This Employment
Agreement (the “Agreement”), dated as of April 13,
2009, is entered into by and between Ascent Media Corporation, a
Delaware corporation (the “Company”), and John A. Orr
(“Executive”).
The Company,
through its subsidiaries (“Affiliates”), is engaged in
the business of providing technical and creative services to the
entertainment industry. The Company desires to employ Executive,
and Executive desires to accept such employment, under the terms
and conditions set forth herein.
NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1.1
Employment . Upon the terms and conditions hereinafter set
forth, the Company hereby employs Executive, and Executive hereby
accepts employment, as Senior Vice President of Corporate
Development.
1.2 Term .
Subject to Article IV below, Executive’s employment
hereunder shall be for a term of five (5) years commencing
effective as of September 17, 2008 (the “Commencement
Date”), and expiring at the close of business on
September 16, 2013 (the “Term”).
1.3 Duties
. During the Term, Executive shall perform such executive duties
for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the
individual(s) set forth in Section 1.4 below. Executive shall
devote his entire productive business time, attention and energies
to the performance of his duties hereunder. Executive shall use his
best efforts to advance the interests and business of the Company
and its Affiliates. Executive shall abide by all rules, regulations
and policies of the Company, as may be in effect from time to time.
Notwithstanding the foregoing, Executive may act for his own
account in passive-type investments as provided in
Section 5.3, or as a member of boards of directors of other
companies, or as a consultant to Liberty Media Corporation
(“LMC”), where the time allocated for those activities
does not interfere with or create a conflict of interest with the
discharge of his duties for the Company.
1.4
Reporting . Executive shall report directly to the Chief
Executive Officer of the Company.
1.5
Location . Except for services rendered during business
trips as may be reasonably necessary, Executive shall render his
services under this Agreement primarily from the offices of LMC in
Englewood, Colorado and periodically from the offices of the
Company in Santa Monica, California.
1.6 Exclusive
Agreement . Executive represents and warrants to the Company
that there are no agreements or arrangements, whether written or
oral, in effect which would prevent Executive from rendering his
exclusive services to the Company during the Term.
2.1
Compensation . For all services rendered by Executive
hereunder and all covenants and conditions undertaken by him
pursuant to this Agreement, the Company shall pay, and Executive
shall accept, as full compensation, the amounts set forth in this
Article II.
2.2 Base
Salary . The base salary shall be an annual salary of $325,000
(the “Base Salary”), payable by the Company in
accordance with the Company’s normal payroll practices.
Beginning as of the first anniversary of the Commencement Date, the
Base Salary shall be reviewed on an annual basis during the Term
for increase in the sole discretion of the compensation committee
(the “Committee”) of the Board of Directors of the
Company.
2.3 Bonus .
For each fiscal year during the Term, commencing with the 2009
fiscal year, in addition to the Base Salary, Executive shall be
eligible for an annual bonus (the “Bonus”) of 50% of
Executive’s annual Base Salary (the “Target
Bonus”). (The Company’s fiscal year is currently
January 1 through December 31 of each year.) Such bonus
opportunity may exceed the 50% Target Bonus but will not exceed 75%
of Executive’s annual Base Salary. Executive’s
entitlement to any Bonus will be determined by the Committee in its
sole discretion, based upon the achievement of such criteria as the
Committee may establish in its sole discretion. Nothing in this
Agreement shall be construed to guarantee the payment of any Bonus
to Executive.
2.4
Deductions . The Company shall deduct from the compensation
described in Sections 2.2 and 2.3, and from any other compensation
payable pursuant to this Agreement, any federal, state or local
withholding taxes, social security contributions and any other
amounts which may be required to be deducted or withheld by the
Company pursuant to any federal, state or local laws, rules or
regulations.
2.5 Disability
Adjustment . Any compensation otherwise payable to Executive
pursuant to Sections 2.2 and 2.3 in respect of any period
during which Executive is Disabled (as contemplated in
Section 4.4) shall be reduced by any amounts payable to
Executive for loss of earnings or the like under any insurance plan
or policy sponsored by the Company.
