then the parties contemplate that the court making such determination shall
enforce the remaining provisions of this Agreement, shall reduce such extent,
duration, scope or other provision and shall enforce them in their reduced form
for all purposes contemplated by this Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements and understandings in respect
thereof, and shall not be modified except by a written instrument signed by
authorized representatives of the parties on or after the date hereof.
11. Contact with and Solicitation of Employees. You agree not to
contact any employee of the Company or its affiliates regarding the transactions
discussed above or the Confidential Information without the prior approval of
the Company's chief executive officer, president and chief operating officer or
acting general counsel or their respective designees. You and your
Representatives agree that for a period of one year from the date of this
Agreement you and your Representatives will not solicit for employment any of
the current employees of the Company or its controlled affiliates so long as
they are employed by the Company without the prior written consent of the
Company. A general advertisement by you or your affiliates for solicitation of
employees shall not constitute a solicitation under this Agreement.
12. Termination. This Agreement will terminate one year from the date
first written above. You agree, however, to treat the Confidential Information
as confidential to the extent required by this Agreement for a period of two
years from the date of receipt thereof.
If the foregoing is acceptable, please sign and return the enclosed
copy of this letter.
ON COMMAND CORPORATION
By: /s/ ARTHUR M. AARON
--------------------------------
Name:
Title:
ACCEPTED AND AGREED
LIBERTY MEDIA CORPORATION
By: /s/ DAVID FLOWERS
--------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 8
ASCENT ENTERTAINMENT GROUP, INC.
1995 KEY EMPLOYEE STOCK PLAN
Ascent Entertainment Group, Inc., a Delaware corporation, has adopted The
1995 Key Employee Stock Plan (the "Plan"), effective December 18, 1995, for the
benefit of its eligible employees.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for key Employees to further
the growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of key
Employees considered essential to the long range success of the Company by
offering them an opportunity to own stock in the Company and/or rights which
will reflect the growth, development and financial success of the Company.
ARTICLE 1
DEFINITIONS
1.1 General. Wherever the following terms are used in this Plan
they shall have the meaning specified below, unless the context clearly
indicates otherwise.
1.2 Award Limit. "Award Limit" shall mean 300,000 (Three hundred
thousand) shares of Common Stock.
1.3 Board. "Board" shall mean the Board of Directors of the Company.
1.4 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.5 Committee. "Committee" shall mean the Compensation Committee of
the Board, or a subcommittee of the Board, appointed as provided in Section 9.1.
1.6 Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
<PAGE> 2
1.7 Company. "Company" shall mean Ascent Entertainment Group, Inc.,
a Delaware corporation.
1.8 Deferred Stock. "Deferred Stock" shall mean Common Stock awarded
under Article VII of this Plan.
1.9 Director. "Director" shall mean a member of the Board.
1.10 Dividend Equivalent. "Dividend Equivalent" shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VII of this Plan.
1.11 Employee. "Employee" shall mean any officer or other employee
(as defined in accordance with Section 3401(c) of the Code) of the Company, or
of any corporation which is a Subsidiary.
1.12 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the mean between the highest and lowest
selling price of a share of Common Stock on the principal exchange on which
shares of Common Stock are then trading, if any, on such date, or if shares were
not traded on such date, then on the closest preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee
acting in good faith.
1.14 Grantee. "Grantee" shall mean an Employee granted a Performance
Award, Dividend Equivalent, Stock Payment or Stock Appreciation Right, or an
award of Deferred Stock, under this Plan.
1.15 Incentive Stock Option. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
1.16 Non-Qualified Stock Option. "Non-Qualified Stock Option" shall
mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.17 Option. "Option" shall mean a stock option granted under Article
III
2
<PAGE> 3
of this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option.
1.18 Optionee. "Optionee" shall mean an Employee granted an Option
under this Plan.
1.19 Performance Award. "Performance Award" shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash, Common
Stock or a combination of both, awarded under Article VII of this Plan.
1.20 Plan. "Plan" shall mean The Ascent Entertainment Group, Inc.
1995 Key Employee Stock Plan.
1.21 Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of this Plan.
1.22 Restricted Stockholder. "Restricted Stockholder" shall mean an
Employee granted an award of Restricted Stock under Article VI of this Plan.
1.23 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.
1.24 Stock Appreciation Right. "Stock Appreciation Right" shall mean
a stock appreciation right granted under Article VIII of this Plan.
1.25 Stock Payment. "Stock Payment" shall mean (i) a payment in the
form of shares of Common Stock, or (ii) an option or other right to purchase
shares of Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to a key
Employee in cash, awarded under Article VII of this Plan.
1.26 Subsidiary. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.27 Termination of Employment. "Termination of Employment" shall
mean the time when the employee-employer relationship between the Optionee,
Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) terminations where there is a
3
<PAGE> 4
simultaneous reemployment or continuing employment of the Optionee, Grantee or
Restricted Stockholder by the Company or any Subsidiary, (ii) at the discretion
of the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee.
The Committee, in its discretion, shall determine the effect of all matters and
questions relating to Termination of Employment, including, but not by way of
limitation, the question of whether a Termination of Employment resulted from a
discharge for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment; provided, however, that, with
respect to Incentive Stock Options, a leave of absence or other change in the
employee-employer relationship shall constitute a Termination of Employment if,
and to the extent that, such leave of absence or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section. Notwithstanding
any other provision of this Plan, the Company or any Subsidiary has an absolute
and unrestricted right to terminate an Employee's employment at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
(a) The shares of stock subject to Options, awards of Restricted
Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be Common Stock, initially shares of
the Company's Common Stock, par value $.01 per share. The aggregate number of
such shares which may be issued upon exercise of such options or rights or upon
any such awards under the Plan shall not exceed 1,500,000 (One million five
hundred thousand) shares. The shares of Common Stock issuable upon exercise of
such options or rights or upon any such awards may be either previously
authorized but unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to options
or Stock Appreciation Rights granted under the Plan to any individual in any
calendar year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are cancelled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction is
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be canceled and the Option deemed to
4
<PAGE> 5
be granted are counted against the Award Limit. Furthermore, to the extent
required by Section 162(m) of the Code, if, after grant of a Stock Appreciation
Right, the base amount on which stock appreciation is calculated is reduced to
reflect a reduction in the Fair Market Value of the Company's Common Stock, the
transaction is treated as a cancellation of the Stock Appreciation Right and a
grant of a new Stock Appreciation Right and both the Stock Appreciation Right
deemed to be canceled and the Stock Appreciation Right deemed to be granted are
counted against the Award Limit.
2.2 Add-back of Options and Other Rights . If any Option, or other
right to acquire shares of Common Stock under any other award under this Plan,
expires or is cancelled without having been fully exercised, or is exercised in
whole or in part for cash as permitted by this Plan, the number of shares
subject to such Option or other right but as to which such Option or other right
was not exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or Grantee or
withheld by the Company upon the exercise of any Option or other award under
this Plan, in payment of the exercise price thereof, may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. If any
share of Restricted Stock is forfeited by the Grantee or repurchased by the
Company pursuant to Section 6.6 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Any Employee selected by the Committee pursuant to
Section 3.4(a)(i) shall be eligible to be granted an Option.
3.2 Disqualification for Stock Ownership. No person may be granted
an Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary unless such Incentive Stock Option conforms to
the applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No Incentive Stock
Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. No Incentive Stock
Option shall be granted to any person who is not an Employee.
3.4 Granting of Options.
(a) The Committee shall from time to time, in its discretion, and
subject
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to applicable limitations of this Plan:
(i) Determine which Employees are key Employees and select
from among them (including Employees who have previously received
Options or other awards under this Plan) such of them as in its
opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected key
Employees;
(iii) Determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options and whether such Options
are intended to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee that the
Employee surrender for cancellation some or all of the unexercised Options,
awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments or other rights
which have been previously granted to him under this Plan or otherwise. An
Option, the grant of which is conditioned upon such surrender, may have an
option price lower (or higher) than the exercise price of such surrendered
Option or other award, may cover the same (or a lesser or greater) number of
shares as such surrendered Option or other award, may contain such other terms
as the Committee deems appropriate, and shall be exercisable in accordance with
its terms, without regard to the number of shares, price, exercise period or any
other term or condition of such surrendered Option or other award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
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ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan. Stock
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
4.2 Option Price. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that such price
shall be no less than the par value of a share of Common Stock and (i) in the
case of Incentive Stock Options and Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
such price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted and (ii) in the case of Incentive
Stock Options granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary such price shall not be
less than 110% of the Fair Market Value of a share of Common Stock on the date
the Option is granted.
4.3 Option Term. The term of an Option shall be set by the Committee
in its discretion; provided, however, that, in the case of Incentive Stock
Options, the term shall not be more than ten (10) years from the date the
Incentive Stock Option is granted, or five (5) years from such date if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary. Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend the
term of any outstanding Option in connection with any Termination of Employment
of the Optionee, or amend any other term or condition of such Option relating to
such a termination.
4.4 Option Vesting
(a) The period during which the right to exercise an Option in whole
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or in part vests in the Optionee shall be set by the Committee and the Committee
may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted; provided, however, that, unless the
Committee otherwise provides in the terms of the Option, no Option shall be
exercisable by any Optionee who is then subject to Section 16 of the Exchange
Act within the period ending six months and one day after the date the Option is
granted. At any time after grant of an Option, the Committee may, in its sole
discretion and subject to whatever terms and conditions it selects, accelerate
the period during which an Option vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any Subsidiary) exceeds
$100,000, such Options shall be treated as Non-Qualified Options to the extent
required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the Fair Market Value of
stock shall be determined as of the time the Option with respect to such stock
is granted.
4.5 Consideration. In consideration of the granting of an Option,
the Optionee shall agree, in the written Stock Option Agreement, to remain in
the employ of the Company or any Subsidiary for a period of at least one year
after the Option is granted. Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Company or any Subsidiary, or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
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5.2 Manner of Exercise. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his office:
(a) A written notice complying with the applicable rules established
by the Committee or the Board stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
(b) Such representations and documents as the Committee or the
Board, in its discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The Committee or Board
may, in its discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;
(c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised. However, at
the discretion of the Committee, the terms of the Option may (i) allow a delay
in payment up to thirty (30) days from the date the Option, or portion thereof,
is exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee for a period of not less than six
months, duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and valuable
consideration; (iv) allow payment, in whole or in part, through the delivery of
a full recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable upon
such terms as may be prescribed by the Committee or the Board, or (v) allow
payment through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii) and (iv). In the case of a promissory note, the
Committee or the Board may also prescribe the form of such note and the security
to be given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
5.3 Certain Timing Requirements. At the discretion of the Committee,
shares of Common Stock issuable to the Optionee upon exercise of the Option may
be used to satisfy the Option exercise price or the tax withholding consequences
of such
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exercise, provided that in the case of persons subject to Section 16 of the
Exchange Act, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
Optionee to use shares of Common Stock issuable to the Optionee upon exercise of
the Option to pay all or part of the Option price or the withholding taxes made
at least six months prior to the payment of such Option price or withholding
taxes.
5.4 Conditions to Issuance of Stock Certificates. The Company shall
not be required to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body which the Committee or Board shall, in its discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee or Board shall, in its
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of the Company in respect
of any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders.
5.6 Ownership and Transfer Restrictions. The Committee, in its
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the
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Employee to give the Company prompt notice of any disposition of shares of
Common Stock acquired by exercise of an Incentive Stock Option within (i) two
years from the date of granting such Option to such Employee or (ii) one year
after the transfer of such shares to such Employee. The Committee may direct
that the certificates evidencing shares acquired by exercise of an Option refer
to such requirement to give prompt notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees (including
Employees who have previously received other awards under this Plan) such
of them as in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms
and conditions applicable to such Restricted Stock, consistent with this
Plan.
(b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be purchased.
In all cases, legal consideration shall be required for each issuance of
Restricted Stock.
