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EXHIBIT 10.9
September 9, 1998
Xx. Xxxxxx X. Xxxxx
00 Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxx:
This letter is intended to set forth various arrangements in connection with
your employment with KaStar Satellite Communications Corp. (the "Company").
INITIAL EMPLOYMENT
You are being hired, effective October 1, 1998, to serve as Chief Executive
Officer of the Company. Your initial salary will be at the rate of $225,000 per
year, with a year-end cash bonus at the discretion of the board of directors of
the Company. In addition, upon execution of this letter agreement you will be
paid $50,000 as a one-time signing bonus in lieu of relocation and placement
expenses. You will receive all standard Company executive benefits, including
without limitation, if offered, 401K match, health benefits and life insurance.
With respect to salary, benefits and equity incentives, you will be treated no
less favorably than other senior management.
SEVERANCE ARRANGEMENTS
In the event that your employment with the Company is terminated by the Company
without "Cause" (as defined below), you will be entitled to receive twelve
months of your base salary at the time of termination (without giving effect to
any reduction in salary occurring at any time prior to such termination) as
severance pay, payable in equal monthly installments commencing the day of such
termination, provided that you execute and deliver to the Company, and not
revoke, a full release of all potential claims against the Company reasonably
satisfactory in form and substance to the Company. For purposes of this letter,
the Company will be deemed to have terminated your employment without Cause if
you voluntarily terminate employment with the Company because (a) you are
required by the Company to relocate away from the Denver, Colorado metropolitan
area or to accept a reduction in base salary or benefits or (b) of a breach of
the Company's representations and warranties.
If at any time during the severance pay period associated with a termination or
deemed termination of your employment by the Company without Cause, the Company
fails to make any such payment on the date due or within 10 days after written
notice to the Company in accordance with the Stock Option Agreement (described
below) that such payment is delinquent, you will automatically be released in
full from all further obligations under the Noncompetition Agreement you are
executing contemporaneously with the signing of this letter, as described below
(the "Noncompetition Agreement"), and notwithstanding any such Noncompetition
Agreement release in the case of such
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termination or deemed termination without Cause, the Company will remain liable
for payment in full of all of the twelve months' of severance payments remaining
unpaid.
If you voluntarily terminate employment with the Company (except as described in
the last sentence of the first paragraph under this heading "Severance
Arrangements"), you will be entitled to twelve months of your base salary at the
time of such termination (without giving effect to any reduction in salary
occurring at any time prior to such termination) as severance pay, provided that
the Company will not be obligated to pay any such severance otherwise payable
after the date it delivers written notice to you releasing you in full from all
further obligations under the Noncompetition Agreement.
"Cause" for termination will exist if you have engaged in (a) fraud,
embezzlement or any other crime involving moral turpitude, (b) gross or willful
neglect of duty, (c) material breach of any material Company written employee
policy or procedure, including but not limited to the Company's code of business
conduct, (d) unauthorized disclosure or use of any material confidential
information or trade secrets of the Company, (e) material breach of any material
document or instrument you sign or furnish to the Company, including without
limitation any stock option or employment agreement, or (f) breach of fiduciary
obligation to the Company, in each case that continues after written notice from
the Company.
In the event you and the Company are not able to agree as to whether your
termination was for Cause and cannot resolve the issue through a negotiated
settlement within ten days following the date of termination of employment (the
"Settlement Period"), then following the expiration of the Settlement Period,
you or the Company may initiate mandatory, binding arbitration proceedings with
the American Arbitration Association in Denver, Colorado. The arbitrator will be
a lawyer then actively engaged in the practice of law. The arbitrator's
decision, including preliminary rulings, shall be binding upon both you and the
Company and enforceable in a court of law. Both you and the Company hereby agree
to waive any right to seek judicial determination of whether your termination
was for Cause. Absent a negotiated settlement within the Settlement Period or
initiation of arbitration as described above, the Company's determination shall
be final. Each party shall bear its or his own costs and expenses (including
without limitation, attorneys' fees) of arbitration unless the arbitrator
determines otherwise in his award. All arbitration proceedings, including
settlements and awards, arising out of this letter agreement will be treated as
confidential by you, and the Company.
In addition to the termination benefits described above, you will also be
entitled to any other severance benefits that are provided generally to
employees of the Company, as well as any rights you may have pursuant to COBRA
with respect to the continuation of medical insurance coverage.
OPTIONS
Contemporaneously with signing of this letter agreement, the Company and you
will enter into a Stock Option Agreement in the form attached as Exhibit A to
this letter (the "Stock Option Agreement").
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In addition, the Company will cause issuance to you, by each other entity in
which the Company holds a direct or indirect interest that is pursuing
development of any Ka-band satellite opportunity or arising out of the Rights
(as defined below), of options to acquire the equivalent of 7% of the total
equity (on a fully diluted basis) in each such entity, calculated through the
earlier of September 15, 2004 or the initial public offering of the applicable
entity. Such options will be granted as of the date the Company acquires its
direct or indirect interest in the entity. Vesting will be at the rate of
33-1/3% annually, commencing September 15, 1999, and the option will expire at
the end of the 10-year term applicable under the Stock Option Agreement. Other
provisions of any such option, including without limitation the option price per
share/percentage interest, will be as specified in the Stock Option Agreement,
with only those changes as necessary to reflect the different identity of the
issuer (and if applicable, its organizational status if it is not a
corporation). For purposes of this Agreement, the "Rights" refer to Federal
Communications Commission authorizations issued to the Company dated May 9, 1997
to construct, launch and operate geostationary Ka-band communications satellites
at 109.2 degrees X.X. and 73 degrees X.X. and the 2 applications filed December
22, 1997 by XxXxxxxxx.Xxxxx Satellite, LLC with the Federal Communications
Commission for authorizations to construct, launch and operate geostationary
Ka-band communications satellites at 175 degrees E.L. and 52 degrees E.L. and
any authorization granted pursuant to such application, including any
extensions, renewals, amendments or proceeds of any of the foregoing.
