Exhibit 10.21
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (as amended,
modified, restated or supplemented from time to time, the
“AGREEMENT”), dated as of April 23, 2005, by and
among Hughes Network Systems, LLC, a Delaware limited liability
company, (the “COMPANY”), and the individual set forth
on ATTACHMENT 1 (the “EXECUTIVE”).
WHEREAS, the Company entered into a
Contribution and Membership Interest Purchase Agreement (as
amended, modified, restated or supplemented from time to time, the
“TRANSACTION AGREEMENT”) dated as of December 3,
2004, with The DirecTV Group, Inc., a Delaware corporation
(“DTV”), Hughes Network Systems, Inc., a Delaware
corporation (“HNS”), and SkyTerra Communications, Inc.,
a Delaware corporation;
WHEREAS, the Executive is currently
party to the Prior Agreements identified on ATTACHMENT 1;
and
WHEREAS, subject to the consummation
of the transactions contemplated by the Transaction Agreement, the
Company desires to employ the Executive on a full-time basis and
the Executive desires to be so employed by the Company.
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein (including,
without limitation, the Company’s employment of the Executive
and the advantages and benefits thereby inuring to the Executive)
and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged by each
party hereto, the parties hereby agree as follows:
1. EMPLOYMENT OF THE
EXECUTIVE.
1.1 EMPLOYMENT BY THE COMPANY. The
Company hereby employs the Executive in the position set forth on
ATTACHMENT 1 and the Executive hereby accepts such employment with
the Company. During the Employment Period (as defined in
Section 3), the Executive shall directly and exclusively
report to, and perform such duties and services for the Company
(including supervising the Company’s investment in its
subsidiaries and affiliates (such subsidiaries and affiliates,
collectively, “AFFILIATES”)), as may be designated from
time to time by the individuals referred to on ATTACHMENT 1. During
the Employment Period, the Executive shall devote all of his
business time and attention to his employment under this Agreement;
PROVIDED, HOWEVER, that the Executive may continue to engage in the
outside activities set forth on ATTACHMENT 1 during the Employment
Period. The Executive acknowledges that he shall be required to
travel on business in connection with the performance of his duties
hereunder.
1.2 LOCATION. During the Employment
Period, the Executive’s principal place of employment shall
be Germantown, Maryland; PROVIDED, HOWEVER, that the Executive
shall be required to travel in a manner consistent with his
employment as a senior executive employed in a world-wide
business.
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2. COMPENSATION AND
BENEFITS.
2.1 (a) SALARY. During the
Employment Period, the Company shall pay the Executive for services
during his employment under this Agreement a base salary of no less
than the annual rate set forth on ATTACHMENT 1 (“BASE
SALARY”). The Base Salary received by the Executive shall be
reviewed by the Compensation Committee (the “COMPENSATION
COMMITTEE”) of the Board of Managers of the Company (the
“BOARD”) no less frequently than annually. If at any
time a Compensation Committee does not exist, all references herein
to the “Compensation Committee” shall be deemed to be
the “Board.” Any and all increases to the
Executive’s Base Salary shall be determined by the
Compensation Committee, in its sole discretion. During the
Employment Period, such Base Salary shall be payable in accordance
with the Company’s customary payroll policies in force at the
time of payment, less any required or authorized payroll
deductions. The Base Salary may be increased, but not decreased,
during the Employment Period.
(b) ANNUAL BONUS. For each fiscal
year during the Employment Period, the Executive shall be eligible
to receive an annual discretionary bonus with a target amount (the
“TARGET BONUS AMOUNT”) up to the percentage of his Base
Salary set forth on ATTACHMENT 1, subject to his satisfaction of
objective performance criteria that have been pre-established by
the Managing Member (such as minimum EBITDA, free cash flow,
backlog, and accomplishment of strategic goals (e.g., the
successful launch and implementation of Spaceway 3)). For each
fiscal year during the Employment Period, the Compensation
Committee may award an additional bonus, in its sole discretion, to
the Executive of up to 50 percent of the Executive’s Target
Bonus Amount, in the event of the Executive’s significant
out-performance of objective performance criteria that have been
pre-established by the Compensation Committee.
