Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”), dated as of September 30, 2011, is
entered into by and between Ascent Capital Group, Inc., a Delaware corporation
(the “Company”), and Michael R. Meyers (“Executive”).

 

INTRODUCTION

 

The Company, through its subsidiaries (“Affiliates”), is engaged primarily in
the business of providing security alarm monitoring and related services to
residential and business subscribers throughout the United States and parts of
Canada. 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:

 

ARTICLE I

 

EMPLOYMENT; TERM; DUTIES

 

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 and Chief Financial Officer
of the Company and Senior Vice President and Chief Financial Officer of
Monitronics International, Inc., a Texas corporation and a wholly-owned
operating subsidiary of the Company (“Monitronics”).

 

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 June 15, 2011 (the “Commencement Date”), and
terminating at the close of business on June 14, 2016 or such earlier date as
provided for herein (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 and its Affiliates, 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, 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 and its Affiliates.

 

1.4                                 Reporting.  Executive shall report directly
to the Chief Executive Officer of Monitronics and the Chief Executive Officer of
the Company.

 

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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 Monitronics in the
Dallas, Texas area and periodically from the offices of the Company in
Englewood, Colorado.

 

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 and its Affiliates during the Term.

 

ARTICLE II

 

COMPENSATION

 

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 $365,000 (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 2012 fiscal year, in addition to the Base Salary,
Executive shall be eligible for an annual bonus (the “Bonus”) of 40% 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 40% Target Bonus but will not exceed 50% of Executive’s annual
Base Salary. Executive’s entitlement to any Bonus will be determined by the
Committee in its good faith discretion, based upon the achievement of key
performance indicators to be established by the Committee in its good faith
discretion with respect to each fiscal year of the Term. Nothing in this
Agreement shall be construed to guarantee the payment of any Bonus to
Executive.  Executive shall be eligible for a pro-rated bonus for the period of
July 1, 2011 through December 31, 2011 to be determined in the good faith
discretion of the Committee in a manner consistent with the terms of this
Section 2.3 (the “2011 Stub Bonus”).

 

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 defined, and determined in
accordance with, Section 4.5) shall be reduced by any amounts

 

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payable to Executive for loss of earnings or the like under any insurance plan
or policy sponsored by the Company.

 

ARTICLE III

 

BENEFITS; EXPENSES

 

3.1                                 Benefits.  During the Term, Executive shall
be entitled to participate in such group life, health, accident, disability or
hospitalization insurance plans, retirement plans, and any other plan 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.  Notwithstanding the foregoing, the Company will continue to pay for
Executive’s health insurance premiums in accordance with Monitronics’ past
practice and custom related to Executive.  Executive understands and
acknowledges that any such payments made by the Company on behalf of Executive
will be deemed and reported as taxable income to Executive.

 

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                                 Key Man Insurance.  The Company may secure
in its own name or otherwise, and at its own expense, life, health, accident and
other insurance covering Executive alone or with others, and Executive shall not
have any right, title or interest in or to such insurance other than as
expressly provided herein.  Executive agrees to assist the Company in procuring
such insurance by submitting to the usual and customary medical and other
examinations to be conducted by such physicians as the Company or such insurance
company may designate and by signing such applications and other written
instruments as may be required by the insurance companies to which application
is made for such insurance.  Executive’s failure to submit to such usual and
customary medical and other examinations shall be deemed a material breach of
this Agreement.

 

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ARTICLE IV

 

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, in each case, 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 material 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 or Monitronics 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) material policy, rule or regulation of the
Company or any of its Affiliates or (ii) any material 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, 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 in cash equal to the sum of the following:

 

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(a)                                  any Base Salary and vacation time, in each
case, accrued but unpaid as of the date of termination;

 

(b)                                 subject to Sections 4.6, 4.7, 4.8, 4.9, 5.3
and 5.4 below, an amount (the “Severance Payment”) equal to the sum of (i) 1.25
times the Executive’s Annual Base Salary, as in effect immediately prior to such
termination and (ii) an amount equal to 40% of Executive’s Annual Base Salary in
effect immediately prior to such termination, multiplied by the percentage
obtained by dividing (A) the number of days during the period beginning on
January 1 of the calendar year in which such termination occurs and ending on
the date of termination, by (B) 365 or 366, as applicable;

 

(c)                                  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

 

(d)                                 any reimbursement for expenses incurred in
accordance with Section 3.2.

