Contract
Exhibit
10.1
This
Employment Agreement (this “Agreement”)
is dated as of this 15th
day of
January, 2008, by and between TerreStar Networks Inc., a Delaware corporation
(hereinafter referred to as the “Company”),
and Xxxxxx X. Xxxxxxx (the “Executive”).
WHEREAS,
the Company and the Executive entered into that certain employment agreement
dated as of May 1, 2007, as amended (the “Predecessor Agreement”),
which expires by its terms on January 15, 2008; and
WHEREAS,
the Company and the Executive wish to continue the Executive’s employment with
the Company following the expiration of the Predecessor Agreement under the
terms and conditions set forth herein.
CONSEQUENTLY,
in consideration of the mutual covenants herein contained and of the mutual
benefits herein provided, the Company and the Executive agree as
follows:
1.
Representations and Warranties.
(a)
The Executive represents and warrants to the Company that the Executive is
not
bound by any restrictive covenants and has no prior or other obligations
or
commitments of any kind that would in any way prevent, restrict, hinder or
interfere with Executive's acceptance of continued employment or the performance
of all duties and services hereunder to the fullest extent of the Executive's
ability and knowledge. The Executive agrees to indemnify and hold harmless
the
Company for any liability the Company may incur as the result of the existence
of any such covenants, obligations or commitments.
(b)
The Company acknowledges and agrees that nothing herein shall be deemed to
terminate, modify, alter or eliminate any compensation, benefits or related
rights Executive already earned or in which he became fully vested (without
any
contingency that would result in the loss of such rights, compensation or
benefits) in connection with his employment with the Company prior to the
execution of this Agreement, including but not limited to any vesting in
or
contributions made to any pension funds, 401(k) plans, vested stock options
or
restricted stock or other equity interest in the Company.
2.
Term of
Employment. The Company will continue to employ the Executive
and the Executive accepts continued employment by the Company on the terms
and
conditions herein contained for the period (the “Employment
Period”) provided in Section
5 of this
Agreement.
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3.
Duties and Functions.
(a)
(i) The
Executive shall be employed as President and Chief Executive Officer of the
Company and shall oversee, direct and manage all operations of the Company.
The
Executive shall report directly to the Board of Directors of the Company
(the
“Board”).
(ii) The
Executive agrees to undertake the duties and responsibilities inherent in
the
position of President and Chief Executive Officer, which may encompass different
or additional duties as may, from time to time, be assigned by the Board,
and
the duties and responsibilities undertaken by the Executive may be altered
or
modified from time to time by the Board. In addition, Executive acknowledges
that, in addition to serving in his capacity as President and Chief Executive
Officer of the Company, he shall serve as President and Chief Executive Officer
of TerreStar Corporation (“TS Corp”) and shall undertake the duties and
responsibilities inherent in such position as may be assigned by the Board
of
Directors of TS Corp from time to time. The Executive, however,
acknowledges he shall not be entitled to any additional compensation solely
for
performing such duties and responsibilities inherent in these positions beyond
the compensation provided pursuant to this Agreement. The Executive
agrees to abide by the rules, regulations, instructions, personnel practices
and
policies of the Company and any change thereof which may be adopted at any
time
by the Company.
(b)
During the Employment Period, the Executive will devote his full time and
efforts to the business of the Company and, except as expressly provided
herein,
will not engage in consulting work or any trade or business for his own account
or for or on behalf of any other person, firm or corporation that competes,
conflicts or interferes with the performance of his duties hereunder in any
way.
The Executive may engage in non-competitive business or charitable activities
for reasonable periods of time each month so long as such activities do not
interfere with the Executive's responsibilities under this Employment Agreement.
The Company acknowledges that the Executive currently serves on the board
of
directors of the companies and organizations listed on Schedule A attached
hereto (the “Other
Company Board Obligations”) and that the Other Company Board Obligations
do not violate the terms of this Agreement. The Executive
acknowledges that he does not reasonably expect that such Other Company Board
Obligations will violate the terms of this Agreement during the Executive’s
employment with the Company. The Company acknowledges that, in
addition to the Other Company Board Obligations, from time to time, the
Executive may be asked to serve on the board of directors of other companies
or
organizations. The Company and the Executive agree that, subject to
the prior written approval of the Company, which shall not be unreasonably
withheld, the Company shall permit the Executive to serve on the boards of
up to
two public companies and not more than four (4) boards in total at any one
time
(including the Other Company Board Obligations); provided, however,
that, with
respect to the Other Company Board Obligations and any additional board
positions maintained by the Executive, such services (i) do not materially
interfere with or materially affect the Executive’s service to the Company, (ii)
do not otherwise create a situation where a conflict of interest or ethical
concerns are likely to be created and (iii) are not for companies or
organizations that compete directly with the Company’s business as then
conducted.
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4.
Compensation.
(a)
Base
Salary:
(i)
As compensation for his services hereunder, during the Executive's employment
as
President and Chief Executive Officer, the Company agrees to pay the Executive
a
base salary at the rate of Five Hundred Seventy-Two Thousand Dollars ($572,000)
per annum (the “Base
Salary”), payable in accordance with the Company's normal payroll
schedule, or on such other periodic basis as may be mutually agreed upon
by the
Company and the Executive. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall
be
required to be withheld pursuant to any applicable law or
regulation.
(ii)
At the end of calendar year 2008 and at the end of each subsequent calendar
year
thereafter, the Executive’s salary shall be reviewed in accordance with
corporate policy in effect at the time and contributions made by the Executive
to the Company during such calendar year subject to the provisions of Section 5 of this
Agreement.
