Exhibit 10.4

PERFORMANCE UNIT AWARD AGREEMENT

This PERFORMANCE UNIT AWARD AGREEMENT (this “Agreement”) is made by and between
RigNet, Inc. a Delaware corporation (the “Company”), and Errol Oliver (the
“Holder” effective as of January 8, 2020 (the “Grant Date”).  The Company hereby
grants to the Holder 23,485 Performance Units at Target (the “Target Units”),
117,425 Performance Units at Maximum (the “Maximum Units”) and 18,788
Performance Units at Threshold (the “Threshold Units”) specified herein (the
Target Units, Maximum Units and Threshold Units are collectively referred to as
the “Performance Units”), which each Performance Unit represents a right to
receive a share of Stock based upon the terms and conditions of this Agreement,
as well as the achievement of the metrics set forth herein in exchange for such
awarded Performance Units:

 

1.

Definitions.  For purposes of this Agreement, the following terms shall have the
meanings indicated below:

 

a.

“2020 Performance Period” means January 1, 2020 through December 31, 2020.

 

b.

“2021 Performance Period” means January 1, 2021 through December 31, 2021.

 

c.

“2022 Performance Period” means January 1, 2022 through December 31, 2022.

 

d.

“AEBITDA” means Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization as reported by Company in its filings with the Securities and
Exchange Commission as adjusted to eliminate foreign exchange impacts and as
further adjusted by the Board pursuant to Section 6 hereof.

 

e.

“Affiliate” means any corporation, partnership, limited liability company or
association, trust or other entity or organization which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company.  For purposes of the preceding sentence, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (a) to vote more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors or comparable individuals of the controlled entity or organization, or
(b) to direct or cause the direction of the management and policies of the
controlled entity or organization, whether through the ownership of voting
securities or by contract or otherwise.

 

f.

“Cause” is defined as any of the following: (i) the Holder’s plea of guilty or
nolo contendere, or conviction of a felony or a misdemeanor involving moral
turpitude; (ii) any act by the Holder of fraud or dishonesty with respect to any
aspect of the Company’s business including, but not limited to, falsification of
Company records; (iii) the Holder’s failure to perform his duties (other than by
reason of Disability); (iv) the Holder’s engagement in misconduct that is
materially injurious to the Company (monetarily or otherwise); (v) the Holder’s
breach of any confidentiality, noncompetition or non-solicitation obligations to
the Company, including but not limited to engagement in Detrimental Activity;
(vi) the Holder’s commencement of employment with an unrelated employer;
(vii) material violation by the Holder of any of the Company’s written policies,
including but not limited to any harassment and/or non-discrimination policies;
or (viii) the Holder’s gross negligence in the performance of his or her duties.

 

g.

“Change in Control” means (i) a change in ownership occurring as the result of a
person or group acquiring Stock of the Company, which, when combined with the
Stock held by such person or group, constitutes more than seventy-five percent
(75%) of the total fair market value or total voting power of the Company;
provided the person or group was not considered as owning more than seventy-five
percent (75%) of the value or voting power prior to the acquisition; (ii) a
change in effective control of the Company occurring as the result of the
replacement of a majority of the members of the Board by directors whose
appointment or election is not endorsed by a majority of the members of the
Board before the date of the appointment or election; or (iii) a change in the
ownership of a substantial portion of the assets of the Company occurring as the
result of a person or group acquiring assets from the Company that have a total
gross fair market value equal to or more than seventy-five percent (75%) of the
total gross fair market value of all the assets of the Company

 

--------------------------------------------------------------------------------

 

 

immediately prior to such acquisition.  The determination of whether a Change of
Control has occurred will be made in accordance with Code Section 409A and the
regulations thereunder.

 

h.

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

 

i.

“Confidential Information” means material of a secret or confidential nature
relating to the business, products, or services of the Company or any Affiliate
acquired by the Holder during employment with the Company or any Affiliate.
“Confidential Information” excludes any information readily available to members
of the general public other than as a result of the unauthorized disclosure,
directly or indirectly, by the Holder.

