exv10w12






EXHIBIT 10.12




EMPLOYMENT AGREEMENT




     This Employment Agreement (the “Agreement”), dated as of February 11, 2008, is entered into by
and between Ascent Media Group, LLC, a Delaware limited liability company (the “Company”), and Jose
A. Royo (“Executive”).



INTRODUCTION




     The Company and its operating subsidiaries (“Affiliates”) are 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:



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 President and Chief Executive
Officer of the Company.



     1.2 Term. Subject to Article IV below, Executive’s employment hereunder shall be for
a term of five (5) years commencing as of February 11, 2008 (the “Commencement Date”), and expiring
at the close of business on February 10, 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 or governing body, as applicable, 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, where the time allocated for those activities
does not materially 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 Chairman of the Company (or at
any time that the position of Chairman is vacant, to the Board of Directors or other similar
governing body of the direct parent of the Company).



     1.5 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.



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 $600,000 (the “Base
Salary”), payable by the Company in accordance with the Company’s normal payroll practices.
Beginning in 2009, the Base Salary shall be reviewed on an annual basis during the Term for
increase in the sole discretion of the Company.



     2.3 Bonus. During the Term, in addition to the Base Salary, Executive shall
participate in the Ascent Media Group, LLC Management Incentive Plan (as amended and restated
effective January 1, 2007, and as it may be further amended during the Term) or, in the event such
plan is terminated during the Term, such other reasonably equivalent incentive bonus plan (any such
plan, the “MIP”), with an annual “Target Award” of fifty percent (50%) of Executive’s “Annual Base
Salary” (as such capitalized terms are defined in the MIP). Except as set forth in Sections 4.2,
4.3 and 4.8 below, (a) Executive’s participation in the MIP will be subject to all of the terms and
conditions of the MIP, and (b) nothing in this Agreement shall be construed to guarantee the
payment of any amount to Executive pursuant to the MIP (i.e., except as set forth in Sections 4.2,
4.3 and 4.8 below, the amount of any bonus payable to Executive under the MIP shall be determined
pursuant to and in accordance with the terms and conditions of the MIP).



     2.4 Deductions. The Company shall deduct from the compensation described in Sections
2.2, 2.3 and 2.4, 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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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, pension plans and
retirement plans as the Company may make available to its other senior 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 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.



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 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).



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     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 or
governing body, as applicable, 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 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.



     Notwithstanding the foregoing, no purported Termination For Cause pursuant to (a), (b), (c),
(d), (e) and (g) 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 the
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:




	 	(a)	 	any Base Salary and vacation time accrued but unpaid as of the date of
termination;
	 
	 	(b)	 	subject to Section 4.6 below, an amount (the “Severance Payment”) equal to:






(i) if the termination of Executive’s employment occurs prior to a Change in Control
(as defined in Section 4.9), an amount equal to Executive’s annual Base Salary in
effect on the date of termination multiplied by 2, or




(ii) if the termination of Executive’s employment occurs concurrently with or
following a Change in Control, the sum of (A) Executive’s annual Base Salary in
effect on the date of termination multiplied by 2.5, plus (B) the Change in Control
Termination Year Annual Award (determined in accordance with Section 4.8(b) below)
multiplied by 2.5;



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	 	(c)	 	subject to Section 4.6 below, in lieu of any Award payable under the MIP with
respect to the calendar year in which termination occurs, an amount (the “Pro Rated
Bonus”) equal to:






(i) if the termination of Executive’s employment occurs prior to a Change in Control
(as defined in Section 4.9), an amount equal to the Termination Year Annual Award
determined as provided in Section 4.8(a) below, 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 (the “Pro Rata Percentage”); or




(ii) if the termination of Executive’s employment occurs concurrently with or
following a Change in Control, an amount equal to the Change in Control Termination
Year Annual Award (determined in accordance with Section 4.8(b) below), multiplied by
the Pro Rata Percentage;




	 	(d)	 	subject to Section 4.6 below, notwithstanding the provisions of Section 6 of
the MIP, any Award (as defined in the MIP) to which Executive otherwise has become
entitled with respect to the calendar year preceding the year in which termination
occurs if such Award has not previously been paid to Executive; and
	 
	 	(e)	 	any reimbursement for expenses incurred in accordance with Section 3.2.