(c) Upon the selection of a key Employee to be awarded Restricted
Stock, the Committee shall instruct the Secretary of the Company to issue such
Restricted Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
6.2 Restricted Stock Agreement. Restricted Stock shall be issued
only pursuant to a written Restricted Stock Agreement, which shall be executed
by the selected key Employee and an authorized officer of the Company and which
shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.
6.3 . Consideration. As consideration for the issuance of Restricted
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of, or to consult for, the Company or any Subsidiary for a period of at least
one year after the
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Restricted Stock is issued. Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall confer on any Restricted Stockholder any right to
continue in the employ of the Company or any Subsidiary or shall interfere with
or restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Restricted Stockholder at any time
for any reason whatsoever, with or without good cause.
6.4 Rights as Stockholders. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Restricted Stock Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the shares; provided,
however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 6.5.
6.5 Restrictions. All shares of Restricted Stock issued under this
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that by a resolution adopted after the Restricted Stock is issued, the Committee
may, on such terms and conditions as it may determine to be appropriate, remove
any or all of the restrictions imposed by the terms of the Restricted Stock
Agreement. Restricted Stock may not be sold or encumbered until all restrictions
are terminated or expire. Unless provided otherwise by the Committee, if no
consideration was paid by the Restricted Stockholder upon issuance, a Restricted
Stockholder's rights in unvested Restricted Stock shall lapse upon Termination
of Employment or, if applicable, upon the termination of his consulting
relationship with the Company.
6.6 Repurchase of Restricted Stock. The Committee shall provide in
the terms of each individual Restricted Stock Agreement that the Company shall
have the right to repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under the Restricted Stock Agreement
immediately upon a Termination of Employment or, if applicable, upon a
termination of any consulting relationship between the Restricted Stockholder
and the Company, at a cash price per share equal to the price paid by the
Restricted Stockholder for such Restricted Stock; provided, however, that
provision may be made that no such right of repurchase shall exist in the event
of a Termination of Employment without cause, or following a change in control
of the Company or because of the Restricted Stockholder's retirement, death
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or disability, or otherwise.
6.7 Escrow. The Secretary of the Company or such other escrow holder
as the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
6.8 Legend. In order to enforce the restrictions imposed upon shares
of Restricted Stock hereunder, the Committee shall cause a legend or legends to
be placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any key Employee selected by the Committee
may be granted one or more Performance Awards. The value of such Performance
Awards may be linked to the market value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee, or may be based
upon the appreciation in the market value, book value, net profits or other
measure of the value of a specified number of shares of Common Stock over a
fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee.
7.2 Dividend Equivalents. Any key Employee selected by the Committee
may be granted Dividend Equivalents based on the dividends declared on Common
Stock, to be credited as of dividend payment dates, during the period between
the date an Option, Stock Appreciation Right, Deferred Stock or Performance
Award is granted, and the date such Option, Stock Appreciation Right, Deferred
Stock or Performance Award is exercised, vests or expires, as determined by the
Committee. Such Dividend Equivalents shall be converted to cash or additional
shares of Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.
7.3 Stock Payments. Any key Employee selected by the Committee
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may receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Fair Market Value, book value, net profits or other measure of
the value of Common Stock or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.
7.4 Deferred Stock. Any key Employee selected by the Committee may
be granted an award of Deferred Stock in the manner determined from time to time
by the Committee. The number of shares of Deferred Stock shall be determined by
the Committee and may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Grantee of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the award has vested and the Common Stock underlying the award has been
issued.
7.5 Performance Award Agreement, Dividend Equivalent Agreement,
Deferred Stock Agreement, Stock Payment Agreement. Each Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
7.6 Term. The term of a Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment shall be set by the Committee in
its discretion.
7.7 Exercise Upon Termination of Employment. A Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
or payable only while the Grantee is an Employee; provided that the Committee
may determine that the Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment may be exercised subsequent to Termination of
Employment without cause, or following a change in control of the Company, or
because of the Grantee's retirement, death or disability, or otherwise.
7.8 Payment on Exercise. Payment of the amount determined under
Section 7.1 or 7.2 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent any payment under this
Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of
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Section 5.4.
7.9 Consideration. In consideration of the granting of a Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment, the
Grantee shall agree, in a written agreement, to remain in the employ of, or to
consult for, the Company or any Subsidiary for a period of at least one year
after such Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment is granted. Nothing in this Plan or in any agreement
hereunder shall confer on any Grantee any right to continue in the employ of the
Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Grantee at any time for any reason whatsoever, with or without
good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right
may be granted to any key Employee selected by the Committee. A Stock
Appreciation Right may be granted (i) in connection and simultaneously with the
grant of an Option, (ii) with respect to a previously granted Option, or (iii)
independent of an Option. A Stock Appreciation Right shall be subject to such
terms and conditions not inconsistent with this Plan as the Committee shall
impose and shall be evidenced by a written Stock Appreciation Right Agreement,
which shall be executed by the Grantee and an authorized officer of the Company.
The Committee, in its discretion, may determine whether a Stock Appreciation
Right is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code and Stock Appreciation Right Agreements evidencing
Stock Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of section
162(m) of the Code. Without limiting the generality of the foregoing, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an Employee
that the Employee surrender for cancellation some or all of the unexercised
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or other rights
which have been previously granted to him under this Plan or otherwise. A Stock
Appreciation Right, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
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8.2 Coupled Stock Appreciation Rights
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
a particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than the number
of shares subject to the simultaneously or previously granted Option to which it
is coupled.
(c) A CSAR shall entitle the Grantee (or other person entitled to
exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.
8.3 Independent Stock Appreciation Rights
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
the terms of the ISAR, no ISAR granted to a person subject to Section 16 of the
Exchange Act shall be exercisable until at least six months have elapsed from
(but excluding) the date on which the Option was granted. The exercise price per
share of Common Stock subject to each ISAR shall be set by the Committee. An
ISAR is exercisable only while the Grantee is an Employee; provided that the
Committee may determine that the ISAR may be exercised subsequent to Termination
of Employment without cause, or following a change in control of the Company, or
because of the Grantee's retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Grantee (or other person entitled to
exercise the ISAR pursuant to this Plan) to exercise all or a specified portion
of the ISAR (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Common Stock on the date of exercise of the ISAR by
the number of shares of
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Common Stock with respect to which the ISAR shall have been exercised, subject
to any limitations the Committee may impose.
8.4 Payment and Limitations on Exercise
(a) Payment of the amount determined under Section 8.2(c) and 8.3(b)
above shall be in cash, in Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.4
hereinabove pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are subject to Section
16 of the Exchange Act may, in the discretion of the Board or Committee, be
required to comply with any timing or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock Appreciation Right.
8.5 Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted. Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of the Company or any Subsidiary or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any reason whatsoever, with
or without good cause.
ARTICLE XI
ADMINISTRATION
9.1 Compensation Committee. The Compensation Committee (or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist of two or more Independent Directors appointed by and
holding office at the pleasure of the Board, each of whom is both a
"disinterested person" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the
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agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under this
Plan except with respect to matters which under Rule 16b-3 or Section 162(m) of
the Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.
9.3 Majority Rule. The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
9.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested persons.
No members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution unless and until such right or award has been exercised, or the
shares underlying such right or award
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have been issued, and all restrictions applicable to such shares have lapsed. No
Option, award of Restricted Stock or Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee,
Grantee, Restricted Stockholder or his successors in interest, or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
During the lifetime of the Optionee or Grantee, only he may exercise
an Option or other right or award (or any portion thereof) granted to him under
the Plan. After the death of the Optionee or Grantee, any exercisable portion of
an Option or other right or award may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement or
other agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.
10.2 Amendment, Suspension or Termination of this Plan. Unless sooner
terminated under this Section 10.2, the Plan will terminate after the expiration
of ten years from the date the Company's Registration Statement, as amended and
filed in connection with the Company's proposed initial public offering of
Common Stock, is declared or deemed to be effective by the Securities and
Exchange Commission. This Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
Committee, and may be terminated at any time by the Board. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Committee, no action of the Committee may, except as
provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Committee may be taken that would otherwise require
stockholder approval as a matter of applicable law, regulation or rule. No
amendment, suspension or termination of this Plan shall, without the consent of
the holder of Options, Restricted Stock or Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments, alter
or impair any rights or obligations under any Options, awards of Restricted
Stock or Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments theretofore granted or awarded, unless the award
itself otherwise expressly so provides. No Options, Restricted Stock, Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments may be granted or awarded during any period of suspension or
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after the first to occur
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<PAGE> 20
of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved
by the Company's stockholders under Section 10.5.
10.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 10.3(e), in the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion, affects the
Common Stock such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, Restricted Stock award, Performance Award, Stock Appreciation
Right, Dividend Equivalent, Deferred Stock award or Stock Payment, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments
may be granted under the Plan, or which may be granted as Restricted Stock
or Deferred Stock (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or
other securities or property) subject to outstanding Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock Payments,
and in the number and kind of shares of outstanding Restricted Stock or
Deferred Stock, and
(iii) the grant or exercise price with respect to any
Option,
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<PAGE> 21
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment.
(b) Subject to Section 10.3(e), in the event of any corporate
transaction or other event described in Section 10.3(a) which results in shares
of Common Stock being exchanged for or converted into cash, securities
(including securities of another corporation) or other property, the Committee
will have the right to terminate this Plan as of the date of the event or
transaction, in which case all options, rights and other awards granted under
this Plan shall become the right to receive such cash, securities or other
property, net of any applicable exercise price.
(c) In the event of any corporate transaction or other event
described in Section 10.3(a) or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations, or accounting principles, the Committee in its discretion is hereby
authorized to take any one or more of the following actions whenever the
Committee determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any option, right or other
award under this Plan, to facilitate such transactions or events or to give
effect to such changes in laws, regulations or principles:
(i) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may provide, either
automatically or upon the optionee's request, for either the purchase of
any such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, or Stock Payment, or any Restricted Stock or Deferred Stock for
an amount of cash equal to the amount that could have been attained upon
the exercise of such option, right or award or realization of the
optionee's rights had such option, right or award been currently
exercisable or payable or the replacement of such option, right or award
with other rights or property selected by the Committee in its sole
discretion;
(ii) In its sole and absolute discretion, the Committee may
provide, either by the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
Stock or Deferred Stock or by action taken prior to the occurrence of such
transaction or event that it cannot be exercised after such event;
(iii) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may provide, either
by the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
Stock or
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<PAGE> 22
by action taken prior to the occurrence of such transaction or event, that
for a specified period of time prior to such transaction or event, such
option, right or award shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in (i) Section 4.4 or
(ii) the provisions of such Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent, or Stock Payment, or Restricted Stock or
Deferred Stock;
(iv) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may provide, either
by the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
Stock or by action taken prior to the occurrence of such transaction or
event, that upon such event, such option, right or award be assumed by the
successor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of
the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; and
(v) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may make adjustments
in the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents, or Stock Payments, and in the
number and kind of outstanding Restricted Stock or Deferred Stock and/or in
the terms and conditions of (including the grant or exercise price), and
the criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future.
(vi) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee may provide either by
the terms of a Restricted Stock award or Deferred Stock award or by action
taken prior to the occurrence of such event that, for a specified period of
time prior to such event, the restrictions imposed under a Restricted Stock
Agreement or a Deferred Stock Agreement upon some or all shares of
Restricted Stock or Deferred Stock may be terminated, and, in the case of
Restricted Stock, some or all shares of such Restricted Stock may cease to
be subject to repurchase under Section 6.6 after such event.
(d) Subject to Sections 10.3(e) and 10.8, the Committee may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.
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<PAGE> 23
(e) With respect to Incentive Stock Options and Options and Stock
Appreciation Rights intended to qualify as performance-based compensation under
Section 162(m), no adjustment or action described in this Section 10.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code or would cause such option or stock appreciation right to fail to so
qualify under Section 162(m), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would violate Section 16 or the exemptive
conditions of Rule 16b-3. The number of shares of Common Stock subject to any
option, right or award shall always be rounded to the next whole number.
