EXHIBIT 10.46
RETENTION AGREEMENT
THIS AGREEMENT, dated July 10, 1998 (the "Effective Date"), is
made by and between PanAmSat Corporation, a Delaware corporation (the "Company")
and Xxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company considers it essential to the best interests
of its shareholders to take reasonable steps to retain key management personnel;
and
WHEREAS, the Executive is currently serving the Company as its
Senior Vice President, Engineering and Operations and Chief Technology Officer;
and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of shareholders to enter into a
retention agreement (the "Agreement") with the Executive to induce the Executive
to remain in the employ of the Company and to compensate him for the performance
of additional services following the execution of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Term. The term of this Agreement shall be the period commencing
on the Effective Date and ending on the third anniversary thereof (the "Term").
2. Retention Award.
(a) Subject to the terms of this Agreement, the Company agrees to
provide the Executive with a retention award (the "Retention Award"). The
Retention Award shall consist of two components: (i) a restricted stock unit
grant and (ii) a cash payment.
(b) Upon the execution of this Agreement, the Company shall grant
the Executive restricted stock units (the "Restricted Stock Units") representing
the agreement of the Company to transfer to the Executive nine thousand seven
hundred (9,700) shares of Common Stock of the Company, subject to the terms and
conditions specified in the Notice of Award attached hereto as Appendix A (the
"Notice Of Award").
(c) The remaining amount of the Retention Award shall be paid in
substantially equal cash payments equal to the sum of Nine Hundred Thousand
Dollars ($900,000) (the "Cash Payment"). Such amount shall vest ratably to the
extent of 25% on the Effective Date, and thereafter to the extent of an
additional 25% on the first anniversary, the second anniversary and the third
anniversary of the Effective Date. Payment will be made as soon as
administratively practical after the amounts become vested.
3. Payments to the Executive Upon Termination of Employment. In
the event that the Executive's employment with the Company is terminated prior
to the expiration of the Term, the Company shall pay the Executive the following
amounts and shall provide the Executive with the following benefits, as
applicable:
(a) In the event that the Executive's employment with the Company
is terminated for Cause or terminated by the Executive without Good Reason,
the Company shall, within thirty days of the date of such termination, make
a lump sum payment to the Executive in an amount equal to the sum of: (i)
his accrued but unpaid Base Salary; (ii) subject to the terms of the Annual
Incentive Plan, any Annual Bonus earned but not yet paid for the year
preceding such termination; provided, however, the Executive shall not be
entitled to an Annual Bonus for the year in which such termination occurs;
plus (iii) the value of his accrued and unused vacation days based upon his
Base Salary then in effect. In addition, the Executive shall also receive
the vested portion, if any, of the Retention Award, to the extent not yet
received. Any non-vested portion of the Retention Award shall be forfeited.
(b) In the event that the Executive's employment with the Company
is subject to an Involuntary Termination, the Company shall, within thirty
days of the date of such termination, make a lump sum payment to the
Executive in an amount equal to the sum of: (i) the Base Salary that he
would have earned during the remainder of the Term; (ii) subject to the
terms of the Annual Incentive Plan, the Annual Bonus that he would have
earned during the remainder of the Term had all bonus targets been met; plus
(iii) the value of his accrued and unused vacation days based upon his Base
Salary then in effect. In addition, in accordance with the Notice of Award,
the remainder of the Retention Award shall be fully vested and (x) the
unpaid portion of the Cash Payment shall promptly be paid to the Executive
in a lump sum and (y) all restrictions relating to the Restricted Stock
Units shall lapse and the Common Stock related thereto (including the Common
Stock related to any deferred Restricted Stock Units) shall be promptly
delivered to the Executive. The Company shall also continue to provide the
Executive and his dependents with the health and accident, life insurance
and medical benefits which they were receiving immediately prior to the
Involuntary Termination (to the extent such benefits may subsequently be
modified for other senior executives), until the sooner of the expiration of
the Term or the date as of which the Executive obtains any other
employment.
(c) In the event that the Executive's employment hereunder is
terminated on account of the Executive's Disability or by reason of his
death, the Company shall, within thirty days of the date of such
termination, make a lump sum payment to the Executive or if applicable, his
estate or personal representative, in an amount equal to the sum of: (i) his
accrued but unpaid Base Salary; (ii) subject to the terms of the Annual
Incentive Plan, the Annual Bonus he would have received had all targets for
the year in which the termination occurs been satisfied, multiplied by a
fraction, the numerator of which shall be the number of days from the
beginning of the award cycle to and including the date his employment
terminates and the denominator of which shall be the total number of days in
the award cycle; plus (iii) the value of his accrued and unused vacation
days based upon his Base Salary then in effect. In addition, in accordance
with the Notice of Award, the remainder of the Retention Award shall be
fully vested and (x) the Cash Payment shall promptly be paid to the
Executive in a lump sum and (y) all restrictions relating to the Restricted
Stock Units shall lapse and the Common Stock related thereto shall be
promptly delivered to the Executive.