(b)
Bonus: The
Executive shall be eligible to receive an annual cash bonus award (the “Annual
Bonus”), which shall be based on a target of eighty-five percent (85%) of
the Executive’s then current Base Salary (the “Target
Annual Bonus”). The Annual Bonus is not guaranteed and is
contingent upon the Executive and the Company achieving deliverables or goals
agreed to by the Executive and the Board or compensation committee of the
Board
(the “Compensation
Committee”). Any Annual Bonus shall be determined by the Board
or the Compensation Committee. There will be an opportunity for the
Executive to earn more than the Target Annual Bonus based upon Executive’s
success in meeting identified performance targets during the relevant time
period. The Target Annual Bonus shall be paid, if at all, by no later
than the fifteenth (15th) day of the third (3rd) month after the close of
the
fiscal year with respect to which the Target Bonus Award is
payable. For purposes of this Agreement, the Executive’s Base Salary
and Annual Bonus shall be referred to collectively as the “Total
Cash Compensation.”
(c)
Participation
in
Equity Incentive Program: The Executive will be eligible to
participate in the 2006 TerreStar Corporation Equity Incentive Stock Plan,
as
the same may be amended from time to time, and such other equity or long-term
incentive programs that the Company has established or may, from time to
time,
establish for its employees or service providers (each, a “Plan”
and, collectively, the “Plans”). The
terms and conditions governing eligibility for, entitlement to, and
participation under any Plan shall be governed by such Plan and any other
documents or agreements to be executed by the Executive or the Company in
accordance therewith.
(d)
Other
Expenses: In addition to the compensation described in this
Section
5, the
Company agrees to pay and reimburse the Executive during his employment for
all
reasonable, ordinary and necessary, properly vouchered, client-related business
or entertainment expenses incurred in the performance of his services hereunder
in accordance with Company policy in effect from time to time; provided, however,
that the
amount available to the Executivefor
such
travel, entertainment and other expenses may require advance approval by
the
Chief Financial Officer or such other executive officer of the Company pursuant
to the Company’s policy then in effect. The Executive shall submit
vouchers and receipts for all expenses for which reimbursement is
sought.
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(e)
Vacation: During
each calendar year, the Executive shall be entitled to the standard amount
of
vacation provided by the Company for senior level executives.
(f)
Fringe
Benefits: In addition to his compensation provided by the
foregoing, the Executive shall be entitled to the benefits available generally
to Company employees pursuant to Company programs, including, by way of
illustration, personal leave, paid holidays, sick leave, profit-sharing,
retirement, disability, dental, vision, group sickness, accident or health
insurance programs of the Company which may now or, if not terminated, shall
hereafter be in effect, or in any other or additional such programs which
may be
established by the Company, as and to the extent any such programs are or
may
from time to time be in effect, as determined by the Company and the terms
hereof, subject to the applicable terms and
conditions of the benefit plans in effect at that time. Nothing
herein shall affect the Company’s ability to modify, alter, terminate or
otherwise change any benefit plan it has in effect at any given time, to
the
extent permitted by law.
5.
Employment Period; Termination.
(a)
Commencement. The
Executive's employment under this Agreement shall commence on January 1,
2008
(the “Commencement
Date”), and shall continue thereafter until this Agreement expires on
December 31, 2010 or the Executive’s employment is terminated by either party
pursuant to the terms of this Agreement. The parties acknowledge
that, for purposes of seniority, benefits entitlement, vacation awards, and
vesting in any pension/retirement programs, the Executive’s initial employment
date with the Company shall be the relevant date for calculating his eligibility
for and entitlement to any such programs, rather than the Commencement
Date.
(b)
Employment
Period. The Employment Period shall commence on the
Commencement Date and shall continue until the earlier of: (i) the close
of
business on December 31, 2010 (the “Expiration
Date”) (with the period from the Commencement Date through the Expiration
Date being referred to herein the “Initial
Term”); and (ii) the termination of the Executive’s employment pursuant
to the terms of this Section
5. The Initial Term may be renewed or extended for any
additional period or periods after the Initial Term (each, a “Renewal
Term”) if the Executive and the Company mutually consent to such renewal
or extension at any time on or prior to the Expiration Date or the last day
of
the expiring Renewal Term, as applicable. The Initial Term plus any
Renewal Terms shall be included in the “Employment
Period.”
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(c)
Termination
By Executive Without Good Reason. Notwithstanding the
provisions of Sections
5(a) and 5(b)
of this Agreement, the Executive may terminate the employment relationship
at
any time for any reason by giving the Company written notice at least
forty-five (45) days prior to the effective date of termination. The
Company, at its election, may (i) require the Executive to continue to
perform
his duties hereunder for the full forty-five (45) day notice period, or
(ii)
terminate the Executive’s employment at any time during such 45-day notice
period (but any such termination by the Company shall not be deemed to
be a
termination of the Executive’s employment without Cause). Unless
otherwise provided by this Section
5, all compensation and benefits paid by the Company to the Executive
shall cease upon his last day of employment. The Executive
acknowledges and agrees that the non-compete restrictions set forth in
the
Company’s Confidentiality, Non-competition, and Proprietary Rights Agreement or
such other similar agreement by which the Executive is bound containing
similar
obligations (the “Confidentiality
Agreement”) will remain in full force and effect for the twelve (12)
month period subsequent to his termination pursuant to this Section
5(c). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights
to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other similar agreement executed by the parties shall continue,
notwithstanding the termination of the employment relationship between
the
parties. Executive shall be entitled to receive any accrued but
unpaid salary and bonuses declared and communicated to the Executive but
not yet
paid as of the effective date of his termination (other than such amounts
as are
subject to a deferred compensation arrangement) (collectively, net after
deferrals, “Accrued
Current Compensation”), and to be reimbursed in accordance with
applicable Company policy for any reimbursable expenses that have not been
reimbursed prior to such termination.