 

j.

“Detrimental Activity” shall include, unless otherwise modified by the Company
in connection with a Change in Control: (i) rendering services for any person or
organization, or engaging directly or indirectly in any business, which is or
becomes competitive with the Company or any Affiliate; (ii) disclosing to anyone
outside the Company or any Affiliate, other than the Company’s or any
Affiliate’s business, without prior written authorization from the Company or
any Affiliate, any Confidential Information; (iii) soliciting, interfering,
inducing, or attempting to cause any employee of the Company or any Affiliate to
leave his or her employment, whether done on the Holder’s own account or on
account of any person, organization, or business; or (iv) directly or indirectly
soliciting the trade or business of any customer of the Company or any
Affiliate, which is or becomes competitive with the Company or any Affiliate.

 

k.

“Disability” or “Disabled” means a determination by the Company’s long‑term
disability carrier that a Holder is disabled in accordance with the Company’s
long‑term disability insurance plan (or, in the case of a non-U.S. Holder, in
accordance with a comparable disability plan), provided the definition of
disability applied under such plan complies with the requirements of Treas. Reg.
Section 1.409A-3(i)(4), or, in the case of a Holder who is not covered under
such plan, a determination made by the Social Security Administration (or, in
the case of a non-U.S. Holder, a determination made by a comparable governmental
entity) that the Holder is totally disabled.  

 

l.

“Forfeiture Restrictions” means the prohibitions and restrictions set forth
herein with respect to the sale or other disposition of the Performance Units
issued to the Holder hereunder and the obligation to forfeit and surrender such
Performance Units to the Company.

 

m.

“Payment Date” means the calendar year 2023.

 

n.

“Performance Award Period” means the three (3) year period that begins on the
first day of the 2020 Performance Period and ends on the last day of the 2022
Performance Period.

 

o.

“Retirement” shall mean Holder’s voluntary election to retire from employment
with the Company or any Affiliate at any time after Holder has reached both the
age of 60 and 5 years of service.

 

p.

“Stock” means the common stock of the Company, $0.001 par value per share (or
such other par value as may be designated by act of the Company’s stockholders).

 

q.

“Stock Price Achievement” means the average price for the thirty (30) trading
days ending on November 15 in each year in the performance period.

2.

Grant of Performance Units.  

 

a.

Metrics. For purposes of determining the vesting of, and the payment, if any, to
be made with respect to, the Performance Units, the Performance Units are based
on two independent and alternative metrics: (1) AEBITDA, and (2) Stock Price
Achievement. The Performance Units will be attributed to attainment of either
metric. The actual number of Performance Units that may be earned by the Holder
will be determined as described below, based upon the actual results for the
Performance Award Period:

 

- 2 -

--------------------------------------------------------------------------------

 

