Document:

mgm-ex106_98.htm

 

Exhibit 10.6

FORM

MGM RESORTS INTERNATIONAL

PERFORMANCE SHARE UNITS AGREEMENT

 

 

Target No. of Performance Share Units:                     

This Agreement (including its Exhibits, the “Agreement”) is made by and between MGM Resorts International (formerly MGM MIRAGE), a Delaware corporation (the “Company”), and                                 (the “Participant”) with an effective date of                     .

RECITALS

A. The Board of Directors of the Company (the “Board”) has adopted the Company’s 2005 Omnibus Incentive Plan, as amended (the “Plan”), which provides for the granting of Performance Share Units (as that term is defined in Section 1 below) to selected service providers. Capitalized terms used and not defined in this Agreement shall have the same meanings as in the Plan.

B. The Board believes that the grant of Performance Share Units will stimulate the interest of selected employees in, and strengthen their desire to remain with, the Company or a Parent or Subsidiary (as those terms are hereinafter defined).

C. The Compensation Committee of the Board (the “Committee”) has authorized the grant of Performance Share Units to the Participant pursuant to the terms of the Plan and this Agreement.

D. The Committee and the Participant intend that the Plan and this Agreement constitute the entire agreement between the parties hereto with regard to the subject matter hereof and shall supersede any other agreements, representations or understandings (whether oral or written and whether express or implied, and including, without limitation, any employment agreement between the Participant and the Company or any of its affiliates (including, without limitation, any Parent or Subsidiary) whether previously entered into, currently effective or entered into in the future) which relate to the subject matter hereof.

Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows:

1. Definitions.

1.1 “Beginning Average Stock Price” means the average closing price of the Company’s Stock over the 60 calendar day period ending on the date of grant.

1.2 “Change of Control” means

A. the date that a reorganization, merger, consolidation, recapitalization, or similar transaction is consummated, unless: (i) at least 50% of the outstanding voting securities of the surviving or resulting entity (including, without limitation, an entity which as a result of such transaction owns the Company either directly or through one or more subsidiaries) (“Resulting Entity”) are beneficially owned, directly or indirectly, by the persons who were the beneficial owners of the outstanding voting securities of the Corporation immediately prior to such transaction in substantially the same proportions as their beneficial ownership, immediately prior to such transaction, of the outstanding voting securities of the Corporation and (ii) immediately following such transaction no person or persons acting as a group beneficially owns capital stock of the Resulting Entity possessing thirty-five percent (35%) or more of the total voting power of the stock of the Resulting Entity; 

B. the date that a majority of members of the Company’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election;

C. the date that any one person, or persons acting as a group, acquires (or has or have acquired as of the date of the most recent acquisition by such person or persons) beneficial ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; or

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D. the date that any one person acquires, or persons acting as a group acquire (or has or have acquired as of the date of the most recent acquisition by such person or persons), assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

1.3 “Code” means the Internal Revenue Code of 1986, as amended.

1.4 “Current Employment Agreement” means the Participant’s employment agreement with the Company or any of its affiliates (including, without limitation, any Parent or Subsidiary) in effect as of the applicable date of determination.

1.5 “Disability” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer. 

1.6 “Employer” means the Company, the Subsidiaries and any Parent and affiliated companies, but specifically excludes Tracinda Corporation, its stockholder or stockholders, and its subsidiaries.

1.7 “Employer’s Good Cause” shall have the meaning given such term or a comparable term in the Current Employment Agreement; provided that if there is no Current Employment Agreement or if such agreement does not include such term or a comparable term, “Employer’s Good Cause” means:

A. Participant’s failure to abide by the Employer’s policies and procedures, misconduct, insubordination, inattention to the Employer’s business, failure to perform the duties required of the Participant up to the standards established by the Employer’s senior management, or material breach of the Current Employment Agreement, which failure or breach is not cured by the Participant within ten (10) days after written notice thereof from the Employer specifying the facts and circumstances of the alleged failure or breach, provided, however, that such notice and opportunity to cure shall not be required if, in the good faith judgment of the Board, such breach is not capable of being cured within ten (10) days; 

B. Participant’s failure or inability to apply for and obtain any license, qualification, clearance or other similar approval which the Employer or any regulatory authority which has jurisdiction over the Employer requests or requires that the Participant obtain; 

C. the Employer is directed by any governmental authority in Nevada, Michigan, Mississippi, Illinois, Macau S.A.R., or any other jurisdiction in which the Employer is engaged in a gaming business or where the Employer has applied to (or during the term of the Participant’s employment under the Current Employment Agreement, may apply to) engage in a gaming business to cease business with the Participant; 

D. the Employer determines, in its reasonable judgment, that the Participant was, is or might be involved in, or is about to be involved in, any activity, relationship(s) or circumstance which could or does jeopardize the Employer’s business, reputation or licenses to engage in the gaming business; or 

E. any of the Employer’s gaming business licenses are threatened to be, or are, denied, curtailed, suspended or revoked as a result of the Participant’s employment by the Employer or as a result of the Participant’s actions.

1.8 “Ending Average Stock Price” means the average closing price of the Company’s Stock over the 60 calendar day period ending on the third anniversary of the date of grant; provided, however, that in the event of a Change of Control, the “Ending Average Stock Price” shall equal the price per share of the Company’s Stock to be paid to the holders thereof in accordance with the definitive agreement governing the transaction constituting the Change of Control (or, in the absence of such agreement, the closing price per share of the Company’s Stock for the last trading day prior to the consummation of the Change of Control).

1.9 “Fair Market Value” means the closing price of a share of Stock reported on the New York Stock Exchange (“NYSE”) or other applicable established stock exchange or over the counter market on the applicable date of determination, or if no closing price was reported on such date, the first trading day immediately preceding the applicable date of determination on which such a closing price was reported. In the event shares of Stock are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate. 

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1.10 “Parent” means a parent corporation as defined in Section 424(e) of the Code.

1.11 “Participant’s Good Cause” shall have the meaning given such term or a comparable term in the Current Employment Agreement; provided that if there is no Current Employment Agreement or if such agreement does not include such term or a comparable term, “Participant’s Good Cause” means:

A. The failure of the Employer to pay the Participant any compensation when due; or 

B. A material reduction in the scope of duties or responsibilities of the Participant or any reduction in the Participant’s salary.

If a breach constituting Participant’s Good Cause occurs, the Participant shall give the Employer thirty (30) days’ advance written notice specifying the facts and circumstances of the alleged breach. During such thirty (30) day period, the Employer may either cure the breach (in which case such notice will be considered withdrawn) or declare that the Employer disputes that Participant’s Good Cause exists, in which case Participant’s Good Cause shall not exist until the dispute is resolved in accordance with the methods for resolving disputes specified in Exhibit A hereto.

1.12 “Performance Share Units” means an award of Performance Shares granted to a Participant pursuant to Article 9 of the Plan.

1.13 “Section 409A” means Section 409A of the Code, and the regulations and guidance promulgated thereunder to the extent applicable.

1.14 “Stock” means the Company’s common stock, $.01 par value per share.

1.15 “Stock Performance Multiplier” means the Company’s Ending Average Stock Price divided by the Target Price.

1.16 “Subsidiary” means a subsidiary corporation of the Company as defined in Section 424(f) of the Code or corporation or other entity, whether domestic or foreign, in which the Company has or obtains a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

1.17 “Target Price” means 125% of the Company’s Beginning Average Stock Price.

2. Grant to Participant. The Company hereby grants to the Participant, subject to the terms and conditions of the Plan and this Agreement, a target award of            Performance Share Units (the “Target Award”). Except as otherwise set forth in the Plan or this Agreement, (i) the grant of Performance Share Units represents the right to receive a percentage of the Target Award upon vesting of such Performance Share Units, with each Performance Share Unit that vests representing the right to receive one (1) share of Stock upon vesting thereof, (ii) unless and until the Performance Share Units have vested in accordance with the terms of this Agreement, the Participant shall not have any right to delivery of the shares of Stock underlying such Performance Share Units or any other consideration in respect thereof and (iii) the portion of the Target Award that vests hereunder shall be paid to the Participant within thirty (30) days following the date that the Target Award vests or the date(s) set forth in Sections 3.1 and 3.2, as applicable.

