FORM OF EMPLOYEE MATTERS AGREEMENT
Exhibit 10.3
FORM OF
THIS EMPLOYEE MATTERS AGREEMENT (this “Agreement”) is entered into as of [• ], 2007, by
and between EchoStar Communications Corporation, a Nevada corporation (“ECC”), and EchoStar
Holding Corporation , a Nevada corporation (the “Company”).
WHEREAS, the Board of Directors of ECC has determined that it is appropriate and desirable to
separate ECC and the Company into two publicly-traded companies by separating from ECC and
transferring to the Company ECC’s non-consumer related businesses and related assets and
liabilities (the “Separation”); and
WHEREAS, ECC and the Company have entered into that certain Separation Agreement, dated as of
[•], 2007 (the “Separation Agreement”), in order to carry out, effect and consummate the
Separation; and
WHEREAS, in connection with the Separation, ECC and the Company desire to enter into this
Employee Matters Agreement to allocate between them assets, liabilities and responsibilities with
respect to certain employee compensation, benefit plans, programs and arrangements, and certain
employment matters.
NOW, THEREFORE, in consideration of the mutual promises, covenants, agreements,
representations and warranties contained herein, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree, intending
to be legally bound, as follows.
ARTICLE I
Definitions
Section 1.01 Unless otherwise defined herein, each capitalized term shall have the meaning
specified for such term in the Separation Agreement. As used in this Agreement:
“Agreement” means this Employee Matters Agreement together with those parts of the
Separation Agreement referenced herein and all Schedules hereto and all amendments, modifications
and changes hereto and thereto.
“Business Employee” means a Transferred Employee or any other individual employed at
any time on or prior to the Distribution Date by the Company or any of its Subsidiaries or
Affiliates who has, as of the Distribution Date, or who, immediately prior to his or her
termination of employment with all of ECC, its Subsidiaries and their respective Affiliates, had
employment duties primarily related to the Company Business.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified
at Part 6 of Subtitle B of Title I of ERISA and at Section 4980B of the Code, as amended.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Domestic Business Employee” means a Business Employee who is located in the United
States or who is an expatriate Business Employee employed by a U.S. entity but who is performing
services outside of the United States for a temporary period of time at the request of his
employer.
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended, 29
U.S.C. §1001, et. seq.
“ECC Non-ERlSA Benefit Arrangement” means any Non-ERlSA Benefit Arrangement sponsored
or maintained by ECC or its Subsidiaries.
“ECC Plan” means any Pension Plan or Welfare Plan sponsored or maintained by ECC or
its Subsidiaries.
“IRS” means the U.S. Internal Revenue Service.
“Non-Domestic Business Employee” means a Business Employee who is located outside the
United States or who is an inpatriate Business Employee in the U.S. employed by a Non-U.S. entity
but who is performing services in the United States for a temporary period of time at the request
of his employer.
“Non-ERISA Benefit Arrangement” means any contract, agreement, policy, practice,
program, plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for
benefits, perquisites or compensation of any nature to any Business Employee, or to any family
member, dependent or beneficiary of any such Business Employee, including, without limitation,
disability, severance, health, dental, life, accidental death and dismemberment, travel and
accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or bereavement
days, holidays, retirement, deferred compensation, profit sharing, bonus, stock-based compensation
or other forms of incentive compensation.
“Pension Plan” means any pension plan as defined in Section 3(2) of ERISA.
“Transferred Employee” means an employee of ECC or any of its Subsidiaries (other than
the Company or any of its Subsidiaries) whose employment is transferred to the Company Group on or
immediately prior to the Distribution Date.
“Welfare Plan” means any employee welfare plan as defined in Section 3(1) of ERISA.
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ARTICLE II
Assignment of Employees
Effective on or immediately prior to the Distribution Date, the employment of the Transferred
Employees by ECC and its Subsidiaries shall be terminated and thereupon shall commence with and
shall be assigned and transferred to the Company or one of its Subsidiaries. Notwithstanding
anything set forth below or herein to the contrary, nothing in this Agreement shall create any
obligation on the part of the Company or any of its Subsidiaries to continue the employment of any
employee for any definite period following the Distribution Date or to change the employment status
of any employee from “at will.” Notwithstanding the foregoing, to the extent necessary to preserve
payroll, benefits, or other legal entitlements with respect to employees outside the United States,
the Company and ECC may enter into one or more agreements whereby either party may lease employees
from the other party for a limited period of time following the Distribution Date. Any such
agreement(s) shall require the party receiving the services of such leased employees to fully
reimburse the leasing company for the full cost of the employee(s) remuneration and shall contain
other terms and conditions consistent with an arm’s length commercial relationship between the
leasing entity and the service recipient.
ARTICLE III
Pension Plans
Section 3.01 U.S. Defined Contribution Plans.