Funding Metric

Threshold

Target

Maximum

Stock Price Target

$8.19

$10.91

$21.38

AEBITDA for 2020 Performance Period

N/A

$42.2MM

$50.6MM

AEBITDA for 2021 Performance Period

N/A

$52.6MM

N/A

Aggregate AEBITDA for Performance Periods 2020-2021

N/A

N/A

$113.8MM

AEBITDA for 2022 Performance Period

N/A

$60.2MM

N/A

Aggregate AEBITDA for

Performance Award Period 2020-2022

$139.5MM

$155.0MM

$186.0MM

The Performance Units that are granted hereby shall be subject to the Forfeiture
Restrictions.  If the Company achieves Target performance for either Stock Price
Achievement or AEBITDA in any one of the 2020, 2021 or 2022 Performance Periods
then the Forfeiture Restrictions on the Target Units shall lapse at the end of
such year.  If the Company achieves Maximum performance for either Stock Price
Achievement or AEBITDA in any one of the 20202, 2021 or 2022 Performance Periods
than the Forfeiture Restrictions shall lapse at the end of such year on the
Maximum Units.  If at the end of the Performance Award Period, the Forfeiture
Restrictions have not lapsed in accordance with the foregoing, but the Company
has achieved Threshold performance for either the Stock Price Achievement or
Aggregate AEBITDA for the Performance Award Period (or the higher of the two if
Threshold has been hit for both), then the Forfeiture Restrictions shall lapse
for that number of Performance Units determined by interpolating performance
between Threshold and Target for the measure, with the Forfeiture Restrictions
lapsing on the Threshold Units at Threshold performance and the Forfeiture
Restrictions lapsing on 100% of the Target Units at Target performance. If at
the end of the Performance Award Period, the Forfeiture Restrictions have not
lapsed on the Maximum Units, but the Company has achieved Target Performance for
either the Stock Price Achievement in 2022 or Aggregate AEBITDA for Performance
Periods 2020-2022 (or the higher of the two if Target has been hit for both),
then the Forfeiture Restrictions shall lapse for that number of Performance
Units determined by interpolating performance between Target and Maximum for the
Measure, with the Forfeiture Restrictions lapsing on the Target Units at Target
Performance and the Forfeiture Restrictions lapsing on the Maximum Units at
Maximum performance.

The Holder shall have no vested interest in the Performance Units credited to
his or her account except as set forth in this Section 2. On or before the
Payment Date, and after satisfaction of the Holder’s tax withholding obligations
described in Section 8, the Company shall issue to the Holder that number of
shares of Stock, if any, calculated or otherwise determined pursuant to this
Agreement in exchange for the Performance Units that vested as a result of the
lapse of the applicable Forfeiture Restrictions and thereafter the Holder shall
have no further rights with respect to such vested Performance Units.

 

b.

Forfeiture.  If the Holder ceases to be employed by the Company or an Affiliate
for any reason before the applicable lapse date, other than in accordance with
subsections (c), (d) and (e) below, the Forfeiture Restrictions then applicable
to the Performance Units shall not lapse and all the Performance Units then
subject to the Forfeiture Restrictions shall be forfeited to the Company on the
date the Holder ceases to be employed by the Company or an Affiliate. If the
Holder breaches, before the applicable lapse date, any non-competition,
confidentiality, restrictive covenant or other similar agreement with the
Company to which the Holder is subject, the Forfeiture Restrictions then
applicable to the Performance Units shall not lapse and all the Performance
Units then subject to the Forfeiture Restrictions shall be forfeited to the
Company on the date the Holder breaches such agreement or covenant.

- 3 -

--------------------------------------------------------------------------------

 

 

c.

Death, Disability and Retirement.  If the Holder’s employment terminates due to
(i) death, (ii) Disability, or (iii) Retirement before the last day of the
Performance Award Period, all unvested Performance Units (assuming the Target
achievement) shall automatically become 100% vested on the Holder’s date of
termination.

 

d.

Change in Control.  If a Change in Control occurs on or before the last day of
the Performance Award Period while the Holder is employed with the Company, all
unvested Performance Units (assuming the Target achievement) shall automatically
become 100% vested upon such Change in Control.

 

e.

Termination not for Cause.  If the Holder’s employment is terminated by Company
for any reason other than for Cause before the last day of the Performance Award
Period, a percentage of the Performance Units (assuming the Target achievement)
equal to the percentage of the Performance Award Period that has elapsed prior
to termination shall automatically become vested upon such termination.

3.

Delivery of Shares.  On the Payment Date, for that amount of shares for which
there has been a lapse of the Forfeiture Restrictions with respect to the
Performance Units granted, the Company shall cause to be delivered to the Holder
any shares of Stock that are to be issued under the terms of this Agreement in
exchange for all vested Performance Units awarded hereby. The shares shall be
evidenced by stock certificates with the appropriate legends affixed thereto,
appropriate entry on the books of the Company or of a duly authorized transfer
agent, or other appropriate means as determined by the Company, and such shares
shall be transferable by the Holder. The maximum number of shares of Stock that
may be paid under this Agreement is equal to the Maximum Units granted under
this Agreement.

4.

Performance Units Do Not Award Any Rights of a Shareholder.  The Holder shall
not have the voting rights or any of the other rights, powers or privileges of a
holder of Stock with respect to the Performance Units that are awarded hereby.
Only after a share is issued in exchange for a Performance Unit will the Holder
have all of the rights of a shareholder with respect to such share of Stock
issued in exchange for a Performance Unit.

5.

Transfer Restrictions.  The Performance Units granted hereby may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of (other than by will or the applicable laws of descent and
distribution). Any such attempted sale, assignment, pledge, exchange,
hypothecation, transfer, encumbrance or disposition in violation of this
Agreement shall be void and the Company shall not be bound thereby. Further, any
shares of Stock issued to the Holder in exchange for Performance Units awarded
hereby may not be sold or otherwise disposed of in any manner that would
constitute a violation of any applicable securities laws. The Holder also agrees
that the Company may (a) refuse to cause the transfer of any such shares to be
registered on the applicable stock transfer records of the Company if such
proposed transfer would, in the opinion of counsel satisfactory to the Company,
constitute a violation of any applicable securities law; and (b) give related
instructions to the transfer agent, if any, to stop registration of the transfer
of such shares of Stock.

6.

Capital Adjustments and Reorganizations; Acquisitions and Divestitures.  The
existence of the Performance Units shall not affect in any way the right or
power of the Company or any company the stock of which is awarded pursuant to
this Agreement to make or authorize any adjustment, recapitalization,
reorganization or other change in its capital structure or its business, engage
in any merger or consolidation, issue any debt or equity securities, dissolve or
liquidate, or sell, lease, exchange or otherwise dispose of all or any part of
its assets or business, or engage in any other corporate act or proceeding. If,
during the Performance Award Period, the Company or any of its subsidiaries
acquire or dispose of, by any means including by asset or equity purchase or
sale or by merger, any entity, business or material group of assets in a
transaction reported by the Company under Item 2.01 on a Current Report on Form
8-K filed with the Securities and Exchange Commission, the Committee shall
revise the threshold, target and maximum for the Performance Period of such
acquisition or disposition and all subsequent Performance Periods as the
Committee determines is necessary to properly adjust such amounts to reflect the
results of such transaction.

7.

Covenant Not To Compete; Solicit or Disclose Confidential Information.  

 

a.

The Holder acknowledges that he or she is in possession of and has access to
Confidential Information and that he or she will continue to have such
possession and access during employment by the Company. The Holder also
acknowledges that the Company’s business, products and services are highly
specialized and that

- 4 -

--------------------------------------------------------------------------------

 

 

it is essential that they be protected, and, accordingly, the Holder agrees that
as partial consideration for the Performance Units granted herein that should
the Holder engage in any Detrimental Activity at any time during his or her
employment or during a period of one (1) year following his or her termination
of employment, the Company shall be entitled to: (i) recover from the Holder the
value of any portion of the Performance Units that has been paid; (ii) seek
injunctive relief against the Holder pursuant to the provisions of subsection
(b) below; (iii) recover all damages, court costs, and attorneys’ fees incurred
by the Company in enforcing the provisions of this Agreement; and (iv) set off
any such sums to which the Company is entitled hereunder against any such sum
which may be owed to the Holder by the Company.  All such rights of the Company
shall be in addition to, and not in lieu of, any additional such rights the
Company may have under any other non-competition, confidentiality, restrictive
covenant, or other similar agreement with the Holder, all of which shall remain
in effect and survive in accordance with their terms.

 

b.

Because of the difficulty of measuring economic losses to the Company as a
result of a breach of the foregoing covenants, and because of the immediate and
irreparable damage that could be caused to the Company for which it would have
no other adequate remedy, the Holder agrees that the foregoing covenants may be
enforced by the Company in the event of breach by him or her by injunction
relief and restraining order, without the necessity of posting a bond, and that
such enforcement shall not be the Company’s exclusive remedy for a breach but
instead shall be in addition to all other rights and remedies available to the
Company.

 

c.