3. Terms and Conditions. 

3.1 Performance Period and Vesting. Subject to Section 3.2 herein, a percentage of the Target Award shall vest, as described below, based on the performance of the Company’s stock price over the three year period beginning on the date of grant of this award and ending on third anniversary of such date of grant (the “Performance Period”), subject to the Participant’s continued employment with the Company or any Subsidiary or Parent through the end of the Performance Period. 

(i) Target. The Participant shall be paid the Target Award if the Ending Average Stock Price equals the Target Price.

(ii) Threshold. The Participant shall not be paid any portion of the Target Award unless the Ending Average Stock Price is at least 60% of the Target Price. If the Ending Average Stock Price is below 60% of the Target Price, all of the Performance Share Units awarded by this Agreement shall immediately be forfeited and cancelled without consideration as of the last day of the Performance Period.

(iii) Maximum. In no event shall the Participant be awarded more than 160% of the Target Award.

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(iv) In the event that the Ending Average Stock Price is at least 60% or more of the Target Price, then the Participant will receive a portion of the Target Award equal to the amount of the Target Award multiplied by the Stock Performance Multiplier; provided, however, in no event shall the Stock Price Multiplier be greater than 1.6.

Any Performance Share Units which vest in accordance with this Section 3.1 shall be paid to the Participant within thirty (30) days following the last day of the Performance Period.

3.2 Vesting at Termination. Upon termination of employment with the Employer for any reason the unvested Performance Share Units shall be forfeited without any consideration; provided, however, that, upon termination of employment by the Employer without Employer’s Good Cause, by the Participant with Participant’s Good Cause, or due to the Participant’s death or Disability, a pro-rata portion of the Performance Share Units, if any, that would have become vested (but for such termination) under the schedule determined in Section 3.1 herein, determined based on the number of days Participant was employed during the Performance Period plus an additional twelve (12) months(or, if shorter, through the end of the Performance Period), shall be paid on the same schedule determined in Section 3.1 herein; provided, however, that such continued vesting shall immediately cease and unvested Performance Share Units shall be forfeited in the event the Participant breaches any post-termination covenant with the Company or its affiliate in an employment agreement (after taking into account any applicable cure period).

3.3 Committee Discretion. The Committee, in its discretion, may accelerate the vesting of the Target Award up to the maximum amount described in 3.1(iii) above, at any time, subject to the terms of the Plan and this Agreement. If so accelerated, the Performance Share Units will be considered as having vested as of the date specified by the Committee or an applicable written agreement but the Committee will have no right to accelerate any payment under this Agreement if such acceleration would cause this Agreement to fail to comply with Section 409A. 

3.4 No Rights as a Stockholder. Participant will have no rights as a stockholder with respect to any shares of Stock subject to Performance Share Units until the Performance Share Units have vested and shares of Stock relating thereto have been issued and recorded on the records of the Company or its transfer agent or registrars. 

3.5 Limits on Transferability. The Performance Share Units granted under this Agreement may be transferred solely to a trust in which the Participant or the Participant’s spouse control the management of the assets. With respect to Performance Share Units, if any, that have been transferred to a trust, references in this Agreement to vesting related to such Performance Share Units shall be deemed to include such trust. Any transfer of Performance Share Units shall be subject to the terms and conditions of the Plan and this Agreement and the transferee shall be subject to the same terms and conditions as if it were the Participant. No interest of the Participant under this Agreement shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. 

3.6 Adjustments. If there is any change in the Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares of Stock, or any similar change affecting the Stock the Committee will make appropriate and proportionate adjustments (including relating to the Stock, other securities, cash or other consideration which may be acquired upon vesting of the Performance Share Units) that it deems necessary to the number and class of securities subject to the Performance Share Units and any other terms of this Agreement. Any adjustment so made shall be final and binding upon the Participant.

3.7 No Right to Continued Performance of Services. The grant of the Performance Share Units does not confer upon the Participant any right to continue to be employed by the Company or any of its affiliates (including, without limitation, any Parent or Subsidiary) nor may it interfere in any way with the right of the Company or any of its affiliates (including, without limitation, any Parent or Subsidiary) for which the Participant performs services to terminate the Participant’s employment at any time.

3.8 Compliance With Law and Regulations. The grant and vesting of Performance Share Units and the obligation of the Company to issue shares of Stock under this Agreement are subject to all applicable federal and state laws, rules and regulations, including those related to disclosure of financial and other information to the Participant and to approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Stock prior to (A) the listing of such shares on any stock exchange on which the Stock may then be listed and (B) the completion of any registration or qualification of such shares under any federal or state law, or any rule or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable.

3.9 Corporate Transaction. Upon the occurrence of a reorganization, merger, consolidation, recapitalization, or similar transaction, unless otherwise specifically prohibited under applicable laws or by the applicable rules and regulations of any governing governmental agencies or national securities exchanges, the Committee is authorized (but not obligated) to make adjustments in the terms and conditions of the Performance Share Units, including without limitation the following (or any combination thereof): (i) 

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continuation or assumption of the Performance Share Units by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent; (ii) substitution by the surviving company or corporation or its parent of an award with substantially the same terms for the Performance Share Units; (iii) accelerated vesting with respect to the Performance Share Units immediately prior to the occurrence of such event and payment to the Participant within thirty (30) days thereafter; and (iv) cancellation of all or any portion of the Performance Share Units for fair value (in the form of cash or its equivalent (e.g., by check), other property or any combination thereof) as determined in the sole discretion of the Committee and which value may be zero (if the value of the underlying stock is zero), and payment to the Participant within thirty (30) days thereafter.

4. Investment Representation. The Participant must, within five (5) days of demand by the Company furnish the Company an agreement satisfactory to the Company in which the Participant represents that the shares of Stock acquired upon vesting are being acquired for investment. The Company will have the right, at its election, to place legends on the certificates representing the shares of Stock so being issued with respect to limitations on transferability imposed by federal and/or state laws, and the Company will have the right to issue “stop transfer” instructions to its transfer agent.

5. Participant Bound by Plan. The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof as amended from time to time. 

6. Withholding. The Company or any Parent or Subsidiary shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Performance Share Units awarded by this Agreement, their grant, vesting or otherwise, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such withholding taxes, which may include, without limitation, reducing the number of shares otherwise distributable to the Participant by the number of shares of Stock whose Fair Market Value is equal to the amount of tax required to be withheld by the Company or a Parent or Subsidiary as a result of the vesting or settlement or otherwise of the Performance Share Units.

7. Notices. Any notice hereunder to the Company must be addressed to: MGM Resorts International, 3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109, Attention: 2005 Omnibus Incentive Plan Administrator, and any notice hereunder to the Participant must be addressed to the Participant at the Participant’s last address on the records of the Company, subject to the right of either party to designate at any time hereafter in writing some other address. Any notice shall be deemed to have been duly given on personal delivery or three (3) days after being sent in a properly sealed envelope, addressed as set forth above, and deposited (with first class postage prepaid) in the United States mail. 

8. Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties hereto with regard to the subject matter hereof and shall supersede any other agreements, representations or understandings (whether oral or written and whether express or implied, and including, without limitation, any employment agreement between the Participant and the Company or any of its affiliates (including, without limitation, any Parent or Subsidiary) whether previously entered into, currently effective or entered into in the future that includes terms and conditions regarding equity awards) which relate to the subject matter hereof.

9. Waiver. No waiver of any breach or condition of this Agreement shall be deemed a waiver of any other or subsequent breach or condition whether of like or different nature.

10. Participant Undertaking. The Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed on either the Participant or the Performance Share Units pursuant to this Agreement.

11. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and upon the Participant, the Participant’s assigns and the legal representatives, heirs and legatees of the Participant’s estate, whether or not any such person shall have become a party to this Agreement and agreed in writing to be joined herein and be bound by the terms hereof.

12. Governing Law. The parties hereto agree that the validity, construction and interpretation of this Agreement shall be governed by the laws of the state of Nevada.

13. Arbitration. Except as otherwise provided in Exhibit A to this Agreement (which constitutes a material provision of this Agreement), disputes relating to this Agreement shall be resolved by arbitration pursuant to Exhibit A hereto.

