Restricted Unit Purchase Agreement, Dated As of 06/20/2005

EXHIBIT 10.4


RESTRICTED UNIT PURCHASE AGREEMENT , dated as of June 20, 2005 (this " Agreement" ), between HUGHES NETWORK SYSTEMS, LLC , a Delaware limited liability company (the " Company" ); and JEFFREY A. LEDDY (the " Purchaser" ).


WHEREAS , the parties hereto are entering into this Agreement to provide for the Company' s issuance, sale and repurchase of certain equity securities to the Purchaser and to set forth certain other agreements between them.

NOW, THEREFORE , in consideration of the mutual benefits to be derived and the representations and warranties, conditions and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as set forth below.


Section 1. Definitions.


Capitalized terms used herein and not otherwise defined shall have the meanings set forth below.

" Affiliate" means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person and/or one or more affiliates thereof.


" Board" means the Board of Managers of the Company. Any calculation, determination, election or decision of the Board hereunder shall be made by the Board excluding the Purchaser if the Purchaser is a member of the Board at such time.

" Business Day" means any day except a Saturday, a Sunday or any other day on which commercial banks are not required to be open in New York, New York.


" Cause" means the acts and omissions of the Purchaser identified in Section 4.3 of the Employment Agreement.


" Change of Control" means (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (as amended from time to time, the " Exchange Act" ) not affiliated with the Company or its owners immediately prior to such acquisition of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50 percent, indirectly or directly, of the equity vote of the Company (other than any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate) or (ii) consummation of an amalgamation, a merger or consolidation of the Company or any direct or indirect subsidiary thereof with any other entity or a sale or other disposition of all or substantially all of the assets of the Company following which the voting securities of the Company that are outstanding immediately prior to such transaction cease to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity (or the entity that owns substantially all of the Company' s assets either directly or through one or more subsidiaries) or any parent or other Affiliate thereof) at least 50 percent of the combined voting power of the securities of the Company or, if the Company is not the surviving entity, such surviving entity (or the entity that


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owns substantially all of the Company' s assets either directly or through one or more subsidiaries) or any parent or other Affiliate thereof, outstanding immediately after such transaction. Notwithstanding the foregoing, a Change of Control shall not include a SkyTerra Acquisition or the acquisition of any assets or securities of the Company or its subsidiaries by the Investors, The DIRECTV Group, Inc. or any of their respective Affiliates.


" Compensation Committee" means the compensation committee of the Board.

" Control" (including, with correlative meaning, the terms " Controlling" , " Controlled by" and " under common Control with" ), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.


" Cumulative Total Return" means the sum (net of all transaction and valuation costs) of (i) all dividends and other distributions (including the aggregate amount of the Quarterly Management Fee Payments (as defined in the LLC Agreement), but specifically excluding tax distributions and expense reimbursement payments) paid to the Investors with respect to the Class A Units (as defined in the LLC Agreement), (ii) the gross proceeds of any sale of Class A Units by any of the Investors, and (iii) solely for purposes of determining Cumulative Total Return as of the fifth anniversary of the Closing, the fair market value of the Class A Units held by the Investors on the fifth anniversary of the Closing, which will be determined by a nationally recognized third party valuation firm selected by the Board. Notwithstanding anything in this Agreement to the contrary, upon a Significant Event, Cumulative Total Return shall be finally determined and there shall be no further opportunity to vest in any Performance Vesting Units.


" Documents" means this Agreement and the LLC Agreement.


" Employment Agreement" means the Employment Agreement dated as of May 23, 2002, among SkyTerra and the Purchaser, as amended, modified, restated or supplemented from time to time.

" Equity Securities" means (a) Restricted Units and any other Securities of the Company acquired by the Purchaser from time to time, (b) any equity Securities issued or issuable pursuant to Section 7 and (c) any equity Securities issued or issuable directly or indirectly with respect to the Securities referred to in clauses (a) and (b) above by way of conversion, distribution, dividend or split or in connection with a combination of equity interests, recapitalization, merger, consolidation or other reorganization.


" Fair Market Value" means, with respect to each Security, the fair market value thereof as determined by the Board in its reasonable good faith discretion.