(a) Establishment of the Company 401(k) Plan. On or as soon as administratively practicable
following the Distribution Date, the Company shall adopt, establish and maintain a 401(k) profit
sharing Pension Plan and trust intended to be qualified under Section 401(a) of the Code and exempt
from federal income tax under Section 501(a) of the Code (the “Company 401(k) Plan”).
(b) Transfer of Account Balances and Forfeitures. As soon as administratively practicable
after the Distribution Date, there shall be transferred from the EchoStar Communications
Corporation 401(k) Employee Savings Plan Trust (“ECC 401(k) Plan Trust”) to the trust
established by the Company for the Company 401(k) Plan assets having a value as of the applicable
valuation date that are equal to the value of the account balances of, and liabilities with respect
to, all Business Employees (other than Business Employees whose employment has terminated prior to
the Distribution Date) with an account balance under the EchoStar Communications Corporation 401(k)
Employee Savings Plan (“ECC 401(k) Plan”) as of such valuation date. In addition, as soon
as administratively practicable after the Distribution Date, there shall be transferred from the
ECC 401(k) Plan Trust to the trust established by the Company to hold the Company 401(k) Plan
assets a pro rata share of all amounts held as unallocated forfeitures in the ECC 401(k) Plan
Trust, determined based upon the ratio of the sum of the account balances of the Business Employees
described in the immediately preceding sentence as of the applicable valuation date to the sum of
all account balances held in the ECC
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401(k) Plan Trust as of such valuation date. Such transferred assets shall be in cash, shares
of securities, promissory notes evidencing outstanding plan loans of such Business Employees, and
shares of ECC Class A Common Stock and Company Class A Common Stock, and such transfer shall be
made in accordance with Section 414(l) of the Code. Liabilities under any qualified domestic
relations orders (as defined in Section 414(p) of the Code) received with respect to any accounts
transferred to the Company 401(k) Plan shall be transferred to and assumed by the Company 401(k)
Plan at the time such assets attributable to such accounts are transferred. The Company shall
assume and thereafter be solely responsible for all then existing and future employer liabilities
related to such Business Employees under the Company 401(k) Plan and the administration thereof,
and ECC shall have no liability therefore.
(c) In consideration for the continued participation of Business Employees in the ECC 401(k)
Plan for any period following the Distribution Date, the Company shall pay to ECC, or reimburse it
for, such amounts as are set forth in the Benefits Administration Services Schedule to the
Transition Services Agreement.
Section 3.02 Non-U.S. Retirement Plans.
Following the Distribution Date, the Company
shall cause its Non-U.S. Subsidiaries to continue to maintain in full force and effect retirement
plans as were sponsored and maintained by such Subsidiaries immediately prior to the Distribution
Date, and neither ECC nor any of its Subsidiaries shall have any liability or obligation with
respect to such plans or any participants or former participants in such plans with respect to
their participation therein. In addition, effective either prior to or as of the Distribution
Date, the Company shall cause its Non-U.S. Subsidiaries in the United Kingdom, Spain, Holland, Hong
Kong, Ukraine, Korea, China, Taiwan and Dubai, to adopt retirement plans with appropriate
eligibility and benefits terms to ensure that Non-Domestic Business Employees in such countries are
either (1) eligible to participate in the same type of plan and enjoy the same level of benefits
for which such Non–Domestic Business Employees were eligible immediately prior to the Distribution
Date (or date of plan adoption, if earlier), or (2) eligible to participate in a plan intended to
provide a substantially comparable level of benefits for which such Non–Domestic Business Employees
were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier).
ARTICLE IV
Welfare Plans
Section 4.01 Company Welfare Plans.
(a) On or as soon as administratively practicable following the Distribution Date, the Company
shall have adopted for the benefit of eligible Domestic Business Employees and their respective
eligible dependents, health (including medical, vision and dental), life, accidental death and
dismemberment, disability and other Welfare Plans as determined by the Company (the “Company
Welfare Plans”) that are substantially similar to the terms of the corresponding Welfare Plans
maintained by ECC. Domestic Business Employees shall be eligible to participate
in the Company Welfare Plans on the terms established by the Company. In consideration for
the continued participation of Business Employees in the Welfare Plans maintained by ECC for any
period following the Distribution Date, the Company shall pay to ECC, or reimburse it for,
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such
amounts as are set forth in the Benefits Administration Services Schedule to the Transition
Services Agreement.
(b) Following the Distribution Date, the Company shall cause its Non-U.S. Subsidiaries to
continue to maintain in full force and effect Welfare Plans as were sponsored and maintained at
such Subsidiaries immediately prior to the Distribution Date, and neither ECC nor any of its
Subsidiaries shall have any liability or obligation with respect to such plans or any participants
or former participants in such plans with respect to their participation therein. ECC and the
Company shall have separate provider contracts established for employees of ECC and Non-U.S.
