Document:

Exhibit 10.2

 

NON-COMPETITION AND DE BONUS AWARD AGREEMENT

 

This Non-Competition and DE Bonus Award Agreement (this “Agreement”) is being executed and delivered as of May 12, 2015 by Colin Heffron (“Participant”), in favor and for the benefit of BGC Partners, Inc., a Delaware corporation (“BGCP”).  For purposes of this Agreement, the term “BGCP Group” shall mean BGCP and each of its Affiliates, which shall include, without limitation, following the Offer Closing, GFI Group, Inc. (the “Company”) and any Affiliates thereof.  This Agreement is being provided to Participant pursuant to the Tender Offer Agreement (as defined below).  Capitalized terms not otherwise defined in the body of this Agreement are otherwise defined in Section 22 of this Agreement.

 

RECITALS

 

WHEREAS, BGCP, BGC Partners, L.P. (“Purchaser”) (an operating subsidiary of BGCP) and the Company have entered into a Tender Offer Agreement, dated as of February 19, 2015 (the “Tender Offer Agreement”), pursuant to which the parties thereto have agreed to make certain representations, warranties, covenants and agreements in connection with BGCP’s cash tender offer to purchase all of the outstanding shares of common stock of the Company (the “Offer”, and the acceptance for payment of shares of the Company’s common stock pursuant to and subject to the terms of the Offer upon expiration of the Offer, the “Offer Closing”).

 

WHEREAS, as of the date hereof, Participant is employed by the Company, and as a condition and mutual inducement to the Offer Closing, and to preserve the value and goodwill of, among other things, the GFI Brand being acquired by BGCP after the Offer Closing and to protect the trade secrets of the Company, the Tender Offer Agreement contemplates, among other things, that Participant and BGCP shall enter into this Agreement and that this Agreement shall become effective upon the Offer Closing.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises made herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BGCP and Participant hereby agree as follows:

 

1.                                    Effective Date. This Agreement is effective as of the date on which the Offer Closing occurs (the “Offer Closing Date”), subject to Participant’s employment with the Company on such date.

 

2.                                    Determination of Distributable Earnings Bonus Pool.

 

(a)                               For purposes of this Agreement, “Distributable Earnings” for each Earnings Period shall (except as noted below) be based on the methodology described and reflected in BGCP’s quarterly or annual earnings releases, as applicable, with such releases and/or parts thereof filed with or furnished to (as the case may be) the United States Securities and Exchange Commission, used to determine what are designated “pre-tax distributable earnings” in such releases, in respect of the then most recent corresponding period (e.g., FY 2015 for Q3 and Q4 2015, and FY 2016 for Q1 and Q2 for 2016, for the first Earnings Period) as applied to the GFI Brand taken as a whole and not solely based on segment reporting (e.g., including allocations of corporate overhead such as executive management beyond any segment), and further as such results may be then further adjusted upward or downward, as applicable, to reflect: (i) any cash charges or other expenses or receipts that are not otherwise included in the calculation of Distributable Earnings that affect the cash flow of the GFI Brand (as described above) for a particular calculation period (e.g., litigation settlements), (ii) the fully-allocated cost or benefit of any employees, consultants, or independent contractors which are assigned to or moved from the GFI Brand, (iii) 50% of the amortization cost attributed to the awards pursuant to the Retention Bonus Pool established by GFI pursuant to Section 5.5(a) of the Tender Offer Agreement, (iv) cash capital charges for capital employed but only to the extent of capital in excess of that used by the GFI Brand immediately subsequent to the Offer Closing, (v) any adjustments of accruals to reflect any forfeiture, as a result of the failure to satisfy the conditions set forth in this Agreement, of a DE Bonus Award, (vi) any compensation (including deferred cash awards issued pursuant to Section 5.17 of the Tender Offer Agreement) of GFI Brand employees, consultants or independent contractors for which a charge has been taken in respect of the DE Measurement Period that is reversed in respect of the DE Measurement Period, solely to the extent that such charge was previously taken into account in respect of the DE Measurement Period for purposes of adjusting Distributable Earnings and (vii) with respect to each Earnings Period, a reduction of $5,000,000.

 

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Distributable Earnings (A) shall include the fully allocated expenses associated with the GFI Brand taken as a whole and not solely based on segment reporting, (B) shall not include any amounts generated by the Trayport and FENICS businesses of the Company, other than the payment, if any, of net market data fees by such FENICS business to the IDB business of the GFI Brand with respect to market data as shall be produced by the IDB business of the GFI Brand and (C) shall not include any interest expense in respect of the Indenture dated as of July 19, 2011, between GFI and The Bank of New York Mellon Trust Company, N. A., as Trustee, relating to the Senior Notes due 2018, together with any supplemental indentures thereunder and including the terms and provisions of the Senior Notes due 2018.

 

(b)                              The amount of the Distributable Earnings Bonus Pool shall be determined no later than the ninetieth (90th) day after the end of the DE Measurement Period (the date of such determination, the “Determination Date”), and shall be reasonably determined by BGCP with an attestation report from BGCP’s independent auditor using agreed upon procedures that the amount of the Distributable Earnings Bonus Pool has been calculated consistent with the methodology set forth in Section 2(a).