10.4 Approval of Plan by Stockholders. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be granted
and Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void.
10.5 Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. Subject to the timing
requirements of Section 5.3, the Committee may in its discretion and in
satisfaction of the foregoing requirement allow such Optionee, Grantee or
Restricted Stockholder to elect to have the Company withhold shares of Common
Stock otherwise issuable under such Option or such other award (or allow the
return of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld.
10.6 Loans. The Committee may, in its discretion, extend one or more
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted under this Plan, or the issuance of Restricted Stock or Deferred
Stock awarded under this Plan. The terms and conditions of any such loan shall
be set by the
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Committee.
10.7 Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee shall have the right (to the extent consistent with the requirements
of Rule 16b-3) to provide, in the terms of Options or other awards made under
the Plan, or to require the recipient to agree by separate written instrument,
that (a) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of the
award, or upon the receipt or resale of any Common Stock underlying such award,
must be paid to the Company, and (b) the award shall terminate and any
unexercised portion of such award (whether or not vested) shall be forfeited, if
(i) a Termination of Employment occurs prior to a specified date, or within a
specified time period following receipt or exercise of the award, or (ii) the
recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee.
10.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents, Stock Payments, Restricted Stock and Deferred Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan, any Option or Stock Appreciation Right intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.
10.9 Effect of Plan Upon Options and Compensation Plans. The adoption
of this Plan shall not affect any other compensation or incentive plans in
effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees of the Company or any Subsidiary or
(ii) to grant or assume options or other rights otherwise than under this Plan
in connection with any proper corporate purpose
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including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
firm or association.
10.10 Compliance with Laws. This Plan, the granting and vesting of
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments under this Plan and
the issuance and delivery of shares of Common Stock and the payment of money
under this Plan or under Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments granted or Restricted Stock or Deferred
Stock awarded hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
10.11 Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.
10.12 Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Ascent Entertainment Group, Inc. on November 17, 1995.
Executed on this 27th day of March, 1996.
Secretary
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<PAGE> 1
EXHIBIT 9
1995 NON-EMPLOYEE DIRECTORS STOCK PLAN
Ascent Entertainment Group, Inc., a Delaware corporation, has adopted the
1995 Non-Employee Directors Stock Plan (the "Plan"), effective December 18,
1995, for the benefit of its eligible Independent Directors (as such term is
defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors to further the
growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of directors
considered essential to the long range success of the Company by offering them
an opportunity to own stock in the Company and rights which will reflect the
growth, development and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 Board. "Board" shall mean the Board of Directors of the Company.
1.3 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
1.5 Company. "Company" shall mean Ascent Entertainment Group, Inc., a
Delaware corporation.
1.6 Corporate Transaction. "Corporate Transaction" shall mean any of the
following stockholder-approved transactions to which the Company is a party:
<PAGE> 2
(a) a merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change the
State in which the Company is incorporated, form a holding company or effect a
similar reorganization as to form whereupon this Plan and all Options are
assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or
(c) any reverse merger in which the Company is the surviving entity but in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities are transferred to a person
or person different from those who held such securities immediately prior to
such merger.
1.7 Director. "Director" shall mean a member of the Board.
1.8 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.9 Fair Market Value. "Fair Market Value" of a share of Common Stock as
of a given date shall be (i) the mean between the highest and lowest selling
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on such date, or if shares were not
traded on such date, then on the closest preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Board acting
in good faith.
1.10 Independent Director. "Independent Director" shall mean a Director who
is not an employee of the Company nor an officer or employee of COMSAT
Corporation so long as COMSAT Corporation holds 50% or more of the outstanding
Common Stock.
1.11 Option. "Option" shall mean a stock option granted under Article III
of this Plan.
1.12 Optionee. "Optionee" shall mean an Independent Director
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<PAGE> 3
granted an Option under this Plan.
1.13 Plan. "Plan" shall mean the 1995 Non-Employee Directors Stock Plan.
1.14 Registration Statement. "Registration Statement" shall mean the
Company's Form S-1 Registration Statement (No. 33-98502), as amended filed in
connection with the Company's proposed initial public offering of Common Stock.
1.15 Rule 16b-3."Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
1.16 Stock Award. "Stock Award" shall mean an award of shares of Common
Stock.
1.17 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50 percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
1.18 Termination of Directorship. "Termination of Directorship" shall mean
the time when an Optionee ceases to be a Director for any reason, including, but
not by way of limitation, a termination by resignation, failure to be elected,
death or retirement. The Board, in its sole and absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Directorship.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan. The shares of stock subject to Options and
Stock Awards shall be Common Stock, initially shares of the Company's Common
Stock, par value $.01 per share. The aggregate number of such shares which may
be issued upon exercise of such options or upon any such awards under the Plan
shall not exceed 110,000 (One hundred ten thousand).
2.2 Unexercised Options. If any Option expires or is cancelled without
having been fully exercised, the number of shares subject to such Option but as
to which such Option was not exercised prior to its expiration or cancellation
may again be optioned hereunder, subject to the limitations of Section 2.1.
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ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Each Independent Director of the Company shall be
eligible to be granted Options at the times and in the manner set forth in
Section 3.2.
3.2 Granting of Options
(a) On the date that the Company's Registration Statement is declared or
deemed to be effective by the Securities Exchange Commission, each individual
then serving as an Independent Director (or nominated for election at the first
shareholder's meeting to elect Directors following such date) shall be granted
an Option to acquire 4,000 shares of Common Stock.
(b) As of the close of each annual shareholder's meeting at which
Directors are elected, each individual then serving as an Independent Director
shall be granted an Option to acquire 4,000 shares of Common Stock.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a written Stock
Option Agreement, which shall be executed by the Optionee and an authorized
officer of the Company and which shall contain such terms and conditions as the
Board shall determine, consistent with this Plan.
4.2 Option Price. The price per share of the shares subject to each Option
shall be the Fair Market Value of a share of Common Stock on the date of grant
of the Option; provided, however, that the price per share of the shares subject
to each Option granted pursuant to Section 3.2(a) shall be the initial offering
price of a share upon the consummation of the Company's proposed initial public
offering of Common Stock.
4.3 Option Term. The term of an Option shall be ten (10) years from the
date the Option is granted.
4.4 Option Vesting
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<PAGE> 5
(a) Except as set forth below in subsections (b) and (c), each Option
shall vest 100% on the third anniversary of the date of grant of such Option,
and no portion of an Option shall be vested prior to the third anniversary of
the date of grant.
(b) On the date that COMSAT Corporation first owns less than 80% of the
Common Stock then outstanding (the "Determination Date"), each Option shall be
vested as follows:
<TABLE>
<CAPTION>
Percent of Option
If the Determination Date is Which Is Exercisable
- ----------------------------- --------------------
<S> <C>
Prior to the first anniversary of the Grant Date 0%
After the first anniversary of the Grant Date 25%
After the second anniversary of the Grant Date 50%
After the third anniversary of the Grant Date 100%
</TABLE>
(c) No portion of an Option which is unexercisable at Termination of
Directorship shall thereafter become exercisable.
4.5 Consideration. In consideration of the granting of an Option, the
Optionee shall agree, in the written Stock Option Agreement, to serve as an
Independent Director of the Company or any Subsidiary until the next annual
meeting of stockholders of the Company. Nothing in this Plan or in any Stock
Option Agreement hereunder shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Optionee at any time for any reason whatsoever, with or without
good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Board may require that, by the terms of the Option, a partial
exercise be with respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:
(a) A written notice complying with the applicable rules established by
the Board stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such
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<PAGE> 6
portion;
(b) Such representations and documents as the Board, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Board may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section
10.1 by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised. However, at
the discretion of the Board the terms of the Option may (i) allow a delay in
payment up to thirty (30) days from the date the Option, or portion thereof, is
exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee for a period of not less than six
months, duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and valuable
consideration; (iv) allow payment, in whole or in part, through the delivery of
a full recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable upon
such terms as may be prescribed by the Board, or (v) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (ii),
(iii) and (iv). In the case of a promissory note, the Board may also prescribe
the form of such note and the security to be given for such note. The Option may
not be exercised, however, by delivery of a promissory note or by a loan from
the Company when or where such loan or other extension of credit is prohibited
by law.
5.3 Certain Timing Requirements. At the discretion of the Board, shares of
Common Stock issuable to the Optionee upon exercise of the Option may be used to
satisfy the Option exercise price or the tax withholding consequences of such
exercise, in the case of persons subject to Section 16 of the Exchange Act, only
(i) during the period beginning on the third business day following the date of
release of the quarterly or annual summary statement of sales and earnings of
the Company and ending on the twelfth business day following such date or (ii)
pursuant to an irrevocable written election by the Optionee to use shares of
Common Stock issuable to the Optionee upon exercise of the Option to pay all or
part of the Option price or the
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<PAGE> 7
withholding taxes made at least six months prior to the payment of such Option
price or withholding taxes.
5.4 Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Board shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Board shall, in its absolute discretion,
determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Board may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect of
any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders.
5.6 Ownership and Transfer Restrictions. The Board, in its discretion, may
impose such restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares.
5.7 Limitations on Exercise of Options. No Option may be exercised to any
extent by anyone after the first to occur of the following events:
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(a) The expiration of twelve (12) months from the date of the Optionee's
death;
(b) the expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code);
(c) the expiration of three (3) months from the date of the Optionee's
Termination of Directorship for any reason other than such Optionee's death or
his permanent and total disability, unless the Optionee dies within said
three-month period;
(d) a Corporate Transaction; provided, however, that any Option granted
or deemed regranted within six months of such Corporate Transaction shall remain
exercisable until the expiration of six months and one day from the later of the
date such Option was granted or the date such Option was deemed regranted; or
(e) The expiration of ten years from the date the Option was granted.
ARTICLE VI
STOCK AWARDS
6.1 Eligibility. Each Independent Director of the Company shall be
eligible to be granted Stock Awards at the times and in the manner set forth in
Section 6.2.
6.2 Granting of Stock Awards
(a) On the date that the Company's Registration Statement is declared or
deemed to be effective by the Securities Exchange Commission, each individual
then serving as an Independent Director (or nominated for election at the first
shareholder's meeting to elect Directors following such date) shall be granted a
Stock Award of 400 shares of Common Stock.
(b) As of the close of each annual shareholder's meeting at which
Directors are elected, each individual then serving as an Independent Director
shall be granted a Stock Award of 400 shares of Common Stock.
ARTICLE VII
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ADMINISTRATION
7.1 Duties and Powers of Board. It shall be the duty of the Board to
conduct the general administration of this Plan in accordance with its
provisions. The Board shall have the power to interpret this Plan and the
agreements pursuant to which Options are granted, and to adopt such rules for
the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any such
grant under this Plan need not be the same with respect to each Optionee.
7.2 Majority Rule. The Board shall act by a majority of its members in
attendance at a meeting at which a quorum is present or by a memorandum or other
written instrument signed by all members of the Board.