(d)
Termination By
Company
For Cause. If the Executive's employment is terminated for
“Cause,” the Executive will not be entitled to and the Company shall not be
obligated to pay any compensation or benefits of any type following the
effective date of termination, but the Executive shall be entitled to receive
any Accrued Current Compensation, and to be reimbursed in accordance with
Company policy for any reimbursable expenses remaining due and owing that
have
not been reimbursed prior to his termination. As used in this
Agreement, the term “Cause”
shall mean a termination for (i) the conviction of the Executive of, or the
entry of a pleading of guilty or nolocontendere
by the Executive
to, any crime involving moral turpitude or any felony or fraud (which includes
any acts of embezzlement or misappropriation of funds) or any material violation
of the Xxxxxxxx-Xxxxx Act of 2002; (ii) serious dereliction of a fiduciary
obligation or duty of loyalty owed to the Company; (iii) a refusal to
substantially perform the Executive's duties hereunder or to comply with
the
policies and practices of the Company, except in the event that the Executive
becomes permanently disabled as set forth in Section 5(f) of this
Agreement; or (iv) Executive’s material breach of this
Agreement. Anything herein to the contrary notwithstanding, the
Company shall give the Executive written notice prior to terminating the
Executive's employment based upon a material breach of this Agreement (clause
(iv) above), setting forth the exact nature of any alleged breach and the
conduct required to cure such breach. The Executive shall have
forty-five (45) days from the giving of such notice within which to cure
the
breach. The Executive acknowledges and agrees that the non-compete
restrictions set forth in the Confidentiality Agreement will remain in full
force and effect for the twelve (12) month period subsequent to his termination
pursuant to this Section
5(d). Furthermore, the obligations imposed on the Executive
withrespect
to confidentiality, non-disclosure and assignment of rights to inventions
or
developments in this Agreement, any Confidentiality Agreement or any other
agreement executed by the parties shall continue, notwithstanding the
termination of the employment relationship between the parties.
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(e)
Termination By
Company
Without Cause. The Company may terminate the Executive without
Cause by delivering written notice to the Executive at least forty-five (45)
days prior to the effective date of such termination.
(i)
If the Executive's employment is terminated by the Company without Cause,
then,
subject to the terms and conditions set forth in this Section 5(e), the
Executive shall be entitled to receive (1) any Accrued Current Compensation,
(2)
an aggregate amount equal to the product of the Executive’s then-current Base
Salary, expressed on a per diem basis, multiplied by the greater of three
hundred sixty-five (365) or the number of days measured from the date of
termination of employment to the Expiration Date, and (3) an aggregate amount
equal to the excess, if any, of (x) the product of Executive’s Target Annual
Bonus for the year in which Executive’s termination of employment occurs
multiplied by two (2), over (y) the gross amount of Target Annual Bonus payments
made to Executive during the Employment Period for years commencing on or
after
the Commencement Date (the amounts payable pursuant to clauses (2) and (3)
of
this sentence hereinafter referred to collectively as the “Severance
Pay”). This Severance Pay shall be paid in substantially equal
monthly installments (or such other frequency consistent with the Company’s
payroll practice then in effect for active employees at the executive level)
over a period of twelve (12) months, commencing no later than thirty (30)
days
after the Executive’s employment is terminated by the Company without Cause,
except as otherwise provided in this Agreement. In addition, to the
extent that the Executive qualifies for, complies with the requirements of
and
otherwise remains eligible for continuation of his health care insurance
benefits under COBRA, and payment of COBRA premiums is permitted under
applicable laws and regulations, the Company shall pay the COBRA premiums
until
the earlier of (A) such time as the Executive obtains alternative employment
and
becomes eligible for health insurance through his new employer and (B) eighteen
(18) months following the date of his termination. Further, the
Executive shall be reimbursed in accordance with Company policy for any
reimbursable expenses remaining due and owing that have not been reimbursed
prior to his termination.
(ii)
In addition to the Executive’s severance calculated in accordance with Section 5(e)(i), if
the Executive's employment is terminated by the Company without Cause, the
vesting period shall be accelerated for all of Executive’s unvested options,
shares of restricted stock, or other rights to purchase equity securities
of the
Company (collectively, the “Award
Shares”) awarded to Executive pursuant to any Plan, such that any
then-unvested Award Shares awarded to Executive shall become fully vested
effective immediately prior to the effective date of Executive’s termination of
employment.
(iii)
The Executive acknowledges and agrees that the non-compete restrictions set
forth in the Confidentiality Agreement will remain in full force and effect
for
the twelve (12) month period subsequent to his termination pursuant to this
Section
5(e).Furthermore,
the obligations imposed on Executive with respect to confidentiality,
non-disclosure and assignment of rights to inventions or developments in
this
Agreement, any Confidentiality Agreement or any other agreement executed
by the
parties shall continue, notwithstanding the termination of the employment
relationship between the parties.
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(iv)
The Severance Pay, COBRA premium payment and accelerated vesting of Award
Shares
to be provided under this Section 5(e) are
referred to herein collectively as the “Termination
Compensation.” The Executive shall not be entitled to any
Termination Compensation unless (i) the Executive complies with all surviving
provisions of any Confidentiality Agreement by which the Executive is bound,
and
(ii) the Executive executes and delivers to the Company after a notice of
termination and on or before the last date on which the severance pay is
scheduled to commence, a mutual release in form and substance acceptable
to the
Company by which the Executive releases the Company from any obligations
and
liabilities of any type whatsoever under this Agreement, except for the
Company's obligations with respect to the Termination Compensation, which
release shall not affect the Executive’s right to indemnification, if any, for
actions taken within the scope of his employment. Notwithstanding
anything herein to the contrary, no Termination Compensation shall be paid
or
otherwise provided until all applicable revocation periods have fully expired,
and the mutual release becomes fully and finally enforceable. The
parties hereto acknowledge that the Termination Compensation to be provided
under this Section
5(e)(iv) is to be provided in part in consideration for the
above-specified release.
