SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(MARK ONE)
--
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
--
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________ to ___________
Commission File No. 33-63284
PanAmSat Corporation
PanAmSat Capital Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 06-1407851
Delaware 06-1371155
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Pickwick Plaza, Greenwich, CT. 06830
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 203-622-6664
- -----------------------------------------------------------------
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES x NO
As of June 30, 1996, an aggregate of 19,081,137 shares of the Company's Common
Stock, 40,459,432 shares of the Company's Class A Common Stock and 40,459,431
shares of the Company's Class B Common Stock were outstanding.
<PAGE>
FORM 10-Q
PanAmSat Corporation
For the Quarter Ended June 30, 1996
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Balance Sheets, June 30, 1996 (unaudited) and December 31, 1995.
Statements of Operations for the Six Months Ended June 30, 1996 and 1995
(unaudited).
Statements of Operations for the Three Months ended June 30, 1996 and 1995
(unaudited).
Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995
(unaudited).
Notes to Financial Statements.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
Signature
Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act of 1995
The Private Securities Litigation Reform Act of 1995 provides a new
"safe harbor" for certain forward-looking statements. When used in this Form
10-Q and the documents incorporated by reference herein, the words "estimate,"
"project," "anticipate," "expect," "believe" and other expressions used to
indicate future events are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially.
<PAGE>
PanAmSat Corporation
BALANCE SHEETS
<TABLE>
June 30, December 31,
1996 1995
ASSETS (Unaudited)
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,400,492 $ 13,562,113
Accounts receivable, less allowance for doubtful
accounts of $100,000 8,102,437 4,881,255
Prepaid expenses and other current assets 17,815,257 5,594,999
-------------- --------------
TOTAL CURRENT ASSETS 33,318,186 24,038,367
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT, AT COST 850,048,043 609,927,311
Less: Accumulated Depreciation and Amortization (107,270,028) (79,177,520)
-------------- --------------
742,778,015 530,749,791
MARKETABLE SECURITIES 413,489,902 495,078,866
SATELLITE SYSTEMS UNDER DEVELOPMENT 338,215,308 377,383,581
DEBT ISSUANCE COSTS (Net of
Amortization) 10,434,598 11,414,920
OTHER ASSETS 512,434 154,287
-------------- --------------
TOTAL ASSETS $1,538,748,443 $1,438,819,812
============== ==============
</TABLE>
<PAGE>
PanAmSat Corporation
BALANCE SHEETS - (continued)
<TABLE>
June 30, December 31,
1996 1995
(Unaudited)
LIABILITIES AND EQUITY ------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,965,891 $ 3,287,250
Accounts payable 1,125,653 834,405
Accrued interest 7,109,375 7,109,375
Accrued liabilities and taxes 3,630,905 7,686,452
Deferred revenue 6,382,678 6,009,836
-------------- --------------
TOTAL CURRENT LIABILITIES 22,214,502 24,927,318
LONG-TERM DEBT 607,417,526 575,283,661
DEFERRED INCOME TAXES 43,805,000 31,573,000
DEFERRED REVENUE 71,184,356 41,656,778
OTHER LIABILITIES 777,934 867,934
-------------- --------------
TOTAL LIABILITIES 745,399,318 674,308,691
-------------- --------------
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, 12-3/4% Mandatorily
Exchangeable Senior Redeemable Preferred Stock,
$0.01 par value, 20,000,000 shares authorized,
311,134 shares issued and outstanding, 8,281
shares for accrued dividends 307,668,167 287,648,667
-------------- --------------
STOCKHOLDERS' EQUITY:
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized,
40,459,432 shares issued and outstanding 404,594 404,594
Class B Common Stock, $0.01 par value,
100,000,000 shares authorized,
40,459,431 shares issued and outstanding 404,594 404,594
Common Stock, $0.01 par value, 400,000,000
shares authorized, 19,081,137 shares issued
and outstanding 190,812 190,812
Additional paid-in-capital 477,297,753 477,297,753
Retained earnings (deficit) 7,383,205 ( 1,435,299)
-------------- ---------------
Total Stockholders' Equity 485,680,958 476,862,454
-------------- --------------
TOTAL LIABILITIES AND EQUITY $1,538,748,443 $1,438,819,812
============== ==============
</TABLE>
<PAGE>
PanAmSat Corporation
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
REVENUES:
Unaffiliated parties $106,510,394 $41,897,278
Related parties 4,196,772 1,909,658
------------ -----------
110,707,166 43,806,936
OPERATING EXPENSES:
Direct expenses-service agreements 3,724,571 2,550,818
Sales and marketing 7,233,472 4,194,711
Engineering and technical services 7,772,119 4,243,250
General and administrative 12,046,740 6,870,072
Depreciation and amortization 29,091,687 13,949,024
Compensation expense related to
corporate reorganization (Note 1) - 8,153,600
------------- -----------
59,868,589 39,961,475
------------ -----------
INCOME FROM OPERATIONS 50,838,577 3,845,461
INTEREST INCOME (12,269,345) (7,702,396)
INTEREST EXPENSE 14,883,918 9,390,488
------------ -----------
INCOME BEFORE INCOME TAXES 48,224,004 2,157,369
INCOME TAXES (NOTE 2) 19,386,000 3,630,000
------------ -----------
NET INCOME (LOSS) 28,838,004 (1,472,631)
------------ ------------
PREFERRED STOCK DIVIDEND 20,019,500 7,119,870
------------ -----------
NET INCOME (LOSS) TO COMMON SHARES $ 8,818,504 $(8,592,501)
============= ============
PRO FORMA NET LOSS TO COMMON SHARES:
HISTORICAL NET LOSS $(1,472,631)
PRO FORMA INCOME TAX BENEFIT (NOTE 2) (1,207,000)
------------
PRO FORMA NET LOSS ( 265,631)
PREFERRED STOCK DIVIDEND 7,119,870
PRO FORMA NET LOSS TO COMMON SHARES $(7,385,501)
============
ACTUAL AND PRO FORMA EARNINGS (LOSS) PER COMMON SHARE $ 0.09 $ (0.09)
============= ============
ACTUAL AND PRO FORMA WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 100,359,533 85,675,677
============== ===========
</TABLE>
<PAGE>
PanAmSat Corporation
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
June 30, June 30,
1996 1995
--------- ----------
<S> <C> <C>
REVENUES:
Unaffiliated parties $57,762,893 $23,691,417
Related parties 2,521,148 902,559
----------- -----------
60,284,041 24,593,976
OPERATING EXPENSES:
Direct expenses-service agreements 2,313,109 1,229,545
Sales and marketing 4,208,541 2,274,461
Engineering and technical services 4,300,648 2,215,940
General and administrative 6,109,648 3,480,393
Depreciation and amortization 15,841,368 6,860,670
Compensation expense related to
corporate reorganization (Note 1) - 1,537,250
----------- -----------
32,773,314 17,598,259
----------- -----------
INCOME FROM OPERATIONS 27,510,727 6,995,717
INTEREST INCOME (5,709,489) (5,117,769)
INTEREST EXPENSE 7,813,399 3,111,588
----------- -----------
INCOME BEFORE INCOME TAXES 25,406,817 9,001,898
INCOME TAXES (NOTE 2) 10,211,000 3,630,000
----------- -----------
NET INCOME 15,195,817 5,371,898
----------- -----------
PREFERRED STOCK DIVIDEND 10,191,631 7,119,870
----------- -----------
NET INCOME (LOSS) TO COMMON SHARES $ 5,004,186 $(1,747,972)
============ ============
EARNINGS (LOSS) PER COMMON SHARE $ 0.05 $ (0.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 100,462,257 85,675,677
=========== ===========
</TABLE>
<PAGE>
PanAmSat Corporation
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $ 28,838,004 $ (1,472,631)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 29,091,687 13,949,024
Deferred income taxes 12,232,000 3,630,000
Accretion of interest on senior subordinated
discount notes 19,614,741 17,566,302
(Accretion)collection of interest on marketable
securities (1,363,871) 484,390
Interest expense capitalized (16,727,322) (18,040,680)
Compensation expense related to corporate
reorganization - 8,153,600
Changes in assets and liabilities:
Increase in accounts receivable (3,221,182) (2,903,548)
Increase in prepaid expenses and other current
assets (12,220,258) (1,640,986)
Decrease in tax distribution receivable - 2,811,733
Increase (decrease)in accounts payable 291,248 (1,342,197)
Decrease in accrued liabilities and taxes (4,055,547) (814,394)
Increase in deferred revenue 29,900,420 30,484,129
Decrease in other liabilities (90,000) -
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 82,289,920 50,864,742
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (8,123,439) (11,679,167)
Expenditures for satellite systems under
development (161,180,546) (202,473,697)
Purchase of marketable securities and cash - (335,987,151)
Proceeds from insurance claim receivable - 191,084,380
Proceeds from maturity of marketable securities 82,952,835 50,000,000
Increase in other assets (377,004) (83,214)
------------ -------------
NET CASH USED IN INVESTING ACTIVITIES (86,728,154) (309,138,849)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from preferred stock offering - 275,000,000
Preferred stock issuance costs - (11,500,471)
Repayments of long-term debt (1,723,387) (832,219)
-------------- -------------
NET CASH PROVIDED BY(USED IN)FINANCING
ACTIVITIES (1,723,387) 262,667,310
--------------- ------------
NET INCREASE(DECREASE)IN CASH AND CASH
EQUIVALENTS (6,161,621) 4,393,203
CASH AND EQUIVALENTS, beginning of period 13,562,113 22,854,209
--------------- ------------
CASH AND EQUIVALENTS, end of period $ 7,400,492 $ 27,247,412
============== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash received for interest $ 10,905,475 $ 8,612,568
=============== ============
Cash paid for interest $ 11,996,785 $ 9,864,866
=============== ============
Cash paid for income taxes $ 8,459,139 $ -
=============== ============
</TABLE>
<PAGE>
FORM 10-Q
PanAmSat Corporation
NOTES TO FINANCIAL STATEMENTS
(1) Principles of Presentation.
---------------------------
PanAmSat, L.P. was the predecessor to PanAmSat Corporation (the
"Company") and operated as a Delaware limited partnership(the
"Partnership"). On March 2, 1995, pursuant to the amended
Exchange and Subscription Agreement and Plan of Reorganization,
the Company, the Partnership and its partners consummated various
transactions (the "Conversion") whereby the Company acquired the
Partnership and converted it to corporate form. In connection
therewith, (i) Rene Anselmo and affiliated persons and entities
(the "Anselmo Group") exchanged their interests in the
Partnership for shares of Class A Common Stock, representing
approximately 49.66% of the outstanding common stock of the
Company, (ii) Univisa Satellite Holdings, Inc.("Univisa")
exchanged its interest in the Partnership for shares of Class B
Common Stock, representing approximately 50.15% of the
outstanding common stock of the Company and (iii) a partner of
the Partnership exchanged his interest in the Partnership for
shares of common stock, representing approximately 0.19% of the
outstanding common stock of the Company. The Amended and Restated
Certificate of Incorporation of the Company provides, among other
things, that holders of the Class A Common Stock will have the
right to elect the majority of the members of the Company's board
of directors and the Anselmo Group and Univisa with a veto over
certain extraordinary transactions of the Company. On April 21,
1995, the Company completed the sale of 275,000 shares of
Preferred Stock in a public offering and received net proceeds of
approximately $262 million. On September 27, 1995 the Company
completed an initial public offering of 18,920,000 shares of
Common Stock, including 4,595,676 shares held by certain selling
stockholders, and received net proceeds of approximately $229
million.
The Conversion also resulted in compensation expense consisting
of (i)approximately $4.4 million during the six month period
ended June 30, 1995 related to the assumption by the Company of
phantom stock plans of a predecessor company in the Conversion,
and (ii) approximately $3.8 million, with an offsetting increase
to capital, relating to a grant of a limited partnership interest
in the partnership to the Executive Vice President of the
Company.
The interim unaudited Financial Statements should be read in
conjunction with the audited Financial Statements and the notes
thereto for the year ended December 31, 1995 included in the
Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (Commission File Number
33-63284) (the "Annual Form 10-K"). The balance sheet as of June
30, 1996, and the related statements of operations, stockholders'
<PAGE>
FORM 10-Q
PanAmSat Corporation
NOTES TO FINANCIAL STATEMENTS
(Continued)
equity and cash flows for the six months ended June 30, 1996 and
1995 have been prepared by the Company and are unaudited. In the
opinion of management, all adjustments which are of a normal
recurring nature necessary to present fairly the financial
position, results of operations and cash flows as of and for the
three and six month periods ended June 30, 1996 and 1995 have
been made. The accounting policies followed during the interim
periods reported are in conformity with generally accepted
accounting principles and are consistent with those applied for
annual periods and described in the Company's Annual Form 10-K.
The results of operations for the six month periods ended June
30, 1996 and 1995 are not necessarily indicative of the operating
results for the full year.
(2) Income Taxes.
-------------
The Conversion resulted in the establishment by the Company of a
deferred tax liability of approximately $22.9 million which was
recorded during the quarter ended March 31, 1995. As a
partnership, the Partnership was not subject to federal or state
income taxes. Accordingly, no income taxes were deducted from the
net income on the Partnership's financial statements.
Substantially all of the difference between the Company's book
income from operations and taxable income for the six months
ended June 30, 1996 and book loss from operations and pro forma
taxable loss for the six months ended June 30, 1995 is
attributable to the difference in depreciation for tax and
financial reporting purposes and certain deposits, and, in 1995,
the temporary difference created by a $4.4 million non-recurring
charge related to the assumption by the Company of phantom stock
plans of a predecessor company in the Conversion and the
permanent difference created by a $3.8 million charge related to
a grant of a limited partnership interest in the Partnership to
the Executive Vice President of the Company, for which the income
tax benefit was specially allocated to a predecessor entity.
The accompanying statements of operations present, on an
unaudited pro forma basis, net loss for the six months ended June
30, 1995 as if the Partnership had been taxed at corporate
federal and state tax rates and as if the Conversion occurred on
January 1, 1995. The pro forma tax effects assume the net
deferred tax liability as described above would have been
provided as the related temporary differences arose.
<PAGE>
FORM 10-Q
PanAmSat Corporation
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) DTH Joint Venture.
------------------
During the third quarter of 1994, the Company announced its
intention to provide DTH services in Latin America. In connection
therewith, the Company and Grupo Televisa, S.A. ("Televisa")
signed a binding memorandum of understanding in the first quarter
of 1995 (the "Original MOU") to put into operation a digital DTH
satellite television broadcasting business covering Latin
America, the Caribbean and certain areas of the southern United
States.