7.3 Compensation; Professional Assistance; Good Faith Actions. All
expenses and liabilities which members of the Board incur in connection with the
administration of this Plan shall be borne by the Company. The Board may, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Board, the Company and the Company's officers and Directors shall be entitled to
rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Board in good faith
shall be final and binding upon all Optionees, the Company and all other
interested persons. No members of the Board shall be personally liable for any
action, determination or interpretation made in good faith with respect to this
Plan or Options, and all members of the Board shall be fully protected by the
Company in respect of any such action, determination or interpretation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Not Transferable. Options under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution. No Option or interest or right therein shall be liable for the
debts, contracts or engagements of the Optionee or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
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During the lifetime of the Optionee, only he may exercise an Option (or any
portion thereof) granted to him under the Plan. After the death of the Optionee,
any exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
8.2 Amendment, Suspension or Termination of this Plan. Unless sooner
terminated under this Section 8.2, the Plan will terminate after the expiration
of ten years from the date the Registration Statement is declared or deemed to
be effective by the Securities and Exchange Commission. The Plan may be wholly
or partially amended or otherwise modified, suspended or terminated at any time
or from time to time by the Board. However, without approval of the Company's
stockholders given within twelve months before or after the action by the Board,
no action of the Board may, except as provided in Section 7.3, increase the
limits imposed in Section 2.1 on the maximum number of shares which may be
issued under this Plan, and no action of the Board may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. Notwithstanding the foregoing, except as permitted by the applicable
exemptive conditions of Rule 16b-3, the provisions of this Plan relating to
formula grants of Options and Stock Awards to Directors, including the amount,
price and timing thereof, shall not be amended more than once in any six-month
period other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the respective rules thereunder. No
amendment, suspension or termination of this Plan shall, without the consent of
the holder of Options and Stock Awards, alter or impair any rights or
obligations under any Options or Stock Awards theretofore granted, unless the
award itself otherwise expressly so provides. No Options or Stock Awards may be
granted during any period of suspension or after termination of this Plan.
8.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 8.3(e), in the event that the Board determines that
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Board's sole discretion, affects the Common Stock such that
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an adjustment is determined by the Board to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Option or Stock Award then
the Board shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which Options may be granted
under the Plan, or which may be granted as Stock Awards (including, but not
limited to, adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued),
(ii) the number and kind of shares of Common Stock (or
other securities or property) subject to outstanding Options and in the
number and kind of shares of outstanding Stock Awards, and
(iii) the grant or exercise price with respect to any
Option.
(b) Subject to Section 8.3(e), in the event of any corporate
transaction or other event described in Section 8.3(a) which results in shares
of Common Stock being exchanged for or converted into cash, securities
(including securities of another corporation) or other property, the Board will
have the right to terminate this Plan as of the date of the event or
transaction, in which case all Options and Stock Awards granted under this Plan
shall become the right to receive such cash, securities or other property, net
of any applicable exercise price.
(c) Subject to Sections 8.3(c)(vii) and 8.3(e), in the event
of any corporate transaction or other event described in Section 8.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Board in its discretion is hereby authorized to take any one or
more of the following actions whenever the Board determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any Option or Stock Award under this Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:
(i) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide, either
automatically or upon the Optionee's request, for either the purchase of
any such Option for an amount of cash equal to the amount that could have
been attained upon the exercise of such Option or realization of the
Optionee's rights had such Option been currently exercisable or payable or
the replacement of such Option or
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Stock Award with other rights or property selected by the Board in its sole
discretion;
(ii) In its sole and absolute discretion, the Board may
provide, either by the terms of such Option or by action taken prior to the
occurrence of such transaction or event that it cannot be exercised after
such event;
(iii) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide, either by
the terms of such Option or by action taken prior to the occurrence of such
transaction or event, that for a specified period of time prior to such
transaction or event, such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in (i) Section
4.4 or (ii) the provisions of such Option;
(iv) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board, in the
case of Options granted to Independent Directors) may provide, either by
the terms of such Option or Stock Award or by action taken prior to the
occurrence of such transaction or event, that upon such event, such option,
right or award be assumed by the successor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options, rights
or awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices; and
(v) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may make adjustments in
the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options, and in the number and kind of
outstanding Stock Awards and/or in the terms and conditions of (including
the grant or exercise price), and the criteria included in, outstanding
options, rights and awards and options, rights and awards which may be
granted in the future.
(vi) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide either by the
terms of a Stock Award or by action taken prior to the occurrence of such
event that, for a specified period of time prior to such event, the
restrictions imposed under a Stock Award Agreement upon some or all shares
of the Stock Award may be terminated.
(vii) None of the foregoing discretionary terms of this
Section 8.3(c) shall be permitted with respect to Options and Stock Awards
to
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<PAGE> 13
the extent that such discretion would be inconsistent with the requirements
of Rule 16b-3. In the event of a Corporate Transaction, to the extent that
the Board does not have the ability under Rule 16b-3 to take or to refrain
from taking the discretionary actions set forth above, each Option shall be
exercisable as to all shares covered thereby during the five days
immediately preceding the consummation of such Corporate Transaction and
subject to such consummation, notwithstanding anything to the contrary in
Section 4.4 and except as provided in Section 5.7(d), Options cannot be
exercised following such event.
(d) Subject to Section 8.3(e) and 8.8, the Board may, in its
discretion, include such further provisions and limitations in any Option or
Stock Award agreement or certificate, as it may deem equitable and in the best
interests of the Company.
(e) No adjustment or action described in this Section 8.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would violate Section 16 or the exemptive conditions of
Rule 16b-3. The number of shares of Common Stock subject to any option, right or
award shall always be rounded to the next whole number.
8.4 Approval of Plan by Stockholder. This Plan will be submitted for
the approval of the Company's stockholders within twelve months after the date
of the Board's initial adoption of this Plan. Options and Stock Awards may be
granted prior to such stockholder approval, provided that such Options shall not
be exercisable prior to the time when this Plan is approved by the stockholders,
and provided further that if such approval has not been obtained at the end of
said twelve-month period, all Options and Stock Awards previously granted under
this Plan shall thereupon be cancelled and become null and void.
8.5 Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Board shall have the right (to the extent consistent with the requirements of
Rule 16b-3) to provide, in the terms of Options or other awards made under the
Plan, or to require the recipient to agree by separate written instrument, that
(a) any proceeds, gains or other economic benefit actually or constructively
received by the recipient upon any receipt or exercise of the award, or upon the
receipt or resale of any Common Stock underlying such award, must be paid to the
Company, and (b) the award shall terminate and any unexercised portion of such
award (whether or not vested) shall be forfeited, if (i) a Termination of
Directorship occurs prior to a specified date, or within a specified time period
following receipt or exercise of the award, or (ii) the recipient at any time,
or
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during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Board.
8.6 Limitations Applicable to Section 16 Persons. Notwithstanding
any other provision of this Plan, the Plan and any Option or Stock Award granted
to a Director who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan, Options and Stock
Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.
8.7 Effect of Plan Upon Options and Compensation Plans. The adoption
of this Plan shall not affect any other compensation or incentive plans in
effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for employees or Directors of the Company or any
Subsidiary or (ii) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate purpose including but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
8.8 Compliance with Laws. This Plan, the granting and vesting of
Options under this Plan and the issuance and delivery of shares of Common Stock
under Options or Stock Awards granted hereunder are subject to compliance with
all applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin requirements) and
to such approvals by any listing, regulatory or governmental authority as may,
in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if
requested by the Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to assure compliance with
all applicable legal requirements. To the extent permitted by applicable law,
the Plan, Options and Stock Awards granted hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
8.9 Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.
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8.10 Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Ascent Entertainment Group, Inc. on November 17, 1995.
Executed on this ____ day of March, 1996.
Secretary
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EXHIBIT 10
1997 NON-EMPLOYEE DIRECTORS STOCK APPRECIATION RIGHTS PLAN
Ascent Entertainment Group, Inc., a Delaware corporation, has adopted the
1997 Non-Employee Directors Stock Plan (the "Plan"), effective as of June 27,
1997, and ratified on October 24, 1997, for the benefit of its eligible
Independent Directors (as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors to further the
growth, development and financial success of the Company by personally
benefitting through the ownership of Company stock appreciation rights which
recognize such growth, development and financial success.
(2) To enable the Company to attract and retain the services of directors
of the highest qualifications considered essential to both the short term
challenges confronting the Company and the long range success of the Company by
offering them an opportunity to own Company stock appreciation rights which will
reflect the growth, development and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
1.2 Board. "Board" shall mean the Board of Directors of the Company.
1.3 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock.
1.5 Company. "Company" shall mean Ascent Entertainment Group, Inc., a
Delaware corporation.
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1.6 Corporate Transaction. "Corporate Transaction" shall mean any of the
following:
(a) 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 AExchange Act@) (a APerson@) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (i) the then outstanding shares of common stock of
the Company (the AOutstanding Company Common Stock@) or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the AOutstanding
Company Voting Securities@); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Corporate
Transaction: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c); or
(b) Individuals who, as of June 27, 1997, constitute the Board (the
AIncumbent Board@) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to June 27, 1997 whose election, or nomination for election by
the Company=s stockholders, 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
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a ABusiness Combination@), in each case, unless, following such
Business Combination, (i) 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
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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, (ii) 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 (iii) 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
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
1.7 Director. "Director" shall mean a member of the Board.
1.8 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.9 Fair Market Value. "Fair Market Value" of a share of Common Stock as
of a given date shall be (i) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any, on
such date, or if shares were not traded on such date, then on the closest
preceding date on which a trade occurred, or (ii) if Common Stock is not traded
on an exchange, the closing price for the Common Stock on such date as reported
by NASDAQ or, if NASDAQ is not then in existence, by its successor quotation
system; or (iii) if Common Stock is not publicly traded, the Fair Market Value
of a share of Common Stock as established by the Board
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acting in good faith.
1.10 Grant Date. "Grant Date" shall mean the date an Independent Director
receives a grant of SARs pursuant to Section 3 of the Plan.
1.11 Independent Director. "Independent Director" shall mean a Director who
is not an officer or employee of the Company or any of its Subsidiaries.
1.12 Holder. "Holder" shall mean an Independent Director granted an SAR
under this Plan.
1.13 Plan. "Plan" shall mean the 1997 Non-Employee Directors Stock Plan.
1.14 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
1.15 Stock Appreciation Right or SAR. AStock Appreciation Right@ or ASAR@
shall mean a right to receive cash in an amount equal to the appreciation in the
Fair Market Value of the Common Stock from the date of grant through the date of
exercise as set forth in Article III of this Plan.
1.16 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
1.17 Termination of Directorship. "Termination of Directorship" shall mean
the time when a Holder ceases to be a Director for any reason, including, but
not by way of limitation, a termination by resignation, failure to be elected,
death or retirement. The Board, in its sole and absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Directorship.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan. The shares subject to SARs shall be shares of
the Company's Common Stock. The aggregate number of such shares which will
relate to SARs issued
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under the Plan shall not exceed seven hundred thousand (700,000).
2.2 Unexercised SARS. If any SARs issued under the Plan expire or are
canceled without having been fully exercised, the number of shares subject to
such SARs but as to which such SARs were not exercised prior to their expiration
or cancellation may again be subject to an SAR hereunder, subject to the
limitations of Section 2.1.
ARTICLE III
GRANTING OF SARs
3.1 Eligibility. Each Independent Director of the Company shall be
eligible to be granted SARs at the times and in the manner set forth in Section
3.2.
3.2 Granting of SARs
(a) On June 27, 1997, each individual then serving on or elected to the
Board and continuing to serve after such date as an Independent Director shall
be granted an SAR with respect to 100,000 shares of Common Stock.
(b) Subsequent to June 27, 1997, each individual, other than those
individuals described in subsection (a) above, who is elected or appointed to
the Board of Directors and is an Independent Director shall be granted, on a
one-time basis, an SAR with respect to 100,000 shares of Common Stock.
ARTICLE IV
TERMS OF SARS
4.1 SAR Agreement. Each SAR grant shall be evidenced by a written SAR
Agreement, which shall be executed by the Holder and an authorized officer of
the Company and which shall contain such terms and conditions as the Board shall
determine, consistent with this Plan.
4.2 SAR Price. The exercise price per share of the shares of Common Stock
subject to each SAR shall be the Fair Market Value of a share of Common Stock on
the date of grant of such SAR.
4.3 SAR Term. The term of a grant of SARs under the Plan shall be ten (10)
years from the date the SARs are granted.