14. Clawback Policy. By accepting this award the Participant hereby agrees that this award and any other compensation paid or payable to the Participant is subject to Company’s Policy on Recovery of Incentive Compensation in Event of Financial Restatement (or any successor policy) as in effect from time to time, and that this award shall be considered a bonus for purposes of such policy. In addition, the Participant agrees that such policy may be amended from time to time by the Board in a manner designed to comply with 

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applicable law and/or stock exchange listing requirements. The Participant also hereby agrees that the award granted hereunder and any other compensation payable to the Participant shall be subject to recovery (in whole or in part) by the Company to the minimum extent required by applicable law and/or stock exchange listing requirements.

15. Amendment. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto; provided that the Company may alter, modify or amend this Agreement unilaterally if such change is not materially adverse to the Participant or to cause this Agreement to comply with applicable law.

16. Severability. The provisions of this Agreement are severable and if any portion of this Agreement is declared contrary to any law, regulation or is otherwise invalid, in whole or in part, the remaining provisions of this Agreement shall nevertheless be binding and enforceable.

17. Execution. Each party agrees that an electronic, facsimile or digital signature or an online acceptance or acknowledgment will be accorded the full legal force and effect of a handwritten signature under Nevada law. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

18. Variation of Pronouns. All pronouns and any variations thereof contained herein shall be deemed to refer to masculine, feminine, neuter, singular or plural, as the identity of the person or persons may require.

19. Tax Treatment; Section 409A. The Participant shall be responsible for all taxes with respect to the Performance Share Units. Notwithstanding the forgoing or any provision of the Plan or this Agreement: 

19.1 The parties agree that this Agreement shall be interpreted to comply with or be exempt from Section 409A, and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. If any provision of this Agreement or the Plan contravenes Section 409A or could cause the Participant to incur any tax, interest or penalties under Section 409A, the Committee may, in its sole discretion and without the Participant’s consent, modify such provision in order to comply with the requirements of Section 409A or to satisfy the conditions of any exception therefrom, or otherwise to avoid the imposition of the additional income tax and interest under Section 409A, while maintaining, to the maximum extent practicable, the original intent and economic benefit to the Participant, without materially increasing the cost to the Company, of the applicable provision. However, the Company makes no guarantee regarding the tax treatment of the Performance Share Units and none of the Company, its Parent, Subsidiaries or affiliates, nor any of their employees or representatives shall have any liability to the Participant with respect thereto.

19.2 A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits considered “nonqualified deferred compensation” under Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If the Participant is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Participant, and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 19.2 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed on the first business day following the expiration of the Delay Period to the Participant in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

19.3 For purposes of Section 409A, the Participant’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

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IN WITNESS WHEREOF, the parties hereto have executed this Performance Share Units Agreement as of the date first written above.

 

	
MGM RESORTS INTERNATIONAL 

 

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

 

	
PARTICIPANT

 

	
By:
	
 
	
 

	
Name:
	
 
	
 

 

 

 

[Signature Page to Performance Share Units Agreement]

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EXHIBIT A 

ARBITRATION

This Exhibit A sets forth the methods for resolving disputes should any arise under the Agreement, and accordingly, this Exhibit A shall be considered a part of the Agreement.

	
1.
	
Except for a claim by either Participant or the Company for injunctive relief where such would be otherwise authorized by law, any controversy or claim arising out of or relating to the Agreement or the breach hereof including without limitation any claim involving the interpretation or application of the Agreement or the Plan, shall be submitted to binding arbitration in accordance with the employment arbitration rules then in effect of the Judicial Arbitration and Mediation Service (“JAMS”), to the extent not inconsistent with this paragraph. This Exhibit A covers any claim Participant might have against any officer, director, employee, or agent of the Company, or any of the Company’s subsidiaries, divisions, and affiliates, and all successors and assigns of any of them. The promises by the Company and Participant to arbitrate differences, rather than litigate them before courts or other bodies, provide consideration for each other, in addition to other consideration provided under the Agreement.

	
2.
	
Claims Subject to Arbitration. This Exhibit A contemplates mandatory arbitration to the fullest extent permitted by law. Only claims that are justiciable under applicable state or federal law are covered by this Exhibit A. Such claims include any and all alleged violations of any state or federal law whether common law, statutory, arising under regulation or ordinance, or any other law, brought by any current or former employees. 

	
3.
	
Non-Waiver of Substantive Rights. This Exhibit A does not waive any rights or remedies available under applicable statutes or common law. However, it does waive Participant’s right to pursue those rights and remedies in a judicial forum. By signing the Agreement and the acknowledgment at the end of this Exhibit A, the undersigned Participant voluntarily agrees to arbitrate his or her claims covered by this Exhibit A.

	
4.
	
Time Limit to Pursue Arbitration; Initiation: To ensure timely resolution of disputes, Participant and the Company must initiate arbitration within the statute of limitations (deadline for filing) provided for by applicable law pertaining to the claim. The failure to initiate arbitration within this time limit will bar any such claim. The parties understand that the Company and Participant are waiving any longer statutes of limitations that would otherwise apply, and any aggrieved party is encouraged to give written notice of any claim as soon as possible after the event(s) in dispute so that arbitration of any differences may take place promptly. The parties agree that the aggrieved party must, within the time frame provided by this Exhibit A, give written notice of a claim pursuant to Section 7 of the Agreement. In the event such notice is to be provided to the Company, the Participant shall provide a copy of such notice of a claim to the Company’s Executive Vice President and General Counsel. Written notice shall identify and describe the nature of the claim, the supporting facts and the relief or remedy sought. 

	
5.
	
Selecting an Arbitrator: This Exhibit A mandates Arbitration under the then current rules of the Judicial Arbitration and Mediation Service (JAMS) regarding employment disputes. The arbitrator shall be either a retired judge or an attorney experienced in employment law and licensed to practice in the state in which arbitration is convened. The parties shall select one arbitrator from among a list of three qualified neutral arbitrators provided by JAMS. If the parties are unable to agree on the arbitrator, each party shall strike one name and the remaining named arbitrator shall be selected.

	
6.
	
Representation/Arbitration Rights and Procedures: 

	
 
	
a.
	
Participant may be represented by an attorney of his/her choice at his/her own expense. 

	
 
	
b.
	
The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of Nevada (without regard to its choice of law provisions) and/or federal law when applicable. In all cases, this Exhibit A shall provide for the broadest level of arbitration of claims between the Company and Participant under Nevada or applicable federal law. The arbitrator is without jurisdiction to apply any different substantive law or law of remedies. 

	
 
	
c.
	
The arbitrator shall have no authority to award non-economic damages or punitive damages except where such relief is specifically authorized by an applicable state or federal statute or common law. In such a situation, the arbitrator shall specify in the award the specific statute or other basis under which such relief is granted. 

	
 
	
d.
	
The applicable law with respect to privilege, including attorney-client privilege, work product, and offers to compromise must be followed. 

	
 
	
e.
	
The parties shall have the right to conduct reasonable discovery, including written and oral (deposition) discovery and to subpoena and/or request copies of records, documents and other relevant discoverable information consistent 

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with the procedural rules of JAMS. The arbitrator shall decide disputes regarding the scope of discovery and shall have authority to regulate the conduct of any hearing and/or trial proceeding. The arbitrator shall have the right to entertain a motion to dismiss and/or motion for summary judgment.  

	
 
	
f.
	
The parties shall exchange witness lists at least 30 days prior to the trial/hearing procedure. The arbitrator shall have subpoena power so that either Participant or the Company may summon witnesses. The arbitrator shall use the Federal Rules of Evidence. Both parties have the right to file a post hearing brief. Any party, at its own expense, may arrange for and pay the cost of a court reporter to provide a stenographic record of the proceedings. 

	
 
	
g.
	
Any arbitration hearing or proceeding shall take place in private, not open to the public, in Las Vegas, Nevada.

	
7.
	
Arbitrator’s Award: The arbitrator shall issue a written decision containing the specific issues raised by the parties, the specific findings of fact, and the specific conclusions of law. The award shall be rendered promptly, typically within 30 days after conclusion of the arbitration hearing, or the submission of post-hearing briefs if requested. The arbitrator may not award any relief or remedy in excess of what a court could grant under applicable law. The arbitrator’s decision is final and binding on both parties. Judgment upon an award rendered by the arbitrator may be entered in any court having competent jurisdiction. 

	
 
	
a.
	
Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Exhibit A and to enforce an arbitration award. 

	
 
	
b.
	