 

3.                                    DE Bonus Award Grant.

 

(a)                               Effective as of the Offer Closing, and subject to (i) Participant’s continued compliance with the terms and conditions of each of the restrictive conditions, obligations and covenants contained in Section 4 and 5 in accordance with the terms of this Agreement, and continued compliance with the terms and conditions of any other restrictive conditions, obligations and covenants (including the provision of remedies for BGCP and its Affiliates in the event that Participant fails to comply with any such conditions, obligations and covenants) that may be contained in any written employment or other written agreement duly executed by the parties thereto to which Participant is or becomes a party with BGCP or any of its Affiliates (including, without limitation, the Company) (which other conditions, obligations and covenants shall be in addition to, and not superseded by, the covenants contained in this Agreement) (all such conditions, obligations and covenants collectively, the “Covenants”), and (ii) the further terms and conditions of this Agreement, Participant is hereby granted a DE Bonus Award.

 

(b)                              Participant’s DE Bonus Award will include the number of BGCH Partnership Awards equal to (i) the DE Bonus Award Amount, divided by (ii) the arithmetic average of the daily volume-weighted average trading price of one BGCP Share on the NASDAQ (or any other securities exchange on which BGCP Shares are listed) during the regular trading session (and excluding pre-market and after-hours trading) over the ten (10) trading days immediately preceding July 1, 2018 (such resulting number of BGCH Partnership Awards that shall be granted shall be Participant’s “DE Partnership Awards”).  On or promptly after the date on which this Agreement is fully executed, Participant shall receive an advance in respect of Participant’s DE Bonus Award in an amount equal to $5,000,000 (the “Advance Amount”), in the form of a forgivable note, subject to Participant’s prior execution of such note in the form attached hereto as Annex A (the “Note”), on terms consistent with those used for other employees of BGCP entities, which shall include the following terms:  (i) the net amount Participant shall receive in cash will be equal to $3,750,000 (the “Net Amount”), (ii) such Note shall be forgiven on October 1, 2018, subject to (x) Participant’s continued employment with, and neither having given nor received notice of termination of employment with respect to, BGCP or an Affiliate thereof through such date and (y) Participant’s compliance with all obligations under this Agreement, the BGCH Partnership Agreement, and Participant’s employment agreement with the Company and Purchaser, including the Covenants, through such date, (iii) if such Note is forgiven pursuant to its terms, and the aggregate amount of all income and payroll taxes required to be withheld exceeds $1,250,000, then an amount equal to such excess (the “Excess Withholding Amount”) shall be deducted from Participant’s DE Bonus Award, and (iv) in the event of a breach by Participant of any Covenant or the BGCH Partnership Agreement after such Note has been forgiven, then Participant shall be obligated to repay BGCP or any Affiliate thereof an amount equal to the sum of (x) the Net Amount and (y) the amount of the tax benefit to Participant as a result of such repayment, if any (it being understood that Participant shall be obligated to claim a deduction in respect of such repayment if Participant is permitted to do so under applicable tax laws).

 

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Such Note shall facilitate collection by BGCP or its Affiliate of the Advance Amount in the event of a breach by Participant of any Covenant or the BGCH Partnership Agreement, in addition to all other remedies for any such breach as otherwise provided in this Agreement or otherwise.

 

(c)                               Participant shall forfeit his DE Bonus Award if his employment is terminated by the Company for Cause (as defined in Participant’s employment agreement with the Company and BGC Partners, L.P. dated as of April 30, 2015) or by him for any reason, in each case prior to the Determination Date. For the avoidance of doubt, Participant shall not forfeit his DE Bonus Award merely as a result of a termination of his employment under other circumstances not described in the immediately prior sentence, provided, however, that, in all cases, Participant’s right to the DE Bonus Award remains subject to the other eligibility or forfeiture provisions contained in Sections 3, 6, and 7 of this Agreement and any related agreements and provisions referenced therein (including, without limitation, any restrictive covenants).

 

(d)                              If Participant’s DE Bonus Award has not been forfeited prior to the Determination Date, then effective as of the first day of the first calendar quarter commencing after the Determination Date, Participant shall be granted the DE Partnership Awards, with respect to which, during the five-year period that immediately follows the Determination Date (the “Exchange Restriction Period”),  such DE Partnership Awards shall be released, in equal installments on an annual basis, from the transfer and exchange restrictions otherwise applicable to such equity awards under the BGCH Partnership Agreement, in accordance with and pursuant to the terms of the BGCH Partnership Agreement, subject in all instances to Participant’s continued compliance with the Covenants through each applicable release date.

 

(e)                               In addition to the other forfeiture provisions contained in this Agreement, Participant shall immediately forfeit his DE Bonus Award and all rights to BGCH Partnership Awards upon the first to occur of any of the following events: (i) Jersey Partners, Inc. (“JPI”) fails to make an irrevocable Election during the Election Period (each such term as defined in the Tender Offer Agreement); (ii) following such Election, JPI fails to comply with all actions reasonably requested by BGCP to complete the Back-End Mergers on terms consistent with those set forth in Section 5.16 of the Tender Offer Agreement (it being agreed by BGCP that JPI shall not be required to make any representations or warranties regarding its business (as such term is defined in the Tender Offer Agreement) other than a representation and warranty by JPI that BGCP shall not assume any asset or liability of JPI or any of its Affiliates other than the Shares (as such terms are defined in the Tender Offer Agreement)).