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4.4 SAR Vesting
(a) Each SAR grant shall vest as follows:
<TABLE>
<CAPTION>
Percent of SAR grant
Date Which Is Exercisable
- ---- --------------------
<S> <C>
Prior to the first anniversary of the
Grant Date 0%
After the first anniversary of the
Grant Date 25%
After the second anniversary of the
Grant Date 50%
After the third anniversary of the
Grant Date 100%
</TABLE>
(b) Except as otherwise provided in this Plan, no portion of an SAR grant
which is unexercisable at a Termination of Directorship shall thereafter become
exercisable.
4.5 Consideration. In consideration of the granting of an SAR, the Holder
shall agree, in the written SAR Agreement, to serve as an Independent Director
of the Company or any Subsidiary until the next annual meeting of stockholders
of the Company. Nothing in this Plan or in any SAR Agreement hereunder shall
interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to remove any Holder as a Director at any time for
any reason whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF SARS
5.1 Partial Exercise. Vested SARs may be exercised in whole or in part.
However, SARs shall not be exercisable with respect to fractional shares and the
Board may require that, by the terms of the SAR, a partial exercise be with
respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of exercisable SARs shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:
(a) A written notice complying with the applicable
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rules established by the Board stating that the SARs, or a portion thereof, are
exercised. The notice shall be signed by the Holder or such other person then
entitled to exercise the SARs or such portion; and
(b) In the event that SARs shall be exercised pursuant to Section 7.1 by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the SARs.
5.3 Conditions to Payment Pursuant to the SARs. The Company shall not be
required to make the cash payment related to the exercise of rights under the
SARs prior to fulfillment of all of the following conditions:
(a) The lapse of such reasonable period of time following the exercise of
the SARs as the Board may establish from time to time for reasons of
administrative convenience; and
(b) The retention out of the SAR exercise proceeds by the Company of full
payment for any applicable taxes.
5.4 Rights as Stockholders. The Holders of SARs shall not be, nor have any
of the rights or privileges of, stockholders of the Company in respect of such
SARs.
5.5 Limitations on Exercise of SARs. No SAR may be exercised to any extent
by anyone after the first to occur of the following events:
(a) the expiration of twelve months from the date of the Holder's death;
(b) the expiration of twelve months from the date of the Holder's
Termination of Directorship by reason of his permanent and total disability
(within the meaning of Section 22(e)(3) of the Code);
(c) the expiration of three months from the date of the Holder's
Termination of Directorship for any reason other than such Holder's death or his
permanent and total disability, unless the Holder dies within said three-month
period;
(d) the expiration of twelve months from the date of a Corporate
Transaction; or
(e) the expiration of ten years from the date the SARS were granted.
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ARTICLE VI
ADMINISTRATION
6.1 Duties and Powers of Board. It shall be the duty of the Board to
conduct the general administration of this Plan in accordance with its
provisions. The Board shall have the power to interpret this Plan and the
agreements pursuant to which SARs are granted, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such grant under
this Plan need not be the same with respect to each Holder.
6.2 Majority Rule. The Board shall act by a majority of its members in
attendance at a meeting at which a quorum is present or by a consent, memorandum
or other written instrument signed by all members of the Board.
6.3 Compensation; Professional Assistance; Good Faith Actions. All
expenses and liabilities which members of the Board incur in connection with the
administration of this Plan shall be borne by the Company. The Board may, but is
not required to, employ attorneys, consultants, accountants, appraisers,
brokers, or other persons. The Board, the Company and the Company's officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Board in good faith shall be final and binding upon all Holders, the
Company and all other interested persons. No members of the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan or the SARs granted pursuant to this Plan, and
all members of the Board shall be fully protected by the Company in respect of
any such action, determination or interpretation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Not Transferable. SARs under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution. No SAR or interest or right therein shall be liable for the
debts, contracts or engagements of the Holder or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any
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other means whether such disposition be voluntary or involuntary or by operation
of law by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect.
During the lifetime of the Holder, only he or she may exercise an SAR (or
any portion thereof) granted to him or her under the Plan. After the death of
the Holder, any exercisable portion of an SAR may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable SAR Agreement, be
exercised by his or her personal representative or by any person empowered to do
so under the deceased Holder's will or under the then applicable laws of descent
and distribution.
7.2 Amendment, Suspension or Termination of this Plan. Unless sooner
terminated under this Section 7.2, the Plan will terminate on June 27, 2007. The
Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Board, no action of the Board may, except as provided in
Section 7.3, increase the limits imposed in Section 2.1 on the maximum number of
shares related to SARs which may be issued under this Plan, and no action of the
Board may be taken that would otherwise require stockholder approval as a matter
of applicable law, regulation or rule; provided, however, that by approving this
Plan stockholders will be authorizing an amendment of the Plan for the purpose
of converting the SARs to options to purchase shares of the Common Stock on
substantially the same terms as the existing SARs. Notwithstanding the
foregoing, except as permitted by the applicable exemptive conditions of Rule
16b-3, the provisions of this Plan relating to grant of SARs to Independent
Directors, including the amount, price and timing thereof, shall not be amended
more than once in any six-month period other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
respective rules thereunder. No amendment, suspension or termination of this
Plan shall, without the consent of the Holders, alter or impair any rights or
obligations under any SARs theretofore granted, unless the award itself
otherwise expressly so provides. No SARs may be granted during any period of
suspension or after termination of this Plan.
7.3 Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
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(a) Subject to Section 7.3(e), in the event that the Board
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Board's sole discretion, affects the
Common Stock such that an adjustment is determined by the Board to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an SAR then the Board shall, in such manner as it may deem equitable, adjust
any or all of
(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which SARS are granted
under the Plan (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares
which may be issued related to SARs),
(ii) the number and kind of shares of Common Stock (or
other securities or property) subject to outstanding SARs, and
(iii) the grant or exercise price with respect to any SARs.
(b) Subject to Section 7.3(e), in the event of any corporate
transaction or other event described in Section 7.3(a) which results in shares
of Common Stock being exchanged for or converted into cash, securities
(including securities of another corporation) or other property, the Board will
have the right to terminate this Plan as of the date of the event or
transaction, in which case all SARs granted under this Plan shall become the
right to receive such cash, securities or other property, net of any applicable
exercise price.
(c) Subject to Sections 7.3(c)(vi) and 7.3(e), in the event of
any corporate transaction or other event described in Section 7.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of
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changes in applicable laws, regulations, or accounting principles, the Board in
its discretion is hereby authorized to take any one or more of the following
actions whenever the Board determines that such action is appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to any SARs granted
under this Plan, to facilitate such transactions or events or to give effect to
such changes in laws, regulations or principles:
(i) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Board may provide,
either automatically or upon the Holder's request, for either the
purchase of any such SAR for an amount of cash equal to the amount
that would have been received upon the exercise of such SAR had such
SAR been currently exercisable or payable or the replacement of such
SAR with other rights or property selected by the Board in its sole
discretion;
(ii) In its sole and absolute discretion, the Board may
provide, either by the terms of such SAR or by action taken prior to
the occurrence of such transaction or event that it cannot be
exercised after such event;
(iii) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide, either
by the terms of such SAR or by action taken prior to the occurrence of
such transaction or event, that for a specified period of time prior
to such transaction or event, such SAR shall be exercisable as to all
shares covered thereby, notwithstanding anything to the contrary in
(a) Section 4.4 or (b) the provisions of such SAR;
(iv) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may provide, either
by the terms of such SARs or by action taken prior to the occurrence
of such transaction or event, that upon such event, such SAR be
assumed by the successor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar awards covering the
stock of the successor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices;
(v) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Board may make adjustments
in the number and type of shares of
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Common Stock (or other securities or property) subject to outstanding
SARs, and/or in the terms and conditions of such SARs (including the
grant or exercise price), and the criteria included in, awards which
may be granted in the future; and
(vi) The foregoing discretionary terms of this Section
7.3(c) shall be permitted with respect to SARs to the extent that such
discretion would be inconsistent with the requirements of Rule 16b-3.
In the event of a Corporate Transaction, to the extent that the Board
does not have the ability under Rule 16b-3 to take or to refrain from
taking the discretionary actions set forth above, each SAR shall be
exercisable as to all shares covered thereby during the five days
immediately preceding the consummation of such Corporate Transaction
and subject to such consummation, notwithstanding anything to the
contrary in Section 4.4, SARs cannot be exercised following such
event.
(d) Subject to Section 7.3(e) and 7.8, the Board may, in its
discretion, include such further provisions and limitations in any SAR
agreement, as it may deem equitable and in the best interests of the Company.
(e) No adjustment or action described in this Section 7.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would violate Section 16 of the Exchange Act or the
exemptive conditions of Rule 16b-3. The number of shares of Common Stock
subject to any SAR shall always be rounded to the next whole number.
7.4 Approval of Plan by Stockholders. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. SARs may be granted prior to
such stockholder approval, provided that such SARs shall not be exercisable
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all SARs previously granted under this Plan shall thereupon
be canceled and become null and void.
7.5 Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to SAR awards under the Plan, the
Board shall have the right (to the extent consistent with the requirements of
Rule 16b-3) to provide, in the terms of SAR awards made under the Plan, or to
require the recipient to agree by separate written instrument,
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that (a) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of the
SARs, must be paid to the Company, and (b) the award shall terminate and any
unexercised portion of such award (whether or not vested) shall be forfeited, if
(i) a Termination of Directorship occurs prior to a specified date, or within a
specified time period following receipt or exercise of the award, or (ii) the
recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Board.
7.6 Limitations Applicable to Section 16 Persons. Notwithstanding
any other provision of this Plan, the Plan and any SAR granted to an Independent
Director who is then subject to Section 16 of the Exchange Act, shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, the Plan and the SARs granted
hereunder shall be deemed amended to the extent necessary to conform to such
applicable exemptive rule.
7.7 Effect of Plan Upon Incentive and Compensation Plans. The
adoption of this Plan shall be in lieu of, and the Board is terminating
effective June 27, 1997, any other compensation plans or arrangements for
Directors. The adoption of this Plan shall not affect any compensation or
incentive plans for officers or employees in effect for the Company or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the Company or any Subsidiary or (ii) to grant or assume SARs or
other rights otherwise than under this Plan in connection with any proper
corporate purpose including but not by way of limitation, the grant or
assumption of SARs in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.
7.8 Compliance with Laws. This Plan and the granting and vesting of
SARs under this Plan are subject to compliance with all applicable federal and
state laws, rules and regulations. To the extent permitted by applicable law,
the Plan and the SARs granted hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
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7.9 Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.
7.10 Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Ascent Entertainment Group, Inc. effective as of June 27, 1997,
and ratified by such Board of Directors on October 24, 1997.
Executed as of the 24th day of October, 1997
/s/ Arthur M. Aaron
------------------------------------
Secretary
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Exhibit 11
ARTICLE VIII OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ASCENT ENTERTAINMENT GROUP, INC.
No Director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (c) pursuant to Section 174 of the General Corporation Law
of the State of Delaware or (iv) for any transaction from which the director
received an improper personal benefit.
<PAGE> 1
Exhibit 12
ARTICLE VIII OF AMENDED AND RESTATED BYLAWS OF
ASCENT ENTERTAINMENT GROUP, INC.
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.
<PAGE> 2
(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 claim ant'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
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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
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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.
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
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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 represent-
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ing 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.
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Exhibit 13
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT made as of June 27, 1997, and
amended and restated as of January 25, 2000, 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, Ascent desires to employ the Executive as Executive Vice
President, Business Affairs 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 Executive Vice President, Business Affairs of Ascent or
its successor entity for a period (the "Employment Period") commencing on
January 25, 2000 (the "Effective Date") and continuing thereafter until June 27,
2003 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 executive officer of Ascent, if there is one (the
"CEO"), and otherwise directly to the Board of Directors of Ascent (the
"Board"). The Executive shall have all duties and authority customarily accorded
a senior business affairs officer, and such other duties as determined by the
CEO or the Board 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 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 $300,000 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
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("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 50% 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
Board 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 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. On June 27, 1997, Ascent
granted to Executive 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 $9.5250.