Subsidiaries of the Company effective on or prior to the Distribution Date. In addition, effective
either prior to or as of the Distribution Date, the Company shall cause its Non-U.S. Subsidiaries
in the United Kingdom, Spain, Holland, Hong Kong, Ukraine, Korea, China, Taiwan and Dubai, to adopt
Welfare Plans with appropriate eligibility and benefits terms, to ensure that Non-Domestic Business
Employees in such countries are either (1) eligible to participate in the same type of plan and
enjoy the same level of benefits for which such Non-Domestic Business Employees were eligible
immediately prior to the Distribution Date (or date of plan adoption, if earlier), or (2) eligible
to participate in a plan intended to provide a substantially comparable level of benefits for which
such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or
date of plan adoption, if earlier), and neither ECC nor any of its Subsidiaries shall have any
liability or obligation with respect to such plans or any participants in such plans.
Section 4.02 Welfare Plan Liabilities.
(a) Company Liabilities. Except as otherwise provided in this Agreement, the Company
shall assume, and be solely responsible for all ECC and Company Welfare Plan liabilities incurred
by any Business Employee before, on, or after the Distribution Date.
(b) ECC Liabilities. ECC shall continue to be responsible after the Distribution
Date for employer liabilities under the EchoStar Communications Corporation Employee Benefits
Health & Welfare Plan and any Non-U.S. Welfare Plan incurred with respect to Business Employees
and their eligible dependents only with respect to the following (except as otherwise provided in
this Agreement):
(1) Continuation Coverage for Terminated Domestic Business Employees and their Dependents.
Any Domestic Business Employee whose employment terminates prior to the Distribution Date for any
reason, including a Domestic Business Employee currently receiving EchoStar Communications
Corporation Employee Benefits Health & Welfare Plan benefits pursuant to a termination
agreement or an “Agreement and Release” under the applicable ECC severance policy, and any
dependent of such Domestic Business Employee, who elected or is eligible to elect, pursuant to the
rights under COBRA or any comparable state law, to continue to
participate in the EchoStar Communications Corporation Employee Benefits Health & Welfare
Plan on the applicable date of termination.
(2) Disabled Persons. ECC shall continue to be responsible after the Distribution Date for
all claims for long-term disability incurred prior to the Distribution Date by any Domestic
Business Employee who is absent from active employment due to a total
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disability, as defined in the
EchoStar Satellite L.L.C. Employee Life Insurance and Disability Plans, on or prior to the
Distribution Date to the extent that such long-term disability benefits are provided under an
insurance contract. ECC shall also be responsible for long-term disability benefits for any
Domestic Business Employee who is receiving weekly short-term disability benefits as of the
Distribution Date and who becomes eligible for long-term disability benefits thereafter, provided
that the total disability relates to the same condition for which weekly short-term disability
benefits were paid and, provided further, that such long-term disability benefits are payable under
an insurance contract.
Section 4.03 Flexible Spending Accounts.
Effective as of the Distribution Date, the
Company shall adopt and maintain a flexible spending account plan (the “Company FSA”) with terms
that are substantially identical in all material respects to those of the EchoStar Communications
Corporation Flexible Benefit Plan (the “ECC FSA”). As soon as practicable following the
Distribution Date, ECC shall cause to be transferred to the Company an amount in cash equal to the
excess of the aggregate accumulated contributions to the flexible spending reimbursement accounts
under the ECC FSA made during the year in which the Distribution Date occurs by the Business
Employees over the aggregate reimbursement payouts made for such year from such accounts to such
Business Employees. The Company shall cause such amounts to be credited to each such employee’s
corresponding accounts under the Company FSA following the Distribution Date. On and after the
Distribution Date, the Company shall assume and be solely responsible for all claims for
reimbursement by Business Employees, whether incurred prior to, on or after the Distribution Date,
that have not been paid in full as of the Distribution Date, which claims shall be paid pursuant to
and under the terms of the Company FSA, and the Company shall indemnify and hold harmless ECC from
any and all claims by or with respect Business Employees for reimbursement under the ECC FSA that
have not been paid in full as of the Distribution Date. The Company agrees to cause the Company FSA
to honor and continue through the end of the calendar year in which the Distribution Date occurs
the elections made by each Business Employee under the Company FSA in respect of the flexible
spending reimbursement accounts that are in effect immediately prior to the Distribution Date.
ARTICLE V
Equity Compensation Plans
Section 5.01 Stock Options.