In November 1995, the Company announced that it would serve as a
satellite service provider for the Latin America DTH service
("Latin America DTH") to be offered by the Globo Organization
("Globo"), Televisa, The News Corporation Limited ("News Corp.")
and Tele-Communications International, Inc. ("TCI").
On February 29, 1996, the Company signed a binding letter
agreement with Globo, Televisa and News Corp. (the "1996 Letter
Agreement") to provide service to a series of joint ventures (the
"Latin America JVs") to be formed by them and TCI on 48
transponders ultimately on PAS-5 and PAS-6, with temporary
service on PAS-3 pending the commencement of service on PAS-6.
This capacity would enable the Latin America JVs to broadcast to
Latin America, the Caribbean, and certain areas of the southern
United States approximately 500 digital channels and to permit
distribution of program packages of approximately 120 digital
channels to specific market areas. Also under the 1996 Letter
Agreement, Globo, Televisa, and News Corp. have agreed to
proportionally guarantee 100 percent of the fees for transponder
services to the Latin America JVs. These guarantee obligations
may be assigned to TCI and, with the Company's prior written
consent, to new equity participants in the Latin America JVs. The
Company will receive minimum service fees equivalent to the
Company's best estimate of the cost per transponder to the
Company of designing, launching, operating and insuring each
satellite for the transponders used by the Latin America JVs. The
Company also will receive additional revenue based on subscriber
revenues of the Latin America JVs above a certain threshold,
except that the transponders that will be used by the Latin
America JV operating in Brazil will be charged on a fixed fee
basis.
Under a verbal agreement in principal with Televisa, the Company
would be granted an option for ten years to obtain 10- to
15-percent interests from Televisa in the Latin America JVs that
would service Latin America, the Caribbean and the southern
United States, but not Brazil. The purchase price would be equal
to the Company's pro rata share of Televisa's aggregate
contributions to the Latin America JVs providing such service,
<PAGE>
FORM 10-Q
PanAmSat Corporation
NOTES TO FINANCIAL STATEMENTS
(Continued)
less all distributions by such Latin America JVs to Televisa,
plus interest. The Company has no interest nor any options to
acquire an interest in the Latin America JVs that will provide
DTH service in Brazil. Upon the execution of binding agreements
incorporating the verbal agreements in principle and relating to
the Spain joint venture with Televisa described below, the
Original MOU will be terminated.
The Company and Televisa have also announced their intention to
provide DTH services through a joint venture in Spain with the
capacity to broadcast approximately 24 to 80 digital channels to
subscribers in Spain using small 24-36 inch (60-90 cm) antennas.
It is anticipated that the Company will ultimately acquire up to
49% (subject to pro rata dilution with Televisa upon admission of
new investors, if any) of this venture for a price equal to the
pro rata aggregate amount of Televisa's contributions to the
venture, less all distributions by the venture to Televisa, plus
interest.
The Company has significant investments in and commitments for
PAS-5 and PAS-6 which it intends to use in the proposed DTH
business. Globo, Televisa and News Corp. plan to enter into one
or more definitive agreements to implement the terms agreed in
and contemplated by the 1996 Letter Agreement. The Company's
acquisition of an option to acquire equity interests in certain
of the Latin America JVs and the joint venture in Spain is
subject to the execution by such parties of such definitive
agreements and to the Company's execution of definitive
agreements with Televisa. No assurance can be given that such
definitive agreements will be consummated, or that the Latin
America JVs or the joint venture in Spain will be successful.
(4) PAS-3 Placed in Service.
------------------------
The Company's PAS-3 satellite (a replacement for a satellite lost
as a result of a launch failure in December 1994) was launched on
January 12, 1996 and commenced service on February 19, 1996. As a
result, approximately $232 million of costs included in satellite
systems under development was transferred to satellites in
service and the Company incurred $15.0 million of long-term debt
in accordance with the satellite performance incentive terms in
its PAS-3 satellite construction contract during the quarter
ended March 31, 1996 (see Management's Discussion and Analysis).
<PAGE>
FORM 10-Q
PanAmSat Corporation
NOTES TO FINANCIAL STATEMENTS
(Continued)
(5) Stockholders' Strategic Objectives.
-----------------------------------
On April 2, 1996, the Company announced that it had engaged a
financial advisor to explore alternatives that would enable its
major stockholders to meet their strategic objectives. In that
connection, the Company filed a Registration Statement on Form S-1
on that date with the Securities and Exchange Commission for an
underwritten secondary offering by certain of its major
stockholders of $350 million of common stock, which may be pursued
as one of the alternatives. As part of this plan to meet its major
stockholders' objectives, the Company has also asked its financial
advisor to explore other options, including joint ventures or
alliances with other companies and the sale or merger of the
Company. No decision has been made regarding any of the
alternatives. In connection with the above, the Company has
adopted the PanAmSat Corporation Change of Control Involuntary
Separation Pay Plan.
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview.
---------
The Company's first satellite, PAS-1, was launched in 1988 for
service over the Atlantic Ocean Region and is the leading
satellite for television and cable programming distribution in
Latin America. The Company's second satellite, PAS-2, was
launched in July 1994 for service over the Pacific Ocean Region
and is a leading satellite for distribution in the Asia-Pacific
region. The Company's PAS-4 satellite was launched in August 1995
for service over the Indian Ocean Region and commenced service on
September 5, 1995. PAS-4 is the leading satellite for program
distribution in South Asia and Africa. The Company's PAS-3
satellite (a replacement for a satellite lost as a result of a
launch failure in December 1994) was launched on January 12, 1996
and commenced service on February 19, 1996 over the Atlantic
Ocean Region.
During the construction period of each of its new satellites, and
thereafter, the Company may incur increased operating expenses,
including expenditures for sales and marketing in excess of the
levels historically incurred, increased engineering and technical
expenses, as well as increased general and administrative
expenses, which increased expenses may not be offset by
additional revenues until the new satellites are successfully
launched and commence service. Also, commencing at the in-service
date of any successfully launched satellite, all satellite
construction costs, launch, launch insurance, capitalized
interest and development costs for such satellite will be
depreciated on a straight-line basis over the estimated useful
life of the satellite. Further, after the in-service date of any
successfully launched satellite (or upon a launch failure), the
Company will be required to expense, and no longer will be able
to capitalize, interest allocable to such satellite's
construction, launch and development costs.
Revenues.
---------
Total revenues for the three months ended June 30, 1996 were
$60.3 million, an increase of $35.7 million or 145% as compared
to the comparable period in 1995. Total revenues for the six
months ended June 30, 1996 were $110.7 million, an increase of
$66.9 million or 153% as compared to the comparable period in
1995.
Broadcasting services revenue for the three months ended June 30,
1996 was $49.9 million, an increase of $32.6 million, or 188%
over the same period in 1995. Broadcasting services revenue for
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
the six months ended June 30, 1996 was $89.6 million, an increase
of $60.0 million, or 203% over the same period in 1995. The
growth in broadcasting services revenue during the three and six
month periods was due primarily to revenues from video services
on PAS-4 and the commencement of revenues from video services on
PAS-3.
Business communications services revenue was $10.0 million in the
three months ended June 30, 1996, increasing $3.2 million or 47%,
over the comparable period in 1995. Business communications
services revenue was $20.3 million in the six months ended June
30, 1996, increasing $7.3 million or 56%, over the comparable
period in 1995. The increase during the three and six month
periods was primarily due to commencement of service for several
new International Digital Services network and carrier service
data contracts.
Long-distance telephone services revenue decreased from $0.5
million for the three months ended June 30, 1995 to $0.4 million
for the three months ended June 30, 1996, a decrease of $0.1
million or 20%. Long-distance telephone services revenue
decreased from $1.2 million for the six months ended June 30,
1995 to $0.8 million for the six months ended June 30, 1996, a
decrease of $0.4 million or 33%.
Direct Expenses.
----------------
Direct expenses were $2.3 million, or 4% of total revenues, in
the three months ended June 30, 1996, an increase of $1.1 million
or 92%, from the same period in 1995 when direct expenses were 5%
of total revenues. Direct expenses were $3.7 million, or 3% of
total revenues, in the six months ended June 30, 1996, an
increase of $1.1 million or 42%, from the same period in 1995
when direct expenses were 6% of total revenues.
Sales and Marketing Expenses.
-----------------------------
Sales and marketing expenses were $4.2 million, or 7% of total
revenues, in the three months ended June 30, 1996, compared to
$2.3 million, or 9% of total revenues, in the three months ended
June 30, 1995. Sales and marketing expenses were $7.2 million, or
7% of total revenues, in the six months ended June 30, 1996,
compared to $4.2 million, or 10% of total revenues, in the six
months ended June 30, 1995. The dollar increase in sales and
marketing expenses over the three and six month periods was
primarily attributable to the Company's efforts in marketing
capacity on the PAS Global System as well as the pursuit of
direct-to-home opportunities worldwide.
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Engineering and Technical Expenses.
-----------------------------------
Engineering and technical expenses were $4.3 million in the three
month period ended June 30, 1996, or 7% of total revenues,
compared to $2.2 million, or 9% of total revenues, for the
comparable period in 1995. Engineering and technical expenses
were $7.8 million in the six month period ended June 30, 1996, or
7% of total revenues, compared to $4.2 million, or 10% of total
revenues, for the comparable period in 1995. The dollar increase
in engineering and technical expenses during the three and six
month periods was primarily due to telemetry, tracking and
control costs for PAS-3 and PAS-4 as well as costs associated
with contracts to provide carrier monitoring services.
General and Administrative Expenses.
------------------------------------
General and administrative expenses were $6.1 million, or 10% of
total revenues, in the three months ended June 30, 1996, an
increase of $2.6 million or 74%, as compared to the same period
in 1995, when general and administrative expenses were $3.5
million, or 14% of total revenues. General and administrative
expenses were $12.1 million, or 11% of total revenues, in the six
months ended June 30, 1996, an increase of $5.2 million or 75%,
as compared to the same period in 1995, when general and
administrative expenses were $6.9 million, or 16% of total
revenues. The dollar increase in general and administrative
expenses during the three and six month periods was primarily
attributable to in-orbit insurance costs for PAS-3 and PAS-4,
increased professional fees, and additional personnel costs
associated with the Company's expansion.
Depreciation and Amortization.
------------------------------
Depreciation and amortization was $15.8 million in the three
months ended June 30, 1996, as compared to $6.9 million in the
three months ended June 30, 1995, an increase of $8.9 million or
129%. Depreciation and amortization was $29.1 million in the six
months ended June 30, 1996, as compared to $13.9 million in the
six months ended June 30, 1995, an increase of $15.2 million or
109%. The dollar increase in the three and six month periods was
primarily due to depreciation expense associated with PAS-3 and
PAS-4 and new communication equipment at the Company's new
teleports.
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Interest.
---------
Interest income, primarily earned from highly liquid investment
funds, was $5.7 million for the three months ended June 30, 1996
compared to $5.1 million for the comparable period in 1995, an
increase of $0.6 million. Interest income was $12.3 million for
the six months ended June 30, 1996 compared to $7.7 million for
the comparable period in 1995, an increase of $4.6 million. The
increase in interest income during the three and six month
periods was primarily a result of interest earned on proceeds
from the offerings of the Preferred Stock and the Common Stock in
the second and third quarters of 1995, respectively, that had not
been applied to satellite systems under development.
Interest expense, net of capitalized interest, increased from
$3.1 million in the quarter ended June 30, 1995 to $7.8 million
in the same quarter in 1996. Interest expense, net of capitalized
interest, increased from $9.4 million in the six months ended
June 30, 1995 to $14.9 million in the same period in 1996. This
additional interest expense during the three and six month
periods was primarily the result of interest expense on the
satellite performance incentives and additional accretion of the
Discount Notes, coupled with a decrease of capitalized interest
on construction in progress.
Income Taxes.
-------------
The Company had an income tax provision of $10.2 million for the
three months ended June 30, 1996 compared to $3.6 million for the
comparable period in 1995. The Company had an income tax
provision of $19.4 million for the six months ended June 30, 1996
compared to $3.6 million for the comparable period in 1995. The
Company had no income tax provision for the three months ended
March 31, 1995 as a result of the Conversion on March 2, 1995 and
break-even results for the month of March 1995.
Preferred Stock Dividend.
-------------------------
The Company had Preferred Stock dividends of $10.2 million for
the three months ended June 30, 1996 compared to $7.1 million for
the comparable period in 1995. The Company had Preferred Stock
dividends of $20.0 million for the six months ended June 30, 1996
compared to $7.1 million for the comparable period in 1995. The
Preferred Stock dividends are a result of the issuance of the
Company's Preferred Stock on April 21, 1995.
EBITDA.
-------
EBITDA was $43.4 million in the three months ended June 30, 1996,
an increase of $29.5 million or 212%, as compared to $13.9
million for the comparable period in 1995. EBITDA was $79.9
million in the six months ended June 30, 1996, an increase of
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
$62.2 million or 351%, as compared to $17.7 million for the
comparable period in 1995. EBITDA was 72% of total revenues in
the first six months of 1996 as compared to 41% of total revenues
for the same period in the prior fiscal year. The dollar increase
in EBITDA for the three and six month periods ended June 30, 1996
was due primarily to the increase in total revenues.
Liquidity and Capital Resources.
--------------------------------
Since inception, the Company and its predecessors have financed
their operations through a combination of debt and equity
financing, vendor financing, bank financing, equipment leases and
cash flow from operations. On August 5, 1993 the Company
completed the sale of the $175 million aggregate principal amount
of the Senior Secured Notes and $460.2 million aggregate
principal amount of the Discount Notes (collectively, the
"Notes") and received net proceeds of approximately $425.5
million. The original PAS-3 satellite was destroyed during a
launch failure on December 1, 1994. The Company collected in 1995
the insurance proceeds in the amount of $214.0 million for the
original PAS-3 satellite. On April 21, 1995, the Company
completed the sale of 275,000 shares of the Preferred Stock in a
public offering and received net proceeds of approximately $261.8
million. On September 27, 1995, the public offering of 18,920,000
shares of the Common Stock was completed and the Company received
net proceeds of approximately $229 million.
The total cost for the construction and launch of PAS-5 and
PAS-6, including launch insurance, certain components for spare
satellites, ground facilities and related development expenses is
estimated to be approximately $473 million. The Company expects
to fund $296.3 million of such costs with the net proceeds of the
offering of the Preferred Stock and $70.0 million of vendor
financing. The balance of such costs and any additional costs due
to cost overruns, delays or other unanticipated expenses is
anticipated to be funded from vendor financing and future cash
flow from operations.