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3.1
Benefits . During the Term, Executive shall be entitled to
participate in such group life, health, accident, disability or
hospitalization insurance plans and retirement plans as the Company
may make available to its other similarly situated executive
employees as a group, subject to the terms and conditions of any
such plans. Executive’s participation in all such plans shall
be at a level, and on terms and conditions, that are commensurate
with his positions and responsibilities at the Company.
3.2
Expenses . The Company agrees that Executive is authorized
to incur reasonable and appropriate expenses in the performance of
his duties hereunder and in promoting the business of the Company
in accordance with the terms of the Company’s Travel &
Entertainment Policy (as the same may be modified or amended by the
Company from time to time in its sole discretion).
3.3
Vacation . Executive shall accrue a total of one
hundred sixty (160) hours of vacation per year following the
date of this Agreement. If, at any time during the Term,
Executive accumulates two hundred forty (240) hours of earned
but unused vacation time (the “Accrual Cap”), Executive
will not accrue additional vacation time until he has taken a
portion of the previously earned vacation. Executive will
again accrue paid vacation time when his accumulated amount of
earned but unused vacation time falls below the Accrual Cap.
Upon termination of Executive’s employment, any accrued but
unused vacation time will be paid to Executive.
3.4 Equity
Grants . As part of the consideration for Executive’s
services to the Company during the Term, the Company has made the
following grants to Executive pursuant to the Ascent Media
Corporation 2008 Incentive Plan (the
“Plan”):
(a) A
grant of 34,542 shares (the “Restricted Shares”) of the
Company’s Series A Common Stock, par value $0.01 per
share (“ASCMA Stock”), pursuant to the Restricted Stock
Award Agreement dated as of October 15, 2008, by and between
the Company and Executive (the “Restricted Stock
Agreement”); and
(b) A
grant of options to purchase from the Company, at an exercise price
of $23.16 per share, 121,799 shares of ASCMA Stock (the
“Options”), pursuant to the Non-Qualified Stock Option
Agreement dated as of October 15, 2008, by and between the
Company and Executive, as amended by the Amendment No. 1 to
Non-Qualified Stock Option Agreement dated as of March 30,
2009, by and between the Company and Executive (as amended, the
“Option Agreement”).
The Restricted
Shares and the Options shall be subject in all respects to the
terms and conditions of the Plan and the Restricted Stock Agreement
and Option Agreement, as applicable.
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TERMINATION; DEATH;
DISABILITY
4.1 Termination
of Employment For Cause . In addition to any other remedies
available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to
Executive, to terminate Executive’s employment hereunder at
any time for “Cause” (a “Termination For
Cause”). In the event of a Termination For Cause,
Executive’s employment will terminate and the Company shall
have no further liability or obligation to Executive (other than
the Company’s obligation to pay Base Salary and vacation time
accrued but unpaid as of the date of termination and reimbursement
of expenses incurred prior to the date of termination in accordance
with Section 3.2 above).
For purposes of
this Agreement, “Cause” shall mean: (a) any act or
omission that constitutes a breach by Executive of any of his
material obligations under this Agreement; (b) the continued
failure or refusal of Executive (i) to substantially perform
the material duties required of him as an Executive of the Company
and/or (ii) to comply with reasonable directions of the
individual(s) set forth in Section 1.4 above; (c) any
material violation by Executive of any (i) policy, rule or
regulation of the Company or (ii) any law or regulation
applicable to the business of the Company or any of its affiliates;
(d) Executive’s material act or omission constituting
fraud, dishonesty or misrepresentation, occurring subsequent to the
commencement of his employment with the Company;
(e) Executive’s gross negligence in the performance of
his duties hereunder; (f) Executive’s conviction of, or
plea of guilty or nolo contendere to, any crime (whether or not
involving the Company) which constitutes a felony or crime of moral
turpitude or is punishable by imprisonment of thirty (30) days
or more, provided , however , that nothing in this
Agreement shall obligate the Company to pay Base Salary or any
bonus compensation or benefits during any period that Executive is
unable to perform his duties hereunder due to any incarceration,
and provided , further , that nothing shall prevent
Executive’s termination under any other subsection of this
Section 4.1 if it provides independent grounds for
termination; or (g) any other misconduct by Executive that is
materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company
or any of its Affiliates.