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
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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.
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(e) Stock Options. Ascent hereby grants to Executive options
("Options") to purchase 100,000 shares of Ascent's common stock, par value $0.01
per share, each such Option exercisable at the per-share price equal to
$11.9063. The Options shall be exercisable by Executive according to the
following schedule:
(i) 50,000 Options on or after January 25, 2001;
(ii) an additional 50,000 Options on or after January 25, 2002.
Notwithstanding the foregoing, 100% of the Options shall immediately vest and
become immediately exercisable, without any further action by the Executive,
upon the occurrence of any "Change of Control 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 Options
shall be represented by a Option agreement containing appropriate terms
consistent with the provisions of this Agreement. The Options, to the extent
they remain unexercised, shall automatically and without further notice
terminate and become of no further force and effect 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) January 25, 2010.
In the event of any stock split, stock dividend, spin-off,
reclassification, recapitalization, merger, consolidation, subdivision,
combination or other change which affects the character or amount of Ascent's
common stock after the Effective Date and prior to the exercise and/or
expiration of all of the Options, the number and exercise price of and/or the
formula for determining the value of such unissued or
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unexercised Options shall be adjusted in order to make such Options, as nearly
as may be practicable, equivalent in nature and value to the Options that would
have existed had such change not taken place. In addition, if Ascent adopts a
stock-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 Options, other than with respect to the vesting schedule thereof,
but in no event will any term(s) applicable to the Options be less favorable to
Executive than those set forth above.
During the Employment Period, the Executive may 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) 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 and Options), life insurance, health
insurance, any other employee equity participation, profit sharing or retirement
plan, group health plan or other employee benefits (individually and
collectively 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,
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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
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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,
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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, the Options and any other stock-based compensation, 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 fifty percent (50%) 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
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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,
Options 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 and Options) 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, Business 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 business affairs officer of comparable
companies; (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; and provided, further, the Executive and the Company
shall explore alternatives to minimize any excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended as of the Effective Date (the
"Code") that would otherwise be payable;
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(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; 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 or 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
CEO or 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 CEO or the Board specifying the serious misconduct
engaged in by the Executive, (iii) the conviction of the Executive of commission
of a felony involving a crime of moral turpitude, whether or not such felony was
committed in connection with Ascent's business, or (iv) any material breach by
the Executive of Section 8 hereof. If Ascent shall terminate the Executive's
employment for "cause," there will be no forfeiture, penalty, reduction or other
adverse effect upon any vested rights or interests relating to any Fringe
Benefits. In such event, Ascent, in full satisfaction of all of Ascent's
obligations under this Agreement and in respect of the termination of the
Executive's employment with Ascent, shall pay the Executive his Base Salary, a
prorated Annual
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Bonus and all other compensation, benefits and reimbursement through the date of
termination of his employment, provided that the SARs, the Options 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, the Options and any
other stock options granted to the Executive under the Ascent option plan or any
successor plan shall become fully vested and shall terminate in accordance with
their terms, but in no event less than one year after such termination,
notwithstanding the limitations of Sections 2(d) and (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
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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, the Options
and any other stock options granted to the Executive under the Ascent option
plan or any successor plan shall become fully vested and shall terminate one
year after the date of termination of the Executive=s employment for death,
notwithstanding the limitations of Section 2(d) and (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) 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
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"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
75% 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
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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
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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
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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
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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. 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
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unenforceability or prohibition in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. Assignment. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. Ascent's rights and
obligations under this Agreement shall not be assignable by Ascent except as
incident to the transfer, by merger or otherwise, of all or substantially all of
the business of Ascent. In the event of any such assignment by Ascent, all
rights of Ascent hereunder shall inure to the benefit of the assignee.
14. Notices. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method, provided
that in such case it shall also be sent by certified or registered mail, return
receipt requested; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. Unless otherwise changed by notice, in each case notice shall
be sent to:
If to Executive, addressed to:
Arthur M. Aaron
5911 E. Crestline Dr.
Greenwood Village, Colorado 80111
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Attention: David A. Holden
Telecopier No. (303) 308-0490
With a copy to:
Ascent Entertainment Group
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1200 Seventeenth Street
Denver, Colorado 80202
Attention: David Ehrlich
Telecopier No. (303) 308-0489
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.
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/ CHARLES M. NEINAS
--------------------------------
Title: Chairman
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Exhibit 14
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT originally made as of June 27, 1997
and amended and restated as of January 25, 2000, 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, Ascent desires to employ the Executive as Executive Vice
President, Finance and Chief Financial 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 Executive Vice President, Finance and Chief Financial
Officer of Ascent or its successor entity for a period (the "Employment Period")
commencing on January 25, 2000 (the "Effective Date") and continuing thereafter
until June 27, 2003 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 executive officer of Ascent, if there is one (the
"CEO") and otherwise directly to the Board of Directors of Ascent (the "Board").
The Executive shall have all duties and authority customarily accorded a chief
financial officer, and such other duties as determined by the CEO or the Board
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 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 $250,000 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.
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(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 50% 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
Board 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 "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. On June 27, 1997, Ascent granted to
Executive 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 $9.5250. 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.
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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
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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) Stock Options. Ascent hereby grants to Executive options
("Options") to purchase 100,000 shares of Ascent's common stock, par value $0.01
per share, each such Option exercisable at the per-share price equal to
$11.9063. The Options shall be exercisable by Executive according to the
following schedule:
(i) 50,000 Options on or after January 25, 2001;
(ii) an additional 50,000 Options on or after
January 25, 2002.
Notwithstanding the foregoing, 100% of the Options shall immediately vest and
become immediately exercisable, without any further action by the Executive,
upon the occurrence of any "Change of Control 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 Options
shall be represented by a Option agreement containing appropriate terms
consistent with the provisions of this Agreement. The Options, to the extent
they remain unexercised, shall automatically and without further notice
terminate and become of no further force and effect 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) January 25, 2010.
In the event of any stock split, stock dividend,
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spin-off, reclassification, recapitalization, merger, consolidation,
subdivision, combination or other change which affects the character or amount
of Ascent's common stock after the Effective Date and prior to the exercise
and/or expiration of all of the Options, the number and exercise price of and/or
the formula for determining the value of such unissued or unexercised Options
shall be adjusted in order to make such Options, as nearly as may be
practicable, equivalent in nature and value to the Options that would have
existed had such change not taken place. In addition, if Ascent adopts a
stock-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 Options, other than with respect to the vesting schedule thereof,
but in no event will any term(s) applicable to the Options be less favorable to
Executive than those set forth above.
During the Employment Period, the Executive may 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) 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 and the Options), life insurance, health insurance, any
other employee equity participation, profit sharing or retirement plan, group
health plan or other employee benefits (individually and collectively 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
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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
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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
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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, the Options and any other stock-based compensation, 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 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 fifty
percent (50%) 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
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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, Options 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 and Options) 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, Finance and Chief Financial
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 principal
financial officers of comparable companies; (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
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Executive in a lump sum upon the effectiveness of his termination as a result of
a Change in Control Event; and provided, further, the Executive and the Company
shall explore alternatives to minimize any excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended as of the Effective Date (the
"Code") that would otherwise be payable; (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; 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 CEO or 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 CEO or the Board specifying the serious misconduct
engaged in by the Executive, (iii) the conviction of the Executive of commission
of a felony involving a crime of moral turpitude, whether or not such felony was
committed in connection with Ascent's business, or (iv) any material breach by
the Executive of Section 8 hereof. If Ascent shall terminate the Executive's
employment for "cause," there will be no forfeiture, penalty, reduction or other
adverse effect upon any vested rights or interests relating to any Fringe
Benefits. In such event, Ascent, in full satisfaction of all of Ascent's
obligations under this Agreement and in respect of the termination of the
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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, the
Options 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, the Options and any other stock options
granted to the Executive under the Ascent option plan or any successor plan
shall become fully vested and shall terminate in accordance with their terms,
but in no event less than one year after such termination, notwithstanding the
limitations of Sections 2(d) and (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.
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(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, the Options and any other stock
options granted to the Executive under the Ascent option plan or any successor
plan shall become fully vested and shall terminate one year after the date of
termination of the Executive's employment for death, notwithstanding the
limitations of Sections 2(d) and (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)(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
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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 75% 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
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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
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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
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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
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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. 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
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invalidate or render unenforceable such provision in any other jurisdiction.
13. Assignment. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. Ascent's rights and
obligations under this Agreement shall not be assignable by Ascent except as
incident to the transfer, by merger or otherwise, of all or substantially all of
the business of Ascent. In the event of any such assignment by Ascent, all
rights of Ascent hereunder shall inure to the benefit of the assignee.
14. Notices. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method, provided
that in such case it shall also be sent by certified or registered mail, return
receipt requested; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. Unless otherwise changed by notice, in each case notice shall
be sent to:
If to Executive, addressed to:
David A. Holden
5220 South Flower Street
Littleton, Colorado 80123
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Attention: Arthur M. Aaron
Telecopier No. (303) 308-0489
With a copy to:
Ascent Entertainment Group
1225 Seventeenth Street
Denver, Colorado 80202
Attention: David Ehrlich
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Telecopier No. (303) 308-0489
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.
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/ CHARLES M. NEINAS
----------------------------------
Title: Chairman
<PAGE> 1
Exhibit 15
EMPLOYMENT AGREEMENT
This AGREEMENT made as of January 25, 2000, by and between Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent" or the "Company"),
and David Ehrlich, a resident of the State of Colorado(the "Executive").
WHEREAS, Ascent desires to employ the Executive as Vice President and
General Counsel 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 and General Counsel and Corporate Secretary
of Ascent or its successor entity for a period (the "Employment Period")
commencing on January 25, 2000 (the "Effective Date") and continuing thereafter
for a term of two years until January 25, 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 either the Executive Vice President, Business Affairs or, if there
is one, the Chief Executive Officer of Ascent (the "CEO"). 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
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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 or 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 $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 25% 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.
(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 Options. Ascent hereby grants to Executive as of the
Effective Date options to purchase ("Options") 40,000 shares of Ascent's common
stock, par value $0.01 per share, each such SAR exercisable at the per-share
price equal to $11.9063 per share. The Options shall be exercisable by Executive
according to the following schedule:
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(i) 50% of the Options on or after January 25, 2001; and
(ii) 50% of the Options on or after January 25, 2002.
Notwithstanding the foregoing, 100% of the Options shall immediately vest and
become immediately exercisable, without any further action by the Executive,
upon the occurrence of any "Change of Control 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 Options
shall be represented by an Option agreement containing appropriate terms
consistent with the provisions of this Agreement. The Options, to the extent
they remain unexercised, shall automatically and without further notice
terminate and become of no further force and effect 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) January 25, 2010.
In the event of any stock split, stock dividend, spin-off,
reclassification, recapitalization, merger, consolidation, subdivision,
combination or other change which affects the character or amount of Ascent's
common stock after the Effective Date and prior to the exercise and/or
expiration of all of the Options, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised Options shall
be adjusted in order to make such Options, as nearly as may be practicable,
equivalent in nature and value to the Options that would have existed had such
change not taken place. In addition, if Ascent adopts a stock-based incentive
plan that in Executive's sole judgment provides for any term(s) more favorable
to the grantee than
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any term(s) set forth above, Executive will be entitled to the benefit of such
more favorable term(s) with respect to the Options, other than with respect to
the vesting schedule thereof, but in no event will any term(s) applicable to the
Options be less favorable to Executive than those set forth above.