 

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4.                                    Restrictive Covenants.

 

(a)                               Participant covenants and agrees that he shall not, at all times while employed by any member of the BGCP Group, whether prior to, on or after the Determination Date, but in any event through the Determination Date and for a period of seven (7) years following the later of the Determination Date or the termination of Participant’s employment with the BGCP Group for any reason, which 7-year period, for the avoidance of doubt, may commence during or after the Exchange Restriction Period, (all such periods, collectively, the “Restricted Period”), directly or indirectly, alone or by action in concert with others (including with or through any Representative):

 

(i)                                  solicit, induce, or influence, or attempt to solicit, induce or influence, any partner, employee or consultant of BGCP or any of its Affiliates, or any member of the Cantor Group (as defined herein) to terminate their employment or other business arrangements with BGCP or any of its Affiliates or any member of the Cantor Group, or to engage in any Competing Business or hire, employ, engage (including as a consultant or partner) or otherwise enter into a Competing Business with any such Person;

 

(ii)                              solicit any of the customers of BGCP or any of its Affiliates, or any member of the Cantor Group (or any of their employees), induce such customers or their employees to reduce their volume of business with, terminate their relationship with or otherwise adversely affect their relationship with, BGCP or any of its Affiliates or any member of the Cantor Group;

 

(iii)                          do business (if such business would constitute a Competing Business) with any person who was a customer of BGCP or any of its Affiliates or any member of the Cantor Group during the twelve (12) month period prior to the applicable date during the Restricted Period on which a determination of whether any such activity constitutes a Competing Business is being made for purposes of this Agreement;

 

(iv)                          directly or indirectly engage in, represent in any way, or be connected with, any Competing Business, competing with the business of BGCP or any of its Affiliates or any member of the Cantor Group, whether such engagement shall be as an officer, director, owner, employee, partner, consultant, Affiliate, investor, creditor or other participant in any Competing Business;

 

(v)                              assist others in engaging in any Competing Business in the manner described in the foregoing clause (iv);

 

(vi)                          take any action that results directly or indirectly in revenues or other benefit for Participant or any third party that is or could be considered to be engaged in any activity of the nature set forth in clauses (ii) through (v) above;

 

(vii)                      make or participate in the making of (including through any of Participant’s Representatives) any comments to the media (print, broadcast, electronic or otherwise) that are disparaging regarding (A) BGCP, any member of the Cantor Group or any of their Affiliates, or (B) the senior executive officers of  BGCP, any member of the Cantor Group  or any of their Affiliates, or are otherwise contrary to the interests of BGCP, any member of the Cantor Group or any of their Affiliates, as determined by the General Partner in its sole and absolute discretion;

 

(viii)                  breach Participant’s duty of loyalty to the Partnership (as defined below);

 

(ix)                          take advantage of, or provide another person with the opportunity to take advantage of, a “corporate opportunity” (as such term would apply to the Partnership if it were a corporation) including opportunities related to intellectual property, which for this purpose shall require granting BGC Partners, LLC (the “General Partner”) a right of first refusal for the General Partner to acquire any assets, stock or other ownership interest in a business being sold by Participant or any Affiliate of Participant, if an investment in such business would constitute a “corporate opportunity” (as such term would apply to the Partnership if it were a corporation), that has not been presented to and rejected by the General Partner or that the General Partner rejects but reserves for possible further action by the General Partner in writing, unless otherwise consented to by the General Partner in writing in its sole and absolute discretion; or

 

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(x)                              otherwise take any action to harm, that harms, or that reasonably could be expected to harm BGCP or any of its Affiliates, or any member of the Cantor Group, including, without limitation, any breach of the provisions of Section 4(c) below.

 

(b)                              Notwithstanding the foregoing, nothing in this Section 4 shall prohibit Participant from acquiring or owning, in accordance with BGCP’s policies and procedures regarding personal securities transactions (for so long as Participant is an employee of BGCP or one of its Affiliates), less than one percent (1%) of the outstanding securities of any class of any corporation that are listed on a national securities exchange or traded in the over-the-counter market.  The determination of whether Participant breaches the Covenants set forth in Section 4(a) or Section 4(c) shall be made in good faith by the Chairman of BGCP.

 

(c)                               Confidentiality.

 

(i)                                  In addition to any other obligations set forth in this Agreement, Participant recognizes that confidential information has been and will be disclosed to such Participant by the Partnership (as defined herein) and members of the BGCP Group (including but not limited to the Company and the GFI Brand). Participant expressly agrees, at all times on and after the date of this Agreement, whether or not at the time a member of the Partnership (a “Partner”) or providing services to the Partnership, any member of the BGCP Group (including, without limitation, as an employee of the Company and the GFI Brand), to (A) maintain the confidentiality of, and not disclose to any Person without the prior written consent of BGCP, any financial, legal or other advisor to BGCP, any information relating to the business, clients, affairs or financial structure, position or results of the Partnership or its Affiliates (including the Company and the GFI Brand) or any dispute that shall not be generally known to the public or the securities industry and (B) not to use such confidential information other than for the purpose of evaluating such Participant’s investment in the Partnership, if applicable, or in connection with the discharge of any duties to the Partnership or any member of the BGCP Group (including the Company and the GFI Brand) the Participant may have in such Participant’s capacity as an officer, director, employee or agent of any member of the BGCP Group (including the Company and the GFI Brand).

