EXHIBIT 10.6

 

As of January 1, 2004

 

Mr. Mitchell Stern

27 Sandune Court

P.O. Box 258

Sagaponack, NY 11962

 

Dear Mitch:

 

This letter agreement (“Agreement”) provides the terms of your employment with
DIRECTV Holdings LLC (the “Company”).

 

1. (a) The Company hereby employs you for a period of four years commencing on
the date hereof and ending on the fourth anniversary hereof (the “Term”).

 

(b) If you continue in the employ of the Company after the end of the Term and
an extension of your employment has not been negotiated, your employment shall
be on an at-will basis at the weekly salary rate paid during your last regular
pay period hereunder.

 

2. (a) For your services hereunder the Company will, on regular pay dates as
then in effect under applicable Company policy, pay you a base salary at the
rate of $2,000,000 per annum, subject to annual increase in the sole discretion
of the Company.

 

(b) You shall also receive an annual bonus based on the achievement of certain
targets established by the CEO of The DIRECTV Group, Inc. (“DTV”) pursuant to a
cash bonus plan (“Cash Plan”) for executive officers of DTV, to be established
with the approval of the Compensation Committee and the Board of Directors of
DTV. If you achieve such targets, your annual bonus shall be no less than 100%
of your then current salary (the “Target Bonus”). You acknowledge that such Cash
Plan is also subject to approval by the stockholders of DTV and no payments
shall be made pursuant to such Cash Plan until and unless the Cash Plan shall
have been so approved. However, if such approval is not so obtained by December
31, 2004, the Company will provide you with alternative cash incentive
compensation arrangements which would enable you to receive (if applicable
targets are achieved) the Target Bonus subject to approval of the Compensation
Committee of DTV (or its designee) to such alternative compensation
arrangements.

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Mr. Mitchell Stern

As of January 1, 2004

Page 2

 

(c) It is anticipated that DTV will adopt a stock incentive plan, which will
provide for the granting of equity awards including stock options, restricted
stock or restricted stock units (such plan if so adopted, is referred to as the
“Stock Plan”). Subject to approval of the Stock Plan by the Compensation
Committee and the Board of Directors of DTV, you shall be granted 650,000
restricted stock units (the “Units”) pursuant to such Stock Plan, with the terms
and conditions of the grant to be established by the Compensation Committee (or
its designee) in accordance with the Stock Plan. You acknowledge that such Stock
Plan is also subject to approval by the stockholders of DTV and the Units shall
not vest or be exercisable, nor shall any payments be made in respect thereof,
until and unless the Stock Plan shall have been so approved. However, if such
approval is not so obtained by December 31, 2004, DTV or the Company will
provide you with alternative compensation arrangements in an amount equal to the
value of the Units, subject to approval of the Compensation Committee of DTV (or
its designee) as to such alternative compensation arrangements.

 

(d) Notwithstanding anything to the contrary contained herein, you shall receive
a minimum payment (the “Minimum Payment”) of $5.0 million in aggregate
compensation (i.e., base salary, annual bonus and Units), for each year or
partial year (on a pro-rata basis) you are employed under this Agreement. For
purposes of determining the value of the Units under this paragraph 2(d), all
Units granted shall be valued as of the date of vesting.

 

(e) You shall receive vacation and other perquisites (including reimbursement
for first class travel and appropriate hotel and entertainment expenses) and all
other benefits generally commensurate with comparable executives of the Company,
except that you will not be entitled to any car allowance. Notwithstanding
anything to the contrary contained herein, the pension and welfare benefits to
be provided will, in the aggregate, be of no less value to you than those
currently being provided by News America Incorporated (“NAI”) at January 1,
2004. The Company agrees that in the event this Agreement is terminated for any
reason other than for cause, it will, to the fullest extent permitted by DTV’s
pension and health plans, provide you at age 55 with retiree medical benefits in
the same manner as you would have received had you continued your employment
with the Company until you reached age 55. You shall also receive excess
liability insurance of no less than $10 million. The Company will bear all
reasonable transaction costs incurred by you in connection with you purchasing a
residence in Manhattan, consistent with those costs for which NAI reimbursed you
in connection with your previous move. The Company will select a reputable
moving vendor and will arrange for it to bill the Company for the actual cost of
moving household goods and personal belongings. The Company will also provide
for insurance and storage costs, if necessary. The Company is required to
include on your W-2 form, as wages, the amount of relocation expenses it has
paid on your behalf or reimbursed directly. You will be reimbursed for any
additional tax liability your may incur. The Company will also furnish you with
office equipment reasonably required by you for the rendition of services from
your homes from time to time, including DIRECTV and other satellite-related
equipment.