The total cost for the construction and launch of PAS-7 and
PAS-8, including launch insurance, ground facilities and related
development expenses (but excluding capitalized interest expense)
is estimated to be approximately $420.0 million. The Company
expects to fund $224.6 million of such costs with the net
proceeds from the offering of the Common Stock. The balance of
such costs and any additional costs due to cost overruns, delays
or other unanticipated expenses is expected to be funded from
vendor financing and future cash flow from operations.
<PAGE>
FORM 10-Q
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Company believes that the net proceeds to it from the
offerings of Preferred Stock and Common Stock, vendor financing,
future cash flow from operations (assuming PAS-5 and PAS-6 are
successfully launched and commence service on the schedule
currently contemplated) and cash on hand will be sufficient to
fund the Company's operations, its remaining costs for the
construction and launch of PAS-5 and PAS-6, its anticipated
minimum contractual commitments for the construction and launch of
PAS-7 and PAS-8, as well as to pursue international opportunities
for DTH services which may be identified by the Company in the
future. Any additional costs due to cost overruns, delays or other
unanticipated expenses are expected to be funded from additional
vendor financing and future cash flow from operations.
Cash flows provided by operating activities increased to $82.3
million in the six months ended June 30, 1996, from $50.9 million
in the six months ended June 30, 1995. The 1996 increase is due
primarily to the significant growth in revenues for the six months
ended June 30, 1996 and the effect of non-cash charges. The
Company has and will continue to have significant non-cash charges
including depreciation of satellites and other equipment and
amortization of original issue discount on its Senior Subordinated
Discount Notes, as well as significant cash payments that are
capitalized rather than being currently expensed, including
capitalized interest.
Net cash used in investing activities decreased to $86.7 million
in the six months ended June 30, 1996 from $309.1 million in the
six months ended June 30, 1995. This decrease primarily reflects
$161.2 million of expenditures for satellite systems under
development partially funded by $83.0 million of proceeds from
maturity of marketable securities. This compares to $202.5 million
in expenditures for satellite systems under development and $336.0
million of purchases of marketable securities during the first six
months of 1995 funded primarily with $191.1 million of insurance
proceeds collected on the launch failure of the original PAS-3
satellite.
Net cash used in financing activities decreased to $1.7 million in
the six months ended June 30, 1996 from $262.7 million provided by
financing activities in the six months ended June 30, 1995. This
decrease reflects $1.7 million in repayments of long-term debt for
the six months ended June 30, 1996 compared to $0.8 million of
repayments of long-term debt during the first six months of 1995
funded by $263.5 million of net proceeds collected on the offering
of Preferred Stock.
<PAGE>
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.11.15 PanAmSat Corporation Severance Pay Plan, effective as of
May 1, 1996*
10.11.16 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Frederick A. Landman*
10.11.17 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Lourdes Saralegui*
10.11.18 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Robert A. Bednarek*
10.11.19 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Patrick J. Costello*
10.11.20 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and James W. Cuminale*
10.11.21 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and David P. Berman*
27 Financial Data Schedule
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
(b) REPORTS ON FORM 8-K
PanAmSat Corporation has not filed any 8-Ks for the
quarter ending June 30, 1996.
<PAGE>
FORM 10-Q
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PanAmSat Corporation
Date: August 14, 1996 /s/Patrick J. Costello
-----------------------------
Patrick J. Costello
Chief Financial Officer
and a Duly Authorized Officer
of the Company
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
10.11.15 PanAmSat Corporation Severance Pay Plan, effective as of
May 1, 1996*
10.11.16 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Frederick A. Landman*
10.11.17 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Lourdes Saralegui*
10.11.18 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Robert A. Bednarek*
10.11.19 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and Patrick J. Costello*
10.11.20 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and James W. Cuminale*
10.11.21 Agreement entered into as of May 15, 1996, between PanAmSat
Corporation and David P. Berman*
27 Financial Data Schedule
- ------------------------
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
PANAMSAT CORPORATION SEVERANCE PAY PLAN
(As Adopted Effective as of May 1, 1996)
SECTION 1
INTRODUCTION
1.1. Effective Date and Purpose. PanAmSat Corporation, a
Delaware corporation ("PanAmSat" or the "Employer"), has established the
PanAmSat Corporation Severance Pay Plan (the "Plan"), effective as of May 1,
1996 (the "Effective Date"). The purpose of the Plan is to provide severance pay
to eligible employees of PanAmSat upon separation of employment.
1.2. Funding Medium. All benefits payable under the Plan shall
be paid solely from the general assets of PanAmSat. No Participant shall have
any right to payment of benefits greater than that of a general creditor of
PanAmSat.
1.3. Plan Administration. PanAmSat is the Administrator of the
Plan. PanAmSat, through its Chief Executive Officer, Executive Vice President,
Chief Financial Officer or General Counsel, has the authority to interpret,
control and manage the operation and administration of the Plan as set forth
herein.
1.4. Plan Year. The Plan Year of the Plan shall be the
calendar year.
SECTION 2
PLAN PARTICIPATION
2.1. Eligibility for Participation. Subject to the conditions
and limitations of the Plan, each employee of PanAmSat employed on a regular
full-time basis shall become a Participant in the Plan as of the Effective Date
of the Plan, or on any subsequent date on which such employee first becomes a
regular full-time employee of PanAmSat.
2.2. Termination of Participation. Subject to the conditions
and limitations of the Plan, an individual shall not be a Participant during any
period that the individual is not an employee of PanAmSat.
2.3. No Employment Guarantee. The Plan does not constitute a
contract of employment and participation in the Plan does not and will not give
any individual the right to be retained in the employ of PanAmSat, or any right
or claim to any benefit under the Plan, unless and except to the extent that
such right or claim is specifically provided for under the terms of the Plan.
SECTION 3
SEVERANCE BENEFITS
3.1. Eligibility for Severance Benefit. A Terminated Employee
(as defined herein) shall be entitled to receive from the Employer the Severance
Benefit described in Subsection 3.2. For purposes of the Plan, a "Terminated
Employee" is an employee whose employment with PanAmSat is terminated by the
Employer other than for Cause (as defined in Subsection 3.3). An employee who
resigns from the employ of PanAmSat or who is on a leave of absence from the
Employer shall not be considered a Terminated Employee.
3.2. Amount of Severance Benefit. The Severance Benefit to be
paid to a Terminated Employee shall be paid by PanAmSat as soon as practicable
after the termination, in the form of a single lump sum payment, less applicable
deductions and withholdings, in an amount calculated as follows:
Employee's Continuous Years of Service Amount of Severance Pay
- -------------------------------------- ---------------------------------
One year but less than five years One week's compensation for every
year of service
Five or more years Five weeks' compensation plus two
weeks' compensation for every
year of service above five years
with maximum and minimum severance benefit payment of:
Minimum Maximum
Executive Employee 4 weeks 52 weeks
Exempt Employee 3 weeks 29 weeks
Non-exempt Employee 2 weeks 29 weeks
For purposes for the above schedule, a Terminated Employee's "Years of
Continuous Service" shall be the number of whole years elapsed during his or her
most recent period of continuous full-time employment. The "week's compensation"
of a Terminated Employee shall be his or her regular weekly gross rate of
compensation. If a Terminated Employee was paid on an hourly basis, then his or
her regular weekly gross rate of compensation shall be equal to the product of
his or her regular hourly rate of compensation on the date of the termination of
employment, multiplied by the number of regularly scheduled weekly hours of
work. If a Terminated Employee was salaried, his or her regular weekly rate
shall be the gross weekly compensation. If a Terminated Employee was a
commissioned salesman, then the regular weekly rate of compensation shall be
equal to the quotient of his or her gross compensation paid in the twelve-month
period ending on the date of the termination of employment divided by fifty-two
(52).
3.3. Cause Defined. For purposes of this Section 3, an
employee shall be considered to have been terminated for "Cause" if he or she is
discharged for theft or other misconduct, negligence, drug or alcohol abuse,
commission of a crime, failure to follow the instructions of a supervisor, or
other violation of the written or oral employment policies of the Employer.
SECTION 4
ADMINISTRATION OF THE PLAN
4.1.Authority. The Chief Executive Officer, or his or her
designee, has the power to determine all questions arising under the Plan,
including the power to determine the rights or eligibility of employees or
participants and their beneficiaries and their respective benefits, and to
remedy ambiguities, inconsistencies or omissions.
4.2. Decision Final. To the extent permitted by law, any
interpretation of the Plan and any decision on any matter within the discretion
of the Chief Executive Officer made by the Chief Executive Officer in good faith
will be binding on all persons. A misstatement or other mistake of fact shall be
corrected when it becomes known, and the Chief Executive Officer shall make such
adjustment on account thereof as he or she considers equitable and practicable.
SECTION 5
CLAIMS PROCEDURE
5.1. Initial Claim and Decision. A Terminated Employee or his
or her beneficiary (or his or her authorized representative) may file a written
claim for any benefits to which the employee believes he or she is entitled
under the Plan. The Chief Executive Officer will provide the claimant with
written notice of his or her decision on a claim within 30 days after receipt of
the written claim, unless special circumstances require an extension of time.
The Chief Executive Officer will provide the claimant with written notice of any
extension before the end of the initial 30 day period which will indicate the
special circumstances requiring the extension and the expected decision date,
which may not be more than 60 days after receipt of a written claim. If any
claim is wholly or partially denied, then the written notice of the decision
will inform the claimant of:
(a) the specific reasons for the denial;
(b) the specific provisions of the Plan upon which the denial is
based;
(c) any additional material or information necessary to perfect
the claim and reasons why such material or information is
necessary; and
(d) the right to request review of the denial and how to request
such review.
If written notice of the decision is not given to the claimant within the
period, including extensions, prescribed above in this Subsection 5.1, then the
claim shall be deemed denied for purposes of the claimant's right to request a
review of the denial pursuant to Subsection 5.2.
5.2. Request For Review of Denied Claim. The claimant or his
or her authorized representative may request review of the denial of a claim
within 60 days after receipt of written notice of the denial of all or a portion
of the claim by writing filed with the Chief Executive Officer. Written issues
and comments may be submitted to the Chief Executive Officer along with the
review request. During the 60 day period following notice of the denial, the
claimant or his or her authorized representative may examine the Plan and any
other document upon which the denial is based.
5.3. Review of Denied Claim. Upon receipt of a request to
review its denial of a claim, the Chief Executive Officer shall undertake a full
and fair review of the denial and, except as provided below, provide the
claimant with written notice of its decision within 10 days after receipt of the
review request unless special circumstances require an extension of time. The
Chief Executive Officer will provide the claimant with written notice of any
extension before the end of the regular review period which will indicate the
special circumstances requiring the extension and the expected decision date,
which may not be more than 20 days after receipt of a review request. The
written notice of the decision shall inform the claimant of the specific reasons
for the decision and the specific provisions of the Plan upon which the decision
is based. If written notice of the decision is not given to the claimant within
the period, including extensions, prescribed above in this Subsection 5.3, then
the claim shall be deemed denied on review. Except as may be otherwise required
by law, the decision of the Chief Executive Officer on review of the denial
shall be conclusive and binding on all parties.
SECTION 6
GENERAL PROVISIONS
6.1. Reemployment of Participant. If the employment of an
employee with the Employer terminates and the employee is subsequently
reemployeed by PanAmSat, then he or she shall be treated as a new employee for
all purposes of the Plan.
6.2. Death of Participant. If a Terminated Employee dies
before receipt of any amount otherwise payable to him under the Plan, then that
amount shall be paid to his or her "Beneficiary", which shall be the employee's
estate
6.3. Benefits May Not Be Assigned or Alienated. The benefits
payable to any person under the Plan may not be voluntarily or involuntarily
assigned or alienated.
6.4. Binding on Successors. The provisions of the Plan shall
be binding upon and shall inure to the benefit of PanAmSat, and the
participants, and their respective successors in interest and assigns. Except as
may otherwise be determined by a resolution of the Board of Directors of
PanAmSat, PanAmSat shall require any person or entity that becomes a "successor
in interest" (as defined below) to PanAmSat to expressly assume the Plan and
agree to perform all of obligations of PanAmSat under the Plan. For purposes of
this Subsection 6.4, a "successor in interest" to PanAmSat shall include any
person or entity (or group of related or affiliated persons or entities) that
acquires (in a single transaction or a series or related transactions) any
businesses or assets of PanAmSat representing twenty-five percent (25%) or more
of PanAmSat's sales, operating profits, or operating assets.
6.5. Gender and Number. Where the context admits, words in any
gender shall include any other gender, words in the singular shall include the
plural, and words in the plural shall include the singular.
6.6. Governing Law. The Plan shall be construed and
administered according to the internal laws and court decisions of the State of
New York to the extent that such laws are not preempted by the laws of the
United States of America.
6.7. Participant Elections and Notices. Any election or notice
required or permitted to be made by a participant under the Plan must be made in
writing and filed with the Chief Executive Officer at such time and in such form
as the Chief Executive Officer requires, except as otherwise specifically
provided in the Plan. Any election, notice, or other document required to be
filed with the Chief Executive Officer shall be properly filed if delivered or
if mailed postage prepaid by certified mail, return receipt requested, to the
attention of the Chief Executive Officer, at the business address of PanAmSat's
office headquarters. Any notice required under the Plan may be waived by the
person entitled to such notice.
SECTION 7
AMENDMENT AND TERMINATION
7.1. Amendment and Termination. Subject to the provisions of
Subsection 7.2, PanAmSat, through its Board of Directors, reserves the right to
amend the Plan from time to time and reserves the right to terminate the Plan at
any time without prior notice.
7.2. Limitations on Amendment and Termination. Notwithstanding
the provisions of Subsection 7.1, except as may otherwise be determined by a
resolution of the Board of Directors of PanAmSat, the Plan shall not be
terminated with respect to any Terminated Employee (or their Beneficiaries) and
no amendment shall be made to the Plan that is adverse to the interests of any
Terminated Employee (or their Beneficiaries). In no event may this Plan be
modified or terminated following a "Material Change" as defined in Section 3.5
of PanAmSat's Involuntary Separation Pay Plan with respect to employees of
PanAmSat at the time of the occurrence of such "Material Change."
<PAGE>
IN WITNESS WHEREOF, the President and Chief Executive Officer
of PanAmSat has executed this Plan, as of the Effective Date, to evidence his
approval of the provisions of the Plan.