" Good Reason" means any of the following conditions or events without the Purchaser' s prior consent: (i) a material diminution of the Purchaser' s position or responsibilities that is inconsistent with the Purchaser' s title at SkyTerra (provided that (x) any change in the Purchaser' s position or responsibilities that occurs as a result of a sale of SkyTerra or its significant assets or (y) any change in the Purchaser' s position or responsibilities at SkyTerra pursuant to an internal reorganization, in each case, following which the Purchaser' s level of position at SkyTerra is not materially diminished shall not give rise to Good Reason under clause (i) or clause (ii) of this definition), (ii) a material and willful breach by the Company of any


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terms of the Employment, or (iii) a reduction in the Purchaser' s base salary or the percentage of his base salary eligible as a target bonus. Any such occurrence shall constitute " Good Reason" only after the Purchaser has given SkyTerra written notice of, and twenty (20) business days opportunity to cure, such violation after receipt by the SkyTerra of such written notice, and then only if such occurrence is not cured.


" Investors" means SkyTerra and its successors and assigns (other than assigns of SkyTerra resulting from a Change in Control).

" Law" means any law, treaty, convention, rule, directive, legislation, ordinance, regulatory code (including, without limitation, rules and regulations) or similar provision having the force of law or an order of any governmental entity or any self-regulatory organization.

" Lien" means and includes security interests, mortgages, liens, pledges, charges, easements, reservations, restrictions, clouds, servitudes, rights of way, options, rights of first refusal, community property interests, equitable interests, restrictions of any kind, conditional sale or other title retention agreements, any agreement to provide any of the foregoing and all other encumbrances, whether or not relating to the extension of credit or the borrowing of money, whether imposed by contract, Law, equity or otherwise.

" LLC Agreement" means the Amended and Restated Limited Liability Company Agreement dated as of April 22, 2005, among the Company, and its other members, as amended, modified, restated or supplemented from time to time.


" Person" shall be construed as broadly as possible and shall include an individual Person, a partnership (including a limited liability partnership), a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental authority.

" Rule 144" means Rule 144 (including Rule 144(k) and all other subdivisions thereof) promulgated by the Securities and Exchange Commission under the Securities Act, as such rule may be amended from time to time, or any similar or successor rule then in force.

" Sale Transaction" means the consummation of (a) the transfer (in one or a series of related transactions) of all or substantially all of the Company' s consolidated assets to a Person or a group of Persons acting in concert; (b) the sale or transfer (in one or a series of related transactions) of a majority of the outstanding Securities of the Company to one Person or a group of Persons acting in concert; or (c) the merger or consolidation of the Company with or into another Person, in the case of clauses (b) and (c) above, under circumstances in which the holders of a majority of the voting power of the outstanding Securities of the Company immediately prior to such transaction own less than a majority in voting power of the outstanding Securities of the Company or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more Subsidiaries of the Company (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or Securities) which constitutes all or substantially all of the consolidated assets of the Company shall be deemed a " Sale Transaction."

" Securities" means " securities" as defined in Section 2(1) of the Securities Act and includes, with respect to any Person, such Person' s capital stock or other equity interests or any


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options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such Person' s capital stock or other equity or equity-linked interests. Whenever a reference herein to Securities is referring to any derivative Securities, the rights of the Purchaser shall apply to such derivative Securities and all underlying Securities directly or indirectly issuable upon conversion, exchange or exercise of such derivative securities.


" Securities Act" means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, all as the same shall be in effect from time to time.


" Share Market Price" means, (x) with respect to the SkyTerra Shares to be issued to the Purchaser in connection with an Exchange: (a) if such SkyTerra Shares are not publicly traded or quoted at the time of determination, the fair market value of such Securities determined by the board of directors of SkyTerra; and (b) if the SkyTerra Shares are publicly traded or quoted at the time of determination, the per share fair market value of such Securities shall be the average closing trading price of such Securities for the twenty (20) Business Day period immediately preceding the date of determination, and (y) with respect to an Exchange following an initial public offering of the Company' s equity securities, the per share fair market value of such Securities shall be the average closing trading price of such Securities for the twenty (20) Business Day period immediately preceding the date of determination.

" Significant Event" means a Change of Control or a liquidation, dissolution or winding up of the Company in accordance with the LLC Agreement. Notwithstanding the foregoing, a Significant Event shall not include (i) the consummation of any public offering of the securities of the Company pursuant to a registration statement declared effective by the Securities and Exchange Commission under the Securities Act, as amended or (ii) a SkyTerra Acquisition (each of (i) and (ii), an " Excluded Event" ).