Notwithstanding
the foregoing, no purported Termination For Cause pursuant to (a),
(b), (c), (d), (e) or (g) of the preceding paragraph of
this Section 4.1 shall be effective unless all of the
following provisions shall have been complied with:
(i) Executive shall be given written notice by the Company of
its intention to effect a Termination For Cause, such notice to
state in detail the particular circumstances that constitute the
grounds on which the proposed Termination For Cause is based; and
(ii) Executive shall have ten (10) business days after
receiving such notice in which to cure such grounds, to the extent
such cure is possible, as determined in the sole discretion of the
Company.
4.2 Termination
of Employment Without Cause . During the Term, the Company may
at any time, in its sole discretion, terminate the employment of
Executive hereunder for any reason (other than those set forth in
Section 4.1 above) upon written notice (the “Termination
Notice”) to Executive (a “Termination Without
Cause”). In such event, the Company shall pay Executive an
amount equal to the sum of the following:
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(a)
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any
Base Salary and vacation time accrued but unpaid as of the date of
termination;
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(b)
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subject to Sections 4.5, 4.6,
4.7, 4.9 and 5.3 below, an amount (the “Severance
Payment”) equal to:
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(i)
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if
the termination of Executive’s employment occurs prior to a
Change in Control (as defined in Section 4.8), the product of
(i) the sum of Executive’s Annual Base Salary plus the
Target Bonus, both as in effect immediately prior to such
Termination Without Cause, multiplied by (ii) 1; or
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(ii)
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if
the termination of Executive’s employment occurs concurrently
with or following a Change in Control, the product of (i) the
sum of Executive’s Annual Base Salary plus the Target Bonus,
both as in effect immediately prior to such Termination Without
Cause, multiplied by (ii) 1.5;
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(c)
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any
Bonus to which Executive has become entitled for the calendar year
prior to the year in which such Termination Without Cause occurs
but which remains unpaid at the date of termination (“Unpaid
Bonus”); and
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(d)
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any
reimbursement for expenses incurred in accordance with
Section 3.2.
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Subject to
Section 4.9, any Severance Payment to which Executive becomes
entitled shall be payable in a lump sum on the sixtieth (60
th ) day
following the date of termination of Executive’s employment
(or, if such day is not a business day, on the first business day
thereafter).
In addition,
subject to Sections 4.5, 4.6, 4.7, 4.9 and 5.3 below, to
the extent such coverage is available and is elected by Executive
under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), the Company shall contribute to the health
insurance plan maintained by the Company and covering the Executive
and his dependents as of the date of termination, or any successor
plan maintained by the Company, that amount that reflects the
proportionate part of the premium for such coverage that is paid by
the Company as of the date of termination (the “Benefits
Payments”), such Benefits Payments to be made monthly in
accordance with the Company’s normal procedures for the
payment of health insurance premiums, throughout the period
beginning on the date of termination and ending on the earlier
of the 12-month anniversary of the date of termination and the
expiration of the coverage period specified in COBRA, such period
to be determined as of the date of termination (the
“Reimbursement Period”) ( i.e. , Executive shall
bear responsibility for that portion of the health insurance
premiums in excess of the Benefits Payments), or, alternately, in
the Company’s sole discretion, the Company shall reimburse
Executive the amount of the Benefits Payment on a monthly basis
during the Reimbursement Period, upon Executive’s submission
to the Company of adequate proof of payment of the full COBRA
premium by Executive; provided , however , that if
Executive becomes employed with another employer during the
Reimbursement Period and is eligible to receive health and/or
medical benefits under such other employer’s plans, the
Company’s payment obligation under this paragraph shall be
reduced to the extent that comparable benefits and/or coverage is
provided under such other employer’s plans. For the avoidance
of doubt, Executive shall be responsible for paying any U.S.
federal or state income taxes associated with the Benefits
Payments.
Executive
acknowledges that the payments and benefits referred to in this
Section 4.2, together with any rights or benefits under any
written plan or agreement which have vested on or
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prior to the
termination date of Executive’s employment under this
Section 4.2, constitute the only payments which Executive
shall be entitled to receive from the Company hereunder in the
event of any termination of his employment pursuant to this
Section 4.2, and the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his
employment.