PANAMSAT CORPORATION
By:
President and Chief Executive Officer
ATTEST:
Its Secretary
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
Frederick A. Landman (hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, EXECUTIVE is currently serving COMPANY as its
President and Chief Executive Officer; and
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
The Term of this Agreement shall be the period commencing on
May 1, 1996 and ending on the third anniversary of such date; provided, however,
that commencing on the date two years after May 1, 1996, and on each annual
anniversary of such date (such date and each annual anniversary thereof shall be
hereinafter referred to as the "Renewal Date"), unless previously terminated,
the Term shall be automatically extended so as to terminate two years after such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Term shall not be so extended;
provided, further that obligations and benefits arising hereunder prior to the
expiration of the Term shall continue until fully satisfied.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases
to consist of nominees of the Holders of COMPANY's Class A
Common Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Following a Material Change, EXECUTIVE
shall have the right to terminate his services with COMPANY. If EXECUTIVE
terminates his services with COMPANY, or COMPANY terminates the services of
EXECUTIVE, in each case during the two year period following the occurrence of a
Material Change, EXECUTIVE shall be entitled to a Termination Payment from
COMPANY, which Termination Payment shall be due and payable ten (10) days after
EXECUTIVE is or has been terminated from, or terminates, his employment with
COMPANY. The term "Termination Payment" shall mean an amount that is equal to 3
times the sum of (1) the Base Salary (as defined below), plus (2) the Applicable
Bonus (as defined below). The term "Base Salary" shall mean the annual cash
compensation to EXECUTIVE by COMPANY for services payable at the time of the
termination, or at the time of the Material Change, whichever is greater and the
term "Applicable Bonus" shall mean the annual amount awarded or paid under any
incentive or bonus plan or program of COMPANY and any additional amounts (such
aggregate amounts, the "Bonus") paid to EXECUTIVE by COMPANY during the fiscal
year ending immediately prior to the fiscal year in which the Material Change
occurred, or the Bonus scheduled to be paid to EXECUTIVE during the fiscal year
in which the Material Change occurs, prorated to the date of termination,
whichever is greater. The Termination Payment is intended to constitute
liquidated damages to compensate EXECUTIVE for amounts EXECUTIVE could have
earned in respect of future services and shall not be subject to reduction based
upon any compensation that EXECUTIVE may receive (or could have received) in
respect of any services EXECUTIVE performs (or could have performed) after
EXECUTIVE terminates his services with COMPANY. The Termination Payment shall be
in addition to and not in lieu of any rights or claims that EXECUTIVE may have
in respect of past services and any rights or claims, past or future, that
EXECUTIVE may have under Section B.2 or Section C hereof, and EXECUTIVE shall
retain all of his rights and claims in respect of past services and all of his
rights and claims, past or future, under Section C hereof.
3. Excise Tax. In the event that, in connection with a
Material Change or at any time following a Material Change, the Termination
Payment or any other amounts payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement or under any plan, program or policy of
COMPANY, or any benefits provided to EXECUTIVE or his dependents under this
Agreement or under any option or other plan, program or policy of COMPANY,
should become subject to the excise tax imposed under Section 4999 of the Code
or any similar tax or assessment (collectively, "Excise Taxes"), COMPANY shall
pay to EXECUTIVE, his designated beneficiary or his dependents, as the case may
be, on demand, the amount (the "Excise Tax Reimbursement Amount") necessary
fully to reimburse EXECUTIVE, his designated beneficiary or his dependents for
(i) all Excise Taxes that may be imposed on EXECUTIVE, his designated
beneficiary or his dependents and (ii) any and all income and other taxes,
including additional Excise Taxes, that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in respect of any of the amounts to be
paid to EXECUTIVE, his designated beneficiary or his dependents under clause (i)
above or under this clause (ii). The determination of the Excise Tax
Reimbursement Amount shall initially be made by the accounting firm that is
serving as COMPANY's independent public accountants immediately prior to the
Material Change, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by COMPANY. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse EXECUTIVE, his designated beneficiary or
his dependents as contemplated above, COMPANY shall pay to EXECUTIVE, his
designated beneficiary or his dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary fully to
reimburse EXECUTIVE, his designated beneficiary or his dependents for (I) any
and all additional Excise Taxes, income taxes and other taxes that may be
imposed on EXECUTIVE, his designated beneficiary or his dependents, (II) any and
all interest, fines and penalties that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in connection with any such additional
Excise Taxes, income taxes or other taxes, and (III) any and all income and
other taxes, including additional Excise Taxes, that may be imposed on
EXECUTIVE, his designated beneficiary or his dependents in respect of any of the
amounts to be paid to EXECUTIVE, his designated beneficiary or his dependents
under clause (I) or (II) above or under this clause (III). If it is subsequently
determined that the EXECUTIVE has received a sum greater than necessary to pay
any such Excise Taxes, the EXECUTIVE shall promptly return such overage to
COMPANY. The purpose of this Section B.3 is to place EXECUTIVE, his designated
beneficiary and his dependents in the same position on an after-tax basis that
each of them would have been in if the Termination Payment and all other amounts
payable to EXECUTIVE, his designated beneficiary or his dependents under this
Agreement or under any plan, program or policy of COMPANY, and all benefits
provided to EXECUTIVE or his dependents under this Agreement or under any plan,
program or policy of COMPANY, had not been subject to any Excise Taxes.
4. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of his rights and claims in respect of past services and all of his rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 and until the earlier of the expiration of the third year
following such event or the securing of similar benefits from a subsequent
employer, EXECUTIVE and his dependents shall be entitled to participate in all
employee welfare benefit plans (as that term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended) and to receive or
participate in all other benefit arrangements, policies or practices to which
and in which active executive employees of COMPANY and/or their dependents are
or shall become entitled to receive or participate in at any time during the
Term; provided, however, that, if a Material Change should occur, the benefits
required to be provided to EXECUTIVE and his dependents under the provisions of
this Section C shall be no less than the employee benefits EXECUTIVE and his
dependents would have received under the provisions of the benefit arrangements,
policies or practices of COMPANY in effect immediately prior to such Material
Change, all at no increased cost or expense to EXECUTIVE and his dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to his last known address;
in the case of the designated beneficiary, to his, her or their last known
address; or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and his heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I, J and K, the designated beneficiary and his or her heirs,
executors, administrators and legal representatives, and (iv) with respect to
Sections B, C, D, E, F, G, H, I, J and K, EXECUTIVE's dependents and their
respective heirs, executors, administrators and legal representatives. In
addition, without in any way limiting the foregoing, following a Material
Change, any person or entity (or group of persons and/or entities) that acquires
(in a single transaction or a series of related transactions) any businesses or
assets of COMPANY representing 25% or more of COMPANY's sales, operating profits
or operating assets shall be deemed to be a successor of COMPANY for the
purposes of this Agreement and shall be liable for the payment of all amounts
payable by COMPANY under this Agreement and for the performance of all
obligations of COMPANY under this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, his designated beneficiary and his dependents (and their
respective heirs, executors, administrators and personal representatives). To
the extent this Agreement is inconsistent with the employment agreement (the
"Prior Employment Agreement") between EXECUTIVE and COMPANY dated December 31,
1992, as amended on March 1, 1995, this Agreement shall supercede the Prior
Employment Agreement.
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, his designated
beneficiary or his dependents or any other person. To the extent that EXECUTIVE,
his designated beneficiary or his dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, his designated beneficiary or
his dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, his designated beneficiary
or 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.
H. Attorneys' Fees and Other Costs and Expenses
EXECUTIVE, his designated beneficiary and his dependents (and
their respective heirs, executors, administrators and personal representatives)
shall each be entitled to recover from COMPANY (and shall be reimbursed by
COMPANY when incurred and upon demand) all attorneys' fees and other costs and
expenses, if any, that may be incurred in connection with enforcing or defending
the rights of EXECUTIVE, his designated beneficiary or his dependents under this
Agreement following a Material Change regardless of the outcome of any
litigation or other proceeding relating to such enforcement or defense.
EXECUTIVE, his designated beneficiary and his dependents (and their respective
heirs, executors, administrators and personal representatives) also shall be
entitled to recover from COMPANY interest on the Termination Payment and any
other amounts that may be payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement (including, without limitation, amounts
required to be reimbursed under the first sentence of this Section, any Excise
Tax Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
Section B.3 hereof that are not paid when due following a Material Change, at an
annual rate equal to 4% over the corporate base rate as announced from time to
time by Citibank, N.A. or its successor (changing as and when such announced
corporate base rate changes), compounded monthly, from the date due until paid.
Payments received by EXECUTIVE, his designated beneficiary or his dependents (or
any of their respective heirs, executors, administrators and personal
representatives) shall be credited first against accrued interest until all
accrued interest is paid in full before any such payment is credited against the
Termination Payment or any other amounts that may be payable to EXECUTIVE, his
designated beneficiary or his dependents under this Agreement.
I. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
J. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
K. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
L. No Competing Employment
For 18 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to him hereunder, Executive shall not, unless he has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
IN WITNESS WHEREOF, COMPANY and EXECUTIVE have executed this Agreement as of the
day and year first above written.
PANAMSAT CORPORATION
By:
FREDERICK A. LANDMAN
By:
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
Lourdes Saralegui(hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, EXECUTIVE is currently serving COMPANY as its
Executive Vice President; and
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
The Term of this Agreement shall be the period commencing on
May 1, 1996 and ending on the third anniversary of such date; provided, however,
that commencing on the date two years after May 1, 1996, and on each annual
anniversary of such date (such date and each annual anniversary thereof shall be
hereinafter referred to as the "Renewal Date"), unless previously terminated,
the Term shall be automatically extended so as to terminate two years after such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Term shall not be so extended;
provided, further that obligations and benefits arising hereunder prior to the
expiration of the Term shall continue until fully satisfied.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases to
consist of nominees of the Holders of COMPANY's Class A Common
Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Following a Material Change, EXECUTIVE
shall have the right to terminate her services with COMPANY. If EXECUTIVE
terminates her services with COMPANY, or COMPANY terminates the services of
EXECUTIVE, in each case during the two year period following the occurrence of a
Material Change, EXECUTIVE shall be entitled to a Termination Payment from
COMPANY, which Termination Payment shall be due and payable ten (10) days after
EXECUTIVE is or has been terminated from, or terminates, her employment with
COMPANY. The term "Termination Payment" shall mean an amount that is equal to 3
times the sum of (1) the Base Salary (as defined below), plus (2) the Applicable
Bonus (as defined below). The term "Base Salary" shall mean the annual cash
compensation to EXECUTIVE by COMPANY for services payable at the time of the
termination, or at the time of the Material Change, whichever is greater and the
term "Applicable Bonus" shall mean the annual amount awarded or paid under any
incentive or bonus plan or program of COMPANY and any additional amounts (such
aggregate amounts, the "Bonus") paid to EXECUTIVE by COMPANY during the fiscal
year ending immediately prior to the fiscal year in which the Material Change
occurred, or the Bonus scheduled to be paid to EXECUTIVE during the fiscal year
in which the Material Change occurs, prorated to the date of termination,
whichever is greater. The Termination Payment is intended to constitute
liquidated damages to compensate EXECUTIVE for amounts EXECUTIVE could have
earned in respect of future services and shall not be subject to reduction based
upon any compensation that EXECUTIVE may receive (or could have received) in
respect of any services EXECUTIVE performs (or could have performed) after
EXECUTIVE terminates her services with COMPANY. The Termination Payment shall be
in addition to and not in lieu of any rights or claims that EXECUTIVE may have
in respect of past services and any rights or claims, past or future, that
EXECUTIVE may have under Section B.2 or Section C hereof, and EXECUTIVE shall
retain all of her rights and claims in respect of past services and all of her
rights and claims, past or future, under Section C hereof.
3. Excise Tax. In the event that, in connection with a
Material Change or at any time following a Material Change, the Termination
Payment or any other amounts payable to EXECUTIVE, her designated beneficiary or
her dependents under this Agreement or under any plan, program or policy of
COMPANY, or any benefits provided to EXECUTIVE or her dependents under this
Agreement or under any option or other plan, program or policy of COMPANY,
should become subject to the excise tax imposed under Section 4999 of the Code
or any similar tax or assessment (collectively, "Excise Taxes"), COMPANY shall
pay to EXECUTIVE, her designated beneficiary or her dependents, as the case may
be, on demand, the amount (the "Excise Tax Reimbursement Amount") necessary
fully to reimburse EXECUTIVE, her designated beneficiary or her dependents for
(i) all Excise Taxes that may be imposed on EXECUTIVE, her designated
beneficiary or her dependents and (ii) any and all income and other taxes,
including additional Excise Taxes, that may be imposed on EXECUTIVE, her
designated beneficiary or her dependents in respect of any of the amounts to be
paid to EXECUTIVE, her designated beneficiary or her dependents under clause (i)
above or under this clause (ii). The determination of the Excise Tax
Reimbursement Amount shall initially be made by the accounting firm that is
serving as COMPANY's independent public accountants immediately prior to the
Material Change, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by COMPANY. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse EXECUTIVE, her designated beneficiary or
her dependents as contemplated above, COMPANY shall pay to EXECUTIVE, her
designated beneficiary or her dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary fully to
reimburse EXECUTIVE, her designated beneficiary or her dependents for (I) any
and all additional Excise Taxes, income taxes and other taxes that may be
imposed on EXECUTIVE, her designated beneficiary or her dependents, (II) any and
all interest, fines and penalties that may be imposed on EXECUTIVE, her
designated beneficiary or her dependents in connection with any such additional
Excise Taxes, income taxes or other taxes, and (III) any and all income and
other taxes, including additional Excise Taxes, that may be imposed on
EXECUTIVE, her designated beneficiary or her dependents in respect of any of the
amounts to be paid to EXECUTIVE, her designated beneficiary or her dependents
under clause (I) or (II) above or under this clause (III). If it is subsequently
determined that the EXECUTIVE has received a sum greater than necessary to pay
any such Excise Taxes, the EXECUTIVE shall promptly return such overage to
COMPANY. The purpose of this Section B.3 is to place EXECUTIVE, her designated
beneficiary and her dependents in the same position on an after-tax basis that
each of them would have been in if the Termination Payment and all other amounts
payable to EXECUTIVE, her designated beneficiary or her dependents under this
Agreement or under any plan, program or policy of COMPANY, and all benefits
provided to EXECUTIVE or her dependents under this Agreement or under any plan,
program or policy of COMPANY, had not been subject to any Excise Taxes.
4. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of her rights and claims in respect of past services and all of her rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 and until the earlier of the expiration of the third year
following such event or the securing of similar benefits from a subsequent
employer, EXECUTIVE and her dependents shall be entitled to participate in all
employee welfare benefit plans (as that term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended) and to receive or
participate in all other benefit arrangements, policies or practices to which
and in which active executive employees of COMPANY and/or their dependents are
or shall become entitled to receive or participate in at any time during the
Term; provided, however, that, if a Material Change should occur, the benefits
required to be provided to EXECUTIVE and her dependents under the provisions of
this Section C shall be no less than the employee benefits EXECUTIVE and her
dependents would have received under the provisions of the benefit arrangements,
policies or practices of COMPANY in effect immediately prior to such Material
Change, all at no increased cost or expense to EXECUTIVE and her dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to her last known address;
in the case of the designated beneficiary, to her, her or their last known
address; or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and her heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I, J and K, the designated beneficiary and her or her heirs,
executors, administrators and legal representatives, and (iv) with respect to
Sections B, C, D, E, F, G, H, I, J and K, EXECUTIVE's dependents and their
respective heirs, executors, administrators and legal representatives. In
addition, without in any way limiting the foregoing, following a Material
Change, any person or entity (or group of persons and/or entities) that acquires
(in a single transaction or a series of related transactions) any businesses or
assets of COMPANY representing 25% or more of COMPANY's sales, operating profits
or operating assets shall be deemed to be a successor of COMPANY for the
purposes of this Agreement and shall be liable for the payment of all amounts
payable by COMPANY under this Agreement and for the performance of all
obligations of COMPANY under this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, her designated beneficiary and her dependents (and their
respective heirs, executors, administrators and personal representatives).
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, her designated
beneficiary or her dependents or any other person. To the extent that EXECUTIVE,
her designated beneficiary or her dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, her designated beneficiary or
her dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, her designated beneficiary
or her 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.
H. Attorneys' Fees and Other Costs and Expenses
EXECUTIVE, her designated beneficiary and her dependents (and
their respective heirs, executors, administrators and personal representatives)
shall each be entitled to recover from COMPANY (and shall be reimbursed by
COMPANY when incurred and upon demand) all attorneys' fees and other costs and
expenses, if any, that may be incurred in connection with enforcing or defending
the rights of EXECUTIVE, her designated beneficiary or her dependents under this
Agreement following a Material Change regardless of the outcome of any
litigation or other proceeding relating to such enforcement or defense.
EXECUTIVE, her designated beneficiary and her dependents (and their respective
heirs, executors, administrators and personal representatives) also shall be
entitled to recover from COMPANY interest on the Termination Payment and any
other amounts that may be payable to EXECUTIVE, her designated beneficiary or
her dependents under this Agreement (including, without limitation, amounts
required to be reimbursed under the first sentence of this Section, any Excise
Tax Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
Section B.3 hereof that are not paid when due following a Material Change, at an
annual rate equal to 4% over the corporate base rate as announced from time to
time by Citibank, N.A. or its successor (changing as and when such announced
corporate base rate changes), compounded monthly, from the date due until paid.
Payments received by EXECUTIVE, her designated beneficiary or her dependents (or
any of their respective heirs, executors, administrators and personal
representatives) shall be credited first against accrued interest until all
accrued interest is paid in full before any such payment is credited against the
Termination Payment or any other amounts that may be payable to EXECUTIVE, her
designated beneficiary or her dependents under this Agreement.
I. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
J. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
K. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
L. No Competing Employment
For 18 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to her hereunder, Executive shall not, unless she has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
IN WITNESS WHEREOF, COMPANY and EXECUTIVE have executed this Agreement as of the
day and year first above written.
PANAMSAT CORPORATION
By:
LOURDES SARALEGUI
By:
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
Robert A. Bednarek (hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, EXECUTIVE is currently serving COMPANY as its Senior
Vice President, Engineering and Operations; and
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
1. Term. The Term of this Agreement shall be the period
commencing on May 1, 1996 and ending on the third anniversary of such date;
provided, however, that commencing on the date two years after May 1, 1996, and
on each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years after such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the Term
shall not be so extended; provided, further that obligations and benefits
arising hereunder prior to the expiration of the Term shall continue until fully
satisfied.
2. Employment Duties. If a Material Change (as hereinafter
defined) should occur during the Term, absent the occurrence of an event that
gives the COMPANY the right to terminate the EXECUTIVE for Cause (as defined
below), COMPANY shall be obligated to continue to employ EXECUTIVE for the
remainder of the Term in the same executive capacity in which EXECUTIVE was
employed immediately prior to such Material Change with substantially the same
duties and responsibilities that EXECUTIVE had immediately prior to such
Material Change; provided, however, that, if COMPANY should cease to be a public
company after a Material Change, the fact that EXECUTIVE may thereupon cease to
have certain duties and responsibilities that were attributable solely to the
status of COMPANY as a public company shall not be deemed to be a breach of this
Section A.2.
Termination for "Cause" shall mean a termination based on (a)
the commission by EXECUTIVE of any felony or crime involving moral turpitude; or
(b) the engagement of EXECUTIVE in any business or activity that is directly
competitive with any business or activity of COMPANY and which, in the opinion
of the Board of Directors of COMPANY, is prejudicial or adverse to the best
interests of COMPANY; provided, however, that, after the occurrence of a
Material Change, EXECUTIVE may be discharged for "Cause" only if COMPANY is able
to establish that the action for which he is being discharged under clause (a)
or (b) of this subsection is an action for which he would have been discharged
for "Cause" under COMPANY'S general employment policies and practices in effect
immediately prior to such Material Change.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases to
consist of nominees of the Holders of COMPANY's Class A Common
Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Provided that EXECUTIVE has not been
terminated for Cause, EXECUTIVE shall be entitled to a Termination Payment (as
hereinafter defined) and shall have the right to elect to terminate his services
with COMPANY after the occurrence of a Material Change, and (a) during the 30
day period following the one year anniversary of a Material Change, or (b) if
within two years following a Material Change:
(i) COMPANY shall terminate the EXECUTIVE for
any reason other than for Cause; or
(ii) COMPANY should fail to continue to employ
EXECUTIVE during the Term in the same executive capacity with
COMPANY in which EXECUTIVE was employed immediately prior to
such Material Change, with materially the same duties and
responsibilities with COMPANY that EXECUTIVE had immediately
prior to such Material Change, except, in the case where
COMPANY ceases to be a public company after such Material
Change, for those duties and responsibilities that were
attributable solely to the status of COMPANY as a public
company; provided, that the EXECUTIVE shall be required prior
to the effectiveness of a constructive termination pursuant to
this subsection (ii) to have given the COMPANY ten (10) days
notice and an opportunity to cure such failure. Without in any
way limiting the right of EXECUTIVE to elect to terminate his
services under this Section B.2(ii), it is understood that any
change in EXECUTIVE's job description (other than as described
in the exception to the first sentence of this clause (ii)),
offices, perquisites or place of employment by more than 35
miles (unless such move is from the Greenwich, Connecticut
offices of COMPANY to New York City), any reduction in the
number of officers or other employees or diminishment in the
overall management responsibility of officers and other
employees reporting directly to EXECUTIVE (other than as
described in the exception to the first sentence of this
clause (i)), any diminishment in the decision making authority
of EXECUTIVE, shall each be a change in his duties and
responsibilities that will give EXECUTIVE the right to elect
to terminate his services under this Section B.2(i); or
(iii) COMPANY should reduce or fail to pay or award to
EXECUTIVE when due any Base Salary, Bonus (as both such terms
are defined below) or other amount payable to EXECUTIVE or to
provide EXECUTIVE with any benefits to which EXECUTIVE is
entitled.
If EXECUTIVE should make any such election during the Term,
EXECUTIVE shall be entitled to a Termination Payment from COMPANY, which
Termination Payment shall be due and payable ten (10) days after EXECUTIVE gives
COMPANY written notice of such election. The term "Termination Payment" in
respect of any election by EXECUTIVE to terminate his services with COMPANY
during the two year period following the occurrence of a Material Change shall
mean an amount that is equal to 3 times the sum of (1) the Base Salary (as
defined below), plus (2) the Applicable Bonus (as defined below). The term "Base
Salary" shall mean the annual cash compensation to EXECUTIVE by COMPANY for
services payable at the time of the termination, or at the time of the Material
Change, whichever is greater and the term "Applicable Bonus" shall mean the
annual amount awarded or paid under any incentive or bonus plan or program of
COMPANY and any additional amounts (such aggregate amounts, the "Bonus") paid to
EXECUTIVE by COMPANY during the fiscal year ending immediately prior to the
fiscal year in which the Material Change occurred, or the Bonus scheduled to be
paid to EXECUTIVE during the fiscal year in which the Material Change occurs,
prorated to the date of termination, whichever is greater. The Termination
Payment is intended to constitute liquidated damages to compensate EXECUTIVE for
amounts EXECUTIVE could have earned in respect of future services and shall not
be subject to reduction based upon any compensation that EXECUTIVE may receive
(or could have received) in respect of any services EXECUTIVE performs (or could
have performed) after EXECUTIVE terminates his services with COMPANY. The
Termination Payment shall be in addition to and not in lieu of any rights or
claims that EXECUTIVE may have in respect of past services and any rights or
claims, past or future, that EXECUTIVE may have under Section B.2 or Section C
hereof, and EXECUTIVE shall retain all of his rights and claims in respect of
past services and all of his rights and claims, past or future, under Section C
hereof.
3. Base Salary; Bonuses.
(a) Following the occurrence of a Material Change and during
the Term, Executive shall receive an annual base salary ("Annual Base Salary"),
which shall be paid at a monthly rate at least equal to twelve times the highest
monthly base salary paid or payable (including any base salary which has been
earned but deferred) to Executive by Company during the period between the
initial public disclosure of the potential Material Change and the month in
which the Material Change occurs. Thereafter, the Annual Base Salary shall be
reviewed at intervals no less frequent than customary for Executive prior to the
Material Change. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase during the Employment Period
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(b) Following the occurrence of a Material Change, COMPANY
shall be obligated to award EXECUTIVE an unconditional bonus for each fiscal
year for so long as EXECUTIVE is employed by COMPANY (including the fiscal year
in which the Material Change occurs) in an amount not less than the higher of
the annual bonus awarded to EXECUTIVE by COMPANY for the fiscal year preceding
the fiscal year in which the Material Change occurs and the annual bonus for the
EXECUTIVE for the fiscal year in which the Material Change occurs, which
unconditional bonus must be awarded and paid not later than the last day of each
year during which EXECUTIVE is employed by COMPANY; provided that such bonus
shall be prorated for any year in which EXECUTIVE has given notice to COMPANY of
his election to terminate his services upon the occurrence of a Termination
Event as set forth in Section B.2 hereof.
4. Excise Tax. In the event that, in connection with a
Material Change or at any time following a Material Change, the Termination
Payment or any other amounts payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement or under any plan, program or policy of
COMPANY, or any benefits provided to EXECUTIVE or his dependents under this
Agreement or under any option or other plan, program or policy of COMPANY,
should become subject to the excise tax imposed under Section 4999 of the Code
or any similar tax or assessment (collectively, "Excise Taxes"), COMPANY shall
pay to EXECUTIVE, his designated beneficiary or his dependents, as the case may
be, on demand, the amount (the "Excise Tax Reimbursement Amount") necessary
fully to reimburse EXECUTIVE, his designated beneficiary or his dependents for
(i) all Excise Taxes that may be imposed on EXECUTIVE, his designated
beneficiary or his dependents and (ii) any and all income and other taxes,
including additional Excise Taxes, that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in respect of any of the amounts to be
paid to EXECUTIVE, his designated beneficiary or his dependents under clause (i)
above or under this clause (ii). The determination of the Excise Tax
Reimbursement Amount shall initially be made by the accounting firm that is
serving as COMPANY's independent public accountants immediately prior to the
Material Change, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by COMPANY. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse EXECUTIVE, his designated beneficiary or
his dependents as contemplated above, COMPANY shall pay to EXECUTIVE, his
designated beneficiary or his dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary fully to
reimburse EXECUTIVE, his designated beneficiary or his dependents for (I) any
and all additional Excise Taxes, income taxes and other taxes that may be
imposed on EXECUTIVE, his designated beneficiary or his dependents, (II) any and
all interest, fines and penalties that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in connection with any such additional
Excise Taxes, income taxes or other taxes, and (III) any and all income and
other taxes, including additional Excise Taxes, that may be imposed on
EXECUTIVE, his designated beneficiary or his dependents in respect of any of the
amounts to be paid to EXECUTIVE, his designated beneficiary or his dependents
under clause (I) or (II) above or under this clause (III). If it is subsequently
determined that the EXECUTIVE has received a sum greater than necessary to pay
any such Excise Taxes, the EXECUTIVE shall promptly return such overage to
COMPANY. The purpose of this Section B.4 is to place EXECUTIVE, his designated
beneficiary and his dependents in the same position on an after-tax basis that
each of them would have been in if the Termination Payment and all other amounts
payable to EXECUTIVE, his designated beneficiary or his dependents under this
Agreement or under any plan, program or policy of COMPANY, and all benefits
provided to EXECUTIVE or his dependents under this Agreement or under any plan,
program or policy of COMPANY, had not been subject to any Excise Taxes.
5. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of his rights and claims in respect of past services and all of his rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 (other than for "Cause") and until the earlier of the expiration
of the second year following such event or the securing of similar benefits from
a subsequent employer, EXECUTIVE and his dependents shall be entitled to
participate in all employee welfare benefit plans (as that term is defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended)
and to receive or participate in all other benefit arrangements, policies or
practices to which and in which active executive employees of COMPANY and/or
their dependents are or shall become entitled to receive or participate in at
any time during the Term; provided, however, that, if a Material Change should
occur, the benefits required to be provided to EXECUTIVE and his dependents
under the provisions of this Section C shall be no less than the employee
benefits EXECUTIVE and his dependents would have received under the provisions
of the benefit arrangements, policies or practices of COMPANY in effect
immediately prior to such Material Change, all at no increased cost or expense
to EXECUTIVE and his dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to his last known address;
in the case of the designated beneficiary, to his, her or their last known
address; or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and his heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I, J and K, the designated beneficiary and his or her heirs,
executors, administrators and legal representatives, and (iv) with respect to
Sections B, C, D, E, F, G, H, I, J and K, EXECUTIVE's dependents and their
respective heirs, executors, administrators and legal representatives. In
addition, without in any way limiting the foregoing, following a Material
Change, any person or entity (or group of persons and/or entities) that acquires
(in a single transaction or a series of related transactions) any businesses or
assets of COMPANY representing 25% or more of COMPANY's sales, operating profits
or operating assets shall be deemed to be a successor of COMPANY for the
purposes of this Agreement and shall be liable for the payment of all amounts
payable by COMPANY under this Agreement and for the performance of all
obligations of COMPANY under this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, his designated beneficiary and his dependents (and their
respective heirs, executors, administrators and personal representatives). Upon
execution of this Agreement, the employment agreement of June 6, 1995 between
COMPANY and EXECUTIVE shall be terminated and of no further force or effect.