 

Subject to Section 4.9, any Severance Payment to which Executive becomes
entitled under this Section 4.2 or Section 4.3 shall be payable in a lump sum on
the sixtieth (60th) 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 4.6, 4.7, 4.8, 4.9, 5.3 and 5.4 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 that are
substantially comparable to those offered by the Company under such other
employer’s plans, the Company’s payment obligation under this paragraph shall
end.  Notwithstanding the foregoing, in the event that the Company’s group
health plan is insured and under applicable guidance the reimbursement of COBRA
premiums causes the Company’s group health plan to violate any applicable
nondiscrimination rule, the Company and Executive agree to negotiate in good
faith a mutually agreeable alternative arrangement.  For the avoidance of doubt,
Executive shall be responsible for paying any U.S. federal or state income taxes
associated with the Benefits Payments.

 

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At least 90 days prior to the expiration of the Term, the Company shall deliver
a written notice to Executive stating either (i) that the Company does not
intend to offer Executive a new employment agreement to take effect at the
expiration of the Term (a “Non-Renewal Notice”) or (ii) that the Company offers
Executive a new employment agreement to take effect at the expiration of the
Term upon terms (other than the length of the term of such new employment
agreement) that are, in material respects, taken as a whole, at least as
favorable to Executive as the terms of this Agreement, and the material terms of
such offer shall be summarized or set forth in the notice (“Renewal Notice”). 
If the Company delivers a Non-Renewal Notice, or if the Company fails to deliver
either a Renewal Notice or a Non-Renewal Notice on a timely basis as provided in
the immediately preceding sentence, Executive’s employment shall be terminated
at the expiration of the Term (or at such earlier date as may be set forth in
the Non-Renewal Notice), and such termination shall be a Termination Without
Cause, whereupon, subject to Sections 4.6, 4.7, 4.8, 4.9, 5.3 and 5.4 below,
Executive shall be entitled to receive the amounts and benefits as provided
under this Section 4.2.

 

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 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 or any of its Affiliates hereunder
in the event of any termination of his employment pursuant to this Section 4.2,
and the Company and its Affiliates 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; (b) the Company requires Executive to devote a majority of
Executive’s time to the performance of duties that are materially inconsistent
with the status of Executive’s position with the Company as set forth in this
Agreement; (c) the Company relocates the principal office at which Executive
performs services on behalf of the Company to a location more than 75 miles from
its present location; or (d) a material breach by the Company of any material
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.

 

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In the event that a Termination With Good Reason occurs, then, subject to
Sections 4.6, 4.7, 4.8, 4.9, 5.3 and 5.4 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 or any of its Affiliates hereunder
in the event of any termination of his employment pursuant to this Section 4.3,
and the Company and its Affiliates shall have no further liability or obligation
to him hereunder or otherwise in respect of his employment.

 

4.4                                 [Intentionally Omitted].

 

4.5                                 Death; Disability.  In the event that
Executive dies or becomes Disabled 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) in a single lump sum cash
payment within thirty (30) days of such termination of employment, an amount
equal to the sum of:

 

(a)                                  any Base Salary and vacation time, in each
case, accrued but unpaid as of the date of death or termination for Disability;

 

(b)                                 any Bonus to which Executive has become
entitled for the calendar year prior to the year in which such death or
termination for Disability occurs but which remains unpaid at the date of death
or such termination; and

 

(c)                                  any reimbursement for expenses incurred in
accordance with Section 3.2.

 

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 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 Monitronics or (b) unable to
reasonably and effectively carry out his duties because any reasonable
accommodation which may be required would cause the Company or Monitronics 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

 

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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.