(v)
Except as otherwise provided under Section 11, the
Termination Compensation described in this Section 5(e) is
intended to supersede any other severance payment provided by any Company
policy, plan or practice. Therefore, the Executive shall be
disqualified from receiving any severance payment under any other Company
severance policy, plan or practice.
(f)
Termination for
Executive’s Permanent Disability. To the extent permissible
under applicable law, in the event the Executive becomes permanently disabled
during employment with the Company, the Company may terminate Executive’s
employment under this Agreement by giving forty-five (45) days prior written
notice to the Executive of its intent to terminate, and unless the Executive
resumes performance of the duties set forth in Section 3 within
forty-five (45) days of the date of the notice, Executive’s employment under
this Agreement shall terminate at the end of such forty-five (45) day
period. If the Executive’s employment is terminated pursuant to this
Section 5(f),
he shall be entitled to receive (i) any Accrued Current Compensation, (ii)
an
amount equal to the product of Executive’s then-current Base Salary, expressed
on a per diem basis, multiplied by the greater of one hundred eighty (180)
or
the number of days measured from the date of termination of employment to
the
Expiration Date, and (iii) an amount equal to the product of fifty percent
(50%)
of Executive’s Target Annual Bonus for the year in which Executive’s termination
of employment occurs multiplied by the greater of one (1) or such fraction
the
numerator of which is the number of days measured from the date termination
of
employment occurs to the Expiration Date and the denominator of which is
365.
The amounts set forth in clauses (ii) and (iii) of the immediately
precedingsentence
shall be paid in substantially equal monthly installments (or such other
frequency consistent with the Company’s payroll practice then in effect for
active employees at the executive level) over a period of twelve (12) months,
commencing no later than thirty (30) days after the Executive’s employment is
terminated because he becomes permanently disabled, except as otherwise provided
in this Agreement, and shall be offset by amounts paid to the Executive under
any disability insurance policy maintained or provided by the Company on
the
Executive. If the Executive’s employment is terminated pursuant to
this Section
5(f),the vesting period shall be accelerated for all of Executive’s Award
Shares awarded to Executive pursuant to any Plan, such that any then-unvested
Award Shares awarded to Executive shall become fully vested effective
immediately prior to the effective date of Executive’s termination of
employment. Further, upon the Executive’s termination of employment,
the Executive shall be reimbursed in accordance with Company policy for any
reimbursable expenses remaining due and owing that have not been reimbursed
prior to his termination. For the purposes of this Agreement, “permanently
disabled” means the inability, due to physical or mental ill health, to
perform the essential functions of the Executive's job, with a reasonable
accommodation, if applicable, for ninety (90) days during any one year of
employment irrespective of whether such days are consecutive. The
Executive acknowledges and agrees that the non-compete restrictions set forth
in
any Confidentiality Agreement will remain in full force and effect for the
twelve (12) month period subsequent to his termination pursuant to this Section
5(f). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights
to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
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(g)
Termination Due
To
Executive’s Death. Executive’s employment under this Agreement
will terminate immediately upon the Executive's death, and the Company shall
not
have any further liability or obligation to the Executive, his executors,
heirs,
assigns or any other person claiming under or through his estate, except
that
the Executive’s estate shall receive (i) any Accrued Current Compensation, (ii)
an amount equal to the product of Executive’s then-current Base Salary,
expressed on a per diem basis, multiplied by the greater of one hundred eighty
(180) or the number of days measured from the date of death to the Expiration
Date, and (iii) an amount equal to the product of fifty percent (50%) of
Executive’s Target Annual Bonus for the year in which Executive’s death occurs
multiplied by the greater of one (1) or such fraction the numerator of which
is
the number of days measured from the date of death to the Expiration Date
and
the denominator of which is 365. The amounts payable
pursuant to the immediately preceding sentence shall be paid in a lump sum
within ninety (90) days after the Executive’s death. If
the Executive’s employment is terminated upon his death, the vesting period
shall be accelerated for all of Executive’s Award Shares awarded to Executive
pursuant to any Plan, such that any then-unvested Award Shares awarded to
Executive shall become fully vested effective as of his date of death and
shall
be exercisable thereafter in accordance with the terms of the applicable
award
agreement. At the Company’s discretion, the Company shall have the
option to provide for payment of the cash severance pay called for under
this
Section 5(g) by
means of a life insurance policy owned by the Company on the Executive’s life,
and the Executive agrees to take all steps reasonably necessary to fulfill
any
underwriting requirements in order for the Company to obtain such life insurance
policy. Any death benefit payment fromsuch
policy to the Executive’s estate or designated beneficiary shall offset, and not
be paid in duplication of, the cash severance amount described in this Section
5(g).
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(h)
Termination by
Executive for “Good Reason”.
(i)
Subject to the
provisions of this Section
5(h),
the
Executive shall have the right to terminate his employment under this
Agreement for Good Reason.
(ii)
For purposes of this Agreement, “Good Reason”
means
the occurrence of any of the following without the Executive’s
consent:
(1)
the
Company’s willful material breach of any provision of this
Agreement;
(2)
any
material adverse change in the Executive’s compensation, position (including his
position as President and Chief Executive Officer of the Company and/or as
President and Chief Executive Officer of TS Corp), authority, duties or
responsibilities, or any other action by the Company (other than a change because
the Executive becomes permanently
disabled or as an accommodation
under the
Americans With Disabilities Act)
which
results in: a diminution
in any material respect in Executive’s position, authority, duties,
responsibilities or base compensation, which diminution continues in time
over
at least thirty (30) days, such that it constitutes an effective demotion
(provided,
however,
that, for the avoidance of doubt, no
diminution of title, position, duties or responsibilities shall be deemed
to
occur solely because the Company becomes a division, unit or subsidiary of
another corporation or entity or because there has been a change in the
reporting hierarchy incident thereto involving the Executive), excluding
for this purpose material adverse changes made due to the Executive’s
termination for Cause or termination by the Executive without Good
Reason;
(3)
relocation of the Company’s headquarters and/or the Executive’s regular work
address to a location which requires the Executive to travel more than fifty
(50) miles from the Executive’s residence (provided that it shall not qualify as
“Good Reason” if the Company moves its headquarters within the Washington, D.C.
Metropolitan Area -- i.e., anywhere within thirty (30) miles of Capitol Hill
--
even if the new headquarters location is more than fifty (50) miles from
Executive’s residence); or
(4)
any
other action or inaction that constitutes a material breach by the Company
of
this Agreement;
provided, however,
that it
shall not constitute Good Reason unless the Executive shall have provided
the
Company with written notice of the Company’s alleged actions constituting Good
Reason (which notice shall specify in reasonable detail the particulars of
such
actions constituting Good Reason) within thirty (30) days after the initial
existence of any such alleged actions and the Company has not cured any such
alleged actions constituting Good Reason or substantially commenced its effort
to cure such breach within thirty (30) days of the Company’s receipt of such
written notice; providedfurther,
that a
termination by the Executive for Good Reason shall not be deemed to have
occurred unless the termination occurs within two (2) yearsafter
the
initial existence of any of the conditions specified in this Section
5(h)(ii). Notwithstanding the
foregoing, in order to avoid any confusion, any consolidation, merger or
other corporate restructuring of or between the Company and TS
Corp (including but not limited to any transaction or series of
transactions that results in TS Corp becoming the sole shareholder of
the Company, or that results in TS Corp and the Company being merged
into one another), or
any
change in the reporting hierarchy
incident thereto involving the Executive, shall not trigger
“Good Reason”
as long as Executive’s duties, responsibilities
and compensation are not
materially altered in an adverse manner with respect to the Company, regardless
of whether the Company remains an independent corporate entity, or becomes
a
part of, or a unit, division or subsidiary of, TS Corp or any related
company.
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(iii)
A termination for Good Reason shall be treated for all severance purposes
as a
Termination without Cause, and the Executive shall be entitled to receive
all of
the payments identified in Section 5(e), subject
to the terms and conditions of Section 5(e), and
Executive’s Award Shares in the Company or TS Corp , as applicable, shall be
accelerated consistent with Section 5(e)(ii);
provided,
however,
that in
connection with a termination for Good Reason, the Executive shall be entitled
to exercise stock options in accordance with the terms of the Plan and any
applicable agreements governing such stock options. The Executive
acknowledges and agrees that the non-compete restrictions set forth in any
Confidentiality Agreement will remain in full force and effect for the twelve
(12) month period subsequent to his termination pursuant to this Section
5(h). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights
to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
(i)
Expiration of
the
Agreement. If this Agreement expires at the end of the Initial
Term as a result of the Company not renewing or extending the Employment
Period
for a Renewal Term where the Executive was willing and able to execute a
new
contract providing terms and conditions substantially similar to those in
the
expiring contract and to continue performing such services, then upon the
Executive’s termination of employment at or after such expiration of the
Agreement, subject to the terms and conditions set forth in Section 5(e), the
Executive shall be entitled to receive (1) an aggregate amount equal to
seventy-five percent (75%) the Executive’s then-current Base Salary, plus (2) an
aggregate amount equal to seventy-five percent (75%) of the Executive’s Target
Annual Bonus for the year in which Executive’s termination of employment
occurs. The amounts payable pursuant to the immediately preceding
sentence shall be paid in substantially equal monthly installments (or such
other frequency consistent with the Company’s payroll practice then in effect
for active employees at the executive level) over a period of twelve (12)
months, commencing no later than thirty (30) days after the Executive’s
employment is terminated, except as otherwise provided in this
Agreement. In addition, if the Executive’s employment
terminates at or after the expiration of the Agreement under the conditions
described in this Section 5(i), to the
extent that the Executive qualifies for, complies with the requirements of
and
otherwise remains eligible for continuation of his health care insurance
benefits under COBRA, and payment of COBRA premiums is permitted under
applicable laws and regulations, the Company shall pay the COBRA premiums
until
the earlierof
(A)
such time as the Executive obtains alternative employment and becomes eligible
for health insurance through his new employer and (B) eighteen (18) months
following the date of his termination. Further, upon the Executive’s
termination of employment at or after the expiration of this Agreement, the
Executive shall be entitled to receive any Accrued Current Compensation,
and to
be reimbursed in accordance with Company policy for any reimbursable expenses
remaining due and owing that have not been reimbursed prior to his
termination. The Executive acknowledges and agrees that the
non-compete restrictions set forth in any Confidentiality Agreement will
remain
in full force and effect for the twelve (12) month period subsequent to his
termination of employment on or after the expiration of this
Agreement. Furthermore, the obligations imposed on the Executive with
respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
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6.