During the Employment Period, the Executive may 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 Options), life insurance, health insurance, any other employee
equity participation, profit sharing or retirement plan, group health plan or
other employee benefits (individually and collectively 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
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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
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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
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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, 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 for a period equal to eighteen
months following the date of such termination (the "Duration Period"): (i) his
then current Base Salary; (ii) an Annual Bonus equal to twenty-five percent
(25%) 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
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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 Options 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 Options) 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 and General Counsel 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 general counsel of comparable companies; (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; provided further that, the Executive and the Company shall explore
alternatives to minimize any excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended as of the Effective Date (the "Code") that
would otherwise be payable; (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
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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; 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 Executive Vice President, Business Affairs
or 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 Executive Vice President, Business Affairs or 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 Executive Vice President, Business Affairs or 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
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his Base Salary, a prorated Annual Bonus and all other compensation, benefits
and reimbursement through the date of termination of his employment, provided
that the Options and any other stock options granted to the Executive under the
Ascent option or any successor plan 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 Options and any other stock options granted to the
Executive under the Ascent option plan or any successor plan shall become fully
vested and shall terminate 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.
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(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, Ascent shall pay to the Executive's estate his
Base Salary and a prorated Annual Bonus through the end of the month in which
the Executive's death occurred, at which time the Employment Period shall
terminate without further notice and there will be no forfeiture, penalty,
reduction or other adverse effect upon any vested rights or interests relating
to any Fringe Benefits; provided that the Options and any other stock options
granted to the Executive under the Ascent option plan or any successor plan
shall become fully vested and shall terminate one year after the date of
termination of the Executive's employment for death, notwithstanding the
limitations of Section 2(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) 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
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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 75% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
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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
75% 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.
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(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
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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
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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.
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(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. Severability. Should any provision of this Agreement be determined to
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Assignment. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. Ascent's rights and
obligations under this Agreement shall not be assignable by Ascent except as
incident to the transfer, by merger or otherwise, of all or substantially all of
the business of Ascent. In the event of any such assignment by Ascent, all
rights of Ascent hereunder shall inure to the benefit of the assignee.
14. Notices. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method, provided
that in such case it shall also be sent by certified or registered mail, return
receipt requested; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested.
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Unless otherwise changed by notice, in each case notice shall be sent to:
If to Executive, addressed to:
David Ehrlich
758 Franklin Street
Denver, Colorado 80218
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Attention: Arthur M. Aaron
Telecopier No. (303) 308-0489
With a copy to:
Ascent Entertainment Group
1225 Seventeenth Street
Denver, Colorado 80202
Attention: David Holden
Telecopier No. (303) 308-0490
15. Miscellaneous. This Agreement constitutes the entire agreement, and
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The validity, interpretation,
performance and enforcement of the Agreement shall be governed by the laws of
the State of Colorado. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ DAVID EHRLICH
------------------------------------
David Ehrlich, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ DAVID A. HOLDEN
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT 16
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into effective January 1, 2000, by and
between Ascent Sports Holdings, Inc., a Delaware corporation (the "Company"),
and Donald M. Elliman Jr. (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company is a wholly owned subsidiary of Ascent
Entertainment Group, Inc., a Delaware corporation ("Ascent"), and was formed to
own and operate Ascent's sports-related businesses, the Denver Nuggets Limited
Partnership, Colorado Avalanche, LLC and Ascent Arena Company, LLC;
WHEREAS, the Company desires to employ the Executive as President of
the Company, 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 contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Term. The Company hereby agrees to employ the Executive as
President of the Company and the Executive agrees to be so employed for a period
commencing January 1, 2000 and ending August 31, 2000 (the "Term").
2. Performance and Scope. During the Term hereof, the Executive
agrees to devote his full time and best efforts in the discharge of his duties
for the Company. The Executive shall report directly to the Sports Businesses
Committee of the Board of Directors of Ascent (the "Committee"). Except as
otherwise provided in existing employment agreements, all other employees of the
Company and its subsidiaries shall report, directly or indirectly, to the
Executive. The parties hereto understand that the Executive shall at all times
be subject to the authority and direction of the Committee and the Board of
Directors of Ascent.
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3. Compensation.
a. As remuneration for the full-time services to be
rendered to the Company during the Term, Executive shall be paid total
compensation consisting of (i) a monthly base salary of $50,000 and (ii)
benefits provided by Section 3(b) hereof. The base salary shall not be decreased
during the Term.
b. During the Term, in addition to his base salary, the
Executive shall receive such benefits as may be extended to other senior
executives of Ascent and Ascent's affiliates, including, if applicable, group
life and health insurance benefits, retirement benefits, deferred compensation
benefits, and expense reimbursements.
4. Termination of Employment. Notwithstanding the provisions of
Section 1 hereof, Employee's employment hereunder may be terminated prior to the
expiration of the Term upon the occurrence of any of the events described in
clauses (i) through (v) of this Section 4. If the termination event is described
in clause (i), (ii) or (iii), the Company shall pay to the Executive (or the
Employee's estate, in the case of clause (ii)), within the five days immediately
following the date of such termination of employment, a lump sum amount equal to
the lesser of three-months base salary or the aggregate base salary otherwise
payable to the Executive through the end of the Term. If the termination event
is described in clause (iv) or (v), the Executive shall forfeit his right to any
and all compensation and benefits he would have been entitled to receive with
respect to any employment period which would otherwise have followed the date of
such termination, but he shall not forfeit any rights or benefits he would
otherwise receive or retain in the absence of this Agreement. The events of
termination are as follows:
(i) At any time by the Committee, without "Cause" (as
defined in Section 4(v) hereof); or
(ii) In the event of Employee's death; or
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(iii) By the Committee in the event Executive is unable to
perform his services hereunder for a continuous period of thirty (30) days
by reason of his physical or mental illness or incapacity, as determined in
good faith by the Committee; or
(iv) At the option of Executive at any time upon ninety
(90) days prior written notice to the Committee; or
(v) At any time by the Committee, for "Cause", which, for
purposes of this Agreement, shall mean (x) 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
Committee 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 Committee specifying the
manner in which the Executive is in default of his duties, (y) the engaging
by the Executive in intentional serious misconduct that is materially and
demonstrably injurious to the Company, Ascent or their affiliates, or (z)
any material breach by the Executive of Section 7 hereof.
5. Liability Insurance. The Executive shall be covered under the
liability insurance policy for directors and officers of Ascent and its
affiliates to the same extent as other officers of Ascent and its affiliates.
6. No Mitigation. The Executive shall have no duty to mitigate
his damages, if any, arising from any termination of his employment hereunder.
7. Noncompetition and Other Covenants.
a. Trade Secrets; Return of Documents and Property. The
Executive acknowledges that during the course of his employment he will receive
secret, confidential and proprietary information ("Trade Secrets") of the
Company, Ascent and their affiliates and of other companies with which the
Company, Ascent and their affiliates do business on a confidential basis and
that the Executive will create and develop Trade Secrets
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for the benefit of the Company, Ascent and its affiliates. Trade Secrets shall
include, without limitation,architectural and engineering data, customer and
other marketing data, custom databases, "know-how," formulae, secret processes
or machines, inventions, computer programs (including documentation of such
programs) and other information of a similar nature to the extent not available
to the public, and plans for future development. All Trade Secrets disclosed to
or created by the Executive during his employment hereunder shall be deemed to
be the exclusive property of the Company. The Executive acknowledges that Trade
Secrets have economic value to the Company 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
the Company, Ascent and their affiliates. The 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 the Executive during the Term of this
Agreement except (i) when the Executive is required to use or disclose any Trade
Secret in the proper course of the Executive's rendition of services to the
Company, Ascent or their affiliates hereunder, (ii) when such Trade Secret
becomes public knowledge other than through a breach of this Agreement, or (iii)
when the Executive is required to disclose any Trade Secret pursuant to any
valid court order in which the Executive is required to disclose such Trade
Secret. The Executive shall notify the Company immediately of any such court
order in order to enable the Company to contest such order's validity. After
termination of this Agreement, the Executive shall not use or otherwise disclose
Trade Secrets unless such information (x) becomes public knowledge or is
generally known in the 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 the Company immediately of any such court
order in order to enable the Company to contest such order's validity.
b. Discoveries and Works. All discoveries and works made or
conceived by the Executive in connection with and during his employment by the
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Company pursuant to this Agreement, jointly or with others, that relate to the
activities of the Company, Ascent or their affiliates ("Discoveries and Works")
shall be owned by the Company. Discoveries and Works shall include, without
limitation, architectural and engineering developments, marketing plans and
proposals, and 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 requested by, the Company to evidence or
better assure title to such Discoveries and Works in the Company, (ii) assist
the Company 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 the Company or thereafter, all applications or other
endorsements necessary or appropriate to maintain copyright and other rights for
the Company and to protect its title thereto.
c. Non-Competition. As an inducement for the Company to enter
into this Agreement, the Executive agrees that for a period commencing as of the
Effective Date and running through December 31, 2000 (the "Non-Competition
Period"), the Executive shall not, without the prior written consent of the
Committee, 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 or could reasonably
expected to be competitive with any business conducted or intended to be
conducted by the Company, Ascent or their affiliates. For the purpose of this
Agreement, a business shall be considered to be competitive with any business of
the Company, Ascent or their affiliates only if such business is engaged in
providing services or products (i) substantially similar to (A) any service or
product provided by the Company, Ascent or their affiliates during his period of
employment hereunder; (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 the Company,
Ascent or their affiliates as of the date hereof or during his employment
hereunder; or (C) any future service or product of the Company, Ascent or their
affiliates as to which the Executive materially and substantially participate in
the development or enhancement, and (ii) to customers,
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distributors or clients served by the Company, Ascent and their affiliates
during the Non-Competition Period.
d. Non-Solicitation of Employees. For a period commencing as of
the Effective Date and running through the first anniversary of the termination
of the Executive's employment hereunder for any reason (the "Non-Solicitation
Period"), the Executive will not (for his own benefit or for the benefit of any
person or entity other than the Company, Ascent or their affiliates) solicit, or
assist any person or entity other than the Company, Ascent or their affiliates
to solicit, any officer, director, executive or employee (other than an
administrative or clerical employee) of the Company, Ascent or their affiliates
to leave his or her employment.
e. Reasonableness; Interpretations. The Executive acknowledges
and agrees, solely for purposes of determining the enforceability of this
Section 7, that (i) the markets served by the Company, Ascent and its affiliates
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 and the lengtho of the Non-Solicitation
Period are linked to the term of the Employment Period and the post-employment
payment provided for in Section 4; and (iii) the above covenants are reasonable
as an inducement for the Company 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 the Company. In the event that
the covenants in this Section 7 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 to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
f. Investment. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation,
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partnership or other entity which is competitive with the Company, Ascent or
their affiliates, 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
Committee.
8. Enforcement. The Executive acknowledges that a breach of the
covenants or provisions contained in Section 7 of this Agreement will cause
irreparable damage to the Company, Ascent and their affiliates, 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 Section 7 of this Agreement, in addition to any other remedy which
may be available at law or in equity, the Company shall be entitled to specific
performance and injunctive relief, without posting bond.
9. 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
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registered mail, return receipt requested. Unless otherwise changed by notice,
in each case notice shall be sent to:
If to the Executive, addressed to:
Donald M. Elliman Jr.
[ ]
[ ]
If to the Company, addressed to:
Ascent Entertainment Group
Sports Business Committee
1225 Seventeenth Street
Denver, Colorado 80202
Attention: Paul Gould and Chuck Neinas
Telecopier No. (303) 308-0490
With a copy to:
Ascent Entertainment Group
1225 Seventeenth Street
Denver, Colorado 80202
Attention: General Counsel
Telecopier No. (303) 308-0489
10. Severability. Subject to the last sentence of Section 7(e)
hereof, if any provision of this Agreement shall 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.
11. Miscellaneous. This Agreement constitutes the entire
agreement, and supersedes all prior understandings or agreements relating to the
subject matter hereof between Executive and the Company, Ascent or any affiliate
thereof (or any predecessor of any such entity). No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The
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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.
12. Continuing Liability. Unless this Agreement or Employee's
employment hereunder is terminated in accordance with the express provisions
hereof, the parties shall have no right to terminate this Agreement or the
Employee's employment hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE ASCENT SPORTS HOLDINGS, INC.