ECC and the Company shall take any and all action as
shall be necessary or appropriate so that outstanding options issued under the Amended and Restated
EchoStar Communications Corporation 1995 Stock Incentive Plan, the EchoStar Communications
Corporation 1999 Stock Incentive Plan, the EchoStar Communications Corporation 2001
Nonemployee Director Stock Option Plan and the ECC 1995 Nonemployee Director Stock Option Plan)
(collectively, the “ECC SIPs”) to purchase ECC Class A Common Stock (“ECC Stock
Options”) held at the close of business on the Distribution Date by current and former
employees and directors of ECC and its Subsidiaries and Affiliates (or their respective
transferees) shall be replaced pursuant to the terms of the ECC SIPs with an adjusted ECC Stock
Option with an adjusted exercise price and a substitute option under the EchoStar Holding
Corporation Transition Stock Incentive Plan (the “Company SIP”) to purchase Company Class A
Common Stock (a “Company Stock Option”). Such replacement will be
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implemented in a manner
such that immediately following the Distribution (i) the number of shares relating to the adjusted
ECC Stock Option will be equal to the number of shares of ECC Class A Common Stock subject to such
option immediately prior to the Distribution, (ii) the number of shares subject to the substitute
Company Stock Option will be equal to the number of shares of Company Class A Common Stock that
the option holder would have received in the Distribution had the ECC Class A Common Stock subject
to the option represented outstanding shares of ECC Class A Common Stock, and (iii) the per share
option exercise price of the original ECC Stock Option will be proportionally allocated between
such separate stock options based upon the relative per share trading prices of ECC Class A Common
Stock and the Company Class A Common Stock immediately following the Distribution, with the
intention that such adjustment and substitution satisfy the requirements of Section 424 of the Code
and avoid treatment as non–qualified deferred compensation subject to Section 409A of the Code.
Each adjusted ECC Stock Option and substituted Company Stock Option adjusted from or substituted
for an original ECC Stock Option described in this Section 5.01 (a), when combined, will in
the exclusive and sole discretion of the administrative committee established pursuant to the
applicable ECC SIP (the “ECC SIP Committee”) preserve the intrinsic value of such original ECC
Option, and each will preserve the ratio from the original option of the exercise price to the fair
market value of the stock subject to the option. Fractional shares shall be adjusted or
compensated by ECC as appropriate in the sole discretion of the ECC SIP Committee. All employment
with both ECC and the Company shall be taken into account for purposes of determining the vesting
and exercisability provisions of such awards.
Section 5.02 Restricted Stock.
ECC and the Company shall take any and all action as
shall be necessary or appropriate, so that current and former employees and directors of ECC and
its Subsidiaries and Affiliates (or their respective transferees) who on the Distribution Date hold
shares of ECC Class A Common Stock issued under one or more ECC SIP that are subject to
restrictions on sale and transfer( “ECC Restricted Stock”) shall, in addition to the ECC
Restricted Stock, receive shares of the Company Class A Common Stock that are subject to
restrictions on sale and transfer (“Company Restricted Stock”) in connection with the
Distribution under the applicable Company SIP based upon the number of shares of ECC Restricted
Stock they hold. All employment with both ECC and the Company shall be taken into account for
purposes of determining when the restrictions on the sale and transfer of such shares lapse.
Fractional shares shall be adjusted or compensated by ECC as appropriate in the sole discretion of
the ECC SIP Committee.
Section 5.03 Restricted Stock Units.
ECC and the Company shall take any and all action as shall be necessary or appropriate, so
that current and former employees and directors of ECC and its Subsidiaries and Affiliates (or
their respective transferees) will have each of their restricted stock units granted under one or
more ECC SIP with respect to ECC Class A Common Stock (“ECC Restricted Stock Unit”)
replaced with a ECC Restricted Stock Unit and a substitute Company restricted stock unit issued
under the Company SIP (“Company Restricted Stock Unit”). The number of the Company
Restricted Stock Units issued in replacement for such ECC Restricted Stock Units shall be
calculated so that immediately following the Distribution (i) the number of ECC Restricted Stock
Units will be equal to the number of ECC Restricted Stock Units held by the participant immediately
prior to the Distribution, and (ii) the number of the Company Restricted Stock Units will be equal
to the number of shares of the Company Class A Common Stock that the holder of the restricted stock
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unit would have received in the Distribution had the ECC Restricted Stock Unit represented
outstanding shares of ECC Class A Common Stock. The ECC Restricted Stock Units and the Company
Restricted Stock Units will each take into account all employment with both ECC and the Company,
and their respective Subsidiaries and Affiliates, for purposes of determining when such awards vest
and terminate. Fractional shares shall be adjusted or compensated by ECC as appropriate in the
sole discretion of the ECC SIP Committee.