 

(ii)                              In the event that any third party requests information from Participant (whether during the period in which Participant is a Partner or otherwise during the Restricted Period), regarding any matter related to Participant’s employment by any member of the BGCP Group (including the Company and the GFI Brand) or Participant’s role as a Partner, as the case may be, Participant will promptly contact and notify the General Counsel of BGCP before responding to such requests for information, so that BGCP may take appropriate action to protect the Partnership’s and the BGCP Group’s interests. However, Participant shall not have any obligation to contact and notify the General Counsel of BGCP prior to any such timely discussions between Participant and his legal counsel or his certified public accountant.

 

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(iii)                          In the event that Participant is subpoenaed, or asked, to testify as a witness or to produce documents in any legal or administrative or other proceeding related to the Partnership or any member of the BGCP Group (whether during the period in which Participant is a Partner or otherwise during the Restricted Period), or otherwise required by law to disclose confidential information, Participant will promptly notify the Partnership and BGCP of such subpoena or request and meet with Partnership Representatives for a reasonable period of time prior to any such appearance or production.

 

(iv)                          So long as Participant shall have complied with his obligations under clauses (ii) and (iii) of Section 4(c), if, after a reasonable period after Participant notifies the Partnership and BGCP of any request or subpoena, the Partnership and BGCP are not able to obtain a protective order or other appropriate protection of such information, then Participant may make such disclosures, notwithstanding any other restrictions contained in this Agreement.

 

(d)                              Definitions.  For purposes of this Agreement, the following terms shall have the following meaning:

 

“Cantor Group” means, collectively, Cantor Fitzgerald, L.P., a Delaware limited partnership, its subsidiaries, and the limited and general partnerships, corporations or other entities owned, controlled by or under common control with BGCP or BGC Holdings, L.P., a Delaware limited partnership (the “Partnership”).

 

“Competing Business” means an activity that (w) involves the development and operations of voice, hybrid or electronic trading systems, (x) involves the conduct of the wholesale or institutional brokerage business, (y) consists of marketing, manipulating or distributing financial price or other information of a type supplied by BGCP or any of its Affiliates or any member of the Cantor Group to information distribution services or (z) competes with any other business conducted by BGCP or any of its Affiliates, or any member of the Cantor Group if such business was first engaged in by BGCP or any of its Affiliates or any member of the Cantor Group or BGCP or any of its Affiliates or any member of the Cantor Group took substantial steps in anticipation of commencing such business and prior to the applicable date during the Restricted Period that a determination of whether any such activity constitutes a Competing Business is being made for purposes of this Agreement; including, for the avoidance of doubt, on and after the Offer Closing Date, any business activity, wholly or partly, in the same or similar business operated by (including providing services or products similar to or that compete with the products and/or services offered or contemplated by) the Company and its Affiliates (including the GFI Brand), or any such business which is contemplated by the Company or its Affiliates for which the Company or any Affiliate has taken preparatory steps at the later of the Determination Date or the date Participant ceases to provide services to the BGCP Group (including without limitation the GFI Brand).

 

“Representatives” means, with respect to any Person, the Affiliates, directors, officers, employees, general partners, agents, accountants, managing member, employees, counsel and other advisors and representatives of such Person, including immediate family members.

 

5.                                    Severability of Covenants. The Covenants contained in Section 4 shall be construed as a series of separate covenants.  If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then BGCP and Participant agree that such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of Section 4 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then BGCP and Participant agree that such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable law.

 

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6.         Participant Acknowledgements and Further Agreements.

 

(a)        Participant acknowledges that (i) Participant has a substantial interest in the Company and is a key employee of the Company; (ii) the goodwill associated with the existing business, customers and assets of the Company prior to the Offer Closing is an integral component of the value of the Company to BGCP and is reflected in the consideration payable in connection with the Offer Closing; and (iii) Participant’s agreement as set forth herein is necessary to preserve the value of the Company for BGCP following the Offer Closing. Participant also acknowledges and agrees that the provisions of this Agreement, specifically including of Section 4, are reasonable in scope and duration and are necessary to protect the interests of BGCP and the Company, including, without limitation, because, among other things: (A) the Company and BGC are engaged in a highly competitive industry; (B) Participant has had unique access to the trade secrets and know-how of the Company, including, without limitation, the plans and strategy (and, in particular, the competitive strategy) of the GFI Brand; and (C) Participant believes that this Agreement provides no more protection than is reasonably necessary to protect BGCP’s legitimate interest in the goodwill, trade secrets and confidential information of the Company.