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, his designated
beneficiary or his dependents or any other person. To the extent that EXECUTIVE,
his designated beneficiary or his dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, his designated beneficiary or
his dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, his designated beneficiary
or 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.
H. Attorneys' Fees and Other Costs and Expenses
EXECUTIVE, his designated beneficiary and his dependents (and
their respective heirs, executors, administrators and personal representatives)
shall each be entitled to recover from COMPANY (and shall be reimbursed by
COMPANY when incurred and upon demand) all attorneys' fees and other costs and
expenses, if any, that may be incurred in connection with enforcing or defending
the rights of EXECUTIVE, his designated beneficiary or his dependents under this
Agreement following a Material Change regardless of the outcome of any
litigation or other proceeding relating to such enforcement or defense.
EXECUTIVE, his designated beneficiary and his dependents (and their respective
heirs, executors, administrators and personal representatives) also shall be
entitled to recover from COMPANY interest on the Termination Payment and any
other amounts that may be payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement (including, without limitation, amounts
required to be reimbursed under the first sentence of this Section, any Excise
Tax Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
Section B.4 hereof that are not paid when due following a Material Change, at an
annual rate equal to 4% over the corporate base rate as announced from time to
time by Citibank, N.A. or its successor (changing as and when such announced
corporate base rate changes), compounded monthly, from the date due until paid.
Payments received by EXECUTIVE, his designated beneficiary or his dependents (or
any of their respective heirs, executors, administrators and personal
representatives) shall be credited first against accrued interest until all
accrued interest is paid in full before any such payment is credited against the
Termination Payment or any other amounts that may be payable to EXECUTIVE, his
designated beneficiary or his dependents under this Agreement.
I. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
J. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
K. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
L. No Competing Employment
For 18 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to him hereunder, Executive shall not, unless he has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
IN WITNESS WHEREOF, COMPANY and EXECUTIVE have executed this Agreement as of the
day and year first above written.
PANAMSAT CORPORATION
By:
ROBERT A. BEDNAREK
By:
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
Patrick J. Costello (hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, EXECUTIVE is currently serving COMPANY as its Chief
Financial Officer; and
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
1. Term. The Term of this Agreement shall be the period
commencing on May 1, 1996 and ending on the third anniversary of such date;
provided, however, that commencing on the date two years after May 1, 1996, and
on each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years after such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the Term
shall not be so extended; provided, further that obligations and benefits
arising hereunder prior to the expiration of the Term shall continue until fully
satisfied.
2. Employment Duties. If a Material Change (as hereinafter
defined) should occur during the Term, absent the occurrence of an event that
gives the COMPANY the right to terminate the EXECUTIVE for Cause (as defined
below), COMPANY shall be obligated to continue to employ EXECUTIVE for the
remainder of the Term in the same executive capacity in which EXECUTIVE was
employed immediately prior to such Material Change with substantially the same
duties and responsibilities that EXECUTIVE had immediately prior to such
Material Change; provided, however, that, if COMPANY should cease to be a public
company after a Material Change, the fact that EXECUTIVE may thereupon cease to
have certain duties and responsibilities that were attributable solely to the
status of COMPANY as a public company shall not be deemed to be a breach of this
Section A.2.
Termination for "Cause" shall mean a termination based on (a)
the commission by EXECUTIVE of any felony or crime involving moral turpitude; or
(b) the engagement of EXECUTIVE in any business or activity that is directly
competitive with any business or activity of COMPANY and which, in the opinion
of the Board of Directors of COMPANY, is prejudicial or adverse to the best
interests of COMPANY; provided, however, that, after the occurrence of a
Material Change, EXECUTIVE may be discharged for "Cause" only if COMPANY is able
to establish that the action for which he is being discharged under clause (a)
or (b) of this subsection is an action for which he would have been discharged
for "Cause" under COMPANY'S general employment policies and practices in effect
immediately prior to such Material Change.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases to
consist of nominees of the Holders of COMPANY's Class A Common
Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Provided that EXECUTIVE has not been
terminated for Cause, EXECUTIVE shall be entitled to a Termination Payment (as
hereinafter defined) and shall have the right to elect to terminate his services
with COMPANY after the occurrence of a Material Change, and (a) during the 30
day period following the one year anniversary of a Material Change, or (b) if
within two years following a Material Change:
(i) COMPANY shall terminate the EXECUTIVE for
any reason other than for Cause; or
(ii) COMPANY should fail to continue to employ
EXECUTIVE during the Term in the same executive capacity with
COMPANY in which EXECUTIVE was employed immediately prior to
such Material Change, with materially the same duties and
responsibilities with COMPANY that EXECUTIVE had immediately
prior to such Material Change, except, in the case where
COMPANY ceases to be a public company after such Material
Change, for those duties and responsibilities that were
attributable solely to the status of COMPANY as a public
company; provided, that the EXECUTIVE shall be required prior
to the effectiveness of a constructive termination pursuant to
this subsection (ii) to have given the COMPANY ten (10) days
notice and an opportunity to cure such failure. Without in any
way limiting the right of EXECUTIVE to elect to terminate his
services under this Section B.2(ii), it is understood that any
change in EXECUTIVE's job description (other than as described
in the exception to the first sentence of this clause (ii)),
offices, perquisites or place of employment by more than 35
miles (unless such move is from the Greenwich, Connecticut
offices of COMPANY to New York City), any reduction in the
number of officers or other employees or diminishment in the
overall management responsibility of officers and other
employees reporting directly to EXECUTIVE (other than as
described in the exception to the first sentence of this
clause (i)), any diminishment in the decision making authority
of EXECUTIVE, shall each be a change in his duties and
responsibilities that will give EXECUTIVE the right to elect
to terminate his services under this Section B.2(i); or
(iii) COMPANY should reduce or fail to pay or award to
EXECUTIVE when due any Base Salary, Bonus (as both such terms
are defined below) or other amount payable to EXECUTIVE or to
provide EXECUTIVE with any benefits to which EXECUTIVE is
entitled.
If EXECUTIVE should make any such election during the Term,
EXECUTIVE shall be entitled to a Termination Payment from COMPANY, which
Termination Payment shall be due and payable ten (10) days after EXECUTIVE gives
COMPANY written notice of such election. The term "Termination Payment" in
respect of any election by EXECUTIVE to terminate his services with COMPANY
during the two year period following the occurrence of a Material Change shall
mean an amount that is equal to 3 times the sum of (1) the Base Salary (as
defined below), plus (2) the Applicable Bonus (as defined below). The term "Base
Salary" shall mean the annual cash compensation to EXECUTIVE by COMPANY for
services payable at the time of the termination, or at the time of the Material
Change, whichever is greater and the term "Applicable Bonus" shall mean the
annual amount awarded or paid under any incentive or bonus plan or program of
COMPANY and any additional amounts (such aggregate amounts, the "Bonus") paid to
EXECUTIVE by COMPANY during the fiscal year ending immediately prior to the
fiscal year in which the Material Change occurred, or the Bonus scheduled to be
paid to EXECUTIVE during the fiscal year in which the Material Change occurs,
prorated to the date of termination, whichever is greater. The Termination
Payment is intended to constitute liquidated damages to compensate EXECUTIVE for
amounts EXECUTIVE could have earned in respect of future services and shall not
be subject to reduction based upon any compensation that EXECUTIVE may receive
(or could have received) in respect of any services EXECUTIVE performs (or could
have performed) after EXECUTIVE terminates his services with COMPANY. The
Termination Payment shall be in addition to and not in lieu of any rights or
claims that EXECUTIVE may have in respect of past services and any rights or
claims, past or future, that EXECUTIVE may have under Section B.2 or Section C
hereof, and EXECUTIVE shall retain all of his rights and claims in respect of
past services and all of his rights and claims, past or future, under Section C
hereof.
3. Base Salary; Bonuses.
(a) Following the occurrence of a Material Change and during
the Term, Executive shall receive an annual base salary ("Annual Base Salary"),
which shall be paid at a monthly rate at least equal to twelve times the highest
monthly base salary paid or payable (including any base salary which has been
earned but deferred) to Executive by Company during the period between the
initial public disclosure of the potential Material Change and the month in
which the Material Change occurs. Thereafter, the Annual Base Salary shall be
reviewed at intervals no less frequent than customary for Executive prior to the
Material Change. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase during the Employment Period
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(b) Following the occurrence of a Material Change, COMPANY
shall be obligated to award EXECUTIVE an unconditional bonus for each fiscal
year for so long as EXECUTIVE is employed by COMPANY (including the fiscal year
in which the Material Change occurs) in an amount not less than the higher of
the annual bonus awarded to EXECUTIVE by COMPANY for the fiscal year preceding
the fiscal year in which the Material Change occurs and the annual bonus for the
EXECUTIVE for the fiscal year in which the Material Change occurs, which
unconditional bonus must be awarded and paid not later than the last day of each
year during which EXECUTIVE is employed by COMPANY; provided that such bonus
shall be prorated for any year in which EXECUTIVE has given notice to COMPANY of
his election to terminate his services upon the occurrence of a Termination
Event as set forth in Section B.2 hereof.
4. Excise Tax. In the event that, in connection with a
Material Change or at any time following a Material Change, the Termination
Payment or any other amounts payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement or under any plan, program or policy of
COMPANY, or any benefits provided to EXECUTIVE or his dependents under this
Agreement or under any option or other plan, program or policy of COMPANY,
should become subject to the excise tax imposed under Section 4999 of the Code
or any similar tax or assessment (collectively, "Excise Taxes"), COMPANY shall
pay to EXECUTIVE, his designated beneficiary or his dependents, as the case may
be, on demand, the amount (the "Excise Tax Reimbursement Amount") necessary
fully to reimburse EXECUTIVE, his designated beneficiary or his dependents for
(i) all Excise Taxes that may be imposed on EXECUTIVE, his designated
beneficiary or his dependents and (ii) any and all income and other taxes,
including additional Excise Taxes, that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in respect of any of the amounts to be
paid to EXECUTIVE, his designated beneficiary or his dependents under clause (i)
above or under this clause (ii). The determination of the Excise Tax
Reimbursement Amount shall initially be made by the accounting firm that is
serving as COMPANY's independent public accountants immediately prior to the
Material Change, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by COMPANY. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse EXECUTIVE, his designated beneficiary or
his dependents as contemplated above, COMPANY shall pay to EXECUTIVE, his
designated beneficiary or his dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary fully to
reimburse EXECUTIVE, his designated beneficiary or his dependents for (I) any
and all additional Excise Taxes, income taxes and other taxes that may be
imposed on EXECUTIVE, his designated beneficiary or his dependents, (II) any and
all interest, fines and penalties that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in connection with any such additional
Excise Taxes, income taxes or other taxes, and (III) any and all income and
other taxes, including additional Excise Taxes, that may be imposed on
EXECUTIVE, his designated beneficiary or his dependents in respect of any of the
amounts to be paid to EXECUTIVE, his designated beneficiary or his dependents
under clause (I) or (II) above or under this clause (III). If it is subsequently
determined that the EXECUTIVE has received a sum greater than necessary to pay
any such Excise Taxes, the EXECUTIVE shall promptly return such overage to
COMPANY. The purpose of this Section B.4 is to place EXECUTIVE, his designated
beneficiary and his dependents in the same position on an after-tax basis that
each of them would have been in if the Termination Payment and all other amounts
payable to EXECUTIVE, his designated beneficiary or his dependents under this
Agreement or under any plan, program or policy of COMPANY, and all benefits
provided to EXECUTIVE or his dependents under this Agreement or under any plan,
program or policy of COMPANY, had not been subject to any Excise Taxes.
5. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of his rights and claims in respect of past services and all of his rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 (other than for "Cause") and until the earlier of the expiration
of the second year following such event or the securing of similar benefits from
a subsequent employer, EXECUTIVE and his dependents shall be entitled to
participate in all employee welfare benefit plans (as that term is defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended)
and to receive or participate in all other benefit arrangements, policies or
practices to which and in which active executive employees of COMPANY and/or
their dependents are or shall become entitled to receive or participate in at
any time during the Term; provided, however, that, if a Material Change should
occur, the benefits required to be provided to EXECUTIVE and his dependents
under the provisions of this Section C shall be no less than the employee
benefits EXECUTIVE and his dependents would have received under the provisions
of the benefit arrangements, policies or practices of COMPANY in effect
immediately prior to such Material Change, all at no increased cost or expense
to EXECUTIVE and his dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to his last known address;
in the case of the designated beneficiary, to his, her or their last known
address; or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and his heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I, J and K, the designated beneficiary and his or her heirs,
executors, administrators and legal representatives, and (iv) with respect to
Sections B, C, D, E, F, G, H, I, J and K, EXECUTIVE's dependents and their
respective heirs, executors, administrators and legal representatives. In
addition, without in any way limiting the foregoing, following a Material
Change, any person or entity (or group of persons and/or entities) that acquires
(in a single transaction or a series of related transactions) any businesses or
assets of COMPANY representing 25% or more of COMPANY's sales, operating profits
or operating assets shall be deemed to be a successor of COMPANY for the
purposes of this Agreement and shall be liable for the payment of all amounts
payable by COMPANY under this Agreement and for the performance of all
obligations of COMPANY under this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, his designated beneficiary and his dependents (and their
respective heirs, executors, administrators and personal representatives).
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, his designated
beneficiary or his dependents or any other person. To the extent that EXECUTIVE,
his designated beneficiary or his dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, his designated beneficiary or
his dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, his designated beneficiary
or 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.
H. Attorneys' Fees and Other Costs and Expenses
EXECUTIVE, his designated beneficiary and his dependents (and
their respective heirs, executors, administrators and personal representatives)
shall each be entitled to recover from COMPANY (and shall be reimbursed by
COMPANY when incurred and upon demand) all attorneys' fees and other costs and
expenses, if any, that may be incurred in connection with enforcing or defending
the rights of EXECUTIVE, his designated beneficiary or his dependents under this
Agreement following a Material Change regardless of the outcome of any
litigation or other proceeding relating to such enforcement or defense.