(c) EQUITY COMPENSATION. The
Executive shall purchase the number of Class B Units of the Company
as set forth on ATTACHMENT 1 (the “RESTRICTED UNITS”)
at the closing (the “ CLOSING ”) of the
transactions contemplated by the Transaction Agreement, having the
terms and conditions provided below and such other terms and
conditions not inconsistent therewith as may be provided for in the
Restricted Unit Purchase Agreement attached hereto as EXHIBIT A (as
amended, modified, supplemented or restated from time to time, the
“RESTRICTED UNIT AGREEMENT”), and the Amended and
Restated Limited Liability Company Agreement of the Company (as
amended, modified, supplemented or restated from time to time, the
“LLC AGREEMENT”). The Executive acknowledges that the
Restricted Units will be subject to the terms and conditions set
forth in this Agreement, the Restricted Unit Agreement and the LLC
Agreement and shall be subject to a substantial risk of forfeiture
and restrictions on transferability.
(d) TIME-VESTING UNITS. 50.0 percent
of the Restricted Units issued to the Executive hereunder (the
“TIME-VESTING UNITS”) shall vest over sixty months with
10 percent of the Time Vesting Units vesting on the first day of
the 7th month following the Closing and the remainder of the Time
Vesting Units vesting in fifty-four equal months installments of
1.6667 percent commencing on the first day of the 8th month
following the Closing, subject to the Executive’s continued
employment on the date of vesting and to Section 4 below.
Notwithstanding anything to the contrary contained herein, if the
Executive is employed by the
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Company on the date that the Investor (together
with its affiliates) holds less than 20% of the aggregate equity
interests, measured by vote and value, of the Company (an
“INVESTOR DILUTION TRANSACTION”), then all of the Time
Vesting Units shall vest on the later to occur of (i) the
third anniversary of the Closing or (ii) the first anniversary
of the date on which the Investor Dilution Transaction occurs. For
the avoidance of doubt, following the occurrence of an Excluded
Event (as defined below), but subject to the other provisions
herein, the Time Vesting Units shall continue to vest in accordance
with and subject to the terms and conditions set forth
herein.
(e) PERFORMANCE UNITS. The remaining
50.0 percent of the Restricted Units granted to the Executive
hereunder (the “PERFORMANCE UNITS”) shall vest as
follows: (X) 50.0 percent of the Performance Units shall vest
on the Test Date (as defined below) if and when the Investors have
received a Cumulative Total Return as set forth below of at least
3.0 times the amount of their aggregate Capital Contributions (as
defined in the LLC Agreement) as of the Test Date and (Y) the
remaining 50.0 percent of the Performance Units shall vest on the
Test Date if and when the Investors have received a Cumulative
Total Return of at least 5.0 times the amount of their aggregate
Capital Contributions as of the Test Date, in each case, subject to
the Executive’s continued employment as of the Test Date and
to Section 4 below. If the Performance Units remain
outstanding but not yet vested as of the fifth anniversary of the
Closing, they shall be forfeited upon such anniversary; PROVIDED,
HOWEVER, that in the event that any Performance Units remain
outstanding upon such anniversary and the valuation process
referred to in the definition of “CUMULATIVE TOTAL
RETURN” has not yet been completed in accordance with the
terms hereof, the forfeiture of such Performance Units shall be
tolled until the completion of such valuation process. For the
avoidance of doubt, following the occurrence of an Excluded Event,
but subject to the other provisions herein, the Performance Units
shall continue to vest in accordance with and subject to the terms
and conditions set forth herein.
(f) DEFINED TERMS.