 

Executive acknowledges that the payments referred to in this Section 4.5,
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 4.5, constitute the only payments which Executive (or his legal
representative, as the case may be) shall be entitled to receive from the
Company or any of its Affiliates hereunder in the event of a termination of his
employment for death or Disability, and the Company and its Affiliates shall
have no further liability or obligation to him (or his legal representatives, as
the case may be) hereunder or otherwise in respect of his employment.

 

4.6                                 No Mitigation by Executive.  Except as
otherwise expressly provided herein, Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for herein
be reduced by any compensation earned by Executive as the result of employment
by another employer; provided, however, that if Executive becomes employed with
another employer and is eligible to receive health and/or medical benefits that
are substantially comparable to those offered by the Company under such other
employer’s plans, Executive’s continued benefits and/or plan coverage as set
forth in Section 4.2 or 4.3, as the case may be, shall end.

 

4.7                                 Severance Agreement and Release.  In the
event that Executive’s employment hereunder is terminated pursuant to (i) a
Termination Without Cause (as defined in Section 4.2 above) or (ii) a
Termination With Good Reason (as defined in Section 4.3 above), payment by the
Company of the amounts described in said sections shall be subject to the
execution and delivery to the Company by Executive of a severance agreement and
release (the “Release”) in a form substantially and materially similar to
Attachment A hereto within the applicable time period described below.

 

The Release shall be delivered to Executive, in the case of a Termination
Without Cause, at the time of delivery of the Termination Notice, and, in the
case of a Termination With Good Reason, upon delivery of written notice by
Executive to the Company. Executive shall have a period of twenty-one (21) days
(or, if required by applicable law, a period of forty-five (45) days) after the
effective date of termination of Executive’s employment hereunder (the
“Consideration Period”) in which to execute and return the original, signed
Release to the Company. If Executive delivers the original, signed Release to
the Company prior to the expiration of the Consideration Period and does not
thereafter revoke such Release within any period of time provided therefor under
applicable law, Executive shall, subject to Sections 4.8,

 

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4.9, 5.3 and 5.4 below, be entitled to receive the Severance Payment at the same
time and in the same form as specified in Section 4.2 or 4.3, as applicable.

 

If Executive does not deliver the original, signed Release to the Company prior
to the expiration of the Consideration Period, or if Executive delivers the
original, signed Release to the Company prior to the expiration of the
Consideration Period and thereafter revokes such Release within any period of
time provided therefor under applicable law, then:

 

(a)                                  the Company shall pay Executive an amount
equal to the sum of (i) any Base Salary and vacation time, in each case, accrued
but unpaid as of the date of termination, plus (ii) any reimbursement for
expenses incurred in accordance with Section 3.2, plus (iii) any Unpaid Bonus;
and

 

(b)                                 the Company shall have no obligation to pay
to Executive any Severance Payment or make any Benefits Payments.

 

4.8                                 Continued Compliance.  Executive and the
Company hereby acknowledge that any Severance Payments and Benefits Payments
payable by the Company under Section 4.2 or 4.3 are part of the consideration
for Executive’s undertakings under Article V below. Such amounts are subject to
Executive’s continued compliance with the provisions of Article V. If Executive
violates the provisions of Article V, then the Company will have no obligation
to make any of the Severance Payments or Benefits Payments that remain payable
by the Company under Section 4.2 or 4.3 on or after the date of such violation.

 