 

(b)        Participant further acknowledges and agrees that BGCP may condition the receipt of any BGCH Partnership Award hereunder upon: (i) the execution of a release of claims against the BGCP Group, substantially in the form that Partners are required to execute pursuant to Section 12.02(k) of the BGCH Partnership Agreement; and (ii) the receipt of a certification, in form and substance reasonably acceptable to BGCP and consistent with any such certification required of any other Partner pursuant to Section 12.02(c)(vii) of the BGCH Partnership Agreement, that such Person has not engaged in any of the activities described in Section 4, and that Participant shall be liable for all damages (including any payments received in respect of any BGCH Partnership Award under the BGCH Partnership Agreement made as a result of a false certification) resulting from the inaccuracy of any such certification, consistent with the provisions of Section 12.02(c)(vii) of the BGCH Partnership Agreement.  Participant further agrees that execution of this Agreement shall be deemed to constitute execution of the BGCH Partnership Agreement as a Partner, effective as of the Determination Date.

 

7.         Remedies. Participant and BGCP agree that any remedy at law for any breach of this Agreement is and will be inadequate, and in the event of a breach or threatened breach by Participant of any of the Covenants (to be determined in the good faith determination of the Chairman of BGCP), at any time during the Restricted Period, BGCP and its Affiliates shall be entitled to an injunction restraining Participant from breaching or otherwise violating any provision of this Agreement without proof of special damages or the posting of any bond or other security, as well as all other legal and equitable remedies. Participant agrees not to oppose the granting of injunctive or other equitable relief as a remedy and agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. Nothing herein contained shall be construed as prohibiting BGCP or any of its Affiliates from pursuing any other remedies available to it for such breach or threatened breach during the Restricted Period, including, without limitation, the immediate termination by BGCP of all of Participant’s rights under this Agreement (including the forfeiture by Participant of any DE Partnership Awards delivered to Participant and immediate cessation of Participant as a Partner without consideration in respect thereof), the immediate return by Participant to BGCP of any DE Partnership Awards (or the value thereof) or cash or BGCP Shares transferred to Participant under this Agreement or the DE Partnership Awards (including pursuant to the BGCH Partnership Agreement), and the recovery of damages from Participant generally. In addition, if Participant is determined to have breached any of the Covenants at any time during the Restricted Period, Participant shall indemnify BGCP and its Affiliates for and pay any resulting attorney’s fees and expenses of BGGP and its Affiliates incurred to enforce any of the terms of this Agreement.

 

8.         Non-Exclusivity. The rights and remedies of BGCP and its Affiliates hereunder are not exclusive of or limited by any other rights or remedies that BGCP and its Affiliates may have, whether at law, in equity, by contract or otherwise, all of which shall be cumulative (and not alternative).

 

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Without limiting the generality of the foregoing, the rights and remedies of BGCP and its Affiliates hereunder, and the obligations and liabilities of Participant hereunder, are in addition to their respective rights, remedies, obligations and liabilities under the law of unfair competition, misappropriation of trade secrets and the like. This Agreement does not limit Participant’s obligations or the rights of BGCP (or any Affiliate of BGCP) under the terms of any other agreement between Participant and BGCP (or any Affiliate of BGCP).

 

9.         Notices. All notices, requests, claims, demands and other communications under this Agreement will be in writing and will be deemed to have been sufficiently given and delivered for all purposes when delivered by hand, by facsimile (with a written or electronic confirmation of delivery), five (5) days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or two (2) days after being sent by overnight delivery providing receipt of delivery, to (or to such other address as may be specified by a party in writing from time to time by similar notice):

 

(i)         if to BGCP or the Partnership, to:

 

BGC Partners, Inc.

499 Park Avenue

New York, NY 10022

Attn:  General Counsel

Fax:  (212) 829-4708

 

(ii)        if to Participant, to the address then on file for Participant at the Company.

 

10.       Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision (or part thereof) of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision (or part thereof) shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement. The parties agree to replace such prohibited or void provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such prohibited or void provision.

 

11.       Governing Law; Consent to Service of Process; Trial by Jury; Attorneys’ Fees.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of laws thereof.  Any disputes, differences or controversies arising under this Agreement shall be heard solely in, and resolved by, a judge either in a court sitting in a New York County, City, or State, the State of Delaware, or in the county in which Participant’s assigned BGCP or Affiliate office is located, if such office location is outside of New York State. Wherever the dispute is resolved, Participant and BGCP agree and understand that any trial will not be before a jury, and both Participant and BGCP waive any jury trial right.  To the maximum extent permitted by law, Participant and BGCP waive any right to seek any damages that are not solely compensatory in nature. This waiver includes waiver of damages that are not solely compensatory, whether special, exemplary, multiple (e.g., treble), or punitive damages or penalties, or amounts in the nature of special, exemplary, multiple, or punitive damages or penalties or by any other name. Participant and BGCP make this waiver regardless of the nature or form of the claim or grievance. If the law does not permit this waiver for a particular claim, then the law overrides this waiver, but only for a claim or damage where the law requires overriding this waiver.  If an applicable statute or another agreement discusses awards of attorneys’ fees, such statute or agreement will apply.

 

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12.       Waiver. No failure on the part of any party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of the waiving party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

 

13.       Entire Agreement. This Agreement, and the other agreements referred to herein, including any agreements containing Covenants, set forth the entire understanding of Participant and BGCP relating to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between any of such parties relating to the subject matter hereof. Participant understands and agrees that he has had an opportunity to seek his own counsel in his review of this Agreement.