4. Gross-Up Payment. In the event that the Executive receives a
notice from the Internal Revenue Service to the effect that the amounts payable
under the Agreement would be subject (in whole or part) to the tax (the "Excise
Tax") imposed under section 4999 of the Code, within thirty (30) days after the
date the Chairman of the Board receives a copy of such notice the Company shall
pay to the Executive such additional amounts (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the amounts paid to the Executive under this Agreement (the "Total Payments")
and any federal, state and local income and employment taxes and Excise Tax upon
the Gross-Up Payment, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the date on which the Gross-Up Payment
is calculated for purposes of this section, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder, the Executive shall repay to
the Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income tax imposed on the Gross-Up Payment
being repaid by the Executive to the extent that such repayment results in a
reduction in Excise Tax and/or a federal, state or local income tax deduction)
plus interest on the amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the amount of such
excess is finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments.
5. Protection of the Company's Interests.
(a) Non-Competition. For as long as the Executive is employed by
the Company and, in the event his employment is terminated prior to the
expiration of the Term in accordance with Section 3(b) of this Agreement and, in
the case of a Disability, Section 3(c) of this Agreement, for the remainder of
the Term (such period being referred to hereinafter as the "Restricted Period"),
the Executive shall not, unless he receives the prior written consent of the
Board, directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any individual, partnership, firm, corporation or other business
organization or entity that competes with the Company; provided, however, that
this Section 5(a) shall not proscribe the Executive's ownership, either directly
or indirectly, of less than five percent of any class of securities which are
listed on a national securities exchange or quoted on the automated quotation
system of the National Association of Securities Dealers, Inc.
(b) No Interference. During the Restricted Period, the Executive
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally solicit, endeavor to entice away from the
Company, or otherwise interfere with the relationship of the Company with, any
person who is employed by or otherwise engaged to perform services for the
Company or any person or entity who is, or was, within the six month period
preceding the Executive's termination of employment, a customer of the Company,
without the written consent of the Company. During the Restricted Period, the
Executive may make a written request to the Company requesting information as to
whether any person or entity is or was, within the six month period preceding
the Executive's termination of employment, a customer of the Company. The
Company shall not unreasonably deny such request.
(c) Confidentiality. The Executive hereby covenants and agrees
that he will not at any time, except in performance of his obligations to the
Company hereunder or with the prior written consent of the Board, directly or
indirectly disclose to any person any secret or confidential information that
the Executive may learn or has learned by reason of his association with the
Company. The term "confidential information" means any information not
previously disclosed to the public or to the trade by the Company's management
with respect to the Company's products, facilities and methods, trade secrets
and other intellectual property, systems, procedures, manuals, confidential
reports, product price lists, customer lists, financial information (including
the revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Executive hereby confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company. Upon the termination of the Executive's employment with
the Company for any reason or upon the request of the Company at any time, he
shall promptly deliver to the Company, and shall not without the consent of the
Board retain copies of, any written materials not previously made available to
the public, or records and documents made by him or coming into his possession
concerning the business or affairs of the Company or any of its parents,
affiliates or subsidiaries which contain confidential information. In addition,
the Executive hereby represents and warrants to the Company that, promptly upon
termination of his employment for any reason, he will return all computer
hardware or software, office equipment, files, papers, records, memoranda,
documents, correspondence, customer lists, financial data, credit cards,
automobiles, keys and security access cards, and all items of any nature which
are the property of the Company including any of which are in his personal
possession or personal files.
(e) Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 5 may result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Executive from engaging in activities prohibited by this Section
5 or such other relief as may be required to specifically enforce any of the
covenants in this Section 5.
6. Legal Fees and Expenses. The Company shall pay or reimburse the
Executive on an after-tax basis for all costs and expenses (including, without
limitation, court costs and reasonable legal fees and expenses incurred by him
as a result of any claim, action or proceeding (i) contesting, disputing or
enforcing any right, benefits or obligations under this Agreement or (ii)
arising out of or challenging the validity, advisability or enforceability of
this Agreement or any provision thereof; provided, however, that this provision
shall not apply if the relevant trier-of-fact determines that the Executive's
claim or position was frivolous and without reasonable foundation.
7. Successors; Binding Agreement.
(a) Assumption by Successor. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place; provided, however, that no such assumption
shall relieve the Company of its obligations hereunder.
(b) Enforceability; Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of the Executive (and his personal representatives
and heirs) and the Company and any organization which succeeds to substantially
all of the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of the
Company or otherwise. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee, to his
estate.
8. Definitions. For purposes of this Agreement, the following
capitalized words shall have the meanings set forth below:
"Annual Bonus" shall mean the 1998 annual bonus program for senior
executives of the Company established pursuant to the Annual Incentive Plan, as
may be modified by the Compensation Committee of the Board.
