Company Appreciation Rights. (I) As of the Effective Date, the Company shall grant the Executive six separate Company Appreciation Rights ("CARs") which will expire on the tenth anniversary of the Effective Date and which will vest on the first through sixth anniversaries of the Effective Date, respectively, if the Executive shall be employed by the Company on the respective six anniversaries; provided, however, that, if the Executive's employment shall be terminated for any reason (other than a termination by the Company for "Cause," as defined in Section 6(c) hereof), the CAR which would otherwise have vested on the anniversary of the Effective Date next following the issuance of a Notice of Termination (as defined in Section 6(e) hereof, except in the case of termination due to death in which event the date of death shall be deemed to be the issuance of such Notice for this purpose) in connection with such termination shall vest on the Executive's Date of Termination (as defined in Section 6(f) hereof). Each vested CAR will entitle the Executive to receive, as soon as practicable after its Settlement Date (defined below) in accordance with the terms hereof, an amount equal to three percent (3%) (subject to adjustment as described below) of the amount by which the equity value of the Company on the Settlement Date (calculated based on the Fair Market Value, as defined below) exceeds the applicable Target Value, as set forth in the table below (subject to adjustment as described below). If on a Settlement Date the Company's equity securities which may be paid to the Executive upon settlement of a CAR are not listed and traded on a national securities exchange or on the Nasdaq National Market (if such equity securities are so listed and traded, the Company shall be deemed to be a "Public Company"), the amount to be paid to the Executive shall be paid as soon as practicable, and in any event within 120 days, after the Company has received notice of the final determination of the Company's Fair Market Value made in accordance with Section 4(d)(VI) hereof. In the discretion of the Board, the amount to be paid to the Executive may be paid in cash, equity securities of the Company, or any combination thereof, and/or such other form of consideration as the Board may determine in good faith; provided, that, if equity securities of the Company are used and more than one class of equity securities is outstanding, the Executive shall have the right to request an appraisal of the fair market value of such equity securities in accordance with the procedures set forth in Section 4(d)(VI) hereof for determining the Fair Market Value of the Company; and provided, further, that a form of consideration other than cash or equity securities of the Company can be used only with the consent of the Executive, which shall not be unreasonably withheld. If the Executive gives the Company notice that he does not consent to payment in such form, the Company shall pay him promptly in cash and/or equity securities of the Company. If equity securities of the Company are paid to the Executive, all such securities shall be of the same type as the securities owned at the time of payment by the Original Shareholders. If the equity securities of the Company delivered to the Executive upon the settlement of a CAR are of more than one class of security, the number of securities of each class so delivered shall bear the same proportionate relationship as the securities of such classes then owned by the Original Share holders (including for purposes of this Section 4(d)(I), their respective successors) bear to each other. If the Company becomes a Public Company pursuant to an initial public offering (the "IPO") of equity securities pursuant to a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or otherwise, (A) the Company will, if requested in writing by the Executive, use its reasonable best efforts to cause to be included in any registration statement with respect to a public offering (including the IPO) of equity securities of the class or classes issued to the Executive upon settlement of a CAR or issued or issuable to the Executive upon exercise of an Option (as defined in Section 4(d)(V) below) an amount of such equity securities so issued to and owned by, or so issuable to, the Executive, as of the Conversion Date (as defined in Section 4(d)(V) below) (the total number of such equity securities, subject to adjustments for splits, combinations and the like, being referred to as the "Maximum Amount"), proportionate to the amount of such equity securities then owned by the Original Shareholders which are included in such registration statement (based on the total amount of such equity securities then owned by the Original Shareholders, and the Maximum Amount, respectively), and (B) in each of the four successive twelve-month periods, the first of which commences on the Conversion Date and each of the remaining three of which commences on each of the three respective subsequent anniversaries thereof, the Company will, if requested in writing by the Executive (which request with respect to the first such twelve-month period may not be made prior to six months after consummation of the IPO), use its reason- able best efforts to promptly cause to be registered under the Securities Act, and registered or qualified under such state securities laws as the Executive may reasonably request (provided that the Company shall not be required to consent to general service of process in any jurisdiction where it is not then so subject), for public sale by the Executive an amount of such equity securities constituting at least 25% of the difference between the Maximum Amount and the number of such equity securities, if any, sold by the Executive in the