(A) CUMULATIVE TOTAL RETURN. The
“CUMULATIVE TOTAL RETURN” means the sum (net of all
transaction and valuation costs) of (i) all dividends and
other distributions (including the aggregate amount of the
Quarterly Management Fee Payments (as defined in the LLC
Agreement), but specifically excluding tax distributions and
expense reimbursement payments) paid to the Investors with respect
to the Class A Units, (ii) the gross proceeds of any sale
of Class A Units by any of the Investors, and
(iii) solely for purposes of determining Cumulative Total
Return as of the fifth anniversary of the Closing, the fair market
value of the Class A Units held by the Investors on the fifth
anniversary of the Closing, which will be determined by a
nationally recognized third party valuation firm selected by the
Managing Member. Notwithstanding anything in this Agreement to the
contrary, upon a Significant Event Cumulative Total Return shall be
finally determined and there shall be no further opportunity to
vest in any Performance Units.
(B) INVESTORS. The
“INVESTORS” means SkyTerra and its successors and
assigns (other than assigns of SkyTerra resulting from a Change in
Control).
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(C) SIGNIFICANT EVENT. A
“SIGNIFICANT EVENT” means a Change of Control or a
liquidation, dissolution or winding up of the Company in accordance
with the LLC Agreement. Notwithstanding the foregoing, a
Significant Event shall not include (i) the consummation of
any public offering of the securities of the Company pursuant to a
registration statement declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended or
(ii) a SkyTerra Acquisition (as defined in the Restricted Unit
Agreement) (each of (i) and (ii), an “EXCLUDED
EVENT”).
(D) TEST DATE. The “TEST
DATE” means the date that is the earlier to occur of
(i) the fifth anniversary of the date hereof and (ii) the
consummation of a Significant Event.
(g) ADJUSTMENT. In the event of any
equity split, reverse split, equity distribution, merger,
consolidation, recapitalization or similar event affecting the
capital structure of the Company, the number and kind of equity
interests (or other property, including without limitation cash)
subject to the Restricted Units shall be equitably adjusted as
determined in good faith by the Compensation Committee to prevent
the dilution or enlargement of the value of the Executive’s
Restricted Units.
(h) BENEFITS. During the Employment
Period, the Executive shall be eligible to participate, on the same
basis and at the same level as other similarly situated senior
executives of the Company generally, in any group insurance,
hospitalization, medical, vision, health and accident, disability,
life insurance, fringe benefit and retirement plans or programs of
the Company now existing or hereafter established to the extent
that he is eligible under the general provisions thereof. The
Executive shall receive credit for service prior to the Closing for
all purposes to the extent provided in EXHIBIT J to the Transaction
Agreement. During the Employment Period, the Executive shall be
entitled to a number of days of vacation time annually as set forth
on ATTACHMENT 1, consistent with the Company’s policies at
such time as may be mutually agreed by the parties
hereto.
(i) EXPENSES. During the Employment
Period, pursuant to the Company’s customary reimbursement
policies in force at the time of payment, the Executive shall be
promptly reimbursed, subject to the Executive’s presentation
of vouchers or receipts therefor, for all expenses properly
incurred by the Executive on behalf of the Company in the
performance of the Executive’s duties hereunder.
(j) EXECUTIVE AUTOMOBILE BENEFITS.
During the Employment Period, the Company shall provide the
Executive with an annual car allowance in the amount set forth on
Attachment 1 (the “AUTO ALLOWANCE”), which such amount
shall be paid in accordance with the policies or practices of the
Company.
