Exhibit 10.8

 

June 27, 2005

 

Mr. David McGlade

Chief Executive Officer

Intelsat, Ltd.

Wellesley House North, 2nd Floor

90 Pitts Bay Road

Pembroke, HM 08

Bermuda

 

Dear Mr. McGlade:

 

1. Introduction

 

This letter confirms the engagement of FTI Palladium Partners, a division of FTI
Consulting Inc. and its wholly owned subsidiaries (collectively referred as
“FTI”) by Intelsat, Ltd. (“you,” “your” or “Intelsat” or the “Company”) to
provide certain employees to the Company to assist it and its affiliates with
the services described below (the “Engagement”). This letter of engagement and
the related supporting schedules constitute the engagement contract (the
“Engagement Contract”) pursuant to which the Services will be provided.

 

2. Scope of Services

 

To the extent requested by the Company, FTI will provide the following
individuals to work with you and your team in connection with the services (the
“Services”) outlined below:

 

  •   Provide the services of Greg Rayburn for overall engagement oversight and
consultation.

 

  •   Provide the services of Bob Medlin to serve as a financial specialist
employee (the “financial specialist”) of the Company, reporting directly to the
Chief Executive Officer of the Company; and serving as the interim Chief
Financial Officer; and

 

  •   Provide the services of other temporary employees (the “Temporary
Employees”) to support Bob Medlin in his role as financial specialist as
follows:

 

  1. Assist in managing and interacting with the “working group” professionals
who are currently assisting the Company in the process to improve coordination
of their effort and individual work product to be consistent with the Company’s
overall objectives;

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  2. Assess the finance department management teams and the functional
capabilities of the Company;

 

  3. Identify both the gaps and the opportunities that exist between the
departments in the Company;

 

  4. Develop and implant business process changes that will serve to close the
gaps and capitalize on the opportunities identified;

 

  5. Design, evaluate and maintain the Company’s disclosure controls and
procedures and internal control over the financial reporting, and if requested
by the Company, sign representations and certifications for submission with SEC
filings as to such controls;

 

  6. Perform the duties of Chief Financial Officer and assist in the recruiting
and retention of a permanent replacement for that position; and

 

  7. Provide such other services as may be requested by the Chief Executive
Officer.

 

We will keep you informed in advance as to our intended staffing and will not
add additional Temporary Employees to the assignment without first obtaining
your consent that such additional resources are required and do not duplicate
the activities of other employees or professionals. In addition, we will
promptly on your request provide additional qualified Temporary Employees.
Moreover, we will attempt to utilize Company personnel to fulfill such roles and
will take such steps as may be necessary to avoid duplication with the Company’s
other professionals. Furthermore, we will obtain your consent as to the areas of
responsibility being filled by all Temporary Employees and will adjust the
staffing level upwards or downwards as you direct.

 

In addition to these specific services, we understand that at your request and
to the extent appropriate, such Temporary Employees may be asked to participate
in meetings and discussions with the Company and other constituencies and their
respective professionals.

 

The Services of the Temporary Employees may be performed by FTI or by any
subsidiary of FTI, as FTI shall determine. FTI may also provide non-officer
Services through agents or independent contractors. References herein to FTI and
its employees shall be deemed to apply also, unless the context shall otherwise
indicate, to employees of each such subsidiary and to any such agents or
independent contractors and their employees. Prior to providing services
hereunder, each Temporary Employee, FTI subsidiary, agent, independent
contractor and employee thereof shall execute a confidentiality agreement
similar to the Confidentiality Agreement (as defined in Section 4).

 

3. No Assurance on Financial Data

 

Because of the time and scope limitations implicit in this Engagement, the depth
of our analyses and verification of the data is significantly limited. We
understand that our Temporary Employees

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are not being requested to perform an audit or to apply generally accepted
auditing standards or procedures for such purposes.

 

4. Privileged and Confidential Information and Work Product

 

The Company acknowledges that all consulting-related advice (written or oral)
given by the Temporary Employees to the Company in connection with the
Engagement is intended solely for the benefit and use of the Company (limited to
the Board of Directors thereof and management) and we understand that the
Company has agreed to treat any consulting-related advice received from us,
whether orally or in writing, confidential and, except as provided in this
Engagement Contract, will not publish, distribute or disclose in any manner any
consulting-related advice developed by or received from us without our prior
written approval (except to the Company’s respective officers, directors,
employees, attorneys, advisors, shareholders, lenders, or prospective investors
or lenders and persons who have a need to know such information in order to
perform services under this Engagement Contract). Such approval shall not be
unreasonably withheld. Our approval is not needed if (a) the advice sought is
required to be disclosed by law or the rules of the NASDAQ Market or any stock
exchange upon which the Company’s stock is listed or by an order binding on the
Company or us, issued by a court having competent jurisdiction over the Company
or us, as applicable (unless such order specifies that the advice to be
disclosed is to be placed under seal), (b) such information is otherwise
publicly available, (c) the disclosure is of information in the possession of
the Company prior to this Engagement or is independently developed by the
Company, or (d) the disclosure is of information acquired from a third party
who, to the Company’s knowledge, owes no obligation of confidence with respect
to such information.