 

14.       Amendments. This Agreement may not be amended, modified, altered, or supplemented other than by means of a written instrument duly executed and delivered on behalf of BGCP and Participant.

 

15.       Assignment. This Agreement and all obligations hereunder are personal to Participant and BGCP and may not be transferred or assigned by Participant or BGCP at any time; provided, however, that BGCP may assign this Agreement or any of the rights, interests or obligations hereunder, in whole or in part, to an Affiliate or Affiliates thereof; provided that any such assignment shall not release BGCP of its obligations hereunder unless such assignment shall be made to an Affiliate having assets sufficient to satisfy BGCP’s obligations hereunder.

 

16.       Third-Party Beneficiaries. Except as specifically provided in Section 7 above and in this Section 16, nothing in this Agreement, express or implied, is intended to or shall confer upon any person or entity, other than the Parties, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that the Parties acknowledge and agree that each of BGCP’s Affiliates, any successor in interest to BGCP or any of its Affiliates by merger, consolidation, reorganization, or otherwise, and each of their respective successors and permitted assigns are intended third party beneficiaries of this Agreement entitled to enforce the terms and conditions of this Agreement and entitled to all legal and equitable remedies in the event Participant breaches or threatens to breach, or otherwise violates, any of the Covenants or other provisions of this Agreement. For avoidance of doubt, for purposes of this Section 16, successors and permitted assigns shall be limited to those successors and permitted assigns provided for in Section 15 of this Agreement.

 

17.       Binding Nature. This Agreement will be binding upon each of BGCP, Participant and their respective representatives, executors, administrators, estate, heirs, successors and assigns, and will inure to the benefit of BGCP and its successors and assigns.

 

18.       Headings. The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof.

 

19.       Execution. This Agreement in unsigned form does not become an offer of any kind and does not become capable of acceptance until executed by Participant, and at such time, this Agreement is capable of contract formation by signature by a duly authorized officer of BGCP; this Agreement shall be effective only when executed by both Participant and a duly authorized officer of BGCP, and upon such shall be binding and enforceable. This Agreement may be executed by facsimile and .pdf and in counterparts, each of which shall be deemed an original and all of which when taken together shall constitute but one and the same instrument.

 

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20.       Miscellaneous.  The DE Bonus Award shall not count toward, be substituted in lieu of, or be considered in determining, payments or benefits due to Participant under any other plan, program or agreement of BGCP or any of its Affiliates.  Where applicable, grants of BGCH Partnership Awards, or any shares of BGCP Shares issued or issuable upon exchange thereof, shall be issued and administered pursuant to the BGC Participation Plan and the BGC LTIP Plan, as applicable.

 

21.       Section 409A.  This Agreement intended to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended and the Department of Treasury Regulations and other interpretive guidelines issued thereunder (“Section 409A”), or an exemption thereto, and if the DE Bonus Award qualifies for the “short-term deferral” or “separation pay” exception it shall be paid under the applicable exception to the greatest extent possible.  Notwithstanding any provision of this Agreement to the contrary, in the event that BGCP determines that any amounts payable hereunder will be immediately taxable to a Participant under Section 409A, BGCP reserves the right (without any obligation to do so or to indemnify a Participant for failure to do so) to (a) adopt such amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that BGCP determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and/or (b) take such other actions as BGCP determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.  No provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A to BGCP or any of its Affiliates, employees, or agents.  Notwithstanding any provision to the contrary in this Agreement, to the extent required by Section 409A, any reference to a termination of employment shall be deemed to occur only if such termination constitutes a “separation from service” within the meaning of Section 409A, and for purposes of Section 409A, any right of a Participant who is a “specified employee” (within the meaning of Section 409A) to receive payment of deferred compensation within the meaning of Section 409A upon a separation from service shall be delayed for six months and one day, to the extent necessary for such form of payment to comply with the requirements of Section 409A.

 

22.       Certain Definitions.  As used in this Agreement, the following terms have the meanings specified in this Section 22.

 

(a)        “Affiliate” means, with respect to any Person, at the time of determination, any other Person, whether now existing or hereafter arising, that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise (which shall include, for the avoidance of doubt, any Subsidiary, and which after the Offer Closing shall include the Company).

 

(b)        “BGC Holdings” means BGC Holdings, L.P.

 

(c)        “BGC LTIP Plan” means the BGC Partners, Inc. Fifth Amended and Restated Long Term Incentive Plan, as amended from time to time.

 

(d)        “BGC Participation Plan” means the BGC Holdings, L.P. Participation Plan, as amended from time to time.

 

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(e)                               “BGCH Partnership Agreement” means that certain Agreement of Limited Partnership of BGC Holdings, amended and restated as of March 31, 2008, as amended from time to time.

 

(f)                                “BGCH Partnership Awards” means, collectively, a grant of REUs and PREUs, with the ratio of REUs and PREUs to be granted consistent with the ratio in which BGCP REUs and PREUs are distributed to BGCP senior executives based in the United States.

 

(g)                               “BGCP Shares” means shares of Class A common stock, par value $0.01 per share, of BGCP.