Section 5.04 Approval and Terms of Equity and Equity-Based Awards. By its approval of
this Article V, the Board of Directors of the Company, as issuer of Company substitute and
replacement equity and equity-based awards provided hereunder, and the Board of Directors of ECC,
as issuer of ECC substitute and replacement equity and equity-based awards provided hereunder and
as sole shareholder of the Company, hereby adopt and approve, respectively, the issuance of the
substitute and replacement options and equity and equity-based awards provided for herein. Except
as set forth above, the terms of the Company SIP, and the Company substitute and replacement equity
and equity-based awards hereunder, shall be substantially identical in all material respects to the
terms of the ECC SIPs, and the corresponding awards under the ECC SIPs, as applicable, except that
references in the substitute and replacement equity and equity-based awards in respect of Company
Class A Common Stock to “Board” and “Committee” shall mean the Board and committee designed by the
Board of the Company, respectively. Notwithstanding the foregoing, awards made under the Company
SIP, or adjusted under the ECC SIPs, pursuant to the Company’s or ECC’s obligations under this
Agreement shall take into account all employment with both ECC and the Company, and their
respective Subsidiaries and Affiliates, for purposes of determining the vesting and exercisability
provisions of such awards. In exercising power and authority hereunder with respect to
replacement and substitute awards provided hereunder, ECC and the Company shall each (i) act in
good faith and (ii) cooperate with, and give due regard to any information provided by, the other
party. In addition, with respect to such replacement and substitute equity and equity-based
awards, neither the Company nor ECC shall, without the prior written consent of the ECC SIP
Committee or the applicable committee designated by the Company’s Board of Directors, as
applicable, take any discretionary action to accelerate vesting of any such awards.
Section 5.05 Responsibility for Tax Withholding, Reporting, and Social Insurance
Contributions. ECC and the Company agree that, unless prohibited by applicable law, (a) ECC shall be
responsible for all tax withholding and reporting obligations and shall pay the employer’s share of
any social insurance tax obligations that arise in connection with the grant, vesting, exercise,
transfer or other settlement of the substitute and replacement awards held by current and former
employees and directors of ECC and its Subsidiaries and Affiliates who are not Business Employees
(or their respective transferees), (b) the Company shall be responsible for all tax withholding and
reporting obligations and shall pay the employer’s share of any social insurance tax obligations
that arise in connection with the grant, vesting, exercise, transfer or other settlement of the
substitute and replacement awards held by Business Employees (or their transferees). ECC and the
Company agree to enter into any necessary agreements regarding the subject matter of this
Section 5.05 to enable ECC and the Company to fulfill their respective obligations
hereunder, including but not limited to compliance with all applicable laws and regulations
regarding the reporting, withholding or remitting of income and social insurance taxes.
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Section 5.06 No Change of Control. The Distribution will not constitute a “change of
control” for purposes of ECC equity and equity-based awards which are outstanding as of the
Distribution Date.
Section 5.07 Employee Stock Purchase Plan. On or prior to the Distribution Date, the
Company shall establish an employee stock purchase plan (the “Company ESPP”) with terms
that are substantially identical in all material respects to the terms of the Amended and Restated
ECC 1997 Employee Stock Purchase Plan (the “ECC ESPP”). Business Employees will be
eligible to participate in the Company ESPP on the Distribution Date. Prior to the Distribution
Date, ECC shall take whatever action is necessary under the ECC ESPP
to provide that the “Purchase Period” (as defined in the ECC
ESPP) ending on December 31, 2007 shall instead end on or about
December 19, 2007.
Section 5.08 Establishment of the Company Stock Incentive Plans. Effective as of the
Distribution Date, the Company shall establish the a stock incentive plan to provide for awards
which may include the following: (i) stock options (both qualified and non-qualified), (ii) stock
appreciation rights, (iii) restricted stock awards, (iv) restricted stock unit awards, (v) phantom
stock units, (vi) performance grants and (vii) bonus awards, including, without limitation, the
awards provided for herein.
ARTICLE VI
Compensation Matters and General Benefit Matters
Section 6.01 Cessation of Participation in ECC Plans and Non-ERISA U.S. Benefit
Arrangements. Except as otherwise provided in this Agreement or as required by the terms of any ECC Plan
or ECC Non-ERISA Benefit Arrangement, or by applicable law, ECC and the Company shall take any and
all action as shall be necessary or appropriate so that participation in ECC Plans and ECC
Non-ERISA Benefit Arrangements by all Business Employees shall terminate as soon as
administratively practicable following the Distribution Date and the Company and/or its
Subsidiaries, as applicable, shall cease to be participating employers under the terms of such ECC
Plans and ECC Non-ERISA Benefit Arrangements as soon as administratively practicable following the
Distribution Date.
Section 6.02 Assumption of Certain Employee Related Obligations. Except as otherwise
provided in this Agreement, effective as of the close of business on the Distribution Date, the
Company shall assume, and none of ECC or any of its Subsidiaries or Affiliates shall have any
further liability for, the following agreements, obligations and liabilities and the Company shall
indemnify ECC and its Subsidiaries and Affiliates, and the officers, directors, and employees of
each, and hold them harmless with respect to such agreements, obligations or liabilities:
(a) Agreements entered into between ECC, its Subsidiaries or Affiliates and Business
Employees.