IPO (such difference being referred to as the "Maximum Annual Amount"); provided that in no event will the Executive sell publicly more than the Maximum Annual Amount in any such twelve-month period. Such registration rights shall not be transferable to any transferee of such equity securities (except to transferees referred to in clauses (i) and (ii) of the last sentence of Section 4(d)(IV) or in the last sentence of Section 4(d)(V)). In addition, such registration rights shall be subject to the Executive entering into underwriting (if applicable), indemnification, and other customary agreements, and to the Company's right to defer (or require the Executive to suspend sales pursuant to) any such registration if (but only for so long as) it determines in good faith that such registration (or continued sales) would require disclosure which would be materially adverse to the Company's interests. The Company shall keep any registration statement filed under clause (B) above effective for at least 90 days (increased by the number of days, if any, that sales under any such registration statement are suspended as provided above). If sold in the public market, shares registered pursuant to this Section 4(d)(I) shall not be subject to the first refusal rights set forth below in Section 4(d)(III). The Company shall bear all registration expenses (exclusive of underwriting discounts and commissions) under this Section 4(d)(I) and shall provide the Executive with indemnification against liabilities under the securities laws in customary form. CAR Vesting Target Date Value 1 1st Anniversary $200 million 2 2nd Anniversary $250 million 3 3rd Anniversary $325 million 4 4th Anniversary $425 million The applicable percentage (initially three percent (3%)) shall be appropriately adjusted downward by the Board in good faith to reflect equity investments in the Company (whether such investments are made in cash or in kind and whether made prior to, on or after the Effective Date); provided, however, that (i) no such adjustment shall be made in respect of up to $25 million of equity investments in the Company to the extent such investments were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, (ii) if equity investments in the Company in excess of $25 million up to a total of $75 million (i.e., $50 million over and above such $25 million) were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, in lieu of adjusting the applicable percentage, the applicable Target Value of each CAR shall be adjusted upward by the amount of such excess equity investments and (iii) if equity invest ments in the Company not covered by clause (i) or (ii) above were or are made by the Original Shareholders or their respective affiliates, the appropriate adjustment in the applicable percentage in respect of such equity investments shall be based on (A) the amount of such equity investment, and (B) the Fair Market Value of the Company (determined in accordance with Section 4(d)(VI)) at the time of such equity investment. For purposes of this Section 4(d), equity investments made by the Original Sharehold ers or their respective affiliates shall include (and shall be deemed made at the time of the payment or advancement of), in addition to actual capital contributions or investments, amounts paid by the Original Shareholders or their respective affiliates to the Company in xxxx- bursement of costs or expenses incurred by or on behalf of the Company and the amount of the loan advanced by the Original Shareholders to the Executive pursuant to Section 4(d), provided that if the "DTS Systems Transfers" are "con summated" (with such quoted terms having the same meaning as in the Limited Liability Company Agreement, dated as of March 5, 1996 between the Original Shareholders (the "DMT L.L.C. Agreement")), the contribution to the Company of "DTS Licenses" (with such quoted term having the same meaning as in the DMT L.L.C. Agreement) pursuant thereto shall not be considered an investment for purposes of this Section 4(d). The applicable Target Value of each CAR shall be appropriately adjusted downward dollar for dollar by the Board in good faith to reflect distributions from the Company in respect of equity interests in the Company (whether such distributions are made in cash or in kind); provided, however, that no adjustment shall be made with respect to distributions for tax liabilities attributable to such equity interests. For the thirty-day period immediately following the Company's notice to the Executive that an additional non-cash equity investment has been made in the Company (other than a non-cash equity investment pursuant to the DTS Systems Transfers) , or that the Company has made a non-cash distribution in respect of equity interests in the Company (which notice the Company agrees to provide within fifteen (15) days following any such investment or distribution) the Executive shall have a right to request an appraisal of the fair market value of such equity investment or distribution in accordance with the procedures set forth in Section 4(d)(VI) hereof. In the event the Company fails to give notice to the Executive as provided in the preceding sentence, the thirty-day period during which the Executive may request such appraisal shall commence on the first date, after the end of the fifteen (15) day notice period for the Company, on which the Executive knows of the applicable equity investment or distribution. Any appraisal so requested shall be made only at the first subsequent Settlement Date, unless the Company, in its discretion, decides to have the appraisal made earlier; provided, however, that if the aggregate value of all such non-cash equity investments or distributions, respectively, would reasonably be estimated to exceed $50 