In the event of any administrative or judicial action by any agency or third party to adjudicate a claim on behalf of Participant which is subject to arbitration under this Exhibit A, Participant hereby waives the right to participate in any monetary or other recovery obtained by such agency or third party in any such action, and Participant’s sole remedy with respect to any such claim shall be any award decreed by an arbitrator pursuant to the provisions of this Exhibit A.

	
8.
	
Fees and Expenses: The Company shall be responsible for paying any filing fee and the fees and costs of the arbitrator; provided, however, that if Participant is the party initiating the claim, Participant will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which Participant is (or was last) employed by the Company. Participant and the Company shall each pay for their own expenses, attorney’s fees (a party’s responsibility for his/her/its own attorney’s fees is only limited by any applicable statute specifically providing that attorney’s fees may be awarded as a remedy), and costs and fees regarding witness, photocopying and other preparation expenses. If any party prevails on a statutory claim that affords the prevailing party attorney’s fees and costs, or if there is a written agreement providing for attorney’s fees and/or costs, the arbitrator may award reasonable attorney’s fees and/or costs to the prevailing party, applying the same standards a court would apply under the law applicable to the claim(s).

	
9.
	
The arbitration provisions of this Exhibit A shall survive the termination of Participant’s employment with the Company and the expiration of the Agreement. These arbitration provisions can only be modified or revoked in a writing signed by both parties and which expressly states an intent to modify or revoke the provisions of this Exhibit A.

	
10.
	
The arbitration provisions of this Exhibit A do not alter or affect the termination provisions of this Agreement. 

	
11.
	
Capitalized terms not defined in this Exhibit A shall have the same definition as in the Agreement to which this is Exhibit A.

	
12.
	
If any provision of this Exhibit A is adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of Exhibit A. All other provisions shall remain in full force and effect.

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ACKNOWLEDGMENT

BOTH PARTIES ACKNOWLEDGE THAT: THEY HAVE CAREFULLY READ THIS EXHIBIT A IN ITS ENTIRETY, THEY UNDERSTAND ITS TERMS, EXHIBIT A CONSTITUTES A MATERIAL TERM AND CONDITION OF THE PERFORMANCE SHARE UNITS AGREEMENT BETWEEN THE PARTIES TO WHICH IT IS EXHIBIT A, AND THEY AGREE TO ABIDE BY ITS TERMS. 

The parties also specifically acknowledge that by agreeing to the terms of this Exhibit A, they are waiving the right to pursue claims covered by this Exhibit A in a judicial forum and instead agree to arbitrate all such claims before an arbitrator without a court or jury. It is specifically understood that this Exhibit A does not waive any rights or remedies which are available under applicable state and federal statutes or common law. Both parties enter into this Exhibit A voluntarily and not in reliance on any promises or representation by the other party other than those contained in the Agreement or in this Exhibit A. 

Participant further acknowledges that Participant has been given the opportunity to discuss this Exhibit A with Participant’s private legal counsel and that Participant has availed himself/herself of that opportunity to the extent Participant wishes to do so.

*          *          *

[The remainder of this page is left blank intentionally.]

10Exhibit 10.1

 

ECHOSTAR CORPORATION

EXECUTIVE OFFICER OR DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

 

This Restricted Stock Unit Agreement (the “Agreement”) is entered into effective as of [Grant Date] (the “Grant Date”), by and between EchoStar Corporation, a Nevada corporation (the “Company”), and [Participant Name] (“Employee”).

 

RECITAL

 

WHEREAS, the Company, pursuant to its 2008 Stock Incentive Plan (as amended from time to time, the “Plan”) desires to grant restricted stock units to Employee, and Employee desires to accept such restricted stock units, each under the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      Grant of Restricted Stock Units

 

The Company hereby grants to Employee, as of the Grant Date, [Number of RSUs Granted] restricted stock units (hereinafter called the “Units”), each representing the right to receive one share of the Class A Common Stock of the Company, par value $0.001 per share (the “Common Shares”), upon vesting of that Unit on the terms and conditions set forth in this Agreement.

 

2.                                      Duration and Vesting

 

(a)                                 [Subject to the terms and conditions set forth in this Agreement, including, without limitation, payment of all applicable withholding taxes, the Units shall vest in cumulative installments on the following vesting dates (the “Vesting Dates”) as follows:                   ]

 

or

 

[Subject to Section 2(f) and the terms and conditions set forth in this Agreement, [performance vesting criteria permitted under the Plan].

 

Notwithstanding the foregoing vesting schedule, each corresponding increment of the Units shall not vest unless and until the Company shall have achieved the applicable [performance goal(s)], in each case as calculated in accordance with Section 2(f) and subject to the terms and conditions set forth in this Agreement, on or before [Date], respectively.]

 

No Common Shares shall be issued in exchange for any Unit until that Unit has vested.

 

(b)                                 Except as permitted pursuant to the Plan, (i) during the lifetime of Employee, the Common Shares issuable upon vesting of the Units shall be issued only to Employee and the Units shall not be assignable or transferable by Employee, other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the 

 

 

Internal Revenue Service Code of 1986, as amended, and regulations thereunder (the “Code”), Title I of the Employee Retirement Income Security Act, or the rules promulgated thereunder; and (ii) the Units may not be sold, assigned, transferred or otherwise disposed of, or pledged, alienated, attached, hypothecated, or otherwise encumbered in any manner (whether by operation of law or otherwise), and will not be subject to execution, attachment or other process.  Any purported sale, assignment, transfer, pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any of its subsidiaries.  Any sale, assignment, transfer, pledge, hypothecation or other disposition of the Units or any attempt to make any such levy of execution, attachment or other encumbrance will cause the Units to terminate immediately, unless the Board of Directors of the Company (the “Board”), the Executive Compensation Committee of the Board (the “Committee”) or the General Counsel of the Company, in their sole and absolute discretion for any reason or no reason at any time and from time to time, specifically waives applicability of this provision.

 

(c)                                  Notwithstanding any other provisions in this Agreement, the Units shall expire, and no Common Shares will be issued in exchange for any Units, on [Date of Expiration] (the “Expiration Date”).

 

(d)                                 The Company assumes no responsibility for individual income taxes, penalties or interest related to the grant, vesting or adjustment of any Unit, or the issuance of Common Shares in exchange for any Unit or the subsequent disposition of any Common Shares issued in exchange for any Unit. Employee should consult with Employee’s personal tax advisor regarding the tax ramifications, if any, which result from the grant, vesting or adjustment of any Unit or the issuance of Common Shares in exchange for any Unit or any subsequent disposition thereof.  If, in the Company’s sole and absolute discretion for any reason or no reason at any time and from time to time, it is necessary or appropriate to collect or withhold federal, state or local taxes in connection with the grant, vesting or adjustment of any portion of the Units or the issuance of Common Shares in exchange for any Unit or any subsequent disposition of Common Shares, the Company shall be entitled to require the payment of such amounts as a condition to vesting.  Prior to any relevant taxable or tax withholding event, as applicable, Employee shall pay or make arrangements satisfactory to the Company to satisfy all withholding obligations.  In furtherance and without limiting the generality of the foregoing, Employee (on its own behalf and on behalf of each and every other proper party as described in Section 2(b) and/or Section 3(c) of this Agreement) hereby authorizes the Company, in its sole and absolute discretion for any reason or no reason at any time and from time to time (including without limitation, pursuant to the then-current procedures implemented by the Company’s administrator for the Units (the “Administrator”), as such Administrator and procedures are designated by the Company in its sole and absolute discretion for any reason or no reason at any time and from time to time), to satisfy all withholding and all other obligations with regard to any individual income taxes, penalties or interest related to the grant, vesting or adjustment of any Unit or the issuance of Common Shares in exchange for any Unit or any subsequent disposition thereof by one or a combination of the following:

 

(i)             withholding from any wages or other cash compensation payable to Employee by the Company;

 

(ii)          withholding Common Shares that are otherwise issuable upon vesting of the Units;

 

(iii)       arranging for the sale of Common Shares that are otherwise issuable upon vesting of the Units, including, without limitation, selling Common Shares as part of a

 

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block trade with other employees under the Plan or otherwise; and/or

 

(iv)      withholding from the proceeds of the sale of Common Shares issued upon vesting of the Units.

 

(e)                                  In considering the acceptance of the Units, Employee understands, acknowledges, agrees and hereby stipulates that he or she has used the same independent investment judgment that Employee would use in making other investments in corporate securities.  Among other things, stock prices will fluctuate over any reasonable period of time and the price of the Common Shares may go down as well as up.  No guarantees are made as to the future prospects of the Company or the Common Shares, or that any market for sale of the Common Shares will exist in the future.  No representations are made by the Company except as may be contained in any active registration statement on file with the SEC relating to the Plan at the time of the applicable issuance of the Units.

 

[(f)                               Provisions relating to the calculation of performance criteria.]

 

3.                                      Effect of Termination of Employment; Death or Disability; Demotion; Termination After Change in Control

 

(a)                                 In the event that Employee shall cease to be employed by the Company or its direct or indirect subsidiaries, if any, for any reason other than Employee’s serious misconduct or a violation of the covenants set forth in Section 5 of this Agreement (as described in Section 3(b) of this Agreement) or Employee’s death or disability (as described in Section 3(c) of this Agreement), and Employee shall have vested Units for which Common Shares have not yet been issued, Employee shall have the right to have such Common Shares issued in exchange for such vested Units on the date of such cessation of employment, but only to the extent of the full number of Common Shares issuable upon such vested Units on the date of such cessation of employment, subject to the condition that any portion of the Units not vested as of the date of such cessation of employment shall terminate as of such cessation of employment and no Common Shares shall be issued in exchange for any unvested Units following the date of such cessation of employment, and that no portion of the Units shall vest after the Expiration Date.  Retirement, whether or not pursuant to any retirement or pension plan of the Company, shall be deemed to be a cessation of employment for all purposes of this Agreement.  The termination of the Units by reason of any such cessation of employment shall be without prejudice to any right or remedy which the Company may have against the holder.

 

(b)                                 In the event that Employee shall cease to be employed by the Company or its direct or indirect subsidiaries, if any, by reason of Employee’s serious misconduct during the course of employment, including without limitation wrongful appropriation of the Company’s funds, theft of Company property or other reasons as determined by the Company, or in the event that Employee violates the covenants set forth in Section 5 of this Agreement, all Units shall be deemed to have terminated and no Common Shares shall be issuable in connection therewith, as of the date of the misconduct or violation.  The termination of the Units by reason of such cessation of employment shall be without prejudice to any right or remedy which the Company may have against the holder.

 

(c)                                  In the event that: (i) Employee shall die while in the employ of the Company or its direct or indirect subsidiaries, if any, or after cessation of employment for any reason other than serious misconduct or violation of the covenants set forth in Section 5 of this Agreement (as described in Section 3(b) of this Agreement); or (ii) employment is terminated because Employee

 

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has become disabled (within the meaning of Section 22(e)(3) of the Code) while in the employ of the Company or its direct or indirect subsidiaries, if any, and Employee shall have vested Units for which Common Shares have not yet been issued as of the date of such death or the date of cessation of employment for such disability, then such Common Shares shall be issued to the personal representatives or administrators, executor or guardians of Employee, as applicable, or to any person or persons to whom the Units are transferred by will or the applicable laws of descent and distribution, but only to the extent of the full number of Common Shares issuable upon such vested Units on the date of such death or the date of cessation of employment for such disability, subject to the condition that any portion of the Units not vested on the date of such death or such cessation of employment shall terminate as of the date of such death or such cessation of employment and no Common Shares shall be issued in exchange for any unvested Units following the date of such death or such cessation of employment, and that no portion of the Units shall vest after the Expiration Date. The termination of the Units by reason of such death or such cessation of employment shall be without prejudice to any right or remedy which the Company may have against the holder.

 

(d)                                 In the event that Employee is demoted (but remains employed) by the Company or its direct and indirect subsidiaries, if any, from Employee’s current level (e.g., chairman, chief executive officer, president, executive vice president, senior vice president, vice president, director, manager, or other level held by Employee on the date of this Agreement), (i) if Employee shall have vested Units for which Common Shares have not yet been issued as of the date of such demotion, then Employee shall have the right to have such Common Shares issued in exchange for such vested Units, but only to the extent of the full number of Common Shares issuable upon such vested Units on the date of such demotion, subject to the condition that any portion of the Units not vested as of the date of such demotion shall terminate as of the date of such demotion and no Common Shares shall be issued in exchange for any unvested Units following the date of such demotion, and that no portion of the Units shall vest after the Expiration Date; and (ii) this Agreement, including without limitation the covenants set forth in Section 5 of this Agreement, shall otherwise continue in force, unless otherwise terminated.  The termination of the Units by reason of such demotion shall be without prejudice to any right or remedy which the Company may have against the holder.

 

(e)                                  In the event that (i) a Change in Control occurs, and (ii) Employee is terminated by the Company (and not simultaneously employed by the surviving entity — if not the Company — in the Change in Control), for any reason other than for Cause, during the twenty-four (24) month period following such Change in Control, then all Units not previously vested shall immediately vest and Common Shares shall be issued in exchange for the vested Units.

 

For the purpose of this subsection 3(e), the capitalized terms shall have the following meanings: “Capital Stock” means any and all shares, interests, participations, rights or other equivalents, however designated, of corporate stock or partnership or membership interests, whether common or preferred. “Cause” means: (i) the willful and continued failure of Employee to substantially perform his duties consistent with past practices prior to the Change in Control; (ii) any illegal conduct or gross misconduct which is materially injurious to the Company or its affiliates; (iii) Employee has been convicted of or pleaded guilty or nolo contendere to a felony or any crime involving moral turpitude or dishonesty; or (iv) Employee has been convicted of or pleaded guilty or nolo contendere to a felony, crime or engaged in conduct which results in a prohibition on Employee from serving, for any period of time, as an officer or director of a publicly-traded company by any federal, state or other regulatory governing body (including without limitation, an exchange or association such as NYSE or Nasdaq). “Change in Control” means: (i) a transaction or a series of transactions the result of which is that any person (other

 

4

 

than the Principal or a Related Party) individually owns more than fifty percent (50%) of the total Equity Interests of either (A) the Company or (B) the surviving entity in any such transaction(s) or a controlling affiliate of such surviving entity in such transaction(s); and (ii) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. “Continuing Director” means, as of any date of determination, any member of the Board of Directors of the Company who: (a) was a member of such Board of Directors on the date of this Agreement; or (b) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or was nominated for election or elected by the Principal and his Related Parties. “Equity Interest” means any Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). “Principal” means Charles W. Ergen. “Related Party” means, with respect to the Principal, (a) the spouse and each immediate family member of the Principal; (b) each trust, corporation, partnership or other entity of which the Principal beneficially holds an eighty percent (80%) or more controlling interest; and (c) the Principal’s personal representatives, administrators, executor, guardians, or any person(s) or entity(ies) to which the Principal’s shares of the Company are transferred as a result of a transfer by will or the applicable laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code, Title I of the Employee Retirement Income Security Act, or the rules promulgated thereunder.

 

4.                                      Manner of Issuance of Common Shares

 

(a)                                 The Common Shares issuable upon vesting of the Units shall be issued only to Employee or other proper party as described in Section 2(b), Section 3(c) and/or Section 4(c) of this Agreement, in whole Common Shares upon meeting the applicable vesting requirements for the Units represented by this Agreement and by following, prior to the Expiration Date, the then-current procedures implemented by the Administrator, as such Administrator and procedures are designated by the Company in its sole and absolute discretion from time to time.

 

(b)                                 Unless notified by the Company or the Administrator to the contrary, the Common Shares issuable upon the vesting of the Units shall be issued on the date specified by the Company within five (5) business days following the date that the General Counsel for the Company determines that all requisite events to issuance of the Common Shares have been properly completed.  The Company shall have no obligation to issue Common Shares upon the vesting of the Units until it has confirmed to its satisfaction that all events requisite for vesting of the Units and issuance of the Common Shares have been accomplished.

 

(c)                                  The certificate or certificates for the Common Shares, if any, which are issued pursuant to the vesting of the Units may be registered only in the name of Employee (or if Employee so requests, jointly in the name of Employee and with a member of Employee’s family, with the right of survivorship, or in the event of the death of Employee, in the name of such survivor of Employee as the person with the right to receive the Common Shares issuable upon the vesting of the Units shall designate).