 

(h)                              “DE Bonus Award” means the right to receive a grant of a number of BGCH Partnership Awards.

 

(i)                                  “DE Bonus Award Amount” means the gross amount (in U.S. dollars) equal to the product of (x) a Participant’s DE Bonus Pool Percentage and (y) the Distributable Earnings Bonus Pool, less the sum of (A) the Advance Amount and (B) if the Note is forgiven pursuant to its terms as described in Section 3(b) above, the Excess Withholding Amount, if any.

 

(j)                                  “DE Bonus Pool Percentage” means the percentage of the Distributable Earnings Bonus Pool that is allocated to a Participant as set forth on the signature page hereto.

 

(k)                              “DE Measurement Period” means the thirty-six (36)-calendar month period beginning on July 1, 2015.

 

(l)                                  “Distributable Earnings Bonus Pool” will be an amount equal to one times the average of the annual Distributable Earnings of the GFI Brand for the Earnings Periods.

 

(m)                          “Earnings Period” means each of the three successive twelve (12)-month periods, with the first such period beginning on July 1, 2015.

 

(n)                              “GFI Brand” means, as applicable, (a) the IDB Business or (b) the IDB Business operating as a GFI-branded division of Purchaser or an Affiliate of Purchaser.

 

(o)                              “IDB Business” means the inter-dealer brokerage business, as conducted by the Company and the Company’s Subsidiaries.

 

(p)                              “Person” means individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, governmental entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

(q)                              “PREU” means a partnership unit of BGC Holdings designated as a PREU issued pursuant to and in accordance with the terms of the BGCH Partnership Agreement, the BGC Participation Plan and any applicable award agreement thereunder.

 

(r)                                 “REU” means a partnership unit of BGC Holdings designated as an REU, issued pursuant to and in accordance with the terms of the BGCH Partnership Agreement, the BGC Participation Plan and any applicable award agreement thereunder.

 

(s)                                “Securities” means, with respect to any Person, any series of common stock or preferred stock, any ordinary shares or preferred shares and any other equity securities, capital stock, partnership, membership or similar interest of such Person, and any securities that are convertible, exchangeable or exercisable into any such stock or interests, however described and whether voting or non-voting.

 

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(t)         “Subsidiary” (and with the correlative meaning “Subsidiaries”), when used with respect to any Person, means any other Person, whether incorporated or unincorporated, of which (i) more than 50% of the Securities or other ownership interests or (ii) Securities or other interests having by their terms power to elect or appoint more than 50% of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly owned or controlled by such Person or by any one or more of its Subsidiaries.

 

[Signature Page Follows]

 

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In witness whereof, the undersigned have executed this Agreement as of the date first above written.

 

	
 
    	
BGCP   PARTNERS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Colin   Heffron
    

 

 

 

DE Bonus Pool Percentage: 35%

 

 

 

 

 

[Signature Page to Non-Competition and DE Bonus Award Agreement
  between Colin Heffron and BGC Partners, Inc., dated as of May 12, 2015]

 

13ex101q22015

Exhibit 10.1

EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”), dated as of April 20, 2015, is entered into by and between Ascent Capital Group, Inc., a Delaware corporation (the “Company”), and Richard G. Walker (“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
1.1Employment.  Upon the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts employment, as Executive Vice President, Strategy and Corporate Development, of the Company.

1.2Term.  Subject to Article IV below, Executive’s employment hereunder shall be for a term of three (3) years commencing effective as of April 20, 2015 (the “Commencement Date”), and terminating at the close of business on April 19, 2018, or such earlier date as provided for herein (the “Term”).

1.3Duties.  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, including continued service as chair or a member of the board of directors of Readers Digest Association, Inc.

1.4Reporting.  Executive shall report directly to the Chief Executive Officer of the Company or a designated member of the Board of Directors. 

1.5Location.  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 the Company in the Greater Denver, Colorado metropolitan area.

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1.6Exclusive 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
2.1Compensation.  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.

2.2Base Salary.  The base salary shall be an annual salary of $415,000 (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.

2.3Bonus.  For each fiscal year during the Term, commencing with the 2016 fiscal year, in addition to the Base Salary, Executive shall be eligible for an annual bonus (the “Bonus”) of 60% 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 60% Target Bonus but is not expected to exceed 75% 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 the Commencement Date through December 31, 2015, to be determined in the good faith discretion of the Committee in a manner consistent with the terms of this Section 2.3. 

2.4Equity. As an incentive for commencement of employment with the Company, the Company agrees to award Executive a grant of 30,000 restricted stock units, subject to the terms and conditions set forth in that certain Performance Based Restricted Stock Units Award Agreement, a copy of which is attached hereto as Exhibit A (the “Equity Award”). If Shareholder approval of the Ascent Capital Group, Inc., 2015 Omnibus Incentive Plan is not obtained on May 29, 2015, then the Company shall make a replacement equity award to Executive, the terms and conditions of which shall, in all material respects,  match the Equity Award.

2.5    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.
2.6    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, in Section 4.5) 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
3.1Benefits.  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.  The Company will pay for Executive’s health insurance premiums consistent with its practice for other similarly situated senior executives, and  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.