3. EMPLOYMENT PERIOD. The
Executive’s employment under this Agreement shall commence on
the Closing and shall terminate on the second anniversary of the
date thereof, unless terminated earlier pursuant to Section 4
(the “INITIAL EMPLOYMENT PERIOD”). Unless written
notice of either party’s desire to terminate this Agreement
has been given to the other party at least ninety days but no more
than one hundred and twenty days prior to the expiration of the
Initial Employment Period (or any renewal thereof contemplated by
this
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sentence), the term of the Executive’s
employment hereunder shall be automatically renewed for successive
one-year periods (such term, including the Initial Employment
Period, as it may be extended, the “EMPLOYMENT
PERIOD”). Notice of non-renewal provided by the Company shall
be treated as a termination by the Company without Cause for
purposes of Sections 4.4(a), (b) and (c) and
Section 4.10, and the Company shall have no additional
obligation to the Executive other than the payment of the Accrued
Obligations (as defined below), except as otherwise required by law
or the terms of the Company’s benefit plans. Notice of
non-renewal provided by the Executive shall be treated as a
termination by the Executive without Good Reason for purposes of
Section 4.6(a).
4. TERMINATION AND FORFEITURE OF
PAYMENTS AND BENEFITS.
4.1 TERMINATION BY THE COMPANY FOR
CAUSE. The Executive’s employment with the Company may be
terminated at any time by the Company for Cause. Upon such a
termination, the Company shall have no obligation to the Executive
pursuant to this Agreement or any other agreement executed in
connection herewith other than the payment of the Executive’s
(i) earned but unpaid base salary and any bonus earned in
accordance with the terms of the applicable bonus plan but which
has not been paid, (ii) accrued but unused vacation, and
(iii) accrued but unreimbursed documented business expenses
incurred in accordance with Company policies, in each case, through
the effective date of such termination (the “ACCRUED
OBLIGATIONS”), except as otherwise required by law or by the
terms of the Company’s benefit plans. All Restricted Units
that have not yet been vested as of the date of termination, shall
be forfeited as of the date of termination. Any Restricted Units
that have vested may be repurchased by the Company at any time
following such termination of employment at a price per Restricted
Unit equal to the lesser of (i) the greater of
(1) (x) fair market value thereof as determined by the
Managing Member in its reasonable and good faith discretion (the
“FAIR MARKET VALUE”) of such Restricted Unit on the
date of the termination minus (y) the value of any dividends
or other distributions previously paid to the Executive in respect
of such Restricted Unit (subject to equitable adjustment in the
Company’s discretion to reflect equity distributions,
corporate transactions, or similar events, to the extent not
reflected in (y)) and (2) $0, and (ii) (x) the
original purchase price paid for such Restricted Unit by the
Executive minus (y) the value of any dividends or other
distributions previously paid to the Executive in respect of such
Restricted Unit, but in no event less than $0.
For purposes of this Agreement, the
term “CAUSE” shall mean any of the following:
(i) the Executive’s failure to perform materially his
duties under this Agreement (other than by reason of illness or
disability), (ii) the Executive’s commission of any
felony, or his commission of any other crime involving moral
turpitude or his commission of a material dishonest act or fraud
against the Company or any of its Affiliates, (iii) the
Executive’s use or sale of illegal drugs, (iv) any act
or omission by the Executive that (A) is the result of his
misconduct or gross negligence and that is, or may reasonably be
expected to be, materially injurious to the financial condition,
business or reputation of the Company or any of its Affiliates or
(B) is the result of his willful, reckless or grossly
negligent act or omission occurring during the Employment Period or
during the one-year period prior to the date hereof and results in
a violation of any International Trade Law (as defined in the
Transaction Agreement), (v) the Executive’s breach of
any material provision of this Agreement, the Conflict of Interest
and
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Confidentiality Agreement, the Restricted Unit
Agreement or the LLC Agreement, or (vi) the Executive’s
exercise of his right to revoke the release set forth in, and in
accordance with, Section 9 hereof. Any such occurrence
described in clauses (i), (iv)(B) or (v) of the preceding
sentence shall constitute “CAUSE” only after the
Company has given the Executive written notice that the Company has
elected to terminate his employment for Cause, which notice shall
specify the particular acts or failures to act on the basis of
which the decision to so terminate employment was made. In the case
of a termination for Cause described in clause (i), (ii), or (iv),
the Executive shall be given the opportunity to meet with the Board
within twenty (20) business days of receipt of such notice to
defend such acts or failures to act.