Subject to Section 4.6 and 4.10, (i) any Severance Payment to which Executive becomes entitled
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), (ii) any Prorated Bonus shall be paid on April 15th of the
year following the year in which the date of termination occurs (or, if such April 15th
is not a business day, on the first business day thereafter), and (iii) any Award payable pursuant
to the terms of Section 4.2(d) shall be payable on the Payment Date (as defined in the MIP)
relating to such Award (which shall in no event be later than December 31st of the
calendar year in which termination occurs).




     In addition, subject to Sections 4.5 and 4.6 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 24-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



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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.



     Provided that a Change in Control (as defined in Section 4.9 below) has not then occurred,
within the period beginning on the date that is six (6) months prior to the expiration of the Term
and ending on the date that is three (3) months prior to the expiration of the Term (the “Notice
Period”), 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 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 within the Notice Period,
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 4.5 and 4.6 below, Executive shall be entitled to receive the
amounts and benefits as provided under this Section 4.2. If the Company delivers a Renewal Notice
and Executive fails to accept such offer in writing prior to the date that is ninety (90) days
following delivery of the Renewal Notice, Executive’s employment shall be terminated as of such
90th day and such termination shall be a Termination Without Cause, whereupon, subject
to Sections 4.5 and 4.6 below, Executive shall be entitled to receive the amounts and benefits as
provided under this Section 4.2 except that “1” shall be substituted for “2” in Section 4.2(b)(i)
for purposes of calculating Executive’s Severance Payment and “12-month anniversary” shall be
substituted for “24-month anniversary” for purposes of calculating Executive’s Benefits Payments
and Reimbursement Period 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 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 without the prior written consent of
Executive: (a) a reduction in Executive’s then current Base Salary; (b) the relocation by the
Company of Executive’s principal place of employment to a location more than 35 miles from
Executive’s principal place of employment prior to such relocation, (c) a breach by the Company of
any material provision of this Agreement, or (d) following a Change in Control, the failure of the
Company and the Executive, within twelve months following the date of such Change in Control or the
remainder of the Term, whichever is shorter (the “Negotiation Period”), to execute a new employment
agreement upon terms that are mutually acceptable to Executive and the Company (in each party’s



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sole and absolute discretion) governing the terms and conditions of Executive’s employment
relationship with the Company (a “Termination With Good Reason”).



     Notwithstanding the foregoing, no purported Termination With Good Reason pursuant to Section
4.3(a), (b) or (c) shall be effective unless all of the following provisions shall have been
complied with: (i) the Company shall be given written notice by Executive of the 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 Executive first learns of such circumstances; and (ii)
the Company shall have fifteen (15) days after receiving such notice in which to cure such grounds,
to the extent such cure is possible. With respect to a Termination With Good Reason pursuant to
Section 4.3(d), no purported Termination With Good Reason shall be effective unless, within ninety
(90) days following the expiration of the Negotiation Period, Executive delivers to the Company
written notice of Executive’s intention to effect a Termination With Good Reason effective on the
30th day following delivery of such notice (even if such date occurs after the natural
expiration of the Term).



     In the event that a Termination With Good Reason occurs, then, subject to Sections 4.5 and 4.6
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, and the Company shall pay Executive (or his legal
representative, as the case may be) as follows:




	 	(a)	 	any Base Salary and vacation time accrued but unpaid as of the date of death or
termination for Disability;
	 
	 	(b)	 	any reimbursement for expenses incurred in accordance with Section 3.2.; and
	 
	 	(c)	 	an amount, determined as of the date of termination of Executive’s employment
under this Section 4.4, equal to the present value of the payments of Base Salary
Executive would have received during the 24-month period following such termination
(assuming that, throughout such 24-month period, Executive would have received his
monthly Base Salary in effect upon the date of termination), calculated by applying a
6% annual rate of interest without compounding and based on Executive’s Base Salary and
the Company’s normal payroll practices in effect as of the date of such termination,
which amount shall be payable in a lump sum on the




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	 	 	 	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).