 

5.                                      Covenant Not to Compete; Non-Solicitation; Protection of Confidential Information and Trade Secrets

 

(a)                                 Employee shall serve the Company and its direct and indirect subsidiaries (collectively, the “Company” for purposes of this Section 5), loyally and in good faith and use Employee’s best efforts to promote the Company’s interests.  Employee hereby agrees not to

 

5

 

compete with the Company, not to solicit employees of the Company, not to solicit customers of the Company, and agrees to protect from disclosure Confidential Information and Trade Secrets (as defined in Section 5(e) of this Agreement), pursuant to the terms and conditions hereinafter set forth.

 

(e)                                  Non-Disclosure of Confidential Information and Trade Secrets.  Employee further agrees to hold in a fiduciary capacity for the benefit of the Company all proprietary and confidential information, knowledge, ideas and data, including, without limitation, customer lists and the Company’s trade secrets, products, processes and programs (“Confidential Information and Trade Secrets”), relating in any way to the present or future business or activities of the Company for as long as such Confidential Information and Trade Secrets remain confidential.  Such Confidential Information and Trade Secrets include but are not limited to: (i) the Company’s financial and business information, such as capital structure, operating results, strategies and plans for future business, pending projects and proposals and potential acquisitions or divestitures; (ii) product and technical information, such as product formulations, new and innovative product ideas, proprietary credit scoring models and approaches, credit policies, new business developments, plans, designs, compilation methods, processes, procedures, program devices, data processing programs, software, software codes, hardware, firmware and research and development products; (iii) marketing information, such as new marketing ideas, mailing lists, the identity of the Company’s customers and prospects, their names and addresses and sales and marketing plans; (iv) information about the Company’s third-party agreements and any confidential or protected information disclosed to the Company by a third-party; (v) the Company’s suppliers, partners, customers and prospect lists; and (vi) personnel information, such as the identity of the Company’s other employees, their salaries, bonuses, benefits, skills, qualifications and abilities.  For the avoidance of doubt and notwithstanding the foregoing, the term “trade secrets” shall mean items of Confidential Information and Trade Secrets that meet the requirements of the Uniform Trade Secrets Act, as adopted in the state of Colorado and as amended from time to time.  All such Confidential Information and Trade Secrets, together with all copies thereof and notes and other references thereto, shall remain the sole property of the Company.  This obligation of confidentiality is intended to supplement, and is not intended to supersede or limit, the obligations of confidentiality Employee has to the Company by agreement, law or otherwise.

 

(f)                                   Tolling.  Employee further agrees that, while the duration of the covenants contained in this Section 5 will be determined generally in accordance with the terms of each respective covenant, if Employee violates or threatens to violate any of those covenants, Employee agrees to an extension of the duration of such covenant on the same terms and conditions for an additional period of time equal to the time that elapses from the commencement of such violation or threat of violation to the later: of (i) the termination of such violation or threat of violation; or (ii) the final non-appealable resolution of any litigation or other legal proceeding stemming from such violation.

 

(g)                                  No Waiver.  In addition to (and without limitation of) the other terms and conditions of this Agreement, the failure of the Company to insist upon strict performance of any provision of any agreement between the Company, on the one hand, and another employee, on the other hand, shall not be construed as a waiver of the Company’s right to insist upon strict performance of each and every representation, warranty, covenant, duty and obligation of Employee hereunder.  In addition to (and without limitation of) the foregoing, the election of certain remedies by the Company with respect to the breach or default by another employee of any agreement between the Company, on the one hand, and such other employee, on the other hand, shall not be deemed to prejudice any rights or remedies that the Company may have at law,

 

6

 

in equity, under contract (including without limitation this Agreement) or otherwise with respect to a similar or different breach or default hereunder by Employee (all of which are hereby expressly reserved).

 

(h)                                 Severability.  Each of the covenants in this Section 5 shall be construed as separable and divisible from every other such covenant and the enforceability of any one such covenant shall not limit the enforceability, in whole or in part, of any other such covenant.  In the event that a court, arbitrator or other body of competent jurisdiction holds any covenant in this Section 5 to be invalid, illegal, void or less than fully enforceable as to time, scope or otherwise, the parties agree that such covenant shall be construed by limiting and reducing it to the minimum extent necessary to render such covenant valid, legal and enforceable while preserving the enforceability of such covenant to the greatest extent permissible against Employee; the remaining covenants of this Section 5 shall not be affected by such alteration, and shall remain in full force and effect.

 

6.                                      Dispute Resolution; Arbitration

 

(a)                                 Employee and the Company agree that any claim, controversy and/or dispute between them, arising out of, relating to, or in connection with (1) Employee’s application for employment, employment and/or termination of employment (collectively “Employment-Related Disputes”) and/or (2) this Agreement (“Units Disputes”), whenever and wherever brought, shall be resolved by arbitration.  Employee agrees that this agreement to arbitrate is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and is fully enforceable.  For purposes of this Section 6, the Company shall be defined to include its direct and indirect subsidiaries, and the employees, shareholders, officers, and directors of all of the foregoing entities.

 

(b)                                 For Employment-Related Disputes,

 

(i)                                     the Company agrees to pay all of the arbitrator’s and arbitration fees and expenses until otherwise ordered by the arbitrator, except that the Company shall not be responsible for Employee’s legal fees and costs, unless awarded to Employee by the arbitrator;

 

(ii)                                  the arbitration shall be governed by the substantive law of the State of Colorado, without giving effect to choice of law principles;

 

(iii)                               a single arbitrator engaged in the practice of employment law from the American Arbitration Association (“AAA”) shall conduct the arbitration of Employment-Related Disputes pursuant to the AAA’s Employment Arbitration Rules and Procedures of 2009, without incorporation of AAA’s Mediation Rules and Supplemental Rules for Class Arbitration, which the parties hereby expressly disclaim (the “Rules”), which may be found at http://www.adr.org;

 

(iv)                              the arbitrator shall have the authority to hear and decide dispositive motions in the context of such arbitration, under the guidelines and legal standards set forth in C.R.C.P. 12 and 56;

 

(v)                                 regardless of what the Rules state, all arbitration proceedings, including without limitation hearings, discovery, settlements and awards shall be confidential and the arbitration and any hearings shall be held in the City

 

7

 

and County of Denver, Colorado; and

 

(vi)                              the arbitrator’s decision shall be final and binding, and judgment upon the arbitrator’s decision and/or award may be entered in any court of competent jurisdiction.

 

(c)                                  For Units Disputes:

 

(i)                                     the Company agrees to pay all of the arbitrator’s and arbitration fees and expenses until otherwise ordered by the arbitrator, except that the Company shall not be responsible for Employee’s legal fees and costs, unless awarded to Employee by the arbitrator;

 

(ii)                                  the arbitration shall be governed by the substantive law of the State of Colorado, without giving effect to choice of law principles;

 

(iii)                               a single arbitrator engaged in the practice of commercial law from the AAA shall conduct the arbitration of Units Disputes under the then-current AAA Commercial Dispute Resolution Procedures (“Procedures”), without incorporation of the Rules, which may be found at http://www.adr.org;

 

(iv)                              the arbitrator shall have the authority to hear and decide dispositive motions in the context of such arbitration, under the guidelines and legal standards set forth in C.R.C.P. 12 and 56;

 

(v)                                 regardless of what the Rules state, all arbitration proceedings, including without limitation hearings, discovery, settlements and awards shall be confidential and the arbitration and any hearings shall be held in the City and County of Denver, Colorado; and

 

(vi)                              the arbitrator’s decision shall be final and binding, and judgment upon the arbitrator’s decision and/or award may be entered in any court of competent jurisdiction.

 

(d)                                 Notwithstanding the foregoing, this agreement to arbitrate all Employment-Related Disputes and/or Units Disputes shall not apply to Employee claims for statutory unemployment compensation benefits, statutory worker’s compensation benefits, charges filed with the National Labor Relations Board alleging violations of the National Labor Relations Act, and claims for benefits from a Company-sponsored “employee benefit plan,” as that term is defined in 29 U.S.C. §1002(3).