" SkyTerra" means SkyTerra Communications, Inc., a Delaware corporation, and its successors and assigns.


" SkyTerra Acquisition" means the direct or indirect acquisition by SkyTerra and/or any of its Affiliates, pursuant to any transaction structure, of all or substantially all of the Securities of the Company that are held by members of the Company that are not employees of the Company.


" SkyTerra Group" means SkyTerra and its Subsidiaries and Affiliates.


" Subsidiary" means, at any time, with respect to any Person (the " Subject Person" ), any other Person of which either (a) more than fifty percent (50%) of the Securities or other interests entitled to vote in the election of directors or comparable governance bodies performing similar functions or (b) more than a 50% interest in the profits or capital of such Person, are at the time owned or controlled directly or indirectly by the Subject Person or through one or more subsidiaries of the Subject Person.


" Test Date" means the date that is the earlier to occur of (i) April 23, 2010 and (ii) the consummation of a Significant Event.

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" Transfer" of Securities shall be construed broadly and shall include any issuance, sale, assignment, transfer, participation, gift, bequest, distribution, or other disposition thereof, or any pledge or hypothecation thereof, placement of a Lien thereon or grant of a security interest therein or other encumbrance thereon, in each case whether voluntary or involuntary or by operation of law or otherwise. Notwithstanding anything to the contrary contained herein, Transfer shall not include the sale or transfer of Equity Securities by the Purchaser to the Company or any of its designees pursuant to Exhibit B attached hereto or otherwise limit the Purchaser' s obligations in Section 8(b).

" Transferee" means a Person acquiring or intending to acquire Equity Securities through a Transfer.

Section 2. Authorization of Restricted Units; Adjustments.


(a) The Company has authorized the issuance and sale to the Purchaser, upon the terms and subject to the conditions set forth in this Agreement, an aggregate of 600 units (the " Restricted Units" ) of the Company' s Class B Units (the " Units" ), of which 50.0 percent shall be " Time-Vesting Units" and 50.0 percent shall be " Performance Vesting Units."

(b) In the event of any equity split, reverse equity split, dividend, merger, consolidation, recapitalization or similar event affecting the capital structure of the Company' s Class A Units, the number, kind and type of equity (or other property, including without limitation cash) subject to the Restricted Units shall be equitably adjusted as determined in good faith by the Compensation Committee to prevent the dilution or enlargement of the value of the Purchaser' s Restricted Units.

Section 3. Issuance and Sale of Restricted Units.


At the Closing, subject to the terms and conditions hereof and in reliance upon the representations and warranties, covenants and agreements contained herein, the Company will issue and sell to the Purchaser, and the Purchaser will purchase from the Company, the Restricted Units for a purchase price per Restricted Unit equal to $0.01. The aggregate purchase price paid for all Restricted Units is hereinafter referred to as the " Cash Consideration" .

Section 4. Closing.

The closing of the transactions contemplated hereby (the " Closing" ) will take place simultaneously with the execution and delivery of this Agreement at the offices of O' Melveny & Myers, LLP, 7 Times Square, New York, New York 10036.

Section 5. Deliveries at the Closing.


At the Closing, the Purchaser shall deliver to the Company (i) the Cash Consideration; (ii) a duly executed counterpart to the LLC Agreement; and (iii) a duly executed spousal consent in the form attached hereto as Exhibit A .


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Section 6. Representations and Warranties.

(a) Representations and Warranties of the Company . The Company represents and warrants to the Purchaser as of the date of this Agreement as set forth below.

(i) It is a company duly organized, validly existing and in good standing under the laws of the State of Delaware. It has full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action.

(ii) This Agreement has been duly and validly executed and delivered by the Company and constitutes a legal and binding obligation of the Company, enforceable against the Company in accordance with its terms.

(iii) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby will not (A) violate any provision of Law to which the Company is subject, (B) violate any order, judgment or decree applicable to the Company or (C) conflict with, or result in a breach or default under, any term or condition of the Company' s certificate of formation or the LLC Agreement or any agreement or instrument to which the Company is a party or by which it is bound, except for such violation ...