     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 (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.



     Executive acknowledges that the payments referred to in this Section 4.4, 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 4.4, constitute the only payments
which Executive (or his legal representative, as the case may be) shall be entitled to receive from
the Company hereunder in the event of a termination of his employment for death or Disability, and
the Company 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.



     4.5 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 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 be reduced to the extent that comparable benefits and/or coverage
is provided under such other employer’s plans.



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     4.6 Severance Agreement and Release. In the event that Executive incurs a termination
of employment 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 by Executive of the
Company’s standard severance agreement and release (the “Release”).



     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 the 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 this Agreement (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, then
the Reimbursement Period shall be deemed to have commenced as of the first day of the Consideration
Period and Executive shall be entitled to the amounts and benefits set forth in Section 4.2 or 4.3,
as the case may be.



     If Executive does not deliver the original, signed Release to the Company prior to the
expiration of the Consideration Period, then:




	 	(a)	 	the Company shall pay Executive an amount equal to the sum of (i) any Base
Salary and vacation time accrued but unpaid as of the date of termination, plus (ii)
any reimbursement for expenses incurred in accordance with Section 3.2; and
	 
	 	(b)	 	the Company shall have no obligation to (i) pay to Executive the Severance
Payment (as that term is defined in Section 4.2(b) above), the Pro Rated Bonus (as that
term is defined in Section 4.2(c) above) or the Award (as that term is defined in
Section 4.2(d) above) or (ii) make the Benefits Payments during the Reimbursement
Period (as those terms are defined in Section 4.2 above).





     4.7 Continued Compliance. Executive and the Company hereby acknowledge that the
amounts or benefits payable by the Company under Sections 4.2(b), (c) and (d), 4.3, and 4.4(c) and
the Benefits Payments payable by the Company under Sections 4.2 or 4.3 are part of the
consideration for Executive’s undertakings under Article V below. Such amounts and benefits 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
payments that remain payable by the Company under Sections 4.2(b), (c) or (d), 4.3 or 4.4(c) or the
Benefits Payments that remain payable by the Company under Sections 4.2 or 4.3 on or after the date
of such violation.



     4.8 Termination Year Annual Award; Change in Control Termination Year Annual Award.
If a Termination Without Cause under Section 4.2 or a Termination With Good Reason under Section
4.3 occurs with respect to Executive, there shall be calculated in accordance with this Section 4.8
the amount of the Award, if any, to which Executive otherwise would be entitled to receive under
the MIP with respect to the calendar year in which such termination occurs, and the amount so
determined in accordance with this Section 4.8 will be used in determining the amount of any
Pro-Rated Bonus and, to the extent applicable, any Severance Payment that may become payable to
Executive pursuant to Section 4.2 or 4.3 above, as set forth in those Sections.



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	 	(a)	 	If such termination occurs prior to a Change in Control and (i) on a date that
is on or prior to June 30 of the calendar year in which such termination occurs, the
Award (the “Termination Year Annual Award”) will be determined by multiplying
Executive’s Annual Base Salary for the year of termination by the arithmetic average of
the percentages, calculated for each of the two years immediately preceding the year of
termination, obtained by dividing the actual Award (if any) received by Executive under
the MIP with respect to such year by Executive’s annual Base Salary for such year (such
resulting arithmetic average, the “Two-Year Percentage”), or (ii) on a date that is
after June 30 of such calendar year, the Termination Year Annual Award will be the
greater of the amount determined under Section 4.8(a)(i) above or the actual Award for
the year of termination, determined as provided under the MIP.
	 
	 	(b)	 	If such termination occurs concurrently with or following a Change in Control,
the Award (the “Change in Control Termination Year Annual Award”) shall be equal to
Executive’s Annual Base Salary for the year of termination, multiplied by the greater
of (a) 60% of Executive’s Target Award (as defined in the MIP) for the year of
termination, or (b) the Two-Year Percentage.