 

We agree that all non-public, confidential or proprietary information
(“Information”) that is received by us from the Company or the Company’s
accountants or outside counsel in connection with this engagement will be
subject to the separate Confidentiality Agreement, dated as of May 31, 2005 (the
“Confidentiality Agreement”), between FTI and the Company.

 

5. Fees

 

Our agreed upon compensation for the services to be rendered pursuant to this
letter agreement is set forth on Schedule I. We will also be reimbursed for
customary and reasonable documented out-of-pocket expenses including, but not
limited to, travel, lodging, costs of reproduction, reasonable out-of-pocket
counsel fees not to exceed $50,000 and other direct expenses.

 

We will require a retainer (the “Retainer”) of $50,000, due upon the execution
of this Engagement Contract. We will further submit to the Company monthly
invoices for services rendered and expenses incurred by additional temporary
employees, which are due within 30 business days of receipt. Upon the conclusion
of this engagement, the Retainer either will be returned to the Company upon
payment in full of all of our outstanding invoices or, if such payment has not
been made, in our sole discretion, applied to any outstanding invoice.

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It is understood that if employees of FTI are required to testify at any
administrative or judicial proceeding relating to this matter (whether during
the term of this letter agreement or after termination), FTI will be compensated
by the Company at the regular hourly rates for each such employee, in effect at
the time, and reimbursed for reasonable out-of-pocket expenses (including
reasonable counsel fees).

 

The Company agrees to promptly notify FTI if it extends (or solicits the
possible interest in receiving) an offer of employment to a principal or
employee of FTI involved in this Engagement and agrees that it will pay FTI a
cash fee, upon hiring, equal to 150% of the aggregate first year’s annualized
compensation, including any guaranteed or target bonus, to be paid to FTI’s
former principal or employee that the Company or any of its subsidiaries or
affiliates hires at any time up to one year subsequent to the date of the final
invoice rendered by FTI with respect to this Engagement.

 

6. Conflicts of Interest

 

Based on the list of interested parties (the “Potentially Interested Parties”)
provided by you, we have undertaken a limited review of our records to determine
FTI’s professional relationships with the Company, the Administrative Agent and
the existing lenders under the Credit Agreement, dated as of January 28, 2005,
as amended, among Zeus Merger One Limited, Zeus Merger Two Limited, the
Administrative Agent thereunder and the lenders party thereto. From the results
of such review, we are not aware of any conflicts of interest or relationships
that would preclude us from performing the above Services for you.

 

As you know, we are a large consulting firm with numerous offices and we are
regularly engaged by new clients which may include one or more of the
Potentially Interested Parties. We will not accept an engagement with any of the
Potentially Interested Parties or any other party that directly or materially
conflicts with this Engagement without your prior written consent.

 

7. Limitation of Liability

 

The Company agrees to indemnify, hold harmless and defend FTI against any and
all losses, claims, damages, liabilities, penalties, judgments, awards, amounts
paid in settlement, reasonable out-of-pocket costs, fees, expenses and
disbursements including, without limitation, the reasonable out-of-pocket costs,
fees, expenses and disbursements, as and when incurred, of investigating,
preparing or defending any action, suit, proceeding or investigation (whether or
not in connection with proceedings or litigation in which FTI is a party),
directly or indirectly caused by, relating to, based upon, arising out of or in
connection with the engagement of FTI by the Company or any services rendered
pursuant to such engagement; provided that the Company will not be responsible
for payment of indemnification amounts hereunder (and any indemnified

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person shall reimburse the Company for indemnification amounts already paid)
that are determined by a final judgment of a court of competent jurisdiction to
have resulted from an indemnified person’s bad faith, self dealing, gross
negligence or willful misconduct. These indemnification provisions extend to the
officers, directors, principals, members, managers, and employees of FTI and
shall survive for 1 year after the termination or expiration of the engagement.
The contract rights to indemnification conferred in this paragraph shall not be
exclusive of any other right that any indemnified person may have or hereafter
acquire under any statute, agreement, order of a bankruptcy court or pursuant to
any directors and officers liability insurance policy (including any such policy
identified in Schedule I). The Company shall also reimburse any indemnified
person for all reasonable out-of-pocket expenses incurred in connection with
enforcing such indemnified person’s rights under this letter agreement.