4.2 PERMANENT DISABILITY. If, during
the Employment Period, the Executive becomes permanently disabled
within the meaning of the Company’s applicable long-term
disability plan, the Company shall have the right to terminate the
Executive’s employment with the Company upon written notice
to the Executive. Upon such a termination, the Company shall have
no obligation to the Executive other than payment of the Accrued
Obligations and to treat the Restricted Units as described below in
this Section 4.2, except as otherwise required by law or by
the terms of the Company’s benefit plans. Any Time Vesting
Units that are not vested as of the date of termination shall vest
as of the date of termination. If the Performance Units are not
vested as of the date of termination, the Performance Units will
remain outstanding until the 180 th day following the date of
termination (not to exceed the fifth anniversary of the Closing),
and if the Test Date occurs prior to the last day of such 180-day
period and the Investors meet the applicable Cumulative Total
Return goal as of the Test Date, the Executive will vest in a
number of Performance Units at such time as each applicable
Cumulative Total Return goal is met. All other Performance Units
will be forfeited. If any Performance Units remain outstanding but
have not yet vested as of the expiration of the foregoing 180-day
period, they shall be forfeited. Section 4.10 shall apply to
Company repurchases of vested Restricted Units. Notwithstanding the
foregoing, the Board, in its sole discretion, may permit the
vesting of any Performance Units that are not vested as of the date
of termination.
4.3 DEATH. The Executive’s
employment with the Company shall terminate automatically upon the
death of the Executive and the Company shall have no obligation to
the Executive or the Executive’s estate other than payment of
the Accrued Obligations and to treat the Restricted Units as
described below in this Section 4.3, except as otherwise
required by law or by the terms of the Company’s benefit
plans. Any Time Vesting Units that are not vested as of the date of
termination shall vest as of the date of termination. If the
Performance Units are not vested as of the date of termination, the
Performance Units will remain outstanding until the 180
th
day following the date
of termination (not to exceed the fifth anniversary of the
Closing), and if the Test Date occurs prior to the last day of such
180-day period and the Investors meet the applicable Cumulative
Total Return goal as of the Test Date, the Executive will vest in a
number of Performance Units at such time as each applicable
Cumulative Total Return goal is met. All other Performance Units
will be forfeited. If any Performance Units remain outstanding but
have not yet vested as of the expiration of the foregoing 180-day
period, they shall be forfeited. Section 4.10 shall apply to
Company repurchases of vested Restricted Units. Notwithstanding the
foregoing, the Board, in its sole discretion, may permit the
vesting of any Performance Units that are not vested as of the date
of termination.
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4.4 TERMINATION BY THE COMPANY
WITHOUT CAUSE. The Executive’s employment with the Company
may be terminated at any time by the Company without Cause. In such
event, the Executive shall have the rights set forth in the
subparagraphs below.
(a) SEVERANCE. Subject to the
Executive’s continued compliance with his obligations under
this Agreement and the other agreements executed in connection
herewith, the Company shall have no obligation to the Executive
other than: (i) the payment of the Accrued Obligations;
(ii) the payment of an amount equal to the sum of the
Executive’s annual Base Salary (as in effect as of the date
of termination) plus the Target Bonus Amount that would have been
payable to the Executive for the calendar year in which such
termination occurs as if the Executive were employed by the Company
at the end of such year; (iii) treatment of the Restricted
Units as described below in Section 4.4(b) and (c) and
Section 4.10; (iv) the continuation of the
Executive’s participation in all Company health and medical
plans in which the Executive was participating immediately prior to
the date of termination, on the same basis as other senior
executives of the Company, for a period twelve months following
such date of termination; and (vi) reasonable executive
outplacement benefits, except as otherwise required by law or by
the terms of the Company’s benefit plans (excluding severance
plans). All payments pursuant to this Section 4.4(a) shall be
made in a lump sum; PROVIDED, HOWEVER, that the payment of the
bonus pursuant to Section 4.4(a)(ii) shall be paid at the time
and in the manner bonuses are paid to the executive officers of the
Company for the year in which such termination occurred. In the
event that the Executive is eligible to receive the severance
benefits provided for by this Section 4.4(a), the Executive
shall not be eligible to receive severance benefits under any other
Company plan, policy or agreement.