(b) Agreements entered into between ECC, its Subsidiaries or Affiliates and independent
contractors providing services solely to the Company Business.
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(c) All collective bargaining agreements, collective agreements, trade union, or works council
agreements entered into between ECC, its Subsidiaries or Affiliates and any union, works council,
or other body representing only Business Employees.
(d) All wages, salary, incentive compensation, commissions and bonuses payable to Business
Employees on or after the Distribution Date, without regard to when such wages, salary, incentive
compensation, commissions and bonuses are or may have been earned.
(e) All moving expenses and obligations related to relocation, repatriation, transfers, or
similar items incurred by or owed to Business Employees.
(f) All immigration-related, visa, work application, or similar rights, obligations and
liabilities related to Business Employees.
(g) All liabilities and obligations whatsoever of the Company Business with respect to claims
made by or with respect to Business Employees or any other persons who at any time prior to the
Distribution Date had employment duties primarily related to the Company Business relating to any
employee benefit plan, program or policy not otherwise retained or assumed by ECC pursuant to this
Agreement, including such liabilities relating to actions or omissions of or by the Company or any
officer, director, employee or agent thereof prior to the Distribution Date.
Section 6.03 Restrictive Covenants in Employment and Other Agreements. To the extent permitted under applicable law, following the Distribution, the Company and
its Subsidiaries and Affiliates shall be considered to be successors to ECC and its Subsidiaries
and Affiliates for purposes of all agreements containing restrictive covenants (including but not
limited to confidentiality and non-competition provisions) between ECC (or any of its Subsidiaries
or Affiliates) and Business Employees, employees of ECC (or any of its Subsidiaries or Affiliates)
as of the Distribution Date that the Company reasonably determines have substantial knowledge of
the Company Business, former employees and independent contractors executed prior to the
Distribution Date such that each of ECC, the Company and their respective Subsidiaries and
Affiliates shall all enjoy the rights and benefits under such agreements, with respect to such
party’s and their respective Subsidiaries” and Affiliates’ business operations; provided,
however, that (a) in no event shall ECC be permitted to enforce the restrictive covenant
agreements against Business Employees in their capacity as employees of the Company or its
Subsidiaries, and (b) in no event shall the Company be permitted to enforce the restrictive
covenants agreements of ECC employees in their capacity as employees of ECC or its Subsidiaries.
Section 6.04 Severance. Effective as of the Distribution Date, the Company may
establish one or more severance plans and policies with respect to Business Employees as the
Company deems appropriate in its discretion. ECC shall have no liability or obligation under any
ECC severance plan or policy with respect to Business Employees whose employment terminates on or
after the Distribution Date. It is not intended that any Business Employee will be eligible for
termination or severance payments or benefits from ECC or its Subsidiaries or Affiliates as a
result of the transfer or change of employment from ECC to the Company or their respective
Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in the event that
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any such
termination or severance payments or benefits become payable on account of such transfer, change or
the refusal of a Business Employee to accept employment with the Company, the Company shall
indemnify ECC, and its Subsidiaries and Affiliates, for the amount of such termination or severance
payments or benefits.
Section 6.05 Past Service Credit. With respect to all Domestic Business Employees,
the Company shall recognize all service recognized under the comparable ECC Plans and ECC Non-ERlSA
Benefit Arrangements for purposes of determining eligibility, participation, vesting, and
calculation of benefits under the Company’s comparable plans and programs, provided that
there shall be no duplication of benefits for Business Employees under the Company’s plans and
programs. ECC will provide to the Company copies of any records available to ECC to document such
service, plan participation and membership and cooperate with the Company to resolve any
discrepancies or obtain any missing data for purposes of determining benefit eligibility,
participation, vesting and calculation of benefits with respect to such Domestic Business
Employees. With respect to retaining, destroying, transferring, sharing, copying and permitting
access to all such information, ECC and the Company shall each comply with all applicable laws,
regulations and internal policies and each party shall indemnify and hold harmless the other party
from and against any and all liability, claims, actions, and damages that arise from a failure (by
the
indemnifying party) to so comply with all applicable laws, regulations and internal policies
applicable to such information.
Section 6.06 Accrued Vacation Days Off. The Company shall recognize and assume all
liability for all vacation, holiday, sick leave, flex days and personal days off, including banked
vacation, accrued by Business Employees as of the Distribution Date and the Company shall credit
each Business Employee with such days off accrual.