Company Property. All
correspondence,
records, documents, software, promotional materials, and other Company property,
including all copies, which come into the Executive's possession by, through
or
in the course of his employment, regardless of the source and whether created
by
the Executive, are the sole and exclusive property of the Company, and
immediately upon the termination of the Executive's employment, or at any
time
the Company shall request, the Executive shall return to the Company all
such
property of the Company, without retaining any copies, summaries or excerpts
of
any kind or in any format whatsoever. The Executive further agrees
that should he discover any Company property or Confidential Information
(as
hereinafter defined) in his possession after the return of such property
has
been requested, the Executive agrees to return it promptly to the Company
without retaining copies, summaries or excerpts of any kind or in any format
whatsoever.
7.
Non-Competition;
Non-Solicitation. Executive acknowledges and agrees that, as a
condition of his employment under this Agreement, he shall be required to
execute a copy of a Confidentiality Agreement to the extent that he has not
already done so, and he shall be bound by the terms and conditions of that
Confidentiality Agreement, including those provisions addressing non-competition
and non-solicitation of customers and employees, which shall continue in
full
force and effect throughout the course of his employment and shall survive
the
termination of this Agreement and the Executive’s employment with the Company
for any reason. The Executive acknowledges that he has received a
copy of the Company’s Confidentiality Agreement and he fully understands its
terms. The Confidentiality Agreement, as well as all of the terms and
obligations imposed on the Executive therein, is incorporated into this
Agreement in their entirety by reference. It shall not be a defense
to any action seeking to enforce the terms of the Confidentiality Agreement
that
the Executive has failed to execute a copy of the Confidentiality
Agreement. The existence of a claim, charge, or cause of action by
the Executive against the Company under this Agreement or otherwise shall
not
constitute a defense to the enforcement by the Company of the foregoing
restrictive covenants contained in the Confidentiality Agreement, but such
claim, charge, or cause of action shall be litigated
separately.
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8.
Protection of Confidential
Information. The Executive
agrees
that all information, whether or not in writing, relating to the business,
technical or financial affairs of the Company and that is generally understood
in the industry as being confidential and/or proprietary information, is
the
exclusive property of the Company. The Executive agrees to hold in a
fiduciary capacity for the sole benefit of the Company all secret, confidential
or proprietary information, knowledge, data, or trade secret (“Confidential
Information”) relating to the Company or any of its affiliates or their
respective clients, which Confidential Information shall have been obtained
during his employment with the Company. The Executive acknowledges
and agrees that, as a condition of his employment under this Agreement, he
is
and shall remain bound by the terms and conditions of the Confidentiality
Agreement, including those provisions addressing the confidentiality and
non-disclosure of Company Confidential Information, and those provisions,
and he
obligations they impose on the Executive shall continue in full force and
effect
throughout the course of his employment and shall survive the termination
of
this Agreement and the Executive’s employment with the Company for any
reason. The Executive agrees that he will not at any time, either
during the Term of this Agreement or after its termination, disclose to anyone
any Confidential Information, or utilize such Confidential Information for
his
own benefit, or for the benefit of third parties without written approval
by an
officer of the Company. The Executive further agrees that all
documents, memoranda, notes, records, data, schematics, sketches, computer
programs, presentations, prototypes, or written, photographic, magnetic or
other
documents or tangible objects developed, created or compiled by him or made
available to him at any time during his employment concerning the business
of
the Company and/or its clients, including any copies of such materials, shall
be
the property of the Company and shall be delivered to the Company on the
termination of his employment, or at any other time upon request of the Company,
and he shall not retain any such materials or copies of such materials
subsequent to the termination of his employment for any reason.
9.
Intellectual Property.
The
Executive
acknowledges and agrees that he is and shall at all times remain bound by
the
terms and conditions of the Confidentiality Agreement during the course of
his
employment with the Company and thereafter, including those provisions
addressing his obligations to the Company with respect to intellectual property
belonging to the Company. These obligations shall continue in full
force and effect throughout the course of his employment and shall survive
the
termination of this Agreement and the Executive’s employment with the Company
for any reason.
10.
Injunctive
Relief. The Executive acknowledges that he understands that,
in the event of a breach or threatened breach of this Agreement by the Executive
(including the terms of the Confidentiality Agreement expressly incorporated
herein by reference), the Company may suffer irreparable harm and will therefore
be entitled to injunctive relief, without prior notice to the Executive and
without the posting of a bond or other guarantee, to enforce this
Agreement. This provision is not a waiver of any other rights which
the Company may have under this Agreement, including the right to recover
attorneys’ fees and costs to cover the expenses it incurs in seeking to enforce
this Agreement, as well as to any other remedies available to it, including
money damages.
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11.
Change of Control
Benefits.
(a)
In the event that, at any time during the Executive’s employment under this
Agreement, the Company and/or TS Corp experiences a Change of Control (as
hereinafter defined) and Executive experiences a Change of Control Position
Modification (as hereinafter defined) in connection with such Change of Control
then, provided that Executive shall have executed a release in form and
substance acceptable to the Company, and subject to the other terms and
conditions contained in this Agreement, the Executive shall be entitled to
receive a lump sum payment in an amount equal to two (2) times the Executive’s
then current annual Total Cash Compensation as severance pay, in recognition
of
his contributions leading up to the Change of Control. Such lump sum
payment shall be reduced by the gross amount of Severance Pay, if any, received
by the Executive pursuant to Section 5 of this
Agreement prior to the date of payment under this Section 11. For
purposes of determining severance pursuant to this Section 11(a), the
Total Cash Compensation shall be calculated based on the Executive’s current
Base Salary as of the effective date of his termination (without giving effect
to any reduction in Base Salary which gave rise to the Good Reason termination,
if applicable), and the full Target Annual Bonus for the relevant
year. This severance pay shall be paid no later than thirty (30) days
after the effective date of the Change of Control or, if later, the Change
of
Control Position Modification, except as otherwise specified under Section
11(c). In addition, vesting in all of Executive’s unvested
Award Shares shall be accelerated such that Executive’s then-unvested Award
Shares shall become vested immediately prior to the effective date of
Executive’s termination, subject to the terms and conditions of the applicable
Plan and other agreements. In addition, to the extent that the
Executive qualifies for, complies with the requirements of and otherwise
remains
eligible for continuation of his health care insurance benefits under COBRA,
and
payment of COBRA premiums is permitted under applicable laws and regulations,
the Company shall pay the COBRA premiums until the earlier of (A) such time
as
the Executive obtains alternative employment and becomes eligible for health
insurance through his new employer and (B) eighteen (18) months following
the
date of his termination. The severance provisions under this Section 11 shall
supersede, and not be in duplication of, the severance provisions contained
in
Section 5(e),
except as otherwise specified under Section
11(c).
(b)
For purposes of this Agreement, the following terms shall have the following
meanings:
(i)
“Affiliate”
shall mean, with respect to any Person, any other Person that controls, is
controlled by or is under common control with the first Person.
(ii)
“Change
of Control” shall mean the earliest to occur of any of the following
events, construed in accordance with Section 409A of the Internal Revenue
Code
of 1986, as amended, and the Treasury guidance promulgated thereunder (the
“Code”):
(A)
any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified
in Section 13(d) and 14(d) of the Exchange Act), other than (1) Parent or
any of its Subsidiaries, (2) any employee benefit plan of Parent or any of
its
Subsidiaries, (3) any Affiliate of Parent or any of itsSubsidiaries,
(4) a company owned, directly or indirectly, by stockholders of Parent in
substantially the same proportions as their ownership of Parent or (5) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or more than one person acting as a group, acquires ownership
of
securities of Parent or of the Company that, together with securities held
by
such person or group, constitutes more than 50% of the shares of voting stock
of
Parent or of the Company then outstanding (for the avoidance of doubt, the
consummation of any merger, reorganization, business combination or
consolidation of Parent or one of its Subsidiaries (including the Company)
with
or into any other entity, other than a merger, reorganization, business
combination or consolidation which would result in the holders of the voting
securities of Parent or the Company outstanding immediately prior thereto
holding securities which represent immediately after such merger,
reorganization, business combination or consolidation more than 50% of the
combined voting power of the voting securities of Parent or the Company or
the
surviving company or the parent of such surviving company, may constitute
a
Change of Control under this Section
11(b)(ii)(A));
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(B)
the consummation of a sale or disposition by Parent or the Company of all
or
substantially all of Parent’s or the Company’s assets that, immediately after
such sale or disposition, results in Parent or the Company no longer owning
more
than 80% of the total gross fair market value of the assets of Parent or
the
Company as applicable, but excluding any sale or disposition if the holders
of
the voting securities of Parent or the Company outstanding immediately prior
thereto hold securities immediately thereafter which represent more than
50% of
the combined voting power of the voting securities of the acquiror, or parent
of
the acquiror, of such assets;
(C)
individuals who, as of the beginning of any twelve (12) month period, constitute
the Board of Directors of the Parent or the Company (each, an “Incumbent
Board”) cease for any reason to constitute at least a majority of such
Board within such twelve (12) month period; provided, however,
that any
individual becoming a director whose election to the Board of Directors of
the
Parent or the Company was approved by a vote of at least a majority of the
directors then comprising the applicable Incumbent Board shall be considered
as
though such individual were a member of the Incumbent Board, but excluding,
for
this purpose, any such individual whose initial assumption of office occurs
as a
result of an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on behalf of
a
person other than the Board of Directors of the Parent or the Company; providedfurther,
that a
change to the membership of the current Board of the Parent or the Company
or
any portion thereof as a result of or in connection with any consolidation,
merger or other corporate restructuring of or between the Company and TS
Corp
(or the consolidation of the boards of directors of TS Corp and the Company
as a
resultof
such
consolidation, merger or other corporate restructuring) shall not constitute
a
Change of Control for purposes of this Agreement.
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(iii)
“Change
of Control Position Modification” shall mean that, coincident with or
within three (3) months after a Change of Control, Executive’s employment with
the Company is terminated by the Company or its successor without Cause (as
defined in Section
5(d) above) or Executive terminates his employment with the Company or
its successor with Good Reason (as defined in Section 5(h) above).
For the avoidance of doubt,
no
diminution of title, position, duties or responsibilities shall be deemed
to
occur solely because the Company has experienced a Change
of Control or
has been merged into or becomes a division,
unit or subsidiary
of another corporation or entity or because there has been a change in the
reporting hierarchy incident thereto involving the Executive. A Change of
Control
Position Modification shall also be deemed to have occurred coincident with
the
Change of Control if the Executive’s employment with the Company had been
terminated by the Company without Cause within the three- (3-) month period
prior to the date on which the Change of Control occurred, and if it is
reasonably demonstrated by the Executive to the Board that such termination
of
employment either was at the request of a third party who had taken steps
reasonably calculated to effect the Change of Control or otherwise arose
in
connection with or in anticipation of the Change of Control. Any
determination by the Board in this regard shall be made in good faith taking
into account all facts and circumstances surrounding the termination of
employment. In any event, a Change of Control Position Modification
shall not be deemed to have occurred unless (a) the Executive shall have
provided the Company with written notice of the Company’s alleged actions
constituting a Change of Control Position Modification (which notice shall
specify in reasonable detail the particulars of such actions) within thirty
(30)
days after the initial existence of any such alleged actions, and the Company
has not cured any such alleged actions or substantially commenced its effort
to
cure such breach within thirty (30) days of the Company’s receipt of such
written notice, and (b) the termination occurs within six (6) months after
the
initial existence of any one of the conditions specified in this Section 11(b)(3) upon
which the termination is based.