(b) TIME VESTING UNITS. To the
extent that any Time Vesting Units remain unvested as of the date
that is six (6) months following such termination, such
unvested Time Vesting Units shall be forfeited as of such date;
PROVIDED, that if the termination without Cause occurs within the
one-year period after a Change of Control (as defined in
Section 4.8 below), all unvested Time Vesting Units shall vest
as of the date of termination.
(c) PERFORMANCE UNITS. If the
Performance Units are not vested as of the date of termination, the
Performance Units will remain outstanding until the 180th day
following the date of termination (not to exceed the fifth
anniversary of the Closing), and if the Test Date occurs prior to
the last day of such 180-day period and the Investors meet the
applicable Cumulative Total Return goal as of the Test Date, the
Executive will vest in a number of Performance Units at such time
as each applicable Cumulative Total Return goal is met. All other
Performance Units will be forfeited. In the event that (i) the
Company consummates an initial public offering of its equity
interests prior to the third anniversary of the Closing and
(ii) the Executive’s employment with the Company is
terminated without Cause after the third anniversary of the
Closing, then the unvested Performance Units shall remain
outstanding until the Test Date. If the Performance Units remain
outstanding but not yet vested as of the fifth anniversary of the
Closing, they shall be forfeited.
4.5 TERMINATION BY THE EXECUTIVE FOR
GOOD REASON. (a) During the Employment Period, the
Executive’s employment with the Company may be terminated by
the Executive for Good Reason, if the Executive provides the
Company with
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notice within 90 days following the
Executive’s knowledge of the event constituting Good Reason.
In the event that the Executive terminates his employment with the
Company for Good Reason, the Executive shall be entitled to the
same payments and benefits that he would have been entitled to
receive under Section 4.4 if his employment had been
terminated by the Company without Cause and the Company shall be
entitled to the repurchase rights thereunder.
(b) For purposes of this Agreement,
the term “GOOD REASON” shall mean any of the following
conditions or events without the Executive’s prior consent:
(i) a material diminution of the Executive’s position or
responsibilities that is inconsistent with the Executive’s
title (PROVIDED that (x) any change in the Executive’s
position or responsibilities that occurs as a result of a sale of
the Company or its significant assets or (y) any change in the
Executive’s position or responsibilities pursuant to an
internal reorganization, in each case, following which the
Executive’s level of position at the Company is not
materially diminished shall not give rise to Good Reason under
clause (i) or clause (ii) of this definition),
(ii) a material and willful breach by the Company of any terms
of this Agreement, (iii) a reduction in the Executive’s
Base Salary or the percentage of his Base Salary eligible as a
target bonus, or (iv) a relocation of the Executive’s
principal place of business more than fifty (50) miles away
from the location set forth as the Executive’s principal
place of business in Section 1.2. Any such occurrence shall
constitute “GOOD REASON” only after the Executive has
given the Company written notice of, and twenty (20) business
days opportunity to cure, such violation after receipt by the
Company of such written notice, and then only if such occurrence is
not cured.
4.6 TERMINATION BY THE EXECUTIVE
WITHOUT GOOD REASON.