4.3 Termination
of Employment With Good Reason . In addition to any other
remedies available to Executive at law, in equity or as set forth
in this Agreement, Executive shall have the right during the Term,
upon written notice to the Company, to terminate his employment
hereunder upon the occurrence of any of the following events:
(a) a material diminution in Executive’s then current
Base Salary without the prior written consent of Executive; or
(b) a material breach by the Company of any provision of this
Agreement without the prior written consent of Executive (a
“Termination With Good Reason”).
Notwithstanding
the foregoing, no purported Termination With Good Reason pursuant
to this Section 4.3 shall be effective unless all of the
following provisions shall have been complied with:
(i) Executive shall give the Company a written notice of
Executive’s intention to effect a Termination With Good
Reason, such notice to state in detail the particular circumstances
that constitute the grounds on which the proposed Termination With
Good Reason is based and to be given no later than ninety
(90) days after the initial occurrence of such circumstances;
(ii) the Company shall have thirty (30) days after
receiving such notice in which to cure such grounds, to the extent
such cure is possible; and (iii) if the Company fails to cure
such grounds within such 30-day period, Executive terminates his
employment hereunder on the last day of such 30-day
period.
In the event that
a Termination With Good Reason occurs, then, subject to
Sections 4.5, 4.6, 4.7, 4.9 and 5.3 below, Executive
shall have the same entitlement to the amounts and benefits as
provided under Section 4.2 for a Termination Without
Cause.
Executive
acknowledges that the payments and benefits referred to in this
Section 4.3, together with any rights or benefits under any
written plan or agreement which have vested on or prior to the
termination date of Executive’s employment under this
Section 4.3, constitute the only payments which Executive
shall be entitled to receive from the Company hereunder in the
event of any termination of his employment pursuant to this
Section 4.3, and the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his
employment.
4.4 Death;
Disability . In the event that Executive dies or becomes
Disabled (as defined herein) during the Term, Executive’s
employment shall terminate either (i) when such death occurs,
or (ii) upon written notice by the Company at any time after
Disability occurs (provided that, in the event of any Disability,
the Company shall have the right, but not the obligation, to
terminate this Agreement), and, in either event, the Company shall
pay Executive (or his legal representative, as the case may be) as
follows:
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(a)
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any
Base Salary and vacation time accrued but unpaid as of the date of
death or termination for Disability; and
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(b)
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any
reimbursement for expenses incurred in accordance with
Section 3.2.
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For the purposes
of this Agreement, Executive shall be deemed to be
“Disabled” or have a “Disability” if,
because of Executive’s physical or mental disability, he has
been substantially
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unable to
perform his duties hereunder for twelve (12) work weeks in any
twelve (12) month period. Executive shall be considered to
have been substantially unable to perform his duties hereunder only
if he is either (a) unable to reasonably and effectively carry
out his duties with reasonable accommodations by the Company or
(b) unable to reasonably and effectively carry out his duties
because any reasonable accommodation which may be required would
cause the Company undue hardship. In the event of a disagreement
concerning Executive’s perceived Disability, Executive shall
submit to such examinations as are deemed appropriate by three
practicing physicians specializing in the area of Executive’s
Disability, one selected by Executive, one selected by the Company,
and one selected by both such physicians. The majority decision of
such three physicians shall be final and binding on the parties.
Nothing in this paragraph is intended to limit the Company’s
right to invoke the provisions of this paragraph with respect to
any perceived Disability of Executive.
Notwithstanding
the foregoing, to the extent and for the period required by any
state or federal family and medical leave law, upon
Executive’s request (i) he shall be considered to be on
unpaid leave of absence and not terminated, (ii) his group
health benefits shall remain in full force and effect, and
(iii) if Executive recovers from any such Disability, at that
time, to the extent required by any state or federal family and
medical leave law, upon Executive’s request, he shall be
restored to his position hereunder or to an equivalent position, as
the Company may determine, and the Term of Executive’s
employment hereunder shall be reinstated effective upon such
restoration. The Term shall not be extended by reason of such
intervening leave of absence, nor shall any compensation or
benefits accrue in excess of those required by law during such
intervening leave of absence. Upon the expiration of any such
rights, unless Executive has been restored to a position with the
Company, he shall thereupon be considered terminated.
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