 

In addition to the above indemnification, FTI personnel serving as employees of
the Company will, to the extent permitted by applicable law, be entitled to the
benefit of the indemnities provided by the Company to its officers and
directors, whether under the Company’s by-laws, certificate of incorporation, by
contract or otherwise.

 

The Company agrees that it will specifically include and cover Bob Medlin (and
any other employee of FTI who, at the request of the Board of Directors of the
Company, agrees to serve as an officer of the Company) under the Company’s
policies for directors’ and officers’ insurance. The Company agrees to also
maintain insurance coverage for Mr. Medlin for a period of not less than two (2)
years following the date of termination of such employee’s services hereunder.
The provisions of this Section 7 are in the nature of contractual obligations
and no change in applicable law or the Company’s charter, bylaws or other
organizational documents or policies shall affect any of Mr. Medlin’s rights
hereunder. The obligations of the parties as reflected in this Section 7 shall
survive the termination of the Engagement as set forth above.

 

The parties intend that an independent contractor relationship will be created
by this letter agreement. As an independent contractor, FTI will have complete
and exclusive charge of the management and operation of its business, including
hiring and paying the wages and other compensation of all its employees and
agents, and paying all bills, expenses and other charges incurred or payable
with respect to the operation of its business. None of FTI’s employees serving
as a Temporary Employee, including Bob Medlin in his capacity as Financial
Specialist of the Company, will be entitled to receive from the Company any
salary, bonus, compensation, vacation pay, sick leave, retirement, pension or
social security benefits, workers compensation, disability, unemployment
insurance benefits or any other Company employee benefits. FTI will be
responsible for all employment, withholding, income and other taxes incurred in
connection with the operation and conduct of its business (including those
related to Bob Medlin and the Temporary Employees).

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8. Waiver of Jury Trial/Dispute Resolution

 

The Company agrees that neither it nor any of its assignees or successors shall
(a) seek a jury trial in any lawsuit, proceeding, counterclaim or any other
action based upon or arising out of or in connection with the engagement of FTI
by the Company or any services rendered pursuant to such engagement or (b) seek
to consolidate any such action with any other action in which a jury trial
cannot be or has not been waived. The provisions of this paragraph have been
fully discussed by the Company and FTI and shall be subject to no exceptions.

 

9. Term of Engagement

 

This letter agreement shall be effective as of the date hereof and shall
continue in effect until termination or completion of our engagement hereunder.
Either you or we may terminate this letter agreement and our engagement at any
time upon the giving of at least thirty (30) days prior written notice to the
other party or immediately by a party upon a material breach of this Agreement
by the other party. Termination shall not affect our right to receive payment
for services performed, reimbursement for reasonable out-of-pocket expenses
properly incurred (in accordance with the terms of this letter agreement) or the
Company’s obligations under Section 7 herein. In the event of termination prior
to the end of a calendar month, you agree to pay us a pro rata portion of any
set monthly compensation based upon the number of days elapsed in the month up
to the effective time of termination.

 

To the extent FTI is terminated without Cause (as defined below), FTI shall be
entitled to the exit fee as set forth in Schedule I hereto payable within 30
days following termination. For purposes of this Engagement Contract, “Cause”
shall mean if (i) any of the Officers is convicted of, admits guilt in a written
document filed with a court of competent jurisdiction to, or enters a plea of
nolo contendere to, an allegation of fraud, embezzlement, misappropriation or
any felony, (ii) any of the Officers willfully disobeys a lawful direction of
the Board of Directors; or (iii) a breach of any of FTI’s or the Officers’
material obligations under this Engagement Contract.

 

If any provision of this Engagement Contract shall be invalid or unenforceable,
in whole or in part, then such provision shall be deemed to be modified or
restricted to the extent and in the manner necessary to render the same valid
and enforceable, or shall be deemed excluded from this letter agreement, as the
case may require, and this letter agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or as if such provision had not been
originally incorporated herein, as applicable.

 

This Engagement Contract and each related confidentiality agreement constitute
the entire understanding between the parties with respect to the subject matter
and supercede all prior written and oral proposals, understandings, agreements
and/or representations, all of which are merged herein. Any amendment or
modification of this letter agreement shall be in writing and executed by each
of the parties hereto.