"Annual Incentive Plan" shall mean the PanAmSat Corporation Annual
Incentive Plan, as may be amended by the Board from time to time.
"Base Salary" shall mean the Executive's 1998 base salary as may
be increased (but not decreased) from time to time in the sole discretion of the
Compensation Committee of the Board.
"Cause" shall mean a termination of the Executive's employment
during the Term which is a result of (i) his conviction of, or plea of nolo
contendere to, a felony, (ii) a determination by the Board that the Executive
has violated any of the protective covenants set forth in Section 5 of this
Agreement or (iii) willful and intentional misconduct, or willful or gross
nonfeasance by the Executive (other than any such failure resulting from his
incapacity due to physical or mental illness or any such actual or anticipated
failure resulting from a resignation by the Executive for Good Reason) after a
written demand for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed his duties, and
which performance is not substantially corrected by the Executive within 20 days
of receipt of such demand. For purposes of the previous sentence, no act or
failure to act on the Executive's part shall be deemed "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor provisions thereto.
"Disability" shall mean the Executive's inability to engage in
substantial gainful activity by reason of any medically determinable mental or
physical impairment which can be expected to result in death or which has lasted
or can be expected to last a continuous period of not less than 6 months.
"Good Reason" shall mean a resignation of the Executive's
employment during the Term as a result of any of the following:
(i) without the Executive's written consent, a significant
reduction in his duties or the nature or status of his responsibilities
(including his reporting responsibilities), from those in effect immediately
prior to the Effective Date;
(ii) without the Executive's written consent, any reduction by the
Company in the Executive's Base Salary as in effect immediately prior to the
Effective Date; a significant reduction in his aggregate incentive
compensation opportunities as in effect immediately prior to the Effective
Date (unless such reduction is pursuant to a general change in benefits
applicable to all similarly situated employees of the Company); a
significant reduction by the Company in the aggregate value of the employee
benefits being provided to the Executive immediately prior to the Effective
Date under the Company's savings, life insurance, medical, health and
accident, disability and fringe benefit plans and programs; or a reduction
by the Company in the number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect immediately prior to the
Effective Date (unless such reduction is pursuant to a general change in
benefits applicable to all senior executives of the Company);
(iii) a transfer of the Executive's principal place of employment
to a location more than 35 miles from his place of employment immediately
prior to the Effective Date; and
(iv) any material and willful breach by the Company of a written
employment agreement with the Executive;
provided, however, that an event described above shall not constitute Good
Reason unless the Executive provides the Company with written notice within 30
calendar days of the date he knew or should have known of the occurrence of such
an event and such event is not corrected by the Company in a manner which is
reasonably satisfactory to the Executive (including full retroactive correction
with respect to any monetary matter) within 30 days of the Company's receipt of
such written notice.
"Involuntary Termination" shall mean (i) termination of the
Executive's employment by the Company or its subsidiaries during the Term other
than for Cause, Disability or death or (ii) the Executive's resignation of
employment with the Company and its subsidiaries during the Term for Good
Reason.
9. Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Chief Executive Officer of the Company at the principal office of the
Company, or to the Executive at his last known address on file with the Company
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement, may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect to
the subject matter hereof.
(b) Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) Withholding. Amounts paid to you hereunder shall be subject to
all applicable federal, state and local withholding taxes.
(e) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Executive shall have no right, title or interest whatsoever
in or to any investments which the Company may make to aid it in meeting its
obligations hereunder. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
(f) No Assignment. The right of the Executive, his designated
beneficiary, his dependents or any other person to receive payments or other
benefits under this Agreement may not be pledged or encumbered and cannot be
assigned or transferred except by will or by the laws of descent and
distribution.
(g) No Mitigation. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts (including amounts for damages for breach) payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment.
(h) Rules of Construction. The captions in this Agreement are for
convenience of reference only and in no way define, limit or describe the scope
or intent of any provisions or paragraphs of this Agreement. All references in
this Agreement to particular paragraphs are references to the paragraphs of this
Agreement, unless some other reference is clearly indicated.
(i) Entire Agreement. This Agreement supersedes all prior
agreements and understandings of the parties with respect to the subject matter
hereof.
(j) Governing Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of New
York applicable to contracts entered into and performed in such State.
(k) Submission to Jurisdiction. The Company and the Executive
agree that they shall bring any action or proceeding with respect of any claim
arising out of or in respect of this Agreement whether in tort, contract, at law
or in equity, exclusively in the United States District Court for the Southern
District of New York or the Supreme Court of the State of New York for the
County of New York (the "Chosen Courts") and the Company and the Executive
further agree to (i) irrevocably submit to the exclusive jurisdiction of the
Chosen Courts, (ii) waive any objection to laying of venue in any such action or
proceeding in the Chosen Courts and (iii) waive any objection that the Chosen
Courts are an inconvenient form or do not have jurisdiction over any party
hereto.
* * * *
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the day and year first above written.
PANAMSAT CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
XXXXXX X. XXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxxx
