Exhibit 10.4
April 13, 1999
Xxxxxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxx:
This letter agreement and its exhibits ("Agreement") will confirm the
understanding between PRIMESTAR, Inc. and Xxxxxxx X. Xxxxxxx ("you") regarding
your employment with PRIMESTAR, Inc. PRIMESTAR, Inc. and you have agreed as
follows:
1. Employment and Services.
-----------------------
PRIMESTAR, Inc., the new privately held corporate entity created as a
result of the restructuring (as defined in the TCI Satellite Entertainment, Inc.
("TSAT") Definitive Proxy Statement/Prospectus dated February 9, 1998 (the
"Roll-up Transaction")), will employ you as Senior Vice President, Chief
Financial Officer, commencing on the first day following the closing of the
Roll-up Transaction, and you have agreed to perform your exclusive and full-time
services in that capacity for PRIMESTAR, Inc. upon the terms and conditions
herein set forth. At all times during your employ hereunder, you agree that you
are subject to and will comply with the personnel policies and procedures of
PRIMESTAR, Inc. currently in effect and as may be modified from time to time by
PRIMESTAR, Inc., except to the extent any such policy or procedure specifically
conflicts with the express terms of this Agreement. This Agreement replaces and
supercedes any other employment agreement or offer letter from TSAT, Primestar
Partners, L.P. or PRIMESTAR, Inc., if any, that may be currently in effect.
2. Term.
----
The term of this Agreement shall commence as of the first day following the
closing of the Roll-up Transaction and will continue for a period of three (3)
years (the "Initial Term").
3. Compensation.
------------
As full compensation for your services rendered under this Agreement, you
will receive the following:
a. Initial base salary, ("Base Salary") at the annual rate of (i)
$247,500.00 during the period from April 1, 1998 to December 31, 1998;
and (ii) $264,825.00 commencing January 1, 1999 and continuing
thereafter with increases at the discretion of the Compensation
Committee of the Board of Directors of PRIMESTAR, Inc. (the "Board");
and
Xxxxxxx X. Xxxxxxx
April 13, 1999
Page 2
b. A target cash bonus of 45% of annual Base Salary, dependent upon
meeting certain defined goals as determined from time to time by
PRIMESTAR, Inc.; and
c. In addition to the foregoing, officers at your level of management will
be eligible for a long-term incentive plan to be developed and approved
by the Board. This long-term incentive plan may be formulated as a
PRIMESTAR, Inc. stock option incentive plan or a cash incentive as
outlined below.
Long-Term Stock Incentive Plan Alternative
------------------------------------------
You will be eligible for an initial grant of PRIMESTAR, Inc. Class A
common share options in an amount equal to the product of five times
your annual base salary, divided by a predetermined strike price. The
vesting period for this initial grant of options will be three (3)
years, with 1/3 vesting on each of the one year, two year and three
year anniversary dates of the initial option grant. Should PRIMESTAR,
Inc. become a publicly-traded company, shares which are the subject of
these options will become publicly tradable.
Although no assurances can be given, should the initial stock options
be granted as outlined above, it is also anticipated that officers at
your level of management (subject to meeting certain individual and
PRIMESTAR, Inc. performance targets) will be eligible in the future to
receive annual options of PRIMESTAR, Inc. Class A common shares under a
PRIMESTAR, Inc. long-term Stock Incentive Plan to be approved by the
Board.
In the event that PRIMESTAR, Inc. does not become a publicly-traded
company, stock options granted during such period shall be granted with
tandem stock appreciation rights ("SARs"), which will be exercisable
exclusively for cash at any time that the Company's common stock is not
publicly traded.
The timing, availability, other eligibility requirements and other
terms and conditions of the cash bonus program and the long-term
incentive plan will be determined by the Board.
4. Benefits.
--------
During the term of this Agreement, you will be entitled to four (4) weeks
vacation per year, sick leave, reimbursement for your reasonable and necessary
business expenses as provided by PRIMESTAR, Inc. generally to employees at your
level, and all other employee benefits as specified in the current PRIMESTAR,
Inc. Employee Handbook as may be modified from time to time by PRIMESTAR, Inc.
in its discretion.