- ---------------------- ----------------------------
By:
Title:
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EXHIBIT 17
EMPLOYMENT AGREEMENT
This AGREEMENT made as of January 7, 2000, by and between On Command
Corporation, a Delaware corporation (the "Company"), and Allan Goodson (the
"Executive").
WHEREAS, the Company desires to employ the Executive as Executive Vice
President and Chief Operating Officer, 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, The Company
and the Executive agree as follows:
1. Employment; Duties.
(a) Employment and Employment Period. The Company shall
employ the Executive to serve as Executive Vice President and Chief Operating
Officer of the Company or its successor entity for a period (the "Employment
Period") commencing on January 7, 2000 (the "Effective Date") and continuing
thereafter for a term of two years until January 7, 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 to the President or Chief Executive Officer of the Company (the "CEO").
The Executive shall have all duties and authority customarily accorded a chief
operating officer.
(c) Devotion to Interests of The Company. 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 the Company. 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
the Company 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. The Company shall pay the Executive a
base salary ("Base Salary") at the rate of $300,000 per year during the
Employment Period with payments made in installments in accordance with the
Company's regular practice for compensating executive personnel.
(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
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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 of the Company's Board of Directors 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 the Company to the
senior executives of the Company. Such benefits shall include reimbursement of
documented expenses reasonably incurred in connection with travel and
entertainment related to the Company's business and affairs. The Company
reserves the right to modify or terminate from time to time the fringe benefits
provided to the senior management group.
(d) Stock Options. The Company hereby grants to the Executive
as of the Effective Date options (the "Options") to purchase 100,000 shares of
the Company's common stock, par value $0.01 per share, exercisable at the
per-share price equal to $15.90625 (the "Exercise Price"). The Options shall be
exercisable by Executive according to the following schedule: (i) 50,000 of the
Options after January 7, 2001; and (ii) 50,000 of the Options after January 7,
2002; provided that if the Executive's employment is terminated by the Company
at any time prior to January 7, 2001 other than for "cause" (as provided in
Section 5(b)), then 50,000 Options will become exercisable and the remaining
50,000 Options shall be cancelled. The Options, 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 the Company (as provided in Section 5(b)) or a termination by the
Executive other than pursuant to an Executive Election Event (as provided in
Section 5(a)) shall have become effective and final; or (y) January 7, 2010.
(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 the Company and any of its
affiliated or related entities, on the other hand, relating to stock-based
incentives (including the Options), life insurance, health insurance, any other
employee equity participation, profit sharing or retirement plan, group health
plan or other employee benefits (individually and collectively 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 the
Company and of other companies with which the Company does business on a
confidential basis and that Executive will create and
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<PAGE> 3
develop Trade Secrets for the benefit of the Company. Trade Secrets shall
include, without limitation, custom databases, "know-how," formulae, secret
processes or machines, inventions, computer programs (including documentation
of such programs), 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. All Trade Secrets disclosed to or created by Executive shall be
deemed to be the exclusive property of the Company (as the context may
require). Executive acknowledges that Trade Secrets have economic value to the
Company 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 the Company 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 the Company 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 the Company immediately
of any such court order in order to enable the Company to contest such order's
validity. 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 the Company immediately of any
such court order in order to enable the Company to contest such order's
validity.
(b) Upon the effective date of notice of the Executive's or
the Company's election to terminate this Agreement, or at any time upon the
request of the Company, the Executive (or his heirs or personal
representatives) shall deliver to the Company (i) all documents and materials
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<PAGE> 4
containing or otherwise relating to Trade Secrets or other information relating
to the Company's business and affairs, and (ii) all documents, materials and
other property belonging to the Company, 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 the Company'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 the Company pursuant to this
Agreement, jointly or with others, that relate to the Company's activities
("Discoveries and Works") shall be owned by the Company. Discoveries and Works
shall include, without limitation, 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,
the Company to evidence or better assure title to such Discoveries and Works in
the Company, (ii) assist the Company 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 the Company or thereafter,
all applications or other endorsements necessary or appropriate to maintain
copyright and other rights for the Company and to protect their title thereto.
Any Discoveries and Works which, within sixty days after the termination of the
Executive's employment by the Company, 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 the
Company, shall, as between the Executive and the Company, be presumed to have
been made during the Executive's employment by the Company.
5. Termination. This Agreement and Executive's employment with the
Company may be terminated as follows:
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<PAGE> 5
(a) By the Executive either at any time for any reason upon
ninety (90) days advance written notice to the Company, or upon an "Executive
Election Event" (as defined below) upon thirty (30) days advance written notice
to the Company. Upon an Executive Election Event or if the Executive's
employment is terminated by the Company without "cause" (as defined below), 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 two-year Employment Period and (y) one
year following the date of such termination (the "Duration Period"): (i) his
Base Salary; (ii) an Annual Bonus equal to seventy percent (70%) of one year's
Base Salary; and (iii) all other benefits provided pursuant to Sections 2(c) 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. The Company 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 the Company exercises such
option, the Company shall have no further compensation payment obligations
under clauses (i) and (ii) above.
An "Executive Election Event" shall be any any substantial
reduction (except in connection with the termination of his employment
voluntarily by the Executive or by the Company for "cause" as defined below) by
the Company, without the Executive's express written consent, of his
responsibilities as Executive Vice President and Chief Operating Officer of the
Company, or any other material default of this Agreement which continues for
ten (10) business days following the Company's receipt of written notice from
the Executive specifying the manner in which the Company is in default of this
Agreement.
(b) By the Company at any time for "cause." For purposes of
this Agreement, the Company 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
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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 injurious to the Company 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, whether or not such felony was committed in
connection with the Company's business, or (iv) any material breach by the
Executive of Section 8 hereof. If the Company 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, the Company, in full satisfaction of all of the
Company's obligations under this Agreement and in respect of the termination of
the Executive's employment with the Company, shall pay the Executive his Base
Salary and all other benefits and reimbursement through the date of termination
of his employment, provided that the Options and any other stock options
granted to the Executive under the Company's option 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, the Company 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 the Company's payment obligations to
the Executive under Section 2(a) and (b) shall terminate with the payment of
the Executive's Base
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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 Options and any other stock options
granted to the Executive under the Company 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 the Company.
(b) If, prior to the expiration or termination of the
Employment Period, the Executive shall die, the Company shall pay to the
Executive's estate his Base Salary and a prorated Annual Bonus through the end
of the month in which the Executive's death occurred, at which time the
Employment Period shall terminate without further notice and there will be no
forfeiture, penalty, reduction or other adverse effect upon any vested rights
or interests relating to any Fringe Benefits; provided that the Options and any
other stock options granted to the Executive under the Company 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 the Company which may be adopted by the
Board.
7. Non-Competition.
(a) As an inducement for the Company to enter into this
Agreement, the Executive agrees that for a period
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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 the Company
for the entire Employment Period or (ii) one year following termination of the
Executive's employment by the Company 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 the Company.
For the purpose of this Agreement, a business shall be
considered to be competitive with any business of the Company only if such
business is engaged in providing services or products (i) substantially similar
to (A) any service or product currently provided by the Company 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 the Company as
of the date hereof or during the Employment Period; or (C) any future service
or product of the Company as to which the Executive materially and
substantially participated in the development or enhancement, and (ii) to
customers, distributors or clients served by the Company 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 the Company) solicit, or assist any person or
entity other than the Company to solicit, any officer, director, executive or
employee (other than an administrative or clerical employee) of the Company to
leave his or her employment.
(c) Reasonableness; Interpretation. The Executive
acknowledges and agrees, solely for purposes of
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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 the Company 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 the Company 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 the Company. 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 the Company,
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.
8. Liability Insurance. The Executive shall be covered under the
Company's liability insurance policy for directors and officers to the same
extent as other officers of the Company.
9. 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 the Company, 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
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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, the
Company shall be entitled to seek specific performance and injunctive relief.
10. Arbitration.
(a) Subject to the Company'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 the Company shall be settled by
arbitration which shall be conducted in Denver, Colorado, or any other location
where the Executive then resides at the Company'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 the Company'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.
11. Severability. Should any provision of this
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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.
12. Assignment. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. The Company's rights and
obligations under this Agreement shall not be assignable by the Company except
as incident to the transfer, by merger or otherwise, of all or substantially
all of the business of the Company. In the event of any such assignment by the
Company, all rights of the Company hereunder shall inure to the benefit of the
assignee.
13. 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:
Allan Goodson
824 Woodburn Drive
Brentwood, Tennessee 37027
If to the Company, addressed to:
On Command Corporation
6331 San Ignacio
San Jose, California 95119
Attention: President and CEO
Telecopier No. (408) 360-4701
With a copy to:
Ascent Entertainment Group
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1225 Seventeenth Street
Denver, Colorado 80202
Attention: General Counsel
Telecopier No. (303) 308-0489
14. 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 California. The headings contained herein
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ ALLAN GOODSON
------------------------------------
Allan Goodson, Executive
ON COMMAND CORPORATION
By:
-------------------------------------
Title: Chairman and Acting
Chief Executive Officer
-12-
<PAGE> 1
EXHIBIT 18
ASCENT ENTERTAINMENT GROUP, INC.
and
THE BANK OF NEW YORK,
Rights Agent
Rights Agreement
Dated as of June 27, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
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
Section 32. Counterparts. . . . . . . . . . . . . . . . . . 44
Section 33. Descriptive Headings. . . . . . . . . . . . . . 44
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Exhibit A - Form of Certificate of Designations . . . . . .
Exhibit B - Form of Right Certificate . . . . . . . . . . .
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
<PAGE> 4
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
1
<PAGE> 5
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 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.
2
<PAGE> 6
(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.
3
<PAGE> 7
(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.
(a) "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,
4
<PAGE> 8
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
5
<PAGE> 9
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 cancelled 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
6
<PAGE> 10
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.
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,
7
<PAGE> 11
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
8
<PAGE> 12
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 cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled 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 cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled 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
9
<PAGE> 13
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.
(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
10
<PAGE> 14
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 cancelled.
(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.
11
<PAGE> 15
(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
12
<PAGE> 16
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
13
<PAGE> 17
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if 1the 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.
14
<PAGE> 18
(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
15
<PAGE> 19
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
16
<PAGE> 20
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
17
<PAGE> 21
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
18
<PAGE> 22
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:
19
<PAGE> 23
(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
20
<PAGE> 24
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
21
<PAGE> 25
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.
(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,
22
<PAGE> 26
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
23
<PAGE> 27
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
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<PAGE> 28
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
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<PAGE> 29
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
26
<PAGE> 30
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
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
27
<PAGE> 31
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.
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
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<PAGE> 32
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 /s/ David Ehrlich By /s/ James A. Cronin, III
Name: David Ehrlich Name: James A. Cronin, III
Title: Assistant Secretary Title: Executive Vice President
CFO and COO
ATTEST: THE BANK OF NEW YORK
By /s/ Steven Myers By /s/ Kevin Brennan
Name: Steven Myers Name: Kevin Brennan
Title: Assistant Treasurer Title: Vice President
29
<PAGE> 33
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
1
<PAGE> 34
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
2
<PAGE> 35
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
3
<PAGE> 36
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
4
<PAGE> 37
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 cancelled 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.
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
5
<PAGE> 38
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.
6
<PAGE> 39
Chief Executive Officer
ATTEST:
- ---------------------------------------
Secretary
7
<PAGE> 40
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
<PAGE> 41
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.
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.
<PAGE> 42
By
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
COUNTERSIGNED:
THE BANK OF NEW YORK
By
-------------------------------------
Name:
Title:
<PAGE> 43
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.
- ------------------------------------------------------------
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
---------------------------
- ------------------------------------------------------------
<PAGE> 44
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> 45
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> 46
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
1
<PAGE> 47
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.
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
2
<PAGE> 48
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 , 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.
3
