Exhibit 10.12
TC Group, L.L.C.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004
August 20, 2004
PanAmSat Corporation
20 Westport Road
Wilton, Connecticut
06897
Ladies and Gentlemen:
THIS LETTER SERVES TO CONFIRM THE RETENTION BY PANAMSAT CORPORATION (THE
"COMPANY") OF TC GROUP, L.L.C. ("TC GROUP") TO PROVIDE MANAGEMENT, CONSULTING
AND FINANCIAL SERVICES TO THE COMPANY AND ITS DIVISIONS, SUBSIDIARIES AND
AFFILIATES (COLLECTIVELY, "PANAMSAT"), AS FOLLOWS:
1.
THE COMPANY HAS RETAINED US, AND WE HEREBY AGREE TO ACCEPT SUCH
RETENTION, TO PROVIDE TO PANAMSAT, WHEN AND IF CALLED UPON, CERTAIN MANAGEMENT,
CONSULTING AND FINANCIAL SERVICES OF THE TYPE CUSTOMARILY PERFORMED BY US.
THE
COMPANY AGREES TO PAY US AN ANNUAL FEE EQUAL TO OUR PRO RATA SHARE (AS DEFINED
BELOW) OF AN AMOUNT EQUAL TO TWO MILLION DOLLARS ($2,000,000)
(THE "ANNUAL
FEE"), SUCH FEE TO BE INCREASED AT A RATE OF 3% ANNUALLY, EFFECTIVE AS OF
AUGUST 20TH OF EACH SUCH YEAR, PAYABLE IN QUARTERLY INSTALLMENTS IN ARREARS AT
THE END OF EACH CALENDAR QUARTER.
FOR PURPOSES OF THIS LETTER, THE TERM "PRO
RATA SHARE" SHALL MEAN A FRACTION, THE NUMERATOR OF WHICH IS THE AGGREGATE
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE OF THE COMPANY
("COMMON STOCK") HELD BY AFFILIATES OF TC GROUP AND THE DOMINATOR OF WHICH IS
THE TOTAL NUMBER OF INVESTOR SHARES OUTSTANDING AT THE TIME OF PAYMENT OF THE
ANNUAL FEE.
IN THIS AGREEMENT, THE TERM "INVESTOR SHARES" SHALL MEAN THE
AGGREGATE NUMBER OF SHARES OF COMMON STOCK HELD BY AFFILIATES OF TC GROUP,
AFFILIATES OF KOHLBERG KRAVIS ROBERTS & CO. L.P. AND AFFILIATES OF PROVIDENCE
EQUITY PARTNERS IV INC.
2.
IN CONSIDERATION FOR OUR STRUCTURING SERVICES RENDERED IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION AGREEMENT,
DATED AS OF APRIL 20, 2004, BY AND AMONG CONSTELLATION, LLC, A DELAWARE LIMITED
LIABILITY COMPANY, THE COMPANY, THE DIRECTV GROUP, INC., A DELAWARE CORPORATION,
AND PAS MERGER SUB, INC., A DELAWARE CORPORATION (THE "TRANSACTION AGREEMENT")
WHICH SUCH SERVICES INCLUDED, BUT WERE NOT LIMITED TO, FINANCIAL ADVISORY
SERVICES AND CAPITAL STRUCTURE REVIEW, THE COMPANY AGREES TO ALSO PAY A ONE-TIME
TRANSACTION FEE TO US IN A TOTAL AMOUNT EQUAL TO ELEVEN MILLION DOLLARS
($11,000,000.00), PAYABLE IMMEDIATELY UPON THE STOCK PURCHASE CLOSING (AS
DEFINED IN THE TRANSACTION AGREEMENT).
3.
WE MAY ALSO INVOICE THE COMPANY FOR ADDITIONAL FEES IN
CONNECTION WITH ACQUISITION OR DIVESTITURE TRANSACTIONS OR IN THE EVENT THAT WE,
OR ANY OF OUR AFFILIATES, PERFORM SERVICES FOR PANAMSAT ABOVE AND BEYOND THOSE
CALLED FOR BY THIS AGREEMENT.
4.
IN ADDITION TO ANY FEES THAT MAY BE PAYABLE TO US UNDER THIS
AGREEMENT, THE COMPANY ALSO AGREES TO REIMBURSE US AND OUR AFFILIATES, FROM TIME
TO TIME UPON REQUEST, FOR ALL REASONABLE OUT-OF-POCKET EXPENSES INCURRED,
INCLUDING UNREIMBURSED EXPENSES INCURRED TO THE DATE HEREOF, IN CONNECTION WITH
THIS RETENTION AND/OR THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION AGREEMENT
(INCLUDING THE PROPOSED ACQUISITION OF THE COMPANY BY TC GROUP, PROVIDENCE
EQUITY PARTNERS IV INC. AND CERTAIN OTHER INVESTORS AND THEIR AFFILIATES),
INCLUDING TRAVEL EXPENSES