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10. Governing Law and Jurisdiction

 

This Engagement Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York. The Courts of New York shall
have exclusive jurisdiction in relation of any claim, dispute or difference
concerning the Engagement Agreement and any matter arising from it. The parties
hereto irrevocably waive any right they may have to object to any action being
brought in these Courts, to claim that the action has been brought to an
inconvenient forum or to claim that those Courts do not have jurisdiction.

 

11. Notice

 

All notices required or permitted to be delivered under this Engagement Contract
shall be sent, if to us, to the address set forth above, to the attention of
Dianne R. Sagner, and if to you, to the address for you set forth above, to the
attention of your General Counsel, or to such other name or address as may be
given in writing to the other party. All notices under the Engagement Contract
shall be sufficient if delivered by facsimile or overnight mail. Any notice
shall be deemed to be given only upon actual receipt.

 

12. Continuation of Terms

 

The terms of the Engagement Contract that by their context are intended to be
performed after termination or expiration of this Engagement Contract, including
but not limited to, section 4 and section 7, are intended to survive such
termination or expiration and shall continue to bind all parties.

 

13. Citation of Engagement

 

Notwithstanding anything to the contrary contained herein, after the engagement
of FTI becomes a matter of public record, we shall have the right to disclose
our retention by the Company or the successful completion of its services
hereunder in marketing or promotional materials placed by FTI, at its own
expense, in financial and other newspapers or otherwise.

 

We look forward to working with you on this matter. Please sign and return a
copy of this letter signifying your agreement with the terms and provisions
herein. If you have any questions, please contact Greg Rayburn at (212) 499-3622
or Bob Medlin at (214) 397-1605.

 

Very truly yours,

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FTI Palladium Partners (a division of FTI Consulting, Inc.)

By:   /s/ Greg Rayburn    

Greg Rayburn

   

Senior Managing Director

Date:

 

June 27, 2005

Agreed by:    

Intelsat, Ltd.

By:

  /s/ David McGlade    

David McGlade

   

Chief Executive Officer

Date:

 

June 27, 2005

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SCHEDULE I

 

Compensation Requirements

 

A) FTI will be paid a monthly fee in arrears in the amount of $85,000 on the
first business day of each month for the services of Bob Medlin. Fees in
connection with this Engagement for the additional Temporary Employees will be
based upon the time spent in providing the Services, multiplied by our standard
hourly rates, summarized as follows:

 

     Per Hour

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Senior Managing Director

   $ 550-625

Director / Managing Director

   $ 370-525

Associates / Consultants

   $ 185-345

Administrative

   $ 75-100

 

As deemed appropriate and necessary and in accordance with the Engagement
Contract, in addition to the Temporary Employees, experts or individuals from
FTI’s specialty service areas, including but not limited to tax and/or insurance
consulting, may be called upon to perform specific advising from time to time.
Fees for these individuals will be based upon their time reasonably spent in
providing those specialty services, multiplied by their hourly rates.

 

Hourly rates are subject to periodic adjustment. We will notify you of any such
changes to our rates. Note that we do not provide any assurance regarding the
outcome of our work and our fees will not be contingent on the results of such
work. In addition to the fees outlined above, FTI will bill for reasonable
expenses relative to the Engagement Contract which may include airfare, meals
and hotel accommodations, telephone, industry research as directed by and for
the benefit of the Company relative to the Engagement Contract counsel fees,
duplicating and printing, etc.

 

B) FTI will earn and be paid by the Company an exit fee of $150,000 upon the
satisfactory conclusion of the engagement, subject to the Engagement Contract
not being terminated voluntarily by FTI or for Cause by the Company; provided,
however, that in the event the Company recruits and hires a permanent Chief
Financial Officer during the term of this Engagement Contract with the
assistance of FTI and without using the services of a separate retention firm,
then the amount of such exit fee shall be $250,000 (subject to the same
provisions referred to in this clause (B)), and that in such event, should such
permanent Chief Financial Officer not remain employed by the Company or its
affiliates for a period of at least one (1) year, FTI shall assist the Company
in recruiting a replacement Chief Financial Officer for no additional fee. In
addition, in the event that this Engagement Contract is terminated without Cause
by the Company and the Company pays only the regular $150,000 exit fee to FTI in
accordance with the provisions of this Engagement Contract, and within ninety
(90) days of termination the Company recruits and hires a permanent Chief
Financial Officer who was first introduced to the Company by FTI, the Company
shall pay FTI an additional $100,000 of exit fee within thirty (30) days of such
hire.