4.9                                 Timing of Payments Under Certain
Circumstances.  With respect to any amount that becomes payable to or for the
benefit of Executive under this Agreement upon Executive’s Separation from
Service (as defined below) for any reason, the provisions of this Section 4.9
will apply, notwithstanding any other provision of this Agreement to the
contrary. If the Company determines in good faith that Executive is a “specified
employee” within the meaning of Section 409A of the Code, any Treasury
regulations promulgated thereunder and any guidance issued by the Internal
Revenue Service relating thereto (collectively, “Code Section 409A”), then to
the extent required under Code Section 409A, payment of any amount of deferred
compensation that becomes payable to or for the benefit of Executive upon
Separation from Service (other than by reason of the death of Executive) and
that otherwise would be payable during the six-month period following
Executive’s Separation from Service shall be suspended until the lapse of such
six-month period (or, if earlier, the date of Executive’s death). A “Separation
from Service” of Executive means Executive’s separation from service, as defined
in Code Section 409A, with the Company and all other entities with which the
Company would be considered a single employer under Internal Revenue Code
Section 414(b) or (c), applying the 80% threshold used in such Internal Revenue
Code Sections or any Treasury regulations promulgated thereunder. Any payment
suspended as provided in this Section 4.9, unadjusted for interest on such
suspended payment, shall be paid to Executive in a single payment on the first
business day following the end of such six-month period or within 30 days
following the death of Executive, whichever occurs sooner, provided that the
death of Executive during such six-month period shall not cause the acceleration
of any amount that otherwise would be payable on any date during such six-month
period following the date of Executive’s death.

 

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ARTICLE V

 

OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;

 

NON-COMPETITION

 

5.1                                 Ownership of Proceeds of Employment.

 

5.1.1.                     The Company shall be the sole and exclusive owner
throughout the universe in perpetuity of all of the results and proceeds of
Executive’s services, work and labor in connection with Executive’s employment
by the Company, free and clear of any and all claims, liens or encumbrances.
Executive shall promptly and fully disclose to the Company, with all necessary
detail for a complete understanding of the same, any and all developments,
client and potential client lists, know how, discoveries, inventions,
improvements, conceptions, ideas, writings, processes, formulae, contracts,
methods, works, whether or not patentable or copyrightable, which are conceived,
made, acquired, or written by Executive, solely or jointly with another, while
employed by the Company (whether or not at the request or upon the suggestion of
the Company) and which are substantially related to the business or activities
of the Company, or which Executive conceives as a result of his employment by
the Company, or as a result of rendering advisory or consulting services to the
Company (collectively, “Proprietary Rights”).

 

5.1.2.                     Executive hereby assigns and transfers, and agrees to
assign and transfer, all his rights, title, and interests in the Proprietary
Rights to the Company or its nominee. In addition, Executive shall deliver to
the Company any and all drawings, notes, specifications, and data relating to
the Proprietary Rights. All copyrightable Proprietary Rights shall be considered
to be “works made for hire.” Whenever requested to do so by the Company,
Executive shall execute and deliver to the Company or its nominee any and all
applications, assignments and other instruments and do such other acts that the
Company shall request to apply for and obtain patents and/or copyrights in any
and all countries or to otherwise protect the Company’s interest in the
Proprietary Rights and/or to vest title thereto to the Company or its nominee;
provided, however, the provisions of this Section 5.1 shall not apply to any
Proprietary Rights that Executive developed entirely on his own time without
using the Company’s equipment, supplies, facilities or proprietary information,
except for Proprietary Rights that (a) at the time of conception or reduction to
practice of the Proprietary Rights, relate to the business of the Company, or
actual or demonstrably anticipated research or development of the Company, or
(b) result from any work performed by Executive for the Company.

 

5.1.3.                     Executive shall assist the Company in obtaining such
copyrights and patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the
Proprietary Rights;

 

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provided, however, Executive shall be reasonably compensated for his time and
reimbursed for any out-of-pocket expenses incurred in rendering such assistance
or giving or preparing to give such testimony.

 

5.2                                 Non-Disclosure of Confidential Information. 
As used herein, “Confidential Information” means any and all information
affecting or relating to the business of the Company, including without
limitation, financial data, customer lists and data, licensing arrangements,
business strategies, pricing information, product development, intellectual,
artistic, literary, dramatic or musical rights, works, or other materials of any
kind or nature (whether or not entitled to protection under applicable copyright
laws, or reduced to or embodied in any medium or tangible form), including
without limitation, all copyrights, patents, trademarks, service marks, trade
secrets, contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and as may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including “know-how”, ideas,
concepts, research, processes, and plans.  “Confidential Information” does not
include information that is in the public domain, information that is generally
known in the trade, or information that Executive can prove he acquired wholly
independently of his employment with the Company.  Executive shall not, at any
time during the Term or thereafter, directly or indirectly, disclose or furnish
to any other person, firm or corporation any Confidential Information, except in
the course of the proper performance of his duties hereunder or as required by
law (in which event Executive shall give prior written notice to Company and
shall cooperate with Company and Company’s counsel in complying with such legal
requirements).  Promptly upon the expiration or termination of Executive’s
employment hereunder for any reason or whenever the Company so requests,
Executive shall surrender to the Company all documents, drawings, work papers,
lists, memoranda, records and other data (including all copies) constituting or
pertaining in any way to any of the Confidential Information.