EXECUTIVE, his designated beneficiary and his dependents (and their respective
heirs, executors, administrators and personal representatives) also shall be
entitled to recover from COMPANY interest on the Termination Payment and any
other amounts that may be payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement (including, without limitation, amounts
required to be reimbursed under the first sentence of this Section, any Excise
Tax Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
Section B.4 hereof that are not paid when due following a Material Change, at an
annual rate equal to 4% over the corporate base rate as announced from time to
time by Citibank, N.A. or its successor (changing as and when such announced
corporate base rate changes), compounded monthly, from the date due until paid.
Payments received by EXECUTIVE, his designated beneficiary or his dependents (or
any of their respective heirs, executors, administrators and personal
representatives) shall be credited first against accrued interest until all
accrued interest is paid in full before any such payment is credited against the
Termination Payment or any other amounts that may be payable to EXECUTIVE, his
designated beneficiary or his dependents under this Agreement.
I. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
J. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
K. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
L. No Competing Employment
For 18 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to him hereunder, Executive shall not, unless he has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
<PAGE>
IN WITNESS WHEREOF, COMPANY and EXECUTIVE have executed this Agreement as of the
day and year first above written.
PANAMSAT CORPORATION
By:
PATRICK J. COSTELLO
By:
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
James W. Cuminale (hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, EXECUTIVE is currently serving COMPANY as its Senior
Vice President and General Counsel; and
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
1. Term. The Term of this Agreement shall be the period
commencing on May 1, 1996 and ending on the third anniversary of such date;
provided, however, that commencing on the date two years after May 1, 1996, and
on each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years after such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the Term
shall not be so extended; provided, further that obligations and benefits
arising hereunder prior to the expiration of the Term shall continue until fully
satisfied.
2. Employment Duties. If a Material Change (as hereinafter
defined) should occur during the Term, absent the occurrence of an event that
gives the COMPANY the right to terminate the EXECUTIVE for Cause (as defined
below), COMPANY shall be obligated to continue to employ EXECUTIVE for the
remainder of the Term in the same executive capacity in which EXECUTIVE was
employed immediately prior to such Material Change with substantially the same
duties and responsibilities that EXECUTIVE had immediately prior to such
Material Change; provided, however, that, if COMPANY should cease to be a public
company after a Material Change, the fact that EXECUTIVE may thereupon cease to
have certain duties and responsibilities that were attributable solely to the
status of COMPANY as a public company shall not be deemed to be a breach of this
Section A.2.
Termination for "Cause" shall mean a termination based on (a)
the commission by EXECUTIVE of any felony or crime involving moral turpitude; or
(b) the engagement of EXECUTIVE in any business or activity that is directly
competitive with any business or activity of COMPANY and which, in the opinion
of the Board of Directors of COMPANY, is prejudicial or adverse to the best
interests of COMPANY; provided, however, that, after the occurrence of a
Material Change, EXECUTIVE may be discharged for "Cause" only if COMPANY is able
to establish that the action for which he is being discharged under clause (a)
or (b) of this subsection is an action for which he would have been discharged
for "Cause" under COMPANY'S general employment policies and practices in effect
immediately prior to such Material Change.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases to
consist of nominees of the Holders of COMPANY's Class A Common
Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Provided that EXECUTIVE has not been
terminated for Cause, EXECUTIVE shall be entitled to a Termination Payment (as
hereinafter defined) and shall have the right to elect to terminate his services
with COMPANY after the occurrence of a Material Change, and (a) during the 30
day period following the one year anniversary of a Material Change, or (b) if
within two years following a Material Change:
(i) COMPANY shall terminate the EXECUTIVE for
any reason other than for Cause; or
(ii) COMPANY should fail to continue to employ
EXECUTIVE during the Term in the same executive capacity with
COMPANY in which EXECUTIVE was employed immediately prior to
such Material Change, with materially the same duties and
responsibilities with COMPANY that EXECUTIVE had immediately
prior to such Material Change, except, in the case where
COMPANY ceases to be a public company after such Material
Change, for those duties and responsibilities that were
attributable solely to the status of COMPANY as a public
company; provided, that the EXECUTIVE shall be required prior
to the effectiveness of a constructive termination pursuant to
this subsection (ii) to have given the COMPANY ten (10) days
notice and an opportunity to cure such failure. Without in any
way limiting the right of EXECUTIVE to elect to terminate his
services under this Section B.2(ii), it is understood that any
change in EXECUTIVE's job description (other than as described
in the exception to the first sentence of this clause (ii)),
offices, perquisites or place of employment by more than 35
miles (unless such move is from the Greenwich, Connecticut
offices of COMPANY to New York City), any reduction in the
number of officers or other employees or diminishment in the
overall management responsibility of officers and other
employees reporting directly to EXECUTIVE (other than as
described in the exception to the first sentence of this
clause (i)), any diminishment in the decision making authority
of EXECUTIVE, shall each be a change in his duties and
responsibilities that will give EXECUTIVE the right to elect
to terminate his services under this Section B.2(i); or
(iii) COMPANY should reduce or fail to pay or award to
EXECUTIVE when due any Base Salary, Bonus (as both such terms
are defined below) or other amount payable to EXECUTIVE or to
provide EXECUTIVE with any benefits to which EXECUTIVE is
entitled.
If EXECUTIVE should make any such election during the Term,
EXECUTIVE shall be entitled to a Termination Payment from COMPANY, which
Termination Payment shall be due and payable ten (10) days after EXECUTIVE gives
COMPANY written notice of such election. The term "Termination Payment" in
respect of any election by EXECUTIVE to terminate his services with COMPANY
during the two year period following the occurrence of a Material Change shall
mean an amount that is equal to 3 times the sum of (1) the Base Salary (as
defined below), plus (2) the Applicable Bonus (as defined below). The term "Base
Salary" shall mean the annual cash compensation to EXECUTIVE by COMPANY for
services payable at the time of the termination, or at the time of the Material
Change, whichever is greater and the term "Applicable Bonus" shall mean the
annual amount awarded or paid under any incentive or bonus plan or program of
COMPANY and any additional amounts (such aggregate amounts, the "Bonus") paid to
EXECUTIVE by COMPANY during the fiscal year ending immediately prior to the
fiscal year in which the Material Change occurred, or the Bonus scheduled to be
paid to EXECUTIVE during the fiscal year in which the Material Change occurs,
prorated to the date of termination, whichever is greater. The Termination
Payment is intended to constitute liquidated damages to compensate EXECUTIVE for
amounts EXECUTIVE could have earned in respect of future services and shall not
be subject to reduction based upon any compensation that EXECUTIVE may receive
(or could have received) in respect of any services EXECUTIVE performs (or could
have performed) after EXECUTIVE terminates his services with COMPANY. The
Termination Payment shall be in addition to and not in lieu of any rights or
claims that EXECUTIVE may have in respect of past services and any rights or
claims, past or future, that EXECUTIVE may have under Section B.2 or Section C
hereof, and EXECUTIVE shall retain all of his rights and claims in respect of
past services and all of his rights and claims, past or future, under Section C
hereof.
3. Base Salary; Bonuses.
(a) Following the occurrence of a Material Change and during
the Term, Executive shall receive an annual base salary ("Annual Base Salary"),
which shall be paid at a monthly rate at least equal to twelve times the highest
monthly base salary paid or payable (including any base salary which has been
earned but deferred) to Executive by Company during the period between the
initial public disclosure of the potential Material Change and the month in
which the Material Change occurs. Thereafter, the Annual Base Salary shall be
reviewed at intervals no less frequent than customary for Executive prior to the
Material Change. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase during the Employment Period
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(b) Following the occurrence of a Material Change, COMPANY
shall be obligated to award EXECUTIVE an unconditional bonus for each fiscal
year for so long as EXECUTIVE is employed by COMPANY (including the fiscal year
in which the Material Change occurs) in an amount not less than the higher of
the annual bonus awarded to EXECUTIVE by COMPANY for the fiscal year preceding
the fiscal year in which the Material Change occurs and the annual bonus for the
EXECUTIVE for the fiscal year in which the Material Change occurs, which
unconditional bonus must be awarded and paid not later than the last day of each
year during which EXECUTIVE is employed by COMPANY; provided that such bonus
shall be prorated for any year in which EXECUTIVE has given notice to COMPANY of
his election to terminate his services upon the occurrence of a Termination
Event as set forth in Section B.2 hereof.
4. Excise Tax. In the event that, in connection with a
Material Change or at any time following a Material Change, the Termination
Payment or any other amounts payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement or under any plan, program or policy of
COMPANY, or any benefits provided to EXECUTIVE or his dependents under this
Agreement or under any option or other plan, program or policy of COMPANY,
should become subject to the excise tax imposed under Section 4999 of the Code
or any similar tax or assessment (collectively, "Excise Taxes"), COMPANY shall
pay to EXECUTIVE, his designated beneficiary or his dependents, as the case may
be, on demand, the amount (the "Excise Tax Reimbursement Amount") necessary
fully to reimburse EXECUTIVE, his designated beneficiary or his dependents for
(i) all Excise Taxes that may be imposed on EXECUTIVE, his designated
beneficiary or his dependents and (ii) any and all income and other taxes,
including additional Excise Taxes, that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in respect of any of the amounts to be
paid to EXECUTIVE, his designated beneficiary or his dependents under clause (i)
above or under this clause (ii). The determination of the Excise Tax
Reimbursement Amount shall initially be made by the accounting firm that is
serving as COMPANY's independent public accountants immediately prior to the
Material Change, or, if such accounting firm is no longer in existence, by its
successor. All costs and expenses of such accounting firm in connection with
making such determination shall be paid by COMPANY. If it is subsequently
determined (as a result of an assessment of additional Excise Taxes by the
Internal Revenue Service or otherwise) that the Excise Tax Reimbursement Amount
is not sufficient fully to reimburse EXECUTIVE, his designated beneficiary or
his dependents as contemplated above, COMPANY shall pay to EXECUTIVE, his
designated beneficiary or his dependents, as the case may be, on demand, the
amount (the "Additional Excise Tax Reimbursement Amount") necessary fully to
reimburse EXECUTIVE, his designated beneficiary or his dependents for (I) any
and all additional Excise Taxes, income taxes and other taxes that may be
imposed on EXECUTIVE, his designated beneficiary or his dependents, (II) any and
all interest, fines and penalties that may be imposed on EXECUTIVE, his
designated beneficiary or his dependents in connection with any such additional
Excise Taxes, income taxes or other taxes, and (III) any and all income and
other taxes, including additional Excise Taxes, that may be imposed on
EXECUTIVE, his designated beneficiary or his dependents in respect of any of the
amounts to be paid to EXECUTIVE, his designated beneficiary or his dependents
under clause (I) or (II) above or under this clause (III). If it is subsequently
determined that the EXECUTIVE has received a sum greater than necessary to pay
any such Excise Taxes, the EXECUTIVE shall promptly return such overage to
COMPANY. The purpose of this Section B.4 is to place EXECUTIVE, his designated
beneficiary and his dependents in the same position on an after-tax basis that
each of them would have been in if the Termination Payment and all other amounts
payable to EXECUTIVE, his designated beneficiary or his dependents under this
Agreement or under any plan, program or policy of COMPANY, and all benefits
provided to EXECUTIVE or his dependents under this Agreement or under any plan,
program or policy of COMPANY, had not been subject to any Excise Taxes.
5. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of his rights and claims in respect of past services and all of his rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 (other than for "Cause") and until the earlier of the expiration
of the second year following such event or the securing of similar benefits from
a subsequent employer, EXECUTIVE and his dependents shall be entitled to
participate in all employee welfare benefit plans (as that term is defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended)
and to receive or participate in all other benefit arrangements, policies or
practices to which and in which active executive employees of COMPANY and/or
their dependents are or shall become entitled to receive or participate in at
any time during the Term; provided, however, that, if a Material Change should
occur, the benefits required to be provided to EXECUTIVE and his dependents
under the provisions of this Section C shall be no less than the employee
benefits EXECUTIVE and his dependents would have received under the provisions
of the benefit arrangements, policies or practices of COMPANY in effect
immediately prior to such Material Change, all at no increased cost or expense
to EXECUTIVE and his dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to his last known address;
in the case of the designated beneficiary, to his, her or their last known
address; or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and his heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I, J and K, the designated beneficiary and his or her heirs,
executors, administrators and legal representatives, and (iv) with respect to
Sections B, C, D, E, F, G, H, I, J and K, EXECUTIVE's dependents and their
respective heirs, executors, administrators and legal representatives. In
addition, without in any way limiting the foregoing, following a Material
Change, any person or entity (or group of persons and/or entities) that acquires
(in a single transaction or a series of related transactions) any businesses or
assets of COMPANY representing 25% or more of COMPANY's sales, operating profits
or operating assets shall be deemed to be a successor of COMPANY for the
purposes of this Agreement and shall be liable for the payment of all amounts
payable by COMPANY under this Agreement and for the performance of all
obligations of COMPANY under this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, his designated beneficiary and his dependents (and their
respective heirs, executors, administrators and personal representatives).
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, his designated
beneficiary or his dependents or any other person. To the extent that EXECUTIVE,
his designated beneficiary or his dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, his designated beneficiary or
his dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, his designated beneficiary
or 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.
H. Attorneys' Fees and Other Costs and Expenses
EXECUTIVE, his designated beneficiary and his dependents (and
their respective heirs, executors, administrators and personal representatives)
shall each be entitled to recover from COMPANY (and shall be reimbursed by
COMPANY when incurred and upon demand) all attorneys' fees and other costs and
expenses, if any, that may be incurred in connection with enforcing or defending
the rights of EXECUTIVE, his designated beneficiary or his dependents under this
Agreement following a Material Change regardless of the outcome of any
litigation or other proceeding relating to such enforcement or defense.
EXECUTIVE, his designated beneficiary and his dependents (and their respective
heirs, executors, administrators and personal representatives) also shall be
entitled to recover from COMPANY interest on the Termination Payment and any
other amounts that may be payable to EXECUTIVE, his designated beneficiary or
his dependents under this Agreement (including, without limitation, amounts
required to be reimbursed under the first sentence of this Section, any Excise
Tax Reimbursement Amount or Additional Excise Tax Reimbursement Amount under
Section B.4 hereof that are not paid when due following a Material Change, at an
annual rate equal to 4% over the corporate base rate as announced from time to
time by Citibank, N.A. or its successor (changing as and when such announced
corporate base rate changes), compounded monthly, from the date due until paid.