3.2Expenses.  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) and the Company shall reimburse Executive for such expenses.

3.3Vacation.  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.

3.4Key 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
4.1Termination 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).

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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 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.
4.2Termination 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:

(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:

(i)  if the termination of Executive’s employment occurs prior to a Change in Control  (as  defined in Section 4.4), the product of (i) the sum of Executive’s Annual Base Salary  plus the Target Bonus, both as in effect immediately prior to such Termination Without Cause, multiplied by (ii)  1; or 

(ii) if the termination of Executive’s employment occurs concurrently with or following a Change of Control, the product of (i) the sum of  Executive’s Annual Base Salary plus the Target Bonus, both as in effect immediately prior to such Termination Without Cause, multiplied by (ii) 2;

(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

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(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.
At least ninety (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 equity award or  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.  

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4.3Termination 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)  a material diminution in  Executive’s  authority, duties or responsibilities, or a requirement that Executive report to a supervisor other than those described in Section 1.4; (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 thirty (30) -day period, Executive  elects to terminate  his employment hereunder by delivering written notice to the Company within 5 business days  of the expiration of such thirty (30) -day period.
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.
4.4Change of Control.   “Change in Control” means any of the following that otherwise meets the definition of a “change in ownership,” a “change in effective control” or a “change in ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A:

(a)  the acquisition by any person or group, (excluding John C. Malone,  and/or any family member(s)  of the foregoing and/or any company, partnership, trust or other entity or investment vehicle controlled by such persons or the holdings of which are for the primary benefit or any of such persons (collectively, the “Permitted Holders”)) of ownership of stock of the Company that, together with stock already held by such person or group, constitutes more than 50% of the total fair market value or more than 50% of the total voting power of the stock of the Company;
(b)  the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the twelve (12)-month period ending on the date of the most recent acquisition by such person or group, assets from the Company that have a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; or

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(c)  the acquisition by any person or group (other than the Permitted Holders), in a single transaction or in multiple transactions all occurring during the twelve (12)-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock of the Company possessing 30% or more of the total voting power of the stock of Company or the replacement of a majority of the Company’s Board of Directors during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of appointment or election.        
 
4.5Death, 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 180 days 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 (3) 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 by reason of Disability.

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Executive acknowledges that the payments referred to in this Section 4.5, together with any rights or benefits under any equity award or  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.
4.6No 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.

4.7Severance 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, 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:
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

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

4.8Continued 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 

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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.

4.9Timing 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 (6) -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.

ARTICLE V

OWNERSHIP OF PROCEEDS OF EMPLOYMENT, NON-DISCLOSURE,
NON-COMPETITION
5.1Ownership of Proceeds of Employment.  

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”).

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 

9

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.

Executive shall assist the Company in obtaining such copyrights and patents during the Term, 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.

5.2Non-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.

5.3Non-Competition.  In consideration of the Company disclosing and providing access to Confidential Information after the date hereof, and other good and valuable consideration (including the severance entitlements payable under Section 4.2) , 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 Executive’s employment hereunder or for a period of twelve months following a Termination Without Cause (as defined in Section 4.2 above) or a Termination With Good Reason (as defined in Section 4.3 above) 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 

10

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 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.  

5.4Non-Solicitation.  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 dealer (a “Dealer”) of the Company’s wholly-owned subsidiary, Monitronics International, Inc. (“Monitronics”), 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 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.

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5.5Breach 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.

5.6Reasonable 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.

5.7Definition.  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).

5.8Third 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
6.1Binding 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.

6.2Assignment.  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.  

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.

6.3Notices.  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:

12

If to the Company:

Ascent Capital Group, Inc.
5251 DTC Park Way Suite 1000
Greenwood Village, CO  80111
Attention:  Chief Executive Officer
With a copy to:
Ascent Capital Group, Inc.
5251 DTC Park Way Suite 1000
Greenwood Village, CO  80111
Attention:  General Counsel
If to Executive:
Richard G. Walker
____________________
____________________
6.4Severability.  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.

6.5Confidentiality.  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.  

6.6Arbitration.  Except as provided otherwise in Section 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 

13

Arapahoe County, Colorado. Only one (1) arbitrator shall preside over the proceedings.  The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of Colorado 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 Colorado state court. The arbitrator shall have the ability to rule on pre-hearing motions, as though the matter were in a Colorado 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 Colorado 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.

6.7Waiver.  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.

6.8Controlling 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.

6.9Entire 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.

6.10Amendment.  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.

6.11Authority.  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.

6.12Applicable 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 Colorado without giving effect to principles relating to conflicts of law.

6.13Counterparts.  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.

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6.14Compliance with Section 409A.  

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).

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.

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). Each amount payable to Executive shall be considered as a “separate payment” for purposes of Code Section 409A.

6.15      Insurance/Indemnification. Executive shall be covered by such insurance, including directors’ and officers’ liability insurance, as the Company shall have established and maintained in respect of its directors and officers generally at  its expense. Executive shall also be entitled to indemnification rights, benefits and related defense expense advances and reimbursement to the same extent as any other similarly situated officer of the Company. 

[Remainder of this page intentionally left blank]

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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/ Richard G. Walker

	 
	Richard G. Walker

16

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