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Mr. Mitchell Stern

As of January 1, 2004

Page 3

 

3. (a) You shall serve as President and Chief Executive Officer of the Company,
reporting directly to the President and Chief Executive Officer of DTV and the
Board of Directors of the Company. You shall be based in New York, New York,
subject to such travel as the rendering of the services hereunder may require.

 

(b) If you are elected a member of the Board of Directors or to any other office
of the Company or any of its affiliates, you agree to serve in such capacity or
capacities without additional compensation, unless additional compensation or
benefits are paid to comparable executives.

 

(c) You hereby accept such employment and agree to devote your full time and
attention as necessary to fulfill all of the duties of your employment
hereunder. During the term of your employment, and for a period of twelve months
thereafter, you will not, in any manner directly or indirectly, engage in any
business which competes with the Company or any of its affiliates and will not
directly or indirectly own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed by, or connected
in any manner with any corporation, firm or business that is so engaged. The
foregoing does not prohibit you from owning less than five percent (5%) of the
outstanding common stock of any company.

 

4. (a) Notwithstanding anything to the contrary contained in paragraph lea)
above, this Agreement may be terminated by the Company for cause if:

 

  (i) you are convicted of, or plead guilty or nolo contendere to, a felony;

 

  (ii) you engage in conduct that constitutes continued willful neglect or
willful misconduct in carrying out your duties under this Agreement, resulting,
in either case, in economic harm to or damage to the reputation of the Company
or any of its affiliates; or

 

  (iii) you breach any material affirmative or negative covenant or undertaking
hereunder, which breach is not substantially cured with fifteen days after
written notice to you specifying such breach.

 

    If you are terminated for cause, you shall be entitled only to payment of
your base salary and accrued vacation pay through the date of termination of
your employment for cause, and no Units shall vest.

 

(b) If your employment is terminated due to death, your estate or beneficiaries,
as the case may be, shall be entitled to:

 

  (i) payment of base salary through the date of termination;

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Mr. Mitchell Stern

As of January 1, 2004

Page 4

 

  (ii) payment of the pro-rated portion of the annual bonus that you received
for the fiscal year immediately preceding the date of termination (or Target
Bonus, in the event of your death prior to January 1, 2005);

 

  (iii) the Units, vested 25% (subject to the adjustment mechanism approved by
the Compensation Committee pursuant to the Stock Plan, which is referred to as
the “Adjustment Factor”) for each full or partial contract year completed. The
Adjustment Factor shall be computed through the end of the year in which
termination occurs; and

 

  (iv) other or additional benefits in accordance with applicable plans and
programs of DTV and the Company.

 

(c) If your employment is terminated due to disability (as defined below), you
shall be entitled to the following (but in no event less than the benefits due
to you under the then current disability program of the Company):

 

  (i) payment of base salary through the date of termination;

 

  (ii) payment of the pro-rated portion of the annual bonus that you received
for the fiscal year immediately preceding the date of termination (or Target
Bonus, in the event of your disability prior to January 1, 2005);

 

  (iii) the Units, vested 25% (subject to the Adjustment Factor) for each full
or partial contact year completed. The Adjustment Factor shall be computed
through the end of the year in which termination occurs;

 

  (iv) until the earlier of the end of such disability and the end of the Term,
continued participation in medical, dental, hospitalization and life insurance
coverage and in all other employee plans and programs in which you were
participating on the date of termination; and

 

  (v) other or additional benefits in accordance with applicable plans and
programs of DTV and the Company.

 

    For purposes of this Agreement, “disability” shall mean your inability to
substantially perform your duties and responsibilities under this Agreement for
a period of 120 consecutive days.