million, the Executive may include in the foregoing request a request for a current appraisal (including of the dilutive effect of such investments) in which event an appraisal thereof in accordance with Section 4(d)(VI) shall be made as promptly as reasonably possible. In the case of an equity investment in cash whereby equity interests in the Company of a different class from the equity interests held by the Original Shareholders are issued, the Executive may request an appraisal of the dilutive effect of such investment on equity interests and the CARs, in which event an appraisal in accordance with Section 4(d)(VI) shall be made as promptly as practicable. It shall be a condition to the Executive's receipt of an Equity Interest (as defined in Section 4(d)(II) below) that, if requested by the Company, the Executive becomes a party to the DMT L.L.C. Agreement as then in effect, or any analogous partnership, stockholders or other governance agreement (with respect to any successor partnership or corporate entity) to which the Original Shareholders (or their successors) are parties (such DMT L.L.C. Agreement or analogous agreement being sometimes referred to as a "Company Governance Agreement"). The Company shall give the Executive written notice of any changes (which notice shall include the full text of such changes) which are made in the Company Governance Agreement from time to time, such notice to be given within fifteen (15) days following any such change. It is agreed that if the Executive becomes a party to a Company Governance Agreement, in the event of any conflict or inconsistency between the respective rights and obligations of the Executive, the Company and the Original Shareholders thereunder and under this Agreement, the provisions of this Agreement shall control.
Appears in 2 contracts
Samples: Employment Agreement (Teligent Inc), Employment Agreement (Teligent Inc)
Company Appreciation Rights. (I) As of the Effective Date, the Company shall grant the Executive six separate Company Appreciation Rights ("CARs") which will expire on the tenth anniversary of the Effective Date and which will vest on the first through sixth anniversaries of the Effective Date, respectively, if the Executive shall be employed by the Company on the respective six anniversaries; provided, however, that, if the Executive's employment shall be terminated for any reason (other than a termination by the Company for "Cause," as defined in Section 6(c) hereof), the CAR which would otherwise have vested on the anniversary of the Effective Date next following the issuance of a Notice of Termination (as defined in Section 6(e) hereof, except in the case of termination due to death in which event the date of death shall be deemed to be the issuance of such Notice for this purpose) in connection with such termination shall vest on the Executive's Date of Termination (as defined in Section 6(f) hereof). Each vested CAR will entitle the Executive to receive, as soon as practicable after its Settlement Date (defined below) in accordance with the terms hereof, an amount equal to three percent (3%) (subject to adjustment as described below) of the amount by which the equity value of the Company on the Settlement Date (calculated based on the Fair Market Value, as defined below) exceeds the applicable Target Value, as set forth in the table below (subject to adjustment as described below). If on a Settlement Date the Company's equity securities which may be paid to the Executive upon settlement of a CAR are not listed and traded on a national securities exchange or on the Nasdaq National Market (if such equity securities are so listed and traded, the Company shall be deemed to be a "Public Company"), the amount to be paid to the Executive shall be paid as soon as practicable, and in any event within 120 days, after the Company has received notice of the final determination of the Company's Fair Market Value made in accordance with Section 4(d)(VI) hereof. In the discretion of the Board, the amount to be paid to the Executive may be paid in cash, equity securities of the Company, or any combination thereof, and/or such other form of consideration as the Board may determine in good faith; provided, that, if equity securities of the Company are used and more than one class of equity securities is outstanding, the Executive shall have the right to request an appraisal of the fair market value of such equity securities in accordance with the procedures set forth in Section 4(d)(VI) hereof for determining the Fair Market Value of the Company; and provided, further, that a form of consideration other than cash or equity securities of the Company can be used only with the consent of the Executive, which shall not be unreasonably withheld. If the Executive gives the Company notice that he does not consent to payment in such form, the Company shall pay him promptly in cash and/or equity securities of the Company. If equity securities of the Company are paid to the Executive, all such securities shall be of the same type as the securities owned at the time of payment by the Original Shareholders. If the equity securities of the Company delivered to the Executive upon the settlement of a CAR are of more than one class of security, the number of securities of each class so delivered shall bear the same proportionate relationship as the securities of such classes then owned by the Original Share holders (including for purposes of this Section 4(d)(I), their respective successors) bear to each other. If the Company becomes a Public Company pursuant to an initial public offering (the "IPO") of equity securities pursuant to a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or otherwise, (A) the Company will, if requested in writing by the