     4.9 Change in Control. For purposes of this Agreement, a “Change in Control” will be
deemed to have occurred if any person or group (other than one or more Permitted Holders):




	 	(a)	 	acquires, directly or indirectly, all or substantially all of the assets of the
Company, either in a single transaction or in a series of related transactions; or
	 
	 	(b)	 	becomes the beneficial owner of more than 50% of the aggregate voting power of
all outstanding classes or series of the Company’s Voting Securities and such person or
group beneficially owns a greater percentage of such aggregate voting power than is at
the time beneficially owned by the Permitted Holders, in the aggregate; provided,
however, that a person or group shall not be deemed the beneficial owner of (i) any
securities tendered pursuant to a tender or exchange offer made by or on behalf of such
person or group until such tendered securities are accepted for purchase or exchange
thereunder, or (ii) any securities the beneficial ownership of which (A) arises solely
as a result of a revocable proxy delivered in response to a proxy or consent
solicitation and (B) is not then reportable on Schedule 13D (or any successor schedule)
under the Exchange Act.




Notwithstanding any other provision of this Section 4.9, in no event will a direct or indirect
spin-off of the Company from DHC or Holdco (whether structured as a pro rata distribution, as an
exchange offer or otherwise) constitute a Change in Control of the Company.




     For purposes of this Section 4.9, the following definitions shall apply:



     “Affiliated Persons” means (i) with respect to any specified Person that is not a natural
person, any other Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and each of the officers, directors, partners,
members and Persons performing similar functions of such other Person; and (ii) with respect to any
specified



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Person that is a natural person, (A) such specified Person’s parents, spouse, siblings,
descendants, step children, step grandchildren, nieces and nephews and their respective spouses,
(B) the estate, legatees and devisees of such specified Person and each of the Persons referred to
in clause (A), and (C) any company, partnership, trust or other entity or investment vehicle
controlled by any of the Persons referred to in clause (A) or (B) or the holdings of which are for
the primary benefit or any of such Persons.



     A “beneficial owner” will be determined in accordance with Rule 13d-3 and Rule 13d-5 under the
Exchange Act, as in effect on the Commencement Date, provided, however, that a Person will be
deemed to be the beneficial owner of Voting Securities of the Company or of the ultimate parent
entity (within the meaning of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended)
of the Company, as applicable, that may be acquired by such Person (disregarding any legal
impediments to such beneficial ownership), whether within 60 days or thereafter, upon the
conversion, exchange or exercise of any warrants, options, rights or other rights to acquire such
Voting Securities and “beneficially own,” “beneficially owned” and “beneficially ownership” have
meanings correlative to that of beneficial owner.



     “DHC” means Discovery Holding Company, a Delaware corporation, and any successor (by merger,
consolidation, transfer or otherwise) to all or substantially all of its assets; provided, that if
a Transferee Parent becomes the beneficial owner of all or substantially all of the equity
securities of the Company then beneficially owned by DHC as to which DHC has dispositive power, the
term “DHC” shall also mean such Transferee Parent and any successor (by merger, consolidation,
transfer or otherwise) to all or substantially all of its assets. “Transferee Parent” for this
purpose means, in the event of any transaction or series of related transactions involving the
direct or indirect transfer (or relinquishment of control) by DHC of any Person (a “Transferred
Person”) that holds equity securities of the Company beneficially owned by DHC, such Transferred
Person or its successor in such transaction or any ultimate parent entity (within the meaning of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) of such Transferred Person or
its successor if immediately after giving effect to such transaction or the last transaction in
such series, Voting Securities representing at least a majority of the voting power of the
outstanding Voting Securities of such Transferred Person, successor or ultimate parent entity are
beneficially owned by any combination of DHC, Persons who immediately prior to such transaction
were beneficial owners of a majority of, or a majority of the voting power of, the outstanding
Voting Securities of DHC (or of any publicly traded class or series of Voting Securities of DHC
designed to track the economic performance of a specified group of assets or businesses).



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “HoldCo” means any Person that is or becomes the ultimate parent entity (within the meaning of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) of the Company, provided that
immediately after giving effect to the transaction or series of transactions in which such Person
became the ultimate parent entity of the Company, Voting Securities representing at least a
majority of the aggregate voting power of all the outstanding classes or series of the Voting
Securities of such Person are beneficially owned by any combination of Persons who immediately
prior to such transaction were beneficial owners of a majority of, or a majority of the aggregate
voting power of, all the outstanding classes or series of the Voting Securities of the Company or
the Person that was the ultimate parent entity of the Company immediately prior to such
transaction.