COMPANY REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties, as of the date
of this letter, on which Xxxxx is relying in entering into the employment and
other arrangements described or referred to in this letter:
1. The authorized capital stock of the Company consists solely of
1,000,000 shares of voting common stock, no par value, of which a total
of 1,000 shares are issued and outstanding.
2. Except as provided in the Convertible Loan Agreement dated as of August
20, 1998, between the Company and DirectCom Networks, Inc. (the
"Convertible Loan Agreement"), there are no outstanding or authorized
(i) securities of the Company convertible into or exchangeable or
exercisable for any shares of its capital stock, (ii) subscriptions,
options, warrants, calls, rights, commitments, or other agreements or
obligations of any kind obligating the Company to issue any additional
shares of its capital stock or any other securities convertible into or
evidencing the right to acquire or subscribe for any shares of its
capital stock.
3. The Company has $2,400,000 in working capital, which is uncommitted
except commitments to Loral Corporation and for office lease
obligations previously disclosed to you.
4. The Company confirms that the representations and warranties in Section
3.12 of the Convertible Loan Agreement are complete and correct. The
Company's affiliate,
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XxXxxxxxx.Xxxxx Satellite, LLC ("LLC"), a Delaware limited liability
company filed applications, which are currently pending with the
Federal Communications Commission, for authorizations to construct,
launch and operate geostationary Ka-band communications satellites at
175 degrees E.L. and 52 degrees E.L. (the "FCC Applications"). The FCC
Applications are correct and complete and are in proper form, and LLC
is legally qualified to hold the licenses that are the subject of the
FCC Applications, if and when granted. The Company will cause LLC to
diligently pursue the granting of licenses pursuant to the FCC
Applications. To the Company's best knowledge, no party has objected to
the FCC Applications and no investigations are pending or threatened
with respect to the FCC Applications.
BOARD OF DIRECTORS REPRESENTATION
Contemporaneously with signing of this letter agreement, the Company will
deliver to you a letter in form satisfactory to you with respect to the
agreement by the controlling stockholder of the Company to vote its stock in the
Company to elect a designee selected by you to the board of directors of Company
at all times while you are an employee of the Company.
NONCOMPETITION AGREEMENT
Contemporaneously with signing of this letter agreement, you will enter into the
Noncompetition Agreement in the form attached as Exhibit B to this letter,
provided that you receive an option agreement in the form attached as Exhibit C,
granting you the right to acquire the equivalent of 7% of the ownership
interests in LLC and in any entity in which LLC holds a direct or indirect
interest that is pursuing development of any Ka-band satellite opportunity or
arising out of the Rights, substantially equivalent to those described in this
letter and the Stock Option Agreement.
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If the above letter and attached Exhibits accurately reflect our agreement with
respect to these matters, please execute both copies of this letter as indicated
below and return one signed copy to me.
Very truly yours,
KaStar Satellite Communications Corp.
By /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
The foregoing letter agreement is hereby agreed to this 9th day of September,
1998.
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), is entered
into between Xxxxxx X. Xxxxx ("Employee") and KaStar Satellite Communications
Corp., a Delaware corporation (the "Company"), and is dated as of May 23, 1999.
WHEREAS, Employee and the Company's predecessor in interest, KaStar
Satellite Communications Corp., a Colorado corporation, entered into a letter
agreement dated September 9, 1998 (the "Employment Agreement");
WHEREAS, the Employee and the Company desire to amend the terms of the
Employment Agreement.
NOW THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, it is mutually covenanted and agreed by the parties
hereto as follows:
1. Ratification of Employment Agreement. The Company hereby
ratifies and assumes all obligations under the Employment
Agreement. Except as expressly set forth in this Amendment,
all terms of the Employment Agreement will remain unchanged
and in full force and effect.
2. Employment At Will. The Company and the Employee agree and
acknowledge that the Employee's employment with the Company
may be terminated by the Employee or the Company at any time,
with or without cause and with or without notice. Any contrary
oral representations or agreements which may have been made to
Employee are superseded by this Amendment. The at-will nature
of the Employee's employment described in this Amendment,
together with the express terms of the Employment Agreement,
shall constitute the entire agreement between the Employee and
the Company concerning the circumstances under which either
the Employee or the Company may terminate the employment
relationship. No person affiliated with the Company has the
authority to enter into any oral agreement that changes the
terms of the Employment Agreement or the at-will nature of the
Employee's employment. The at-will term of Employee's
employment can only be changed in a writing signed by Employee
and any other authorized officer of the Company, which
expressly states the intention to modify the at-will term of
Employee's employment.
3. No Change to Rights Under Employment Agreement. Nothing in
this Amendment shall alter in any way the rights or
obligations of the Company or the Employee as set forth in the
Employment Agreement, including, but not limited to, the
Employee's right to severance (as stated in the Employment
Agreement).
KaStar Satellite Communications Corp.
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Vice-President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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