 

5.3                                 Non-Competition.  In consideration of the
Company disclosing and providing access to Confidential Information after the
date hereof, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Executive and the Company,
intending to be legally bound, hereby agree as follows.  Executive shall not,
during the Term or during any Consideration Period, directly: (a) compete with
the Company; or (b) have an interest in, be employed by, be engaged in or
participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business
within the Territory (as such terms are hereinafter defined); provided, however,
that notwithstanding the foregoing, Executive may make solely passive
investments in any Competing Entity the common stock of which is “publicly
held,” and of which Executive shall not own or control, directly or indirectly,
in the aggregate securities which constitute more than one (1%) percent of the
voting rights or equity ownership of such Competing Entity; or (c) solicit or
divert any business or any customer from the Company or assist any person, firm
or corporation in doing so or attempting to do so; or (d) cause or seek to cause
any person, firm or corporation to refrain from dealing or doing business with
the Company or assist any person, firm or corporation in doing so or attempting
to do so.

 

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For purposes of this Section 5.3, (i) the term “Competing Entity” shall mean any
entity which presently or during the period referred to above engages in any
business activity in which the Company is then engaged; and (ii) the term
“Territory” shall mean any geographic area in which the Company conducts
business during such period.

 

Notwithstanding the foregoing, in the event that Executive elects (a
“Competitive Election”), during the Consideration Period, to either (a) compete
with the Company, or (b) have an interest in, be employed by, be engaged in or
participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business
within the Territory (the foregoing subsections (a) and (b), collectively, the
“Competitive Activities”), then, at least ten (10) business days prior to
commencing any such Competitive Activities, Executive shall deliver to the
Company a written notice (the “Competition Notice”) advising the Company of
(i) Executive’s intent to commence Competitive Activities, and (ii) the
commencement date for such Competitive Activities (the “Effective Date”). No
such Competitive Election during the Consideration Period will be deemed a
breach of this Agreement; rather, in the event Executive makes a Competitive
Election prior to the expiration of the Consideration Period, then (x) Executive
shall forfeit any Severance Payment and Benefits Payments otherwise payable
pursuant to Section 4.2 or 4.3 above, and (y) the Company shall have no
obligation to make any Severance Payment or Benefits Payments to Executive under
Section 4.2 or 4.3 for any periods beyond the Effective Date.

 

5.4                                 Non-Solicitation.

 

5.4.1.                     Executive shall not, for a period of eighteen (18)
months from the date of any termination or expiration of his employment
hereunder, directly or indirectly:  (a) acquire any financial interest in or
perform any services for himself or any other entity in connection with a
business in which Executive’s interest, duties or activities would inherently
require Executive to reveal any Confidential Information; or (b) solicit or
cause to be solicited the disclosure of or disclose any Confidential Information
for any purpose whatsoever or for any other party.

 

5.4.2.                     In consideration of the Company disclosing and
providing access to Confidential Information, after the date hereof, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Executive and the Company, intending to be legally bound, hereby
agree as follows.  Executive shall not, for a period of eighteen (18) months
from the date of any termination or expiration of his employment hereunder,
solicit, directly or indirectly, or cause or permit others to solicit, directly
or indirectly, (a) any person employed by the Company (a “Current Employee”) to
leave employment with the Company or (b) any Monitronics dealer (a “Dealer”) to
leave the Monitronics dealer network (the “Dealer Network”) or sell alarm
monitoring contracts to another alarm monitoring company. The term “solicit”
includes, but is not limited to the following (regardless of whether done
directly or indirectly):  (i) requesting that a Current Employee change
employment or that a Dealer leave the Dealer Network, (ii) informing a Current
Employee that an opening exists elsewhere or inform a Dealer that alternative
dealer arrangements are available, (iii) assisting a Current Employee in finding
employment elsewhere or a Dealer in finding