11









 





     “Permitted Holders” means any one or more of (i) DHC, (ii) any HoldCo, (iii) Dr. John C.
Malone, (iv) each of the respective Affiliated Persons of the Persons referred to in clauses (i),
(ii) and (iii), and (v) any Person a majority of the aggregate voting power of all Voting
Securities of which are beneficially owned by any one or more of the Persons referred to in clauses
(i), (ii), (iii) or (iv).



     “person” and “group” have the meanings given to them for purposes of Section 13(d) and 14(d)
of the Exchange Act or any successor provisions, and the term “group” includes any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning of rule 13d-5(b)(1)
under the Exchange Act, or any successor provision.



     “Person” means any natural person, corporation, limited liability company, partnership
(whether limited or general), joint venture, trust, association, unincorporated organization or
other entity.



     “unissued shares” means shares of voting stock not outstanding that are subject to options,
warrants, rights to purchase or conversion privileges exercisable within 60 days of the date of
determination of a Change in Control.



     “Voting Securities” means securities generally entitling the holder thereof to vote in the
election of directors or other similar governing officials of a Person.



     4.10 Timing of Payments Under Certain Circumstances. With respect to any amount that
becomes payable to Executive under this Agreement upon Executive’s Separation from Service (as
defined below) for any reason, the provisions of this Section 4.10 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 Internal Revenue
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 that becomes payable to 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 4.10, 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, as applicable, 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.



12









 





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 any of its Affiliates, or which Executive
conceives as a result of his employment by the Company or its Affiliates, or as a result of
rendering advisory or consulting services to the Company or its Affiliates (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 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; provided, however, in accordance with California Labor Code
Section 2870 and 2872, 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 Company’s business, 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; 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.



          5.1.4 Contemporaneously with the execution and delivery of this Agreement, Executive is
executing and delivering an acknowledgment in the form of Exhibit A hereto.



13









 





     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 and
its Affiliates, 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. Executive shall not, during the Term or during the 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.



     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 or any of its Affiliates is then engaged; and (ii) the term “Territory” shall mean any
geographic area in which the Company or any of its Affiliates conducts business during such period;
provided, however, that, during the Consideration Period, the term “Territory”
shall mean only Los Angeles County, California and New York County, New York.



     Notwithstanding the foregoing, in the event that Executive elects, during the Consideration
Period, to either (a) compete with the Company, or (b) have an interest in, be employed by, be



14









 







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. Executive’s election to participate in any Competitive
Activities during the Consideration Period shall not be deemed a breach of this Agreement; rather,
in the event Executive delivers the Competition Notice (and thereafter engages in Competitive
Activities prior to the expiration of the Consideration Period), then (x) Executive shall forfeit
any Severance Payment, Pro Rated Bonus or Benefits Payment 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 Pro
Rated Bonus to Executive or any Benefits Payment under Section 4.2 or 4.3.



     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 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, any person employed by the Company (a “Current
Employee”) to leave employment with the 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, (ii) informing a Current Employee that an opening exists elsewhere,
(iii) assisting a Current Employee in finding employment elsewhere, (iv) inquiring if a Current
Employee “knows of anyone who might be interested” in a position elsewhere, (v) inquiring if a
Current Employee might have an interest in employment elsewhere, (vi) informing others of the name
or status of, or other information about, a Current Employee, or (vii) any other similar conduct,
the effect of which is that a Current Employee leaves the employment of the Company.



     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.



15









 





     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).



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.



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

520 Broadway, 5th Floor

Santa Monica, CA 90401

Attention: Chairman

Fax No.: (310) 434-7007
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	Ascent Media Group, LLC

520 Broadway, 5th Floor

Santa Monica, CA 90401

Attention: General Counsel

Fax No.: (310) 434-7005





	 	 	 
	(b)

	 	If to Executive:
	 
	 	 
	 

	 	Jose A. Royo

433 Venezia Avenue

Venice, CA 90291







16









 







     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. 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 Los Angeles County, California. Only one arbitrator shall preside over
the proceedings. The arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of California 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 California state
court. The arbitrator shall have the ability to rule on pre-hearing motions, as though the matter
were in a California state court, including the ability to rule on a motion for summary judgment.