(a) The Executive may voluntarily
resign from his employment with the Company without Good Reason,
PROVIDED that the Executive shall provide the Company with ninety
(90) days’ advance written notice (which notice
requirement may be waived, in whole or in part, by the Company in
its sole discretion) of his intent to terminate. Upon such a
termination, the Company shall have no obligation to the Executive
pursuant to this Agreement or any other agreement executed in
connection herewith other than the payment of the Accrued
Obligations, except as otherwise required by law or by the terms of
the Company’s benefit plans. All Restricted Units that have
not yet been vested as of the date of termination shall be
forfeited as of the date of termination. Subject to
Section 4.6(b), any Restricted Units that have vested may be
repurchased by the Company at any time following such termination
of employment at a price per Restricted Unit equal to the lesser of
(i) the (x) Fair Market Value of such Restricted Unit on
the date of the termination minus (y) the value of any
distributions previously paid to the Executive in respect of such
Restricted Unit (subject to equitable adjustment in the
Company’s discretion to reflect equity distributions,
corporate transactions, or similar events, to the extent not
reflected in (y)) and (ii) the original purchase price paid
for such Restricted Unit by the Executive.
(b) If the Executive terminates his
employment with the Company pursuant to this Section 4.6 and
represents, warrants and covenants (the “RETIREMENT
COVENANT”) that he is permanently retiring and does not
intend to, and will not, engage in any business or professional
activity whether as an employer, consultant or owner (excluding the
Executive’s Management of his owned real estate or his
personal portfolio of publicly traded securities), then any
Restricted Units that have vested may be repurchased by the Company
at any time following
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such termination of employment at a price per
Restricted Unit regardless of the value of the Escrow Amount (as
defined below) equal to the (x) Fair Market Value of such
Restricted Unit on the date of the termination minus (y) the
value of any distributions previously paid to the Executive in
respect of such Restricted Unit (subject to equitable adjustment in
the Company’s discretion to reflect equity distributions,
corporate transactions, or similar events, to the extent not
reflected in (y)). All amounts (whether cash, securities or other
property) (the “ESCROW AMOUNT”) (i) payable upon
the exercise of the repurchase right set forth in the prior
sentence and (ii) derived from the Restricted Units whether
from distribution, a Liquidity Event resulting after the date that
the Executive terminates his employment with the Company (the
“RETIREMENT DATE”) pursuant to this Section 4.6(b)
or otherwise, in each case, shall be deposited into an escrow
account under the sole control of the Company. The Escrow Amount
shall be promptly released to the Executive on the fifth
anniversary of the Retirement Date (or to his estate upon his
death) if the Executive has complied with the Retirement Covenant
in all respects. If the Executive violates the Retirement Covenant
at any time prior to the earlier of (x) the fifth anniversary
of the Retirement Date and (y) the date of his death, the
Escrow Amount shall be promptly released to the Company for the
sole benefit of the Company and the Executive shall have no right
or claim to the Escrow Amount or any other rights with respect to
the Restricted Units repurchased pursuant by the Company pursuant
to this Section 4.6(b). For the purposes of this Agreement,
the term “LIQUIDITY EVENT” shall mean the consummation
of an Excluded Event, a Significant Event, a Sale of the Company
(as defined in the Restricted Unit Agreement), an Exchange (as
defined in the Restricted Unit Agreement) or any other event or
transaction resulting in the purchase, sale, transfer or
disposition of the Restricted Units (or any securities issued in
exchange for, or substitution of, the Restricted Units) after the
Retirement Date.
4.7 RELEASE OF CLAIMS AND
COOPERATION. As a condition to receiving any payments set forth in
Section 4.2 through Section 4.5, the Executive (or his
executor) shall be required to execute and not revoke a waiver and
release of claims in favor of the Company and its Affiliates, in
the form attached hereto as EXHIBIT B and, to the extent reasonably
necessary, for a 180-day period following such employment
termination, shall make himself reasonably available to provide
transition services and consultation to the Company, subject to his
other business and personal commitments.