Payments received by EXECUTIVE, his designated beneficiary or his dependents (or
any of their respective heirs, executors, administrators and personal
representatives) shall be credited first against accrued interest until all
accrued interest is paid in full before any such payment is credited against the
Termination Payment or any other amounts that may be payable to EXECUTIVE, his
designated beneficiary or his dependents under this Agreement.
I. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
J. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
K. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
L. No Competing Employment
For 18 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to him hereunder, Executive shall not, unless he has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
<PAGE>
IN WITNESS WHEREOF, COMPANY and EXECUTIVE have executed this Agreement as of the
day and year first above written.
PANAMSAT CORPORATION
By:
JAMES W. CUMINALE
By:
AGREEMENT
THIS AGREEMENT made and entered into effective as of May 15,
1996 (this Agreement, as the same may hereafter be amended from time to time,
hereinafter referred to as this "Agreement"), by and between PanAmSat
Corporation, a Delaware corporation (hereinafter referred to as "COMPANY"), and
David P. Berman (hereinafter referred to as "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, the BOARD OF DIRECTORS of COMPANY believes that it is
in the best interests of COMPANY to enter into this Agreement with EXECUTIVE,
and EXECUTIVE desires to enter into this Agreement with COMPANY.
NOW, THEREFORE, in consideration of the foregoing and the
promises, covenants and agreements hereinafter set forth, COMPANY and EXECUTIVE
hereby agree as follows:
A. Term
1. Term. The Term of this Agreement shall be the period
commencing on May 1, 1996 and ending on the third anniversary of such date;
provided, however, that commencing on the date two years after May 1, 1996, and
on each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Term shall be automatically extended so as to
terminate two years after such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the Term
shall not be so extended; provided, further that oligations and benefits arising
hereunder prior to the expiration of the Term shall continue until fully
satisfied.
2. Employment Duties. If a Material Change (as hereinafter
defined) should occur during the Term, absent the occurrence of an event that
gives the COMPANY the right to terminate the EXECUTIVE for Cause (as defined
below), COMPANY shall be obligated to continue to employ EXECUTIVE for the
remainder of the Term in the same executive capacity in which EXECUTIVE was
employed immediately prior to such Material Change with substantially the same
duties and responsibilities that EXECUTIVE had immediately prior to such
Material Change; provided, however, that, if COMPANY should cease to be a public
company after a Material Change, the fact that EXECUTIVE may thereupon cease to
have certain duties and responsibilities that were attributable solely to the
status of COMPANY as a public company shall not be deemed to be a breach of this
Section A.2.
Termination for "Cause" shall mean a termination based on (a)
the commission by EXECUTIVE of any felony or crime involving moral turpitude; or
(b) the engagement of EXECUTIVE in any business or activity that is directly
competitive with any business or activity of COMPANY and which, in the opinion
of the Board of Directors of COMPANY, is prejudicial or adverse to the best
interests of COMPANY; provided, however, that, after the occurrence of a
Material Change, EXECUTIVE may be discharged for "Cause" only if COMPANY is able
to establish that the action for which he is being discharged under clause (a)
or (b) of this subsection is an action for which he would have been discharged
for "Cause" under COMPANY'S general employment policies and practices in effect
immediately prior to such Material Change.
B. Material Change
1. Definition. A "Material Change" shall be deemed to
have occurred for the purposes of this Agreement if any of the following events
should occur:
(i) The sale (in one or more transactions) of all
or substantially all of the assets of COMPANY; or
(ii) The loss by the Holders (as defined below) of
the COMPANY's Class A Common Stock of the power to elect a
majority of the Board of Directors of COMPANY; or
(iii) A majority of the Board of Directors ceases to
consist of nominees of the Holders of COMPANY's Class A Common
Stock; or
(iv) A complete liquidation or dissolution of
COMPANY;
provided, that the term "Holders" shall mean and include only the holders,
beneficially or otherwise, of the Company's Class A Common Stock on the date
hereof, their lineal descendants, trusts for the benefit of any such holders and
corporations or other business entities of which all of the capital stock or
other ownership interest is held by such holders.
2. Termination Event. Provided that EXECUTIVE has not been
terminated for Cause, EXECUTIVE shall be entitled to a Termination Payment (as
hereinafter defined) and shall have the right to elect to terminate his services
with COMPANY after the occurrence of a Material Change if within two years
following a Material Change:
(i) COMPANY shall terminate the EXECUTIVE for
any reason other than for Cause; or
(ii) COMPANY should fail to continue to employ
EXECUTIVE during the Term in the same executive capacity with
COMPANY in which EXECUTIVE was employed immediately prior to
such Material Change, with materially the same duties and
responsibilities with COMPANY that EXECUTIVE had immediately
prior to such Material Change, except, in the case where
COMPANY ceases to be a public company after such Material
Change, for those duties and responsibilities that were
attributable solely to the status of COMPANY as a public
company; provided, that the EXECUTIVE shall be required prior
to the effectiveness of a constructive termination pursuant to
this subsection (ii) to have given the COMPANY ten (10) days
notice and an opportunity to cure such failure. Without in any
way limiting the right of EXECUTIVE to elect to terminate his
services under this Section B.2(ii), it is understood that any
change in EXECUTIVE's job description (other than as described
in the exception to the first sentence of this clause (ii)),
offices, perquisites or place of employment by more than 35
miles (unless such move is from the Greenwich, Connecticut
offices of COMPANY to New York City), any reduction in the
number of officers or other employees or diminishment in the
overall management responsibility of officers and other
employees reporting directly to EXECUTIVE (other than as
described in the exception to the first sentence of this
clause (i)), any diminishment in the decision making authority
of EXECUTIVE, shall each be a change in his duties and
responsibilities that will give EXECUTIVE the right to elect
to terminate his services under this Section B.2(i); or
(iii) COMPANY should reduce or fail to pay or award to
EXECUTIVE when due any Base Salary, Bonus (as both such terms
are defined below) or other amount payable to EXECUTIVE or to
provide EXECUTIVE with any benefits to which EXECUTIVE is
entitled.
If EXECUTIVE should make any such election during the Term,
EXECUTIVE shall be entitled to a Termination Payment from COMPANY, which
Termination Payment shall be due and payable ten (10) days after EXECUTIVE gives
COMPANY written notice of such election. The term "Termination Payment" in
respect of any election by EXECUTIVE to terminate his services with COMPANY
during the two year period following the occurrence of a Material Change shall
mean an amount that is equal to 1.5 times the sum of (1) the Base Salary (as
defined below), plus (2) the Applicable Bonus (as defined below). The term "Base
Salary" shall mean the annual cash compensation to EXECUTIVE by COMPANY for
services payable at the time of the termination, or at the time of the Material
Change, whichever is greater and the term "Applicable Bonus" shall mean the
annual amounts awarded or paid under any incentive or bonus plan or program of
COMPANY and any additional amounts (such aggregate amounts, the "Bonus") paid to
EXECUTIVE by COMPANY during the fiscal year ending immediately prior to the
fiscal year in which the Material Change occurred, or the Bonus scheduled to be
paid to EXECUTIVE during the fiscal year in which the Material Change occurs,
prorated to the date of termination, whichever is greater.
The Termination Payment is intended to constitute liquidated
damages to compensate EXECUTIVE for amounts EXECUTIVE could have earned in
respect of future services and shall not be subject to reduction based upon any
compensation that EXECUTIVE may receive (or could have received) in respect of
any services EXECUTIVE performs (or could have performed) after EXECUTIVE
terminates his services with COMPANY. The Termination Payment shall be in
addition to and not in lieu of any rights or claims that EXECUTIVE may have in
respect of past services and any rights or claims, past or future, that
EXECUTIVE may have under Section B.2 or Section C hereof, and EXECUTIVE shall
retain all of his rights and claims in respect of past services and all of his
rights and claims, past or future, under Section C hereof.
3. Base Salary; Bonuses.
(a) Following the occurrence of a Material Change and during
the Term, Executive shall receive an annual base salary ("Annual Base Salary"),
which shall be paid at a monthly rate at least equal to twelve times the highest
monthly base salary paid or payable (including any base salary which has been
earned but deferred) to Executive by Company during the period between the
initial public disclosure of the potential Material Change and the month in
which the Material Change occurs. Thereafter, the Annual Base Salary shall be
reviewed at intervals no less frequent than customary for Executive prior to the
Material Change. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase during the Employment Period
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(b) Following the occurrence of a Material Change, COMPANY
shall be obligated to award EXECUTIVE an unconditional bonus for each fiscal
year for so long as EXECUTIVE is employed by COMPANY (including the fiscal year
in which the Material Change occurs) in an amount not less than the higher of
the annual bonus awarded to EXECUTIVE by COMPANY for the fiscal year preceding
the fiscal year in which the Material Change occurs and the annual bonus for the
EXECUTIVE for the fiscal year in which the Material Change occurs, which
unconditional bonus must be awarded and paid not later than the last day of each
year during which EXECUTIVE is employed by COMPANY; provided that such bonus
shall be prorated for any year in which EXECUTIVE has given notice to COMPANY of
his election to terminate his services upon the occurrence of a Termination
Event as set forth in Section B.2 hereof.
4. Payment for Past Services. The termination of EXECUTIVE's
employment with COMPANY for any reason, including "Cause", shall not diminish or
otherwise affect in any way the obligations of COMPANY with respect to the
payment of any Base Salary, Bonuses or other compensation (whether payable
currently or deferred) in respect of past services, and EXECUTIVE shall retain
all of his rights and claims in respect of past services and all of his rights
and claims, past and future, under Section C hereof, except to the extent
expressly provided otherwise in Section C hereof, as the case may be.
C. Employee Benefits
From and after the occurrence of a termination event pursuant
to Section B.2 (other than for "Cause") and until the earlier of the expiration
of the 18 month period following such event or the securing of similar benefits
from a subsequent employer, EXECUTIVE and his dependents shall be entitled to
participate in all employee welfare benefit plans (as that term is defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended)
and to receive or participate in all other benefit arrangements, policies or
practices to which and in which active executive employees of COMPANY and/or
their dependents are or shall become entitled to receive or participate in at
any time during the Term; provided, however, that, if a Material Change should
occur, the benefits required to be provided to EXECUTIVE and his dependents
under the provisions of this Section C shall be no less than the employee
benefits EXECUTIVE and his dependents would have received under the provisions
of the benefit arrangements, policies or practices of COMPANY in effect
immediately prior to such Material Change, all at no increased cost or expense
to EXECUTIVE and his dependents.
D. Notice
Any notice given under this Agreement shall be sufficient if
in writing and if sent by registered or certified mail, postage prepaid,
addressed, in the case of COMPANY, to its then principal office to the attention
of its Board of Directors; in the case of EXECUTIVE, to his last known address;
in the case of the designated beneficiary, to his, or their last known address;
or, in the case of EXECUTIVE's dependents, to their last known address.
E. Binding Effect
This Agreement shall inure to the benefit of and be binding
upon and enforceable against (i) COMPANY and its successors and assigns
(including, without limitation, the surviving corporation in any merger or
consolidation with COMPANY), (ii) EXECUTIVE and his heirs, executors,
administrators and legal representatives, (iii) with respect to Sections B, D,
E, F, G, H, I and J, the designated beneficiary and his heirs, executors,
administrators and legal representatives, and (iv) with respect to Sections B,
C, D, E, F, G, H, I and J, EXECUTIVE's dependents and their respective heirs,
executors, administrators and legal representatives. In addition, without in any
way limiting the foregoing, following a Material Change, any person or entity
(or group of persons and/or entities) that acquires (in a single transaction or
a series of related transactions) any businesses or assets of COMPANY
representing 25% or more of COMPANY's sales, operating profits or operating
assets shall be deemed to be a successor of COMPANY for the purposes of this
Agreement and shall be liable for the payment of all amounts payable by COMPANY
under this Agreement and for the performance of all obligations of COMPANY under
this Agreement.
F. Governing Law
All questions relating to the validity, construction,
interpretation, performance and administration of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
covering contracts made and to be performed in that State. Following a Material
Change, this Agreement is to be interpreted and construed in the manner most
favorable to EXECUTIVE, his designated beneficiary and his dependents (and their
respective heirs, executors, administrators and personal representatives).
G. No Trust, Etc.
Neither this Agreement nor any action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust or
fiduciary relationship of any kind between COMPANY and EXECUTIVE, his designated
beneficiary or his dependents or any other person. To the extent that EXECUTIVE,
his designated beneficiary or his dependents or any other person acquires a
right to receive any payments or other benefits from COMPANY under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of COMPANY, and any and all amounts credited to make any
payment or provide any other benefit to EXECUTIVE, his designated beneficiary or
his dependents or any other person shall continue for all purposes to be a part
of the general funds of COMPANY, and no person other than COMPANY shall have any
interest in any such funds. The right of EXECUTIVE, his designated beneficiary
or 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.
H. SUBMISSION TO JURISDICTION
EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING
IN RESPECT OF ANY CLAIM ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT WHETHER
IN TORT OR CONTRACT OR 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 (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO.
I. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
J. Severability
The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
K. No Competing Employment
For 12 months following the occurrence of a termination event
pursuant to Section B.2, provided that Executive has received the payments due
to him hereunder, Executive shall not, unless he has received the prior written
consent of the Company, become employed by or otherwise render personal services
to any corporation, firm, or other entity which directly competes with the
Company.
<PAGE>
IN WITNESS WHEREOF, COMPANY has caused this Agreement to be executed on its
behalf by the Chairman of its Board of Directors and EXECUTIVE has executed this
Agreement, all as of the day and year first above written.
PANAMSAT CORPORATION
By:
DAVID P. BERMAN
By:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the PanAmSat
6/30/96 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,400,492
<SECURITIES> 413,489,902
<RECEIVABLES> 8,102,437
<ALLOWANCES> (100,000)
<INVENTORY> 0
<CURRENT-ASSETS> 33,318,186
<PP&E> 850,048,043
<DEPRECIATION> (107,270,028)
<TOTAL-ASSETS> 1,538,748,443
<CURRENT-LIABILITIES> 22,214,502
<BONDS> 607,417,526
307,668,167
0
<COMMON> 1,000,000
<OTHER-SE> 484,680,958
<TOTAL-LIABILITY-AND-EQUITY> 1,538,748,443
<SALES> 110,707,166
<TOTAL-REVENUES> 110,707,166
<CGS> 0
<TOTAL-COSTS> 59,868,589
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,614,573
<INCOME-PRETAX> 48,224,004
<INCOME-TAX> 19,386,000
<INCOME-CONTINUING> 28,838,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,838,004
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