Executive, use its reasonable best efforts to cause to be included in any registration statement with respect to a public offering (including the IPO) of equity securities of the class or classes issued to the Executive upon settlement of a CAR or issued or issuable to the Executive upon exercise of an Option (as defined in Section 4(d)(V) below) an amount of such equity securities so issued to and owned by, or so issuable to, the Executive, as of the Conversion Date (as defined in Section 4(d)(V) below) (the total number of such equity securities, subject to adjustments for splits, combinations and the like, being referred to as the "Maximum Amount"), proportionate to the amount of such equity securities then owned by the Original Shareholders which are included in such registration statement (based on the total amount of such equity securities then owned by the Original Shareholders, and the Maximum Amount, respectively), and (B) in each of the four successive twelve-month periods, the first of which commences on the Conversion Date and each of the remaining three of which commences on each of the three respective subsequent anniversaries thereof, the Company will, if requested in writing by the Executive (which request with respect to the first such twelve-month period may not be made prior to six months after consummation of the IPO), use its reason- able reasonable best efforts to promptly cause to be registered under the Securities Act, and registered or qualified under such state securities laws as the Executive may reasonably request (provided that the Company shall not be required to consent to general service of process in any jurisdiction where it is not then so subject), for public sale by the Executive an amount of such equity securities constituting at least 25% of the difference between the Maximum Amount and the number of such equity securities, if any, sold by the Executive in the IPO (such difference being referred to as the "Maximum Annual Amount"); provided that in no event will the Executive sell publicly more than the Maximum Annual Amount in any such twelve-month period. Such registration rights shall not be transferable to any transferee of such equity securities (except to transferees referred to in clauses (i) and (ii) of the last sentence of Section 4(d)(IV) or in the last sentence of Section 4(d)(V)). In addition, such registration rights shall be subject to the Executive entering into underwriting (if applicable), indemnification, and other customary agreements, and to the Company's right to defer (or require the Executive to suspend sales pursuant to) any such registration if (but only for so long as) it determines in good faith that such registration (or continued sales) would require disclosure which would be materially adverse to the Company's interests. The Company shall keep any registration statement filed under clause (B) above effective for at least 90 days (increased by the number of days, if any, that sales under any such registration statement are suspended as provided above). If sold in the public market, shares registered pursuant to this Section 4(d)(I) shall not be subject to the first refusal rights set forth below in Section 4(d)(III). The Company shall bear all registration expenses (exclusive of underwriting discounts and commissions) under this Section 4(d)(I) and shall provide the Executive with indemnification against liabilities under the securities laws in customary form. CAR Vesting Target Date Value 1 1st Anniversary $200 million 2 2nd Anniversary $250 million 3 3rd Anniversary $325 million 4 4th Anniversary $425 million The applicable percentage (initially three percent (3%)) shall be appropriately adjusted downward by the Board in good faith to reflect equity investments in the Company (whether such investments are made in cash or in kind and whether made prior to, on or after the Effective Date); provided, however, that (i) no such adjustment shall be made in respect of up to $25 million of equity investments in the Company to the extent such investments were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, (ii) if equity investments in the Company in excess of $25 million up to a total of $75 million (i.e., $50 million over and above such $25 million) were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, in lieu of adjusting the applicable percentage, the applicable Target Value of each CAR shall be adjusted upward by the amount of such excess equity investments and (iii) if equity invest ments in the Company not covered by clause (i) or (ii) above were or are made by the Original Shareholders or their respective affiliates, the appropriate adjustment in the applicable percentage in respect of such equity investments shall be based on (A) the amount of such equity investment, and (B) the Fair Market Value of the Company (determined in accordance with Section 4(d)(VI)) at the time of such equity investment. For purposes of this Section 4(d), equity investments made by the Original Sharehold ers or their respective affiliates shall include (and shall be deemed made at the time of the payment or advancement of), in addition to actual capital contributions or investments, amounts paid by the Original Shareholders or their respective affiliates to the Company in xxxx- xxxx bursement of costs or expenses incurred by or on behalf of the Company and the amount of the loan advanced by the Original Shareholders to the Executive pursuant to Section 4(d), provided that if the "DTS Systems Transfers" are "con summated" (with such quoted terms having the same meaning as in the Limited Liability Company Agreement, dated as of March 5, 1996 between the Original Shareholders (the "DMT L.L.C. Agreement")), the contribution to the Company of "DTS Licenses" (with