The covenants and provisions of this Section 7 are severable and separate, and
the unenforceability of any specific covenant or provision shall not affect the
enforceability of any other covenant or provision. Moreover, in the event any
arbitrator or court of competent jurisdiction shall determine that the scope or
time set forth are unreasonable, then it is the intention of the parties that
such restrictions be enforced to the fullest extent which the panel or court
deems reasonable, and this Agreement shall thereby be reformed.

 

d.

Each of the covenants in this Section 7 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of the Holder against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants or provisions.

 

e.

The Holder shall not be held criminally or civilly liable under any federal or
state trade secret law for the disclosure of a trade secret that: (A) is made
(x) in confidence to a federal, state, or local government official, either
directly or indirectly, or to an attorney, and (y) solely for the purpose of
reporting or investigating a suspected violation of law; or (B) is made in a
complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal. Should the Holder file a lawsuit for retaliation by
an employer for reporting a suspected violation of law the Holder may disclose
the trade secret to the Holder’s attorney and use the trade secret information
in the court proceeding, if the Holder: (A) files any document containing the
trade secret under seal; and (B) does not disclose the trade secret, except
pursuant to court order. Nothing in this Agreement is intended to conflict with
18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that
are expressly allowed by 18 U.S.C. § 1833(b).

8.

Tax Withholding.  To the extent that the receipt of the Performance Units, any
payment in cash or shares of Stock or the lapse of any Forfeiture Restrictions
results in income to the Holder for federal, state or local income, employment
or other tax purposes with respect to which the Company or any Affiliate has a
withholding obligation, the Holder shall deliver to the Company at the time of
such receipt, payment or lapse, as the case may be, such amount of money as the
Company or any Affiliate may require to meet its obligation under applicable tax
laws or regulations, and, if the Holder fails to do so, the Holder will be
deemed to have elected for the Company to withhold the amount of shares
necessary to cover applicable tax withholding.

9.

No Fractional Shares.  All provisions of this Agreement concern whole shares. If
the application of any provision hereunder would yield a fractional share, such
fractional share shall be rounded down to the next whole share if it is less
than 0.5 and rounded up to the next whole share if it is 0.5 or more.

10.

Nontransferability.  This Agreement is not transferable by the Holder otherwise
than by will or by the laws of descent and distribution.

- 5 -

--------------------------------------------------------------------------------

 

11.

Employment Relationship.  For purposes of this Agreement, the Holder shall be
considered to be in the employment of the Company and its Affiliates as long as
the Holder has an employment relationship with the Company and its Affiliates.
The Committee shall determine any questions as to whether and when there has
been a termination of such employment relationship, and the cause of such
termination and the Committee’s determination shall be final and binding on all
persons.

12.

Not an Employment Agreement.  This Agreement is not an employment agreement, and
no provision of this Agreement shall be construed or interpreted to create an
employment relationship between the Holder and the Company or any Affiliate, to
guarantee the right to remain employed by the Company or any Affiliate for any
specified term or require the Company or any Affiliate to employ the Holder for
any period of time.

13.

Legend.  The Holder consents to the placing on the certificate for any shares of
Stock issued under this Agreement in certificated form an appropriate legend
restricting resale or other transfer of such shares except in accordance with
all applicable securities laws and rules thereunder.

14.

Notices.  Any notice, instruction, authorization, request or demand required
hereunder shall be in writing, and shall be deemed to have been duly given when
delivered or mailed to the Company or the Holder, as applicable, by (a) personal
delivery; (b) United States registered mail, return receipt requested, postage
prepaid, addressed to the Company at the then current address of the Company’s
principal corporate office, or to the Holder at the Holder’s residential address
indicated in the Company’s records; or (c) email to the Company at
LegalDesk@rignet.com or to the Holder at the Holder’s email address indicated in
the Company’s records.

15.

Amendment and Waiver.  Except as otherwise provided herein, this Agreement may
be amended, modified or superseded only by written instrument executed by the
Company and the Holder. Only a written instrument executed and delivered by the
party waiving compliance hereof shall make any waiver of the terms or
conditions. Any waiver granted by the Company shall be effective only if
executed and delivered by a duly authorized executive officer of the Company
other than the Holder. The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner effect the right to
enforce the same. No waiver by any party of any term or condition, or the breach
of any term or condition contained in this Agreement, in one or more instances,
shall be construed as a continuing waiver of any such condition or breach, a
waiver of any other condition, or the breach of any other term or condition.