17









 





     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 California 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.



     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 California 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. The provisions of this Agreement are intended to
meet the requirements of Code Section 409A and will be interpreted in a manner that is consistent
with such intent. Without limiting the generality of the foregoing, the Company and Executive
agree that Executive’s entitlement to the payments described in Section 4.2(c) and (d) (including,
if
applicable, any such payments determined under the penultimate paragraph of Section 4.2) upon a
Termination Without Cause or a Termination with Good Reason or the payments described in Section
4.4(c) upon termination of Executive’s employment on account of Disability shall be conditioned
upon such Termination Without Cause, Termination with Good Reason or termination of Executive’s
employment on account of Disability constituting a Separation from Service of Executive as defined
in Section 4.10.



[Remainder of this page intentionally left blank]




18









 









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



	 	 	 	 	 
	 	“COMPANY”



ASCENT MEDIA GROUP, LLC

 	 
	 	By:  	/s/ William R. Fitzgerald
 	 
	 	 	William R. Fitzgerald 	 
	 	 	Chairman 	 



	 	 	 	 	 
	 	“EXECUTIVE”

 	 
	 	/s/ Jose A. Royo
 	 
	 	Jose A. Royo 	 
	 	 	 



19









 






	 	 	 	 	 



Exhibit A




Form of Acknowledgment Under Section 2870 of the California Labor Code




Section 2870 of the California Labor Code provides:



(a) Any provision in an employment agreement which provides that an employee shall assign or offer
to assign any of his or her rights in an invention to his or her employer shall not apply to an
invention that the employee developed entirely on his or her own time without using the employer’s
equipment, supplies, facilities, or trade secret information except for those inventions that
either: (1) Relate at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or development of the employer;
(2) Result from any work performed by the employee for the employer.



(b) To the extent a provision in an employment agreement purports to require an employee to assign
an invention otherwise excluded from being required to be assigned under subdivision (a), the
provision is against the public policy of this state and is unenforceable.




ACKNOWLEDGEMENT





     This Acknowledgement is entered into in connection with that Employment Agreement (the
“Agreement”) between me and Ascent Media Group, LLC, a Delaware limited liability company (the
“Company”), dated as of the date hereof.



     1. I hereby acknowledge that the provisions of the Agreement relating to rights to
inventions which I have executed does not apply to an invention for which no equipment, supplies,
facility, or trade secret information of the Company was used and which was developed entirely on
my own time, unless (a) the invention relates (i) to the business of the Company, or (ii) to the
Company’s actual or demonstrably anticipated research or development, or (b) the invention results
from any work performed by me for the Company. I hereby acknowledge receipt of a copy of
California Labor Code Section 2870 (hereinafter referred to as the “Act”) which relates to
employer/employee rights to inventions.



     2. I understand that I have an obligation to disclose to the Company all my inventions,
made solely or jointly with others, during the term of the employment, even though I believe that
some fall within the provisions of the Act. I agree that at the time I disclose any such invention
to the Company that I shall declare in writing if I believe the invention falls within the
provisions of the Act. Failure to provide such written notice shall be construed as an admission
that all rights in the invention belong to the Company.



     3. I understand that the burden is on me to prove that an invention qualifies under the
provisions of the Act. I understand that if I fail to prove that an invention qualifies under the
Act, the Company shall be entitled to the invention as provided in the Agreement.



20









 





     4. I further agree that the provisions of this Acknowledgement shall not apply if I am
transferred, with my prior written consent, to a subsidiary, office, division or unit of the
Company outside of the State of California, and that, as a result, the Company may have greater
rights with respect to inventions than those provided in the Agreement or the Act.



Date: May 1, 2008




	 	 	 	 	 
	 	 	 
	 	     /s/ Jose A. Royo
 	 
	 	Jose A. Royo 	 
	 	 	 
	 




21