such quoted term having the same meaning as in the DMT L.L.C. Agreement) pursuant thereto shall not be considered an investment for purposes of this Section 4(d). The applicable Target Value of each CAR shall be appropriately adjusted downward dollar for dollar by the Board in good faith to reflect distributions from the Company in respect of equity interests in the Company (whether such distributions are made in cash or in kind); provided, however, that no adjustment shall be made with respect to distributions for tax liabilities attributable to such equity interests. For the thirty-day period immediately following the Company's notice to the Executive that an additional non-cash equity investment has been made in the Company (other than a non-cash equity investment pursuant to the DTS Systems Transfers) , or that the Company has made a non-cash distribution in respect of equity interests in the Company (which notice the Company agrees to provide within fifteen (15) days following any such investment or distribution) the Executive shall have a right to request an appraisal of the fair market value of such equity investment or distribution in accordance with the procedures set forth in Section 4(d)(VI) hereof. In the event the Company fails to give notice to the Executive as provided in the preceding sentence, the thirty-day period during which the Executive may request such appraisal shall commence on the first date, after the end of the fifteen (15) day notice period for the Company, on which the Executive knows of the applicable equity investment or distribution. Any appraisal so requested shall be made only at the first subsequent Settlement Date, unless the Company, in its discretion, decides to have the appraisal made earlier; provided, however, that if the aggregate value of all such non-cash equity investments or distributions, respectively, would reasonably be estimated to exceed $50 million, the Executive may include in the foregoing request a request for a current appraisal (including of the dilutive effect of such investments) in which event an appraisal thereof in accordance with Section 4(d)(VI) shall be made as promptly as reasonably possible. In the case of an equity investment in cash whereby equity interests in the Company of a different class from the equity interests held by the Original Shareholders are issued, the Executive may request an appraisal of the dilutive effect of such investment on equity interests and the CARs, in which event an appraisal in accordance with Section 4(d)(VI) shall be made as promptly as practicable. It shall be a condition to the Executive's receipt of an Equity Interest (as defined in Section 4(d)(II) below) that, if requested by the Company, the Executive becomes a party to the DMT L.L.C. Agreement as then in effect, or any analogous partnership, stockholders or other governance agreement (with respect to any successor partnership or corporate entity) to which the Original Shareholders (or their successors) are parties (such DMT L.L.C. Agreement or analogous agreement being sometimes referred to as a "Company Governance Agreement"). The Company shall give the Executive written notice of any changes (which notice shall include the full text of such changes) which are made in the Company Governance Agreement from time to time, such notice to be given within fifteen (15) days following any such change. It is agreed that if the Executive becomes a party to a Company Governance Agreement, in the event of any conflict or inconsistency between the respective rights and obligations of the Executive, the Company and the Original Shareholders thereunder and under this Agreement, the provisions of this Agreement shall control.
Appears in 2 contracts
Samples: Employment Agreement (Mandl Alex J), Employment Agreement (Associated Group Inc)
Company Appreciation Rights. (I) As of the Effective Date, the Company shall grant the Executive six separate Company Appreciation Rights ("CARs") which will expire on the tenth anniversary of the Effective Date and which will vest on the first through sixth anniversaries of the Effective Date, respectively, if the Executive shall be employed by the Company on the respective six anniversaries; provided, however, that, if the Executive's employment shall be terminated for any reason (other than a termination by the Company for "Cause," as defined in Section 6(c) hereof), the CAR which would otherwise have vested on the anniversary of the Effective Date next following the issuance of a Notice of Termination (as defined in Section 6(e) hereof, except in the case of termination due to death in which event the date of death shall be deemed to be the issuance of such Notice for this purpose) in connection with such termination shall vest on the Executive's Date of Termination (as defined in Section 6(f) hereof). Each vested CAR will entitle the Executive to receive, as soon as practicable after its Settlement Date (defined below) in accordance with the terms hereof, an amount equal to three percent (3%) (subject to adjustment as described below) of the amount by which the equity value of the Company on the Settlement Date (calculated based on the Fair Market Value, as defined below) exceeds the applicable Target Value, as set forth in the table below (subject to adjustment as described below). If on a Settlement Date the Company's equity securities which may be paid to the Executive upon settlement of a CAR are not listed and traded on a national securities exchange or on the Nasdaq National Market (if such equity securities are so listed and traded, the Company shall be deemed to be a "Public Company"), 4 the amount to be paid to the Executive shall be paid as soon as practicable, and in any event within 120 days, after the Company