 

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alternative distribution opportunities elsewhere, (iv) inquiring if a Current
Employee “knows of anyone who might be interested” in a position elsewhere or if
a Dealer “knows of anyone who might be interested” in joining an alternative
dealer network, (v) inquiring if a Current Employee might have an interest in
employment elsewhere or if a Dealer might have an interest in joining an
alternative dealer network, (vi) informing others of the name or status of, or
other information about, a Current Employee or Dealer, or (vii) any other
similar conduct, the effect of which is that a Current Employee leaves the
employment of the Company or that a Dealer leaves the Dealer Network.

 

5.5                                 Breach of Provisions.  In the event that
Executive shall breach any of the provisions of this Article V, or in the event
that any such breach is threatened by Executive, in addition to and without
limiting or waiving any other remedies available to the Company at law or in
equity, the Company shall be entitled to immediate injunctive relief in any
court, domestic or foreign, having the capacity to grant such relief, without
the necessity of posting a bond, to restrain any such breach or threatened
breach and to enforce the provisions of this Article V. Executive acknowledges
and agrees that there is no adequate remedy at law for any such breach or
threatened breach and, in the event that any action or proceeding is brought
seeking injunctive relief, Executive shall not use as a defense thereto that
there is an adequate remedy at law.

 

5.6                                 Reasonable Restrictions.  The parties
acknowledge that the foregoing restrictions, the duration and the territorial
scope thereof as set forth in this Article V, are under all of the circumstances
reasonable and necessary for the protection of the Company and its business.

 

5.7                                 Definition.  For purposes of this Article V,
the term “Company” shall be deemed to include (i) any predecessor to, or
successor of the Company, (ii) any subsidiary of the Company (including, without
limitation, any entity in which the Company owns 50% or more of the issued and
outstanding equity), and (iii) any entity that is under the control or common
control of the Company (including, by way of illustration and not as a
limitation, any joint venture to which the Company or one of its subsidiaries is
a party).

 

5.8                                 Third Party Trade Secrets.  In the same way
that the Company endeavors to protect its own Confidential Information, the
Company endeavors not to engage in any conduct which would violate the legal
protection afforded to the trade secret information of third parties. Under no
circumstances will the Company accept the improper disclosure of other parties’
trade secrets. Therefore, in rendering Executive’s services hereunder, Executive
agrees not to disclose to the Company or utilize in any manner trade secret
information in Executive’s possession belonging to any other party.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.1                                 Binding Effect.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
legal representatives, heirs, distributees, successors and assigns.

 

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6.2                                 Assignment.

 

6.2.1.                     The Company may assign this Agreement to any
successor in interest to its business, or to any Affiliate of the Company, and
Executive hereby agrees to be employed by such assignee as though such assignee
were originally the employer named herein.

 

6.2.2.                     Notwithstanding anything to the contrary contained
herein, in the event that Monitronics ceases to be an Affiliate of the Company
or the Company effects a sale, disposition, or transfer of a material portion of
the business or assets of Monitronics to any person (a “Alternative Assignee”)
that is not an Affiliate of the Company or will not be an Affiliate of the
Company following the completion of the transaction of which such sale,
disposition or transfer forms a part, (i) if Monitronics or such Alternative
Assignee, as the case may be, executes a written commitment to abide by the
terms of this Agreement, the Company may assign this Agreement to Monitronics or
such Alternative Assignee, as the case may be (and, in each case, Executive
hereby agrees to be employed by such assignee as though such assignee were
originally the employer named herein), and terminate Executive from his then
current position at the Company, and, in the case of any such assignment to an
Alternative Assignee, terminate Executive from his then current position at
Monitronics, or (ii) the Company may retain Executive in his then current
position at the Company and terminate Executive from his then current position
at Monitronics, provided, however, that no assignment or termination
contemplated by this Section 6.2.2 will constitute a breach of any provision of
this Agreement.