 

(e)                                  Notwithstanding the foregoing, the Company shall have the right to seek any temporary restraining orders and/or preliminary and/or permanent injunctions in a court of competent jurisdiction based on the Company’s claims that Employee is violating the Company’s rights, and/or breaching Employee’s duties and/or obligations, under this Agreement or under any other agreement, at law or in equity regarding: (i) non-competition agreements or obligations; (ii) non-solicitation agreements or obligations; (iii) intellectual property, including without limitation copyrights, patent rights, trade secrets and/or know-how; and/or (iv) confidential information.  Employee agrees that the state and federal courts located in the City and County of Denver, Colorado shall have exclusive subject matter and personal jurisdiction to hear and decide any

 

8

 

such action, and that any such court action shall be governed by the substantive law of the State of Colorado, without giving effect to choice of law principles. Employee irrevocably waives, to the fullest extent permitted by law, any and all objections which he or she may now or hereafter have to the venue of any such proceeding brought in any such court, including, without limitation, any claim that such proceeding has been brought in an inconvenient forum.

 

(f)                                   The prevailing party in any arbitration or court proceeding contemplated by this Section 6 shall be entitled to its, his, or her reasonable attorneys’ fees and to reimbursement of costs of arbitrator’s fees and reasonable arbitration expenses.  Nothing in this Agreement shall require Employee to reimburse the Company for its attorneys’ fees and costs, including arbitration fees and costs, incurred when the Company prevails in defense of any statutory claim of unlawful discrimination, unless said claim brought by Employee is frivolous, unreasonable or without foundation, or Employee continues to prosecute a claim after the claim became frivolous, unreasonable or without foundation.  In the event either party hereto files a judicial or administrative action asserting claims subject to this arbitration provision, and the other party successfully stays such action and/or compels arbitration of the claims made in such an action, the party filing the administrative or judicial action shall pay the other party’s attorneys’ fees and costs incurred in obtaining a stay and/or compelling arbitration.

 

(g)                                  Each of the provisions of this Section 6 shall be construed as separable and divisible from every other such provision and the enforceability of any one such provision shall not limit the enforceability, in whole or in part, of any other such provision.  In the event that a court, arbitrator or other body of competent jurisdiction holds any provision of this Section 6 to be invalid, illegal, void or less than fully enforceable as to time, scope or otherwise, the parties agree that such provision shall be construed by limiting and reducing it to the minimum extent necessary to render such provision valid, legal and enforceable while preserving the enforceability of such provision to the greatest extent permissible; the remaining provisions of this Section 6 shall not be affected by such alteration, and shall remain in full force and effect.

 

(h)                                 This Agreement supersedes and renders void any prior agreement(s) to arbitrate between Employee and the Company with respect to the subject matter of this agreement to arbitrate, and there are no agreements, verbal or written or otherwise, between the parties hereto regarding arbitration of Employment-Related Disputes or Units Disputes other than as expressly set forth in this Agreement.  In the event of any conflict or inconsistency between any AAA rules and/or procedures and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall control.

 

(i)                                     THE RIGHT TO A TRIAL, TO A TRIAL BY JURY, AND TO COMMON LAW CLAIMS FOR PUNITIVE AND/OR EXEMPLARY DAMAGES ARE OF VALUE AND ARE WAIVED PURSUANT TO THIS AGREEMENT.  Other than potential rights to a trial, a jury trial, and common law claims for punitive and/or exemplary damages, nothing in this agreement to arbitrate limits any statutory remedy to which Employee may be entitled under law.

 

(j)                                    The parties acknowledge that this agreement to arbitrate shall not alter the at-will nature of their employment relationship MEANING THAT EMPLOYEE MAY TERMINATE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY AND ITS DIRECT AND INDIRECT SUBSIDIARIES AT ANY TIME WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE, AND THE COMPANY AND ITS DIRECT AND INDIRECT SUBSIDIARIES RESERVE THE SAME RIGHTS TO TERMINATE EMPLOYEE’S EMPLOYMENT AND/OR DEMOTE EMPLOYEE.

 

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7.                                      Miscellaneous

 

(a)                                 Units Subject to the Plan.  The Units are issued pursuant to the Plan and are subject to its terms and conditions.  The terms and conditions of the Plan are available for inspection during normal business hours at the principal offices of the Company.  The Committee has final authority to decide, interpret, determine and calculate any and all aspects of the Plan in its sole and absolute discretion for any reason or no reason at any time and from time to time.

 

(b)                                 No Right to Continued Employment; No Rights as Shareholder. This Agreement shall not confer upon Employee any right with respect to continuance of employment with the Company or any of its direct or indirect subsidiaries, nor will it interfere in any way with the right of the Company and its direct and indirect subsidiaries to terminate such employment or to demote Employee for any reason or no reason at any time and from time to time. Employee shall have none of the rights of a shareholder with respect to Common Shares subject to the Units unless and until such Common Shares shall have been issued to Employee in accordance with this Agreement and the Plan (as evidenced by the records of the transfer agent of the Company).

 

(c)                                  Changes in Capital Structure.  If there shall be any change in the Common Shares of the Company through merger, consolidation, reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split or other change in the corporate structure of the Company, , then appropriate adjustments may be made by the Company, as determined in the sole and absolute discretion of the Committee for any reason or no reason at any time and from time to time, to all or any portion of the Units that have not yet vested and been exchanged for Common Shares or have not been terminated or expired, in order to prevent dilution or enlargement of Employee’s rights under the Units. Such adjustments may include, where appropriate, changes in the number of shares of Common Shares subject to the outstanding Units. Notwithstanding the foregoing, no action that would modify the treatment of the Units under the Code shall be effective unless agreed to in writing by the Company and Employee.

 

(d)                                 Assigns and Successors.  This Agreement shall inure to the benefit of the Company’s assigns and successors.

 

(e)                                  Compliance with Law; Legal Requirements.  The Company shall at all times during the term of the Units reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Agreement.  The vesting of the Units and the issuance of any Common Shares in exchange for the Units shall only be effective at such time that the issuance and sale of Common Shares prior or pursuant to such vesting will not violate any state or federal securities or other laws.  The Company may suspend Employee’s right to vesting of the Units and the issuance of any Common Shares in exchange for the Units and shall not issue the Common Shares in exchange for the Units unless it is satisfied in its judgment that the issuance and sale of Common Shares will not violate any of the provisions of the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any rules or regulations of the SEC promulgated thereunder, or the requirements of applicable state law relating to authorization, issuance or sale of securities, or until there has been compliance with the provisions of such acts, laws and rules.

 

If the Company in its sole and absolute discretion so elects, it may register the Common Shares issuable upon the vesting of the Units under the Securities Act, and list the Common Shares on any securities exchange.  In the absence of such election, Employee understands that neither the Units nor the Common Shares issuable upon the vesting of the Units thereof will be registered under the Securities Act, or tradeable on any securities exchange, and Employee represents that

 

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the Units are being acquired, and that such Common Shares which will be acquired pursuant to the Units will be acquired, by Employee for investment and not with a view to distribution thereof.

 

In the absence of an effective Registration Statement meeting the requirements of the Securities Act, upon any sale or transfer of the Common Shares issued pursuant to the Units, Employee shall deliver to the Company an opinion of counsel satisfactory to the Company to the effect that the sale or transfer of the Common Shares does not violate any provision of the Securities Act or the Exchange Act.

 

Regardless of whether the offering and sale of the Common Shares have been registered under the Securities Act, or have been registered or qualified under the securities laws of any state, the Company in its sole and absolute discretion for any reason or no reason at any time and from time to time may impose restrictions upon the sale, pledge or other transfer of such Common Shares (including the placement of appropriate legends on certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the Exchange Act, the securities laws of any state or any other law.

 

(f)                                   Notice of Disposal of Common Shares; Withholding.  If Employee shall dispose of any of the Common Shares of the Company acquired by Employee pursuant to the Units within two (2) years from the date the Units were granted or within one (1) year after the transfer of any such shares to Employee upon the vesting of the Units, then, in order to provide the Company with the opportunity to claim the benefit of any income tax deduction (if any) which may be available to it under the circumstances, Employee shall promptly notify the Company of the dates of acquisition and disposition of such shares, the number of shares so disposed of, and the consideration, if any, received for such shares.  In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to insure:  (i) notice to the Company of any disposition of the Common Shares of the Company within the time periods described above; and (ii) that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Employee.

 

(g)                                  No Rights as Shareholder; Confidential Treatment of Units.  The holder of the Units will not have any right to dividends or any other right of a shareholder with respect to the Common Shares subject to the Units unless and until such Common Shares shall have been issued to Employee, upon the vesting of the Units and in accordance with this Agreement and the Plan (as evidenced by the records of the transfer agent of the Company).