Xxxxxxx X. Xxxxxxx
April 13, 1999
Page 3
5. Termination.
-----------
Notwithstanding Paragraph 2 hereof, PRIMESTAR, Inc. may terminate your
services with or without cause. PRIMESTAR, Inc. may terminate your services for
cause in the event of:
a. Your willful and continuing refusal without proper cause to perform
your material obligations under this Agreement;
b. Your willful, material and continuing breach of the Non-Competition and
Confidentiality Agreement set forth in Exhibit A; or
---------
c. Your conviction of (or nolo contendere plea to) any felony(whether or
---------------
not any right to appeal has been or may be exercised).
Such termination for cause shall be effected by written notice thereof
delivered by the Company to you and shall be effective as of the date of such
notice; provided, however, that the termination shall not be effective if (i)
such termination is pursuant to paragraph 5(b) above; and (ii) such notice is
the first such notice of termination delivered by the Company to you hereunder;
and (iii) within thirty (30) days following the date of such notice you shall
cure the breach. In the event of termination by the Company for cause in
accordance with the foregoing procedures, without prejudice to any other rights
or remedies that the Company may have at law or equity, the Company shall have
no further obligations to you other than to pay Base Salary as accrued through
the effective date of termination, together with all accrued vacation pay.
In the event that you are terminated without cause (in which event the
Company will provide you with thirty (30) days notice) or you resign for "good
reason" (which shall mean, PRIMESTAR, Inc.'s breach of any material provision of
this Agreement, any demotion without cause, your being required by PRIMESTAR,
Inc. to maintain your office other than in the Denver metropolitan region or
your resignation following the termination or voluntary resignation of Xxxx
Xxxxx from the position of Chief Executive Officer), in either case, subject to
your execution of a Severance and Release Agreement that is not materially
different from the form attached hereto as Exhibit B, you shall be eligible to
---------
receive severance payments equal to two (2) years of your base annual salary at
the time of termination of your employment ("Base Salary Severance") plus two
----
years of your target cash bonus equal to 45% of your base annual salary at the
time of termination of your employment ("Target Bonus Severance") without regard
to whether the Company has met its goals. You may elect to take your Base
Salary Severance plus the first year Target Bonus Severance in a lump sum up
front to be paid after all applicable waiting periods set forth in the Severance
and Release Agreement have run. Under this scenario, your second year Target
Bonus Severance would be paid on or before January 31 of the second January
following your termination date. Alternatively, you may elect to take your Base
Salary Severance, on a biweekly basis when normally otherwise due and payable,
for a period of two
Xxxxxxx X. Xxxxxxx
April 13, 1999
Page 4
(2) years after the termination of your employment, in which case PRIMESTAR,
Inc. shall continue to provide you with health benefits for the shorter of one
(1) year or such period of time as PRIMESTAR maintains its health benefit plans.
Under this scenario, PRIMESTAR, Inc. will pay the Target Bonus Severance on or
before January 31 of each of the two years following your termination date.
To the extent you hold PRIMESTAR, Inc. stock options, stock appreciation
rights or restricted shares under any stock incentive plan or non-qualified
stock option agreement, your vesting and any exercise rights shall be treated
pursuant to the applicable stock option, stock appreciation or restricted share
agreement and stock incentive plans.
If the Company terminates you without cause or you resign for good reason,
the Company will provide you with senior executive outplacement services with
Xxx Xxxxx Xxxxxxxx or a comparable provider for nine months.
This Agreement will terminate upon your death or total disability (as
defined in the PRIMESTAR, Inc. long-term disability plan). In the event of such
termination, PRIMESTAR, Inc. shall pay you (or your estate, if appropriate) all
compensation due hereunder but not yet paid prior to such termination, including
the Base Salary Severance and the Target Bonus Severance if your employment was
terminated prior to your death or total disability and such payments are
otherwise due and payable pursuant to the terms of this Agreement. Additionally,
if termination is due to your death, PRIMESTAR, Inc. will continue to provide
health benefits to your family for the shorter of one (1) full year or such
period of time as PRIMESTAR maintains its health benefit plans.
