EXHIBIT 10.3
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
10
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.
5. COVENANTS.
5.1 The
Executive understands that, in the course of his employment with
the Company, he will be given access to confidential
informa