 

(h)                                 Confidentiality.  Employee agrees to treat with confidentiality the existence, terms and conditions of the Units, and agrees that failure to do so may result in immediate termination of the Units.

 

(i)                                     Obligations Unaffected.  Except as expressly set forth to the contrary in Sections 6(e) and 6(h) of this Agreement, the obligations of Employee under this Agreement shall be independent of, and unaffected by, and shall not affect, other agreements, if any, binding Employee which apply to Employee’s business activities during and/or subsequent to Employee’s employment by the Company.

 

(j)                                    Survival.  Any provision of this Agreement which logically would be expected to survive termination or expiration, shall survive for a reasonable time period under the

 

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circumstances, whether or not specifically provided in this Agreement.  Except as set forth to the contrary in Sections 3(d) and 5(b)(iv) of this Agreement, the obligations under this Agreement also shall survive any changes made in the future to the employment terms and conditions of Employee, including without limitation changes in salary, benefits, bonus plans, job title and job responsibilities.

 

(k)                                 Complete Agreement; No Waiver.  This Agreement sets forth the entire, final and complete understanding between the parties hereto relevant to the subject matter of this Agreement, and it supersedes and replaces all previous understandings or agreements, written, oral, or implied, relevant to the subject matter of this Agreement made or existing before the date of this Agreement. Except as expressly provided by this Agreement, no waiver or modification of any of the terms or conditions of this Agreement shall be effective unless in writing and signed by both parties. The failure of any party to insist upon strict performance of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or similar nature.

 

(l)                                     Severability.  Each provision of this Agreement shall be construed as separable and divisible from every other provision and the enforceability of any one provision shall not limit the enforceability, in whole or in part, of any other provision.  Except as otherwise set forth in Section 5(f) of this Agreement, in the event that a court, arbitrator or other body of competent jurisdiction holds any provision of this Agreement to be invalid, illegal, void or less than fully enforceable as to time, scope or otherwise, the parties agree that such provision shall be construed by limiting and reducing it to the minimum extent necessary to render such provision valid, legal and enforceable while preserving to the greatest extent permissible the original intent of the Parties; the remaining terms and conditions of this Agreement shall not be affected by such alteration, and shall remain in full force and effect.

 

(m)                             Summary Information.  In the event that the Company provides Employee (or anyone acting on behalf of Employee) with summary or other information concerning, including, or otherwise relating to Employee’s rights or benefits under this Agreement (including without limitation the Units, and any vesting thereof), such summary or other information shall in all cases be qualified in its entirety by this Agreement and the Plan, unless it explicitly states otherwise and is signed by an officer of the Company, shall not constitute an amendment or other modification hereto.

 

(n)                                 Employee Acknowledgements

 

(i)                                     Employee understands, acknowledges, agrees and hereby stipulates that he or she is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else.

 

(ii)                                  Employee understands, acknowledges, agrees and hereby stipulates that he or she has carefully read, considered and understands all of the provisions of this Agreement and the Company’s policies reflected in this Agreement.

 

(iii)                               Employee understands, acknowledges, agrees and hereby stipulates that he or she has asked any questions needed for him or her to understand the terms, consequences and binding effect of this Agreement and Employee fully understands them, including that he or she is waiving the right to a trial, a trial by jury, and common law claims for punitive and/or

 

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exemplary damages.

 

(iv)                              Employee understands, acknowledges, agrees and hereby stipulates that he or she was provided an opportunity to seek the advice of an attorney of his or her choice before signing this Agreement.

 

(v)                                 Employee understands, acknowledges, agrees and hereby stipulates that the obligations and restrictions set forth in this Agreement are consistent with Employee’s right to sell his or her labor, the public’s interest in unimpeded trade, are fair and reasonable, and are no broader than are reasonably required to protect the Company’s interests.

 

(vi)                              Employee understands, acknowledges, agrees and hereby stipulates that it is the Company’s policy to seek legal recourse to the fullest extent possible for breach of this Agreement.  Employee understands that nothing in this Agreement shall be construed to prohibit the Company from pursuing any other available remedies for such breach or threatened breach, including the recovery of damages from Employee.  Employee further agrees that, if he or she violates or threatens to violate this Agreement, it would be difficult to determine the damages and lost profits which the Company would suffer as a result of such breach including, but not limited to, losses attributable to lost or misappropriated Confidential Information and Trade Secrets and losses stemming from violations of the non-disclosure, non-compete and non-solicitation obligations set forth above.  Accordingly, Employee agrees that if he or she violates or threatens to violate this Agreement, then the Company shall be entitled to an order for injunctive relief and/or for specific performance, or their equivalent, in addition to money damages and any other remedies otherwise available to it at law or equity.  Such injunctive relief includes but is not limited to requirements that Employee take action or refrain from taking action to avoid competing with the Company, to avoid soliciting the Company’s employees or customers, to preserve the secrecy of Confidential Information and Trade Secrets, to avoid conflicts of interest and to protect the Company from irreparable harm.  Employee expressly agrees that the Company does not need to post a bond to obtain an injunction and Employee waives the right to require such a bond.

 

(o)                                 Notice.  All notices to the Company shall be addressed to: EchoStar Corporation, 100 Inverness Terrace East, Englewood, Colorado, 80112, Attn: Corporate Secretary, or to such other address or person as the Company may notify Employee from time to time.  All notices to Employee or other person or persons then entitled to the Common Shares relating to the Units shall be addressed to Employee or such other person(s) at Employee’s address on file with the Company, or to such other address as Employee or such person(s) may notify the Company or its administrator for the Units in writing from time to time.

 

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Upon Employee’s acceptance of the terms and conditions set forth in this Agreement through the electronic grant process available through the Administrator, this Agreement shall become effective between the parties as of the date first written above.

 

ECHOSTAR CORPORATION

 

 

EMPLOYEE — [Participant Name]

Accepted on [Acceptance Date]

 

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2008 STOCK INCENTIVE PLAN

 

Explanation of Beneficiary Designation

 

The 2008 Stock Incentive Plan provides that although common shares issuable upon vesting of a restricted stock unit are able to be issued during Employee’s lifetime only to him or her, common shares issuable upon vesting of a restricted stock unit may be issued after the death of any Employee (if the restricted stock unit was vested and not otherwise terminated prior to such death) to the person whom Employee shall have designated as beneficiary or, if no designation has been made, to the person to whom Employee’s rights shall have passed by will or the laws of descent and distribution.  (Note: A restricted stock unit is not otherwise assignable or transferable.)

 

The right to designate beneficiaries could provide certain advantages including avoidance of probate (and attendant costs) with respect to receipt of Common Shares issued in exchange for the Units.  Since the individual circumstances of each Employee differ, however, and since the Company cannot warrant the validity or effect of such a designation of beneficiary, it is recommended that you consult your personal tax or other advisor(s) before making any decision, particularly if you propose to designate a trust as beneficiary.

 

If more than one beneficiary is named, the beneficiaries shall share equally in the rights unless otherwise stated above. Please designate a beneficiary or beneficiaries by following the procedures specified by the Administrator, as such Administrator and procedures are designated by the Company in its sole and absolute discretion for any reason or no reason at any time and from time to time.  Please note that your decision thereon will apply only to the Units evidenced by the accompanying Restricted Stock Unit Agreement and only until you receive the Common Shares issuable upon vesting of such Units.  It does not apply to any future grants of Units since a separate election is made with respect to each grant of Units that may be granted.  If you wish to change a beneficiary for any grant of Units, please contact the Administrator.

 

Unless otherwise expressly provided, if any designated beneficiary predeceases Employee, any rights shall pass equally to the remaining designated beneficiary(ies), if any, who survive Employee, but if no designated beneficiary survives Employee, any rights shall pass to Employee’s estate. The designation herein is subject to all the terms and conditions of the Plan and all applicable laws, rules and regulations.  In addition, the Company may require an indemnity and/or other assurances from the beneficiary(ies) or successor(s) in connection with the exercise of any rights by such beneficiary(ies) or successor(s) under the Units.

 

Capitalized terms not otherwise defined in this Explanation of Beneficiary Designation shall have the meaning given to such terms in the accompanying Agreement.

 

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