 

6.2.3.                     Executive hereby acknowledges that the services to be
rendered by Executive are unique and personal, and, accordingly, Executive may
not assign any of his rights or delegate any of his duties or obligations under
this Agreement.

 

6.3                                 Notices.  Any notice provided for herein
shall be in writing and shall be deemed to have been given or made when
personally delivered or three (3) days following deposit for mailing by first
class registered or certified mail, return receipt requested, or if delivered by
facsimile transmission (to a fax number specified by the recipient in writing
pursuant to this Section 6.3), upon confirmation of receipt of the transmission,
to the address of the other party set forth below or to such other address as
may be specified by notice given in accordance with this Section 6.3:

 

(a)                                  If to the Company:

 

Ascent Capital Group, Inc.

12300 Liberty Boulevard

Englewood, CO  80112

Attention:  Chief Executive Officer

 

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With a copy to:

 

Ascent Capital Group, Inc.

12300 Liberty Boulevard

Englewood, CO  80112

Attention:  General Counsel

 

(b)                                 If to Executive:

 

Michael R. Meyers

 

6.4                                 Severability.  If any provision of this
Agreement, or portion thereof, shall be held invalid or unenforceable by a court
of competent jurisdiction, such invalidity or unenforceability shall attach only
to such provision or portion thereof, and shall not in any manner affect or
render invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein.  In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.

 

6.5                                 Confidentiality.  The parties hereto agree
that they will not, during the Term or thereafter, disclose to any other person
or entity the terms or conditions of this Agreement (excluding the financial
terms hereof) without the prior written consent of the other party, except as
required by law, regulatory authority or as necessary for either party to obtain
personal loans or financing.  Approval of the Company and of Executive shall be
required with respect to any press releases regarding this Agreement and the
activities of Executive contemplated hereunder.

 

6.6                                 Arbitration.  Except as provided otherwise
in Sections 5.5, if any controversy, claim or dispute arises out of or in any
way relates to this Agreement, the alleged breach thereof, Executive’s
employment with the Company or termination therefrom, including without
limitation, any and all claims for employment discrimination or harassment,
civil tort and any other employment laws, excepting only claims which may not,
by statute, be arbitrated, both Executive and the Company (and its directors,
officers, employees or agents) agree to submit any such dispute exclusively to
binding arbitration. Both Executive and the Company acknowledge that they are
relinquishing their right to a jury trial in civil court. Executive and the
Company agree that arbitration is the exclusive remedy for all disputes arising
out of or related to Executive’s employment with the Company.

 

The arbitration shall be administered, at the election of the party initiating
the arbitration proceeding, either by JAMS in accordance with the Employment
Arbitration Rules & Procedures of JAMS then in effect and subject to JAMS Policy
on Employment Arbitration Minimum Standards or by the American Arbitration
Association in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association, except as provided otherwise in this
Agreement. Arbitration shall be commenced and heard in Dallas County, Texas.
Only one arbitrator shall preside over the proceedings.  The arbitrator shall
apply the substantive law (and

 

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the law of remedies, if applicable) of Texas or federal law, or both, as
applicable to the claim(s) asserted. In any arbitration, the burden of proof
shall be allocated as provided by applicable law. The arbitrator shall have the
authority to award any and all legal and equitable relief authorized by the law
applicable to the claim(s) being asserted in the arbitration, as of the
claim(s) were brought in a court of law.  Either party may bring an action in
court to compel arbitration under this Agreement and to enforce an arbitration
award. Discovery, such as depositions or document requests, shall be available
to the Company and Executive as though the dispute were pending in Texas state
court. The arbitrator shall have the ability to rule on pre-hearing motions, as
though the matter were in a Texas state court, including the ability to rule on
a motion for summary judgment.

