November 24, 2008
Exhibit
10.2
November
24, 2008
VIA HAND
DELIVERY
Xxxxxxx
X. Xxxxxxx
00000
Xxxxxx Xxxxx Xxxx, 0xx Xxx
Xxxxxx,
XX 00000
Dear
Xxxxxxx:
This
letter (“Letter
Agreement”) confirms our agreement concerning the amendment of the
employment agreement between TerreStar Networks Inc., a Delaware corporation
(the “Company”) and
you, dated as of January 15, 2008, as amended by the letter agreement May 20,
2008 (the “Employment Agreement”), as needed to
comply with section 409A of the Internal Revenue Code (“Section 409A”).
The
Company and you agree that the Employment Agreement is hereby amended in the
following regards:
1. Definition of Termination of
Employment
Deferred
compensation under Section 409A may be paid upon “termination of employment” if
the plan expressly defines that term in accordance with Treasury regulation
section 1.409A-1(h). Section 23(g) of the Employment Agreement
contains a problematic definition of “termination of employment” because the
definition is both underinclusive and overinclusive. It is
underinclusive because it covers a complete termination of employment, but
excludes a substantial diminution in the level of services provided by the
executive, which is required under Treasury regulation section
1.409A-1(h). It is overinclusive because “termination of employment”
is used throughout the Employment Agreement in contexts other than in relation
to deferred compensation, but section 23(g) imputes to these contexts the
less-than-intuitive definition under Treasury regulation section
1.409A-1(h). To refine the definition of “termination of employment,”
section 23(g) is hereby amended in its entirety to read as follows (revisions
marked):
(g) “Termination of employment,” or words of similar import,
as used in this Agreement, means for purposes of any payments under this Agreement
that are payments of deferred compensation subject to Section 409A of the
Code, the date as of which the
Company and the Executive reasonably anticipate that no further services will be
performed by the Executive and shall be construed as the date that the Executive
first incurs aExecutive’s “separation from
service” for
purposes ofas defined
in Section 409A of the Code.
2. Six-Month Delay for
Specified Employees
Section
409A requires a public company to delay for six months the payment to a
“specified employee” (as defined under Treasury regulation section 1.409A-1(i))
of certain severance that constitutes deferred compensation. How a
payment is to be delayed for six months must be specified in the applicable
agreement. Section 23(h) of the Employment Agreement does so,
but it is unclear whether the six-month delay affects an entire stream of
payments or just the portion that otherwise would have been payable during the
six-month period. To clarify this ambiguity, section 23(h) of the
Employment Agreement is hereby amended in its entirety to read as follows
(revisions marked):
(h) If
a payment obligation under this Agreement arises on account of the Executive’s
separation from service while the Executive is a “specified employee” (as
defined under Section 409A of the Code and determined in good faith by the
Compensation Committee), any payment of “deferred compensation” (as defined
under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the
exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within
six (6) months after such separation from service shall accrue without
interest and shall be madepaid within 15 days after the
end of the six-month period beginning on the date of such separation from
service or, if earlier, within 15 days after the appointment of the personal
representative or executor of the Executive’s estate following his
death.
3. Miscellaneous
This
Letter Agreement shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Virginia, without reference to principles of
conflict of laws. Except as modified by the terms of this Letter
Agreement, the Employment Agreement remains in full force and
effect. This Letter Agreement shall not be modified, waived or
amended except by a written agreement executed by the parties hereto or their
respective successors and legal representatives. This Letter
Agreement shall inure to the benefit of and be binding upon you, the Company and
its successors and assigns.
If the
foregoing terms are acceptable to you, please confirm your agreement by signing
your name below. Your signature below will indicate that you are
entering into this Letter Agreement freely and with a full understanding of its
terms and effect.
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Very
truly yours,
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/s/
Xxxxx Xxxxxxx
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Xxxxx
Xxxxxxx
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Chair,
Compensation and Stock Option
Committee
of the Board of Directors of
TerreStar
Networks
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AGREED
AND ACCEPTED:
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Xxxxxxx
X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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Date:
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November
24, 2008
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