6. Indemnification.
---------------
Provided that you perform your duties for the Company in good faith and in
a manner believed by you to be in the best interests of the Company and not in
contravention of the terms of this Agreement, the Company agrees to indemnify
you to the fullest extent permitted by applicable law against all reasonably
paid expenses (including reasonable attorneys' fees), judgments, and amounts
paid in settlement to which Company has consented in writing, in connection with
any threatened, pending or completed investigation, claim, action, suit or
proceeding arising out of the performance by you of services to the Company
under this Agreement, provided that you cooperate with the Company in connection
therewith. You shall provide Company with prompt notice of the commencement of
any such investigation or litigation. The provisions of this Section 6 shall
survive termination of this Agreement with respect to events that occurred
during your employment with the Company.
Xxxxxxx X. Xxxxxxx
April 13, 1999
Page 5
7. Confidentiality and Non-Competition Obligations.
-----------------------------------------------
As a condition of your employment with PRIMESTAR, Inc. you will be
obligated to execute the non-competition and confidentiality agreement attached
hereto as Exhibit A.
---------
8. General.
-------
a. This Agreement sets forth the entire agreement and understanding of the
parties hereto, and, effective on the commencement date hereof,
supersedes all prior agreements, arrangements, and understandings. No
representation, promise or inducement has been made by either party
that is not embodied in this Agreement.
b. Nothing herein contained shall be construed so as to require the
commission of any act contrary to law. Whenever there is any conflict
between any provision of this Agreement and any present or further
statute, law, ordinance or regulation, the latter shall prevail, but in
such event, the provision of this Agreement affected shall be curtailed
and limited only to the extent necessary to bring it within legal
requirements.
c. The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
d. This Agreement may be amended, and any terms of it waived only by a
written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure or
waiver of either party at any time(s) to require performance of any
provision hereof shall in no manner affect the right at a later time to
enforce the same or any other provision.
e. This Agreement shall be governed and construed in accordance with the
laws of Colorado applicable to contracts entered into and fully
performed in Colorado without regard to principles of conflict of laws.
Any controversy or claim arising out of or relating to this Agreement,
its enforcement or interpretation, or because of an alleged breach,
default, or misrepresentation in connection with any of its provisions,
or arising out of or relating in any way to your employment or
termination thereof, shall be submitted to arbitration, to be held in
Colorado, before the American Bar Association, Denver, Colorado for
resolution in accordance with the rules and procedures of the American
Bar Association, with the power to grant equitable relief, including
injunctions and temporary restraining orders. The parties irrevocably
agree to be bound by any decision rendered by the American Bar
Association. Notwithstanding the foregoing, PRIMESTAR, Inc. shall have
the right to obtain injunctive, relief against you from an appropriate
court if you
Xxxxxxx X. Xxxxxxx
April 13, 1999
Page 6
threaten or attempt to: (i) seek, negotiate or obtain employment other
than with PRIMESTAR, Inc. except as permitted by this Agreement; or
(ii) make unauthorized disclosure of confidential information to a
third party.
f. Neither party may assign any provision hereof, directly or indirectly,
without the prior consent of the other party hereto.
g. You have read this Agreement, fully understand its contents and terms,
and have had the opportunity to raise any questions, concerns or issues
you may have in connection with the Agreement or the terms of the
Agreement. You also have had the opportunity, and taken it to the
extent you choose, to consult legal counsel or any other advisers of
your choice in connection with this Agreement.
Very truly yours,
PRIMESTAR, Inc.
By:
-----------------------------------
Xxxx X. Xxxxx
Chief Executive Officer
AGREED:
--------------------------
Xxxxxxx X. Xxxxxxx