4.8 DEFINITION OF CHANGE OF CONTROL.
A “CHANGE OF CONTROL” shall mean (i) the
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended from time to time) not affiliated with the
Company or its owners immediately prior to such acquisition of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50 percent, indirectly or
directly, of the equity vote of the Company (other than any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Affiliate) or
(ii) consummation of an amalgamation, a merger or
consolidation of the Company or any direct or indirect subsidiary
thereof with any other entity or a sale or other disposition of all
or substantially all of the assets of the Company following which
the voting securities of the Company that are outstanding
immediately prior to such transaction cease to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity (or the entity that owns substantially all
of the Company’s assets either directly or through one or
more subsidiaries) or any parent or other Affiliate thereof)
at
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least 50 percent of the combined voting power of
the securities of the Company or, if the Company is not the
surviving entity, such surviving entity (or the entity that owns
substantially all of the Company’s assets either directly or
through one or more subsidiaries) or any parent or other Affiliate
thereof, outstanding immediately after such transaction.
Notwithstanding the foregoing, a Change of Control shall not
include a SkyTerra Acquisition or the acquisition of any assets or
securities of the Company or its subsidiaries by the Investors, DTV
or any of their respective Affiliates.
4.9 RESIGNATION. Upon a termination
of employment, the Executive will upon the Company’s request
resign from all boards of directors and officer positions of the
Company and any of its Affiliates.
4.10 REPURCHASE RIGHT. Any
Restricted Units held by the Executive as a result of vesting may
be repurchased (the “REPURCHASE RIGHT”) by the Company
at any time during the two-year period following (x) the date
of termination of employment in the event that such Restricted
Units were vested as of such termination and (y) the vesting
of such Restricted Units in the event that such vesting occurred
after the date of termination of employment, each (other than
Repurchase Rights exercised following a termination pursuant to
Section 4.1 and 4.6) at a price per Restricted Unit equal to
the Fair Market Value thereof determined as of the date of
repurchase. If the Company’s or any of its
subsidiaries’ debt agreements restrict, limit or prohibit it
from exercising the Repurchase Right, the foregoing two-year period
shall be tolled until such time as the Company is permitted to
exercise the Repurchase Right pursuant to the terms of such debt
agreements. At no time shall the Company be obligated to exercise
the Repurchase Right. The Repurchase Right shall be exercised by
the Company, or its designee, by delivering to the Executive a
written notice of exercise and a check in the amount of the
applicable purchase price. Upon delivery of such notice and payment
of the applicable purchase price, the Company, or its designee,
shall become the legal and beneficial owner of the Restricted Units
being repurchased and all rights and interest therein or related
thereto, and the Company, or its designee, shall have the right to
transfer to its own name the number of Restricted Units being
repurchased without further action by the Executive or any of his
transferees. If the Company or its designee elect to exercise the
Repurchase Right pursuant to this Section 4.10 and the
Executive or his transferee fails to deliver the Restricted Units
in accordance with the terms hereof, the Company, or its designee,
may, at its option, in addition to all other remedies it may have,
deposit the applicable purchase price in an escrow account
administered by an independent third party (to be held for the
benefit of, and payment over to, the Executive or his transferee in
accordance herewith) or set-off the applicable purchase price
against any amount the Company or its affiliates may owe the
Executive at such time, whereupon the Company shall by written
notice to the Executive cancel on its books all of the
Executive’s or his transferee’s right, title and
interest in and to such Restricted Units. Anything herein to the
contrary notwithstanding, in lieu of “forfeiting” any
unvested Restricted Units hereunder, the Company may, but shall not
be obligated to, repurchase such Restricted Units at a purchase
price equal to the original purchase price paid for such Restricted
Units held by the Executive. For purposes of this
Section 4.10, in the event that the Executive in good faith
disputes the determination of Fair Market Value hereunder, the
Managing Member shall select a regionally or nationally recognized
investment banking or valuation firm (the “VALUER”) to
determine the fair market value of such Restricted Units and the
Valuer’s determination shall be final and binding on all the
parties. The fees and expenses of the Valuer shall be paid one-half
by the Executive and one-half by the Company.
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5. COVENANTS.
5.1 The Executive understands that,
in the cour