has received notice of the final determination of the Company's Fair Market Value made in accordance with Section 4(d)(VI) hereof. In the discretion of the Board, the amount to be paid to the Executive may be paid in cash, equity securities of the Company, or any combination thereof, and/or such other form of consideration as the Board may determine in good faith; provided, that, if equity securities of the Company are used and more than one class of equity securities is outstanding, the Executive shall have the right to request an appraisal of the fair market value of such equity securities in accordance with the procedures set forth in Section 4(d)(VI) hereof for determining the Fair Market Value of the Company; and provided, further, that a form of consideration other than cash or equity securities of the Company can be used only with the consent of the Executive, which shall not be unreasonably withheld. If the Executive gives the Company notice that he does not consent to payment in such form, the Company shall pay him promptly in cash and/or equity securities of the Company. If equity securities of the Company are paid to the Executive, all such securities shall be of the same type as the securities owned at the time of payment by the Original Shareholders. If the equity securities of the Company delivered to the Executive upon the settlement of a CAR are of more than one class of security, the number of securities of each class so delivered shall bear the same proportionate relationship as the securities of such classes then owned by the Original Share holders (including for purposes of this Section 4(d)(I), their respective successors) bear to each other. If the Company becomes a Public Company pursuant to an initial public offering (the "IPO") of equity securities pursuant to a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or otherwise, (A) the Company will, if requested in writing by the Executive, use its reasonable best efforts to cause to be included in any registration statement with respect to a public offering (including the IPO) of equity securities of the class or classes issued to the Executive upon settlement of a CAR or issued or issuable to the Executive upon exercise of an Option (as defined in Section 4(d)(V) below) an amount of such equity securities so issued to and owned by, or so issuable to, the Executive, as of the Conversion Date (as defined in Section 4(d)(V) below) (the total number of such equity securities, subject to adjustments for splits, combinations and the like, being referred to as the "Maximum Amount"), proportionate to the amount of such equity securities then owned by the Original Shareholders which are included in such registration statement (based on the total amount of such equity securities then owned by the Original Shareholders, and the Maximum Amount, respectively), and (B) in each of the four successive twelve-month periods, the first of which commences on the Conversion Date and each of the remaining three of which commences on each of the three respective subsequent anniversaries thereof, the Company will, 5 if requested in writing by the Executive (which request with respect to the first such twelve-month period may not be made prior to six months after consummation of the IPO), use its reason- able reasonable best efforts to promptly cause to be registered under the Securities Act, and registered or qualified under such state securities laws as the Executive may reasonably request (provided that the Company shall not be required to consent to general service of process in any jurisdiction where it is not then so subject), for public sale by the Executive an amount of such equity securities constituting at least 25% of the difference between the Maximum Amount and the number of such equity securities, if any, sold by the Executive in the IPO (such difference being referred to as the "Maximum Annual Amount"); provided that in no event will the Executive sell publicly more than the Maximum Annual Amount in any such twelve-month period. Such registration rights shall not be transferable to any transferee of such equity securities (except to transferees referred to in clauses (i) and (ii) of the last sentence of Section 4(d)(IV) or in the last sentence of Section 4(d)(V)). In addition, such registration rights shall be subject to the Executive entering into underwriting (if applicable), indemnification, and other customary agreements, and to the Company's right to defer (or require the Executive to suspend sales pursuant to) any such registration if (but only for so long as) it determines in good faith that such registration (or continued sales) would require disclosure which would be materially adverse to the Company's interests. The Company shall keep any registration statement filed under clause (B) above effective for at least 90 days (increased by the number of days, if any, that sales under any such registration statement are suspended as provided above). If sold in the public market, shares registered pursuant to this Section 4(d)(I) shall not be subject to the first refusal rights set forth below in Section 4(d)(III). The Company shall bear all registration expenses (exclusive of underwriting discounts and commissions) under this Section 4(d)(I) and shall provide the Executive with indemnification against liabilities under the securities laws in customary form. CAR Vesting Target Date Value 1 1st Anniversary $200 million 2 2nd Anniversary $250 million 3 3rd Anniversary $325 million 4 4th Anniversary $425 million The applicable percentage (initially three percent (3%)) shall be appropriately adjusted downward by the Board in good faith to reflect equity investments in the Company (whether such investments are made in cash or in kind and whether