Section 6.07 Leaves of Absence. The Company will continue to apply the leave of
absence policies maintained by ECC to inactive Business Employees who are on an approved leave of
absence as of the Distribution Date. Leaves of absence taken by Business Employees prior to the
Distribution Date shall be deemed to have been taken as employees of the Company.
Section 6.08 ECC Assets. Except as otherwise set forth herein, ECC shall retain all
reserves, bank accounts, trust funds or other balances maintained with respect to ECC’s Non-ERlSA
Benefit Arrangements.
Section 6.09 Further Cooperation/Personnel Records/Data Sharing. The parties shall
provide each other such records and information only as necessary or appropriate to carry out their
obligations under law, this Agreement, or for the purposes of administering the Company plans and
policies. The parties shall take commercially reasonable actions so that after the Separation, all
ministerial matters relating to (i) the Company awards issued to individuals other than Business
Employees can be administered by ECC and (ii) ECC equity and equity-based awards issued to Business
Employees can be administered by the Company. Each of the parties shall provide information
requested by the other party relating to employee status changes (such as terminations,
retirements, etc.) and exercised options during the ten-year period beginning on the Distribution
Date. Subject to applicable law, all information and records regarding employment and personnel
matters of Business Employees shall be accessed, retained,
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held, used, copied and transmitted after
the Distribution Date by the Company in accordance with all laws and policies relating to the
collection, storage, retention, use, transmittal, disclosure and destruction of such records.
Access to such records after the Distribution Date will be provided to ECC in accordance with
Article IV of the Separation Agreement. Notwithstanding the foregoing, ECC shall retain reasonable
access to those records necessary for ECC’s continued administration of any plans or programs on
behalf of Business Employees after the Distribution Date, provided that such access shall
be limited to individuals who have a job-related need to access such records. ECC shall also
retain copies of all confidentiality and non-compete agreements with any Business Employee in which
ECC has a valid business interest. With respect to retaining, destroying, transferring, sharing,
copying and permitting access to all such information, ECC and the Company shall each comply with
all applicable laws, regulations and internal policies, and each party shall indemnify and hold
harmless the other party from and against any and all liability, claims, actions, and damages that
arise from a failure (by the indemnifying party) to so comply with all applicable laws,
regulations and internal policies applicable to such information.
ARTICLE VII
General Provisions
Section 7.01 Preservation of Rights to Amend. The rights of ECC or the Company to
amend or terminate any plan, program, or policy referred to herein shall not be limited in any way
by this Agreement.
Section 7.02 Confidentiality. Each party hereto agrees that the specific terms and
conditions of this Agreement and any information conveyed or otherwise received by or on behalf of
a party hereto in conjunction herewith are confidential and are subject to the terms of the
confidentiality provisions set forth in Section 4.5 of the Separation Agreement.
Section 7.03 Administrative Complaints/Litigation. Except as otherwise provided in
this Agreement, as of and after the Distribution Date, the Company shall assume, and be solely
liable for, the handling, administration, investigation, and defense of actions, including, without
limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful
dismissal, discrimination or human rights and unemployment compensation claims, asserted at any
time against ECC or the Company by any Business Employee (including any dependent or beneficiary of
a Business Employee), or any other person to the extent such actions or claims arise out of or
relate to employment or the provision of services (whether as an employee, contractor, consultant,
or otherwise) to or with the Company Business. Any Liabilities arising from such actions shall be
deemed Assumed Liabilities under the Separation Agreement.
Section 7.04 Reimbursement and Indemnification. The parties hereto agree to reimburse
each other, within 30 days of receipt from the other party of appropriate verification, for all
costs and expenses which each may incur on behalf of the other as a result of any of the Welfare
Plans, Pension Plans and Non-ERISA Benefit Arrangements and, as contemplated by Section
6.04, any termination or severance payments or benefits. All liabilities retained, assumed or
indemnified against by the Company pursuant to this Agreement, and all
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liabilities retained,
assumed or indemnified against by ECC pursuant to this Agreement, shall in each case shall be
subject to the indemnification provisions of Article V of the Separation Agreement.
Section 7.05 Entire Agreement. This Agreement, including the Schedules hereto and
the sections of the Separation Agreement referenced herein, constitutes the entire agreement
between the parties hereto with respect to the subject matter contained herein, and supersedes all
prior agreements,
negotiations, discussions, understandings, writings and commitments between the parties hereto
with respect to such subject matter.
Section 7.06 Governing Law; Service of Process; Jurisdiction. This Agreement and the
legal relations between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of laws rules thereof to the
extent such rules would require the application of the law of another jurisdiction. The state or
federal courts located within the City of New York shall have exclusive jurisdiction over any and
all disputes between the parties hereto, whether in law or equity, arising out of or relating to
this Agreement and the agreements, instruments and documents contemplated hereby and the parties
hereto consent to and agree to submit to the exclusive jurisdiction of such courts. Each of the
parties hereto hereby waives and agrees not to assert in any such dispute, to the fullest extent
permitted by Applicable Law, any claim that (i) such party is not personally subject to the
jurisdiction of such courts, (ii) such party and such party’s property is immune from any legal
process issued by such courts or (iii) any litigation or other proceeding commenced in such courts
is brought in an inconvenient forum.