 

(d) If the Company terminates your employment for any reason other than those
defined in paragraphs 4(a), (b) or (c) above, then you shall be entitled to:

 

  (i) the Minimum Payment for each year or partial year (on a pro rata basis)
through the end of the Term, in accordance with paragraph 2 (d) above, but in no
event more than two times the Minimum Payment; and

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Mr. Mitchell Stern

As of January 1, 2004

Page 5

 

  (ii) all other benefits as would be called for under this Agreement had your
employment not been terminated, provided that your health care coverage (other
than retiree health coverage) shall terminate when you receive health care
coverage from a subsequent employer.

 

5. (a) You agree to abide by the provisions of the Company’s Code of Ethics and
Business Conduct (receipt of which is hereby acknowledged) at all times during
your employment.

 

(b) You will not during the term of your employment and for a period of two
years thereafter, directly or indirectly, induce or attempt to induce any
managerial, sales or supervising employee of the Company or its affiliates to
render services to any other person, firm or corporation.

 

(c) You acknowledge that the relationship between the parties hereto is
exclusively that of employer and employee and that the Company’s obligations to
you are exclusively contractual in nature. The Company shall be the sole owner
of all the fruits and proceeds of your services hereunder, including, but not
limited to, all ideas, concepts, formats, suggestions, developments,
arrangements, designs, packages, programs, promotions and other intellectual
properties which you may create in connection with and during your term of your
employment hereunder, free and clear of any claims by you (or anyone claiming
under you) of any kind or character whatsoever (other than your right to
compensation hereunder). You shall, at the request of the Company, execute such
assignments, certificates or other instruments as the Company may from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title and interest in or to any such
properties.

 

(d) All memoranda, notes, records and other documents made or compiled by you,
or made available to you during the term of this Agreement concerning the
business of the Company or its affiliates shall be the Company’s property and
shall be delivered to the Company on the termination of this Agreement or at any
other time on request. You shall keep in confidence and shall not use for
yourself or others, or divulge to others, any information concerning the
business not publicly available and which is obtained by you as a result of your
employment, including but not limited to, trade secrets or processes and
information deemed by the Company to be proprietary in nature, unless disclosure
is permitted by the Company or required by law.

 

(e) The Company shall have the right to use your name, biography and likeness in
connection with its business, including in advertising its products and
services, and may grant this right to others, but not for use as a direct
endorsement.

 

(f) The covenants set forth in sub paragraphs (b), (c) and (d) above shall
survive the termination of this Agreement.

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Mr. Mitchell Stern

As of January 1, 2004

Page 6

 

6. The services to be furnished by you hereunder and the rights and privileges
granted to the Company by you are of a special, unique, unusual, extraordinary
and intellectual character which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and a breach by you of any of the provisions contained herein will cause the
Company irreparable injury and damage. You expressly agree that the Company
shall be entitled to seek injunctive and other equitable relief, to prevent a
breach of this Agreement by you. Resort to equitable relief, however, shall not
be construed as a waiver of any preceding or succeeding breach of the same or
any other term or provision. The various rights and remedies of the Company
hereunder shall be construed to be cumulative and no one of them shall be
exclusive of any other or of any right or remedy allowed by law.

 

7. In consideration of the making of this Agreement, as well as of the other
consideration stated herein, you expressly agree that if you continue in the
employ of the Company after the end of this Agreement, your employment shall be
at-will and shall otherwise be in accordance with the provisions of such then
existing Company policies as may then be in effect applicable to comparable
executives of the Company.

 

8. This Agreement shall be governed by the laws of the State of New York
applicable to contracts performed entirely therein.

 

9. This Agreement shall inure to the benefit of the successors and general
assigns of the Company and to the benefit of any other corporation or entity
which is a parent, subsidiary or affiliate of the Company to which this
Agreement is assigned, and any other corporation or entity into which the
Company may be merged or with which it may be consolidated. Except as herein
provided, this Agreement shall be nonassignable.

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Mr. Mitchell Stern

As of January 1, 2004

Page 7

 

Sincerely,

THE DIRECTV GROUP, INC.

By:  

/s/    Chase Carey

   

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Title: President and Chief Executive Officer

 

DIRECTV HOLDINGS LLC

/s/     Chase Carey

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Title: Chairman

 

 

 

THE FORGOING IS AGREED TO:

/s/    Mitchel Stern

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Mitchell Stern

March 16, 2004

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Date