made prior to, on or after the Effective Date); provided, however, that (i) no such adjustment shall be made in respect of up to 6 5 5th Anniversary $25 million of equity investments in the Company to the extent such investments were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, (ii) if equity investments in the Company in excess of $25 million up to a total of $75 million (i.e., $50 million over and above such $25 500 million) were or are made by the Original Shareholders or their respective affiliates prior to one year after the Effective Date, in lieu of adjusting the applicable percentage, the applicable Target Value of each CAR shall be adjusted upward by the amount of such excess equity investments and (iii) if equity invest ments in the Company not covered by clause (i) or (ii) above were or are made by the Original Shareholders or their respective affiliates, the appropriate adjustment in the applicable percentage in respect of such equity investments shall be based on (A) the amount of such equity investment, and (B) the Fair Market Value of the Company (determined in accordance with Section 4(d)(VI)) at the time of such equity investment. For purposes of this Section 4(d), equity investments made by the Original Sharehold ers or their respective affiliates shall include (and shall be deemed made at the time of the payment or advancement of), in addition to actual capital contributions or investments, amounts paid by the Original Shareholders or their respective affiliates to the Company in xxxx- bursement of costs or expenses incurred by or on behalf of the Company and the amount of the loan advanced by the Original Shareholders to the Executive pursuant to Section 4(d), provided that if the "DTS Systems Transfers" are "con summated" (with such quoted terms having the same meaning as in the Limited Liability Company Agreement, dated as of March 5, 1996 between the Original Shareholders (the "DMT L.L.C. Agreement")), the contribution to the Company of "DTS Licenses" (with such quoted term having the same meaning as in the DMT L.L.C. Agreement) pursuant thereto shall not be considered an investment for purposes of this Section 4(d). The applicable Target Value of each CAR shall be appropriately adjusted downward dollar for dollar by the Board in good faith to reflect distributions from the Company in respect of equity interests in the Company (whether such distributions are made in cash or in kind); provided, however, that no adjustment shall be made with respect to distributions for tax liabilities attributable to such equity interests. For the thirty-day period immediately following the Company's notice to the Executive that an additional non-cash equity investment has been made in the Company (other than a non-cash equity investment pursuant to the DTS Systems Transfers) , or that the Company has made a non-cash distribution in respect of equity interests in the Company (which notice the Company agrees to provide within fifteen (15) days following any such investment or distribution) the Executive shall have a right to request an appraisal of the fair market value of such equity investment or distribution in accordance with the procedures set forth in Section 4(d)(VI) hereof. In the event the Company fails to give notice to the Executive as provided in the preceding sentence, the thirty-day period during which the Executive may request such appraisal shall commence on the first date, after the end of the fifteen (15) day notice period for the Company, on which the Executive knows of the applicable equity investment or distribution. Any appraisal so requested shall be made only at the first subsequent Settlement Date, unless the Company, in its discretion, decides to have the appraisal made earlier; provided, however, that if the aggregate value of all such non-cash equity investments or distributions, respectively, would reasonably be estimated to exceed $50 million, the Executive may include in the foregoing request a request for a current appraisal (including of the dilutive effect of such investments) in which event an appraisal thereof in accordance with Section 4(d)(VI) shall be made as promptly as reasonably possible. In the case of an equity investment in cash whereby equity interests in the Company of a different class from the equity interests held by the Original Shareholders are issued, the Executive may request an appraisal of the dilutive effect of such investment on equity interests and the CARs, in which event an appraisal in accordance with Section 4(d)(VI) shall be made as promptly as practicable. It shall be a condition to the Executive's receipt of an Equity Interest (as defined in Section 4(d)(II) below) that, if requested by the Company, the Executive becomes a party to the DMT L.L.C. Agreement as then in effect, or any analogous partnership, stockholders or other governance agreement (with respect to any successor partnership or corporate entity) to which the Original Shareholders (or their successors) are parties (such DMT L.L.C. Agreement or analogous agreement being sometimes referred to as a "Company Governance Agreement"). The Company shall give the Executive written notice of any changes (which notice shall include the full text of such changes) which are made in the Company Governance Agreement from time to time, such notice to be given within fifteen (15) days following any such change. It is agreed that if the Executive becomes a party to a Company Governance Agreement, in the event of any conflict or inconsistency between the respective rights and obligations of the Executive, the Company and the Original Shareholders thereunder and under this Agreement, the provisions of this Agreement shall control.
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