Section 7.07 Amendment. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of ECC and the
Company.
Section 7.08 Waiver. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the party or the parties hereto entitled to the
benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this
Agreement if, as to any party hereto, it is in writing signed by an authorized representative of
such party. The failure of any party hereto to enforce at any time any provision of this Agreement
shall not be construed to be a waiver of such provision, or in any way to affect the validity of
this Agreement or any part hereof or the right of any party hereto thereafter to enforce each and
every such provision. No waiver of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach.
Section 7.09 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby or thereby, as the case may be, is not affected in any manner
adverse to any party hereto or thereto. Upon such determination, the parties hereto shall negotiate
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in good faith in an effort to agree upon such a suitable and equitable provision to effect the
original intent of the parties hereto.
Section 7.10 Execution in Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original instrument, but all of which shall be
considered one and the same agreement, and shall become binding when one or more counterparts have
been signed by and delivered to each of the parties hereto.
Section 7.11 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and permitted assigns; provided,
however, that the rights and obligations of either party hereto under this Agreement shall
not be assignable by such party without the prior written consent of the other party. The
successors and permitted assigns hereunder shall include any permitted assignee as well as the
successors in interest to such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise).
Section 7.12 Notices. All notices or other communications under this Agreement shall
be in writing and shall be deemed to be duly given when delivered or mailed in accordance with the
terms of Section 9.12 of the Separation Agreement.
Section 7.13 Performance. Each party hereto shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth herein to be
performed by any Affiliate of such party.
Section 7.14 No Public Announcement. Neither ECC nor the Company shall, without the
approval of the other, make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that either party hereto
shall be so obligated by Applicable Law or the rules of any regulatory body, stock exchange or
quotation system, in which case the other party hereto shall be advised and the parties hereto
shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to
be issued; provided, however, that the foregoing shall not preclude communications
or disclosures necessary to implement the provisions of this Agreement or to comply with Applicable
Law, accounting and SEC disclosure obligations or the rules of any stock exchange.
Section 7.15 Limited Liability. Notwithstanding any other provision of this
Agreement, no individual who is a stockholder, director, employee, officer, agent or representative
of the Company or ECC, in its capacity as such, shall have any liability in respect of or relating
to the covenants or obligations of such party under this Agreement and, to the fullest extent
legally permissible, each of the Company and ECC, for itself and its respective stockholders,
directors, employees, officers and
Affiliates, waives and agrees not to seek to assert or enforce any such liability that any
such Person otherwise might have pursuant to Applicable Law.
Section 7.16 Mutual Drafting. This Agreement shall be deemed to be the joint work
product of ECC and the Company and any rule of construction that a document shall be interpreted or
construed against a drafter of such document shall not be applicable.
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Section 7.17 Dispute Resolution. The parties hereto agree that any dispute,
controversy or claim between them with respect to the matters covered hereby shall be governed by
and resolved in accordance with the procedures set forth in Article VIII of the Separation
Agreement.
Section 7.18 No Third Party Beneficiaries. No Business Employee or other current or
former employee of ECC or the Company or any Subsidiary or Affiliate of either (or his/her spouse,
dependent or beneficiary), or any other person not a party to this Agreement, shall be entitled to
assert any claim hereunder. The provisions of this Agreement are solely for the benefit of the
parties hereto and their respective Affiliates, successors and permitted assigns and shall not
confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess
of those existing without reference to this Agreement.
Section 7.19 Effect if Separation Does Not Occur. Notwithstanding anything in this
Agreement to the contrary, if the Separation Agreement is terminated prior to the Distribution
Date, this Agreement shall be of no further force and effect
Section 7.20 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT.
Section 7.21 Corporate Authorization. The officers of ECC and the Company are hereby authorized, empowered and directed, in the
name and on behalf of each of ECC and the Company, respectively, to take or cause to be taken all
such further action, to execute and deliver or cause to be executed and delivered all such further
agreements, certificates, instruments and documents, to make or cause to be made all such filings
with governmental or regulatory authorities, and to pay or cause to be paid all such fees and
expenses, in each case which shall in such officers’ judgment be deemed necessary, proper or
advisable to effect and carry out the intent of this Agreement, such determination to be evidenced
conclusively by such officers’ execution and delivery thereof or taking of action in respect
thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
authorized representatives as of the date first above written.
| EchoStar Communications Corporation |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| EchoStar Holding Corporation |
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| By: | ||||
| Name: | ||||
| Title: | ||||