16.

Disputes.  In the event of any difference of opinion concerning the meaning or
effect of the this Agreement, such difference shall be resolved by the
Committee. Any controversy arising out of or relating to this Agreement shall be
resolved by the state and federal courts sitting in Harris County, Texas.

17.

Governing Law and Severability.  The validity, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware, excluding
any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction. The invalidity of any provision of this Agreement shall
not affect any other provision of this Agreement, which shall remain in full
force and effect.

18.

Successors and Assigns.  Subject to the limitations which this Agreement imposes
upon the transferability of the Performance Units granted hereby and any shares
of Stock issued hereunder, this Agreement shall bind, be enforceable by and
inure to the benefit of the Company and its successors and assigns, and to the
Holder, the Holder’s permitted assigns, executors, administrators, agents, legal
and personal representatives.

19.

Counterparts.  This Agreement may be executed in two or more counterparts, each
of which shall be an original for all purposes but all of which taken together
shall constitute but one and the same instrument.

20.

Recoupment.  The Holder acknowledges and agrees that all payments made under
this Agreement are subject to the Company’s clawback policy, as it may be
amended from time to time (the “Policy”). If at any time after an amount is paid
under this Agreement the financial results of the Company and/or its Affiliates
are restated (other than a restatement caused by a change in applicable
accounting rules or interpretations) and such restated financial results would
have resulted in fewer shares of Stock being paid under this Agreement if such
restated financial results had been taken into account originally in determining
the vesting of the Performance Units then the vesting of the Performance Units
shall be recalculated under the applicable provisions of this Agreement taking
into

- 6 -

--------------------------------------------------------------------------------

 

account such restated financial results and the Holder or, if the Holder has
died, the Holder’s estate, will, to the extent required by governing law or
regulations, as they may be amended from time to time, and/or the Policy, repay
to the Company, upon demand by the Company, any shares of Stock delivered under
this Agreement in excess of the number of shares that would have been delivered
if the restated financial results had been taken into account originally in
determining the vesting of the Performance Units.

21.

Compliance with Section 409A. This Agreement is subject to, and intended to
comply with, to the extent applicable, or to be exempt from the requirements of,
Section 409A. This Agreement shall be administered in a manner that is intended
to meet those requirements and shall be construed and interpreted in accordance
with such intent. Although the Company will use its best efforts to avoid the
imposition of taxation, interest and penalties under Section 409A, the tax
treatment of the benefits provided under the Plan under Section 409A or
otherwise is not warranted or guaranteed.  Neither the Company, its Affiliates
nor their respective directors, officers, employees or advisers shall be held
liable for any taxes, interest, penalties or other monetary amounts owed by the
Holder (or any other individual claiming a benefit through the Holder) as a
result of the Plan. Notwithstanding anything to the contrary in this Agreement,
to the extent any payment or benefit provided under this Agreement and the Plan
constitutes “nonqualified deferred compensation” for purposes of Section 409A,
such payment or benefit shall not be made or provided until the date which is
the earlier of (A) the expiration of the six (6)-month period measured from the
date of such “separation from service” of the Holder, and (B) the date of the
Holder’s death, to the extent required under Section 409A.  For purposes of
Section 409A, each installment payment provided under this Agreement shall be
treated as a separate payment.  Any payments to be made under this Agreement
upon a termination of employment shall be made upon a “separation from service”
to the extent required under Section 409A.

- 7 -

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Holder and the Company agree and acknowledge that this
grant of Performance Units is granted under and governed by the terms and
conditions of the Plan and this Agreement.

Holder

RigNet, Inc.

 

 

By: /s/ ERROL OLIVIER

By:/s/ STEVEN E. PICKETT

 

 

Name: Errol Olivier

Name: Steven E. Pickett

 

 

 

Title: Chief Executive Officer and President

 

- 8 -