 

Unless otherwise permitted under applicable law, the fees of the arbitrator and
any other fees for the administration of the arbitration that would not normally
be incurred if the action were brought in a court of law (e.g., filing fees,
room rental fees, etc.) shall be paid by the Company, provided that Executive
shall be required to pay the amount of filing fees equal to that which Executive
would be required to pay to file an action in Texas state court.  The arbitrator
must provide a written decision which is subject to limited judicial review
consistent with applicable law. If any part of this arbitration provision is
deemed to be unenforceable by an arbitrator or a court of law, that part may be
severed or reformed so as to make the balance of this arbitration provision
enforceable.

 

6.7                                 Waiver.  No waiver by a party hereto of a
breach or default hereunder by the other party shall be considered valid unless
in writing signed by such first party, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or any other nature.

 

6.8                                 Controlling Nature of Agreement.  To the
extent any terms of this Agreement are inconsistent with the terms or provisions
of the Company’s Employee Handbook or any other personnel policy statements or
documents, the terms of this Agreement shall control.  To the extent that any
terms and conditions of Executive’s employment are not covered in this
Agreement, the terms and conditions set forth in the Employee Handbook or any
similar document shall control such terms.

 

6.9                                 Entire Agreement.  This Agreement sets forth
the entire agreement between the parties with respect to the subject matter
hereof, and supersedes any and all prior agreements or understanding between the
Company and Executive, whether written or oral, fully or partially performed
relating to any or all matters covered by and contained or otherwise dealt with
in this Agreement.

 

6.10                           Amendment.  No modification, change or amendment
of this Agreement or any of its provisions shall be valid unless in writing and
signed by the party against whom such claimed modification, change or amendment
is sought to be enforced.

 

6.11                           Authority.  The parties each represent and
warrant that they have the power, authority and right to enter into this
Agreement and to carry out and perform the terms, covenants and conditions
hereof.

 

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6.12                           Applicable Law.  This Agreement, and all of the
rights and obligations of the parties in connection with the employment
relationship established hereby, shall be governed by and construed in
accordance with the substantive laws of the State of Texas without giving effect
to principles relating to conflicts of law.

 

6.13                           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

 

6.14                           Compliance with Section 409A.

 

6.14.1.               This Agreement is intended to provide payments that are
exempt from or compliant with the provisions of Section 409A of the Code and
related regulations and Treasury pronouncements (“Section 409A”), and the
Agreement shall be interpreted accordingly.  Each payment under this Agreement
is intended to be excepted from Section 409A, including, but not limited to, by
compliance with the short-term deferral exception as specified in Treasury
Regulation § 1.409A-1(b)(4) and the involuntary separation pay exception within
the meaning of Treasury Regulation § 1.409A-1(b)(9)(iii), and the provisions of
this Agreement will be administered, interpreted and construed accordingly (or
disregarded to the extent such provision cannot be so administered, interpreted,
or construed).

 

6.14.2.               All reimbursements or provision of in-kind benefits
pursuant to this Agreement shall be made in accordance with Treasury Regulation
§ 1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed
payable at a specified time or on a fixed schedule relative to a permissible
payment event.  Specifically, the amount reimbursed or in-kind benefits provided
under this Agreement during Executive’s taxable year may not affect the amounts
reimbursed or provided in any other taxable year (except that total
reimbursements may be limited by a lifetime maximum under a group health plan),
the reimbursement of an eligible expense shall be made on or before the last day
of Executive’s taxable year following the taxable year in which the expense was
incurred, and the right to reimbursement or provision of in-kind benefit is not
subject to liquidation or exchange for another benefit.

 

6.14.3.               For all purposes of this Agreement, Executive shall be
considered to have terminated employment with the Company when Executive incurs
a “separation from service” with the Company within the meaning of Code
Section 409A(a)(2)(A)(i).

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

 

“COMPANY”

 

 

 

ASCENT CAPITAL GROUP, INC.

 

 

 

 

 

By:

/s/ William E. Niles

 

 

William E. Niles

 

 

Executive Vice President and General Counsel

 

 

 

 

 

“EXECUTIVE”

 

 

 

 

 

 

/s/ Michael R. Meyers

 

 

Michael R. Meyers

 

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