(iv)
“control”,
“controlled
by” and “under
common control with”, as used with respect to any Person, means the
possession, directly or indirectly, through one or more intermediaries or
otherwise, of the power to direct or cause the direction of the management
or
policies of such Person, whether through the ownership of voting securities,
contractually or in any other manner whatsoever.
(v)
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.
(vi)
“Parent”
means TS Corp (including its successor through any internal reorganization)
or,
in case TS Corp is not the ultimate parent of the Company, the entity
that is the ultimate parent corporation of the Company.
(vii)
“Person”
means any individual, firm, corporation, limited liability company, partnership,
sole proprietorship, trust or other legally cognizable entity.
(viii) “Subsidiary”
with respect to any specified Person, means:
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(A)
any corporation, association or other business entity of which more than
50% of
the total voting power of shares of capital stock entitled (without regard
to
the occurrence of any contingency and after giving effect to any voting
agreement or stockholders’ agreement that effectively transfers voting power) to
vote in the election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
(B)
any partnership (1) the sole general partner or the managing general partner
of
which is such Person or a Subsidiary (as defined in clause (A)) of such Person
or (2) the only general partners of which are that Person or one or more
Subsidiaries (as defined in clause (A)) of that Person (or any combination
thereof).
(c)
In the event that Executive suffers a Change of Control Position Modification
that results in his termination of employment prior to the date that the
Change
of Control occurs, then, provided that Executive shall have executed a release
in form and substance acceptable to the Company, and subject to the other
terms
and conditions contained in this Agreement, the Executive shall receive such
benefits to which he is entitled under Section 5 of this
Agreement absent the occurrence a Change of Control. Notwithstanding
the preceding sentence, within thirty (30) days after the effective date
of the
Change of Control, Executive shall cease receiving further Severance Pay
payments under Section
5 and shall receive the balance of the benefits (without interest)
to
which he is entitled under Section
11(a). For the avoidance of doubt, the benefits provided under
this Section 11
shall not be made in duplication of any benefits provided under Section 5 of this
Agreement.
12.
Excise Tax on Parachute Payments.
(a)
The Executive shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any payment received
hereunder, including, without limitation, any excise tax imposed by Section
4999
of the Code; provided, however, that
any payment or
benefit received or to be received by the Executive in connection with a
Change
of Control or the termination of the Executive's employment (whether payable
pursuant to the terms of this Agreement (“Contract
Payments”) or any other plan, arrangements or agreement with the Company
or any affiliate (collectively with the Contract Payments, the “Total
Payments”)) shall be reduced to the extent necessary so that no portion
thereof shall be subject to the excise tax imposed by Section 4999 of the
Code
but only if, by reason of such reduction, the net after-tax benefit received
by
the Executive shall exceed the net after-tax benefit that would be received
by
the Executive if no such reduction was made.
(b)
For purposes of this Section 12, “net
after-tax benefit” shall
mean (i) the total of all payments and the value of all benefits which
the
Executive receives or is then entitled to receive from the Company that
would
constitute “excess parachute payments” within the meaning of Section 280G of the
Code, less (ii) the amount of all federal, state and local income taxes
payable
with respect to the foregoing calculated at the maximum marginal income
tax rate
for each year in which the foregoing shall be paid to the Executive (based
on
the rate in effect for such year as set forth in the Code as in effect
at the
time of the first payment of the foregoing), less (iii) the amount of excise
taxes imposed with respect to the payments and benefits described in (i)
above
by Section 4999 of the Code.
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(c)
The foregoing determination shall be made by a nationally recognized accounting
firm (the “Accounting
Firm”) selected by the Company and reasonably acceptable to the Executive
(which may be, but will not be required to be, the Company's independent
auditors). The Accounting Firm shall submit its determination and
detailed supporting calculations to both the Executive and the Company within
fifteen (15) days after receipt of a notice from either the Company or the
Executive that the Executive may receive payments which may be “parachute
payments.” If the Accounting Firm determines that a reduction is
required by this Section 12, the
Executive, in the Executive's discretion, may determine which of the Total
Payments shall be reduced to the extent necessary so that no portion of the
Total Payments shall be subject to the excise tax imposed by Section 4999
of the
Code, and the Company shall pay such reduced amount to the Executive; provided
that, if the Executive does not make such determination within ten (10) business
days after the receipt of the calculations made by the Accounting Firm, the
Company shall elect which and how much of the Total Payments shall be eliminated
or reduced consistent with the requirements of this Section 12 and shall
notify the Executive promptly of such election.
(d)
The Executive and the Company shall each provide the Accounting Firm access
to
and copies of any books, records, and documents in the possession of the
Executive or the Company, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by this Section
12. The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated
by
this Section 12
shall be borne by the Company.
13.
Publicity. Except
as otherwise
required by law, including but not limited to the disclosure obligations
imposed
on public companies under the federal and/or state securities laws, neither
party shall issue, without consent of the other party, any press release
or make
any public announcement with respect to this Agreement or the employment
relationship between them. Following the date of this Agreement and
regardless of any dispute that may arise in the future, the Executive and
the
Company jointly and mutually agree that they will not disparage, criticize
or
make statements that are negative, detrimental or injurious to the other
to any
individual, company or client, including within the Company.
14.
Non-disparagement. The
Executive shall not, while executive is employed by the Company or at any
time
thereafter, directly, or through any other personal entity, make any public
or
private statements that are disparaging of the Company, its business or its
employees, officers, directors, or stockholders. The Company agrees
to refrain from any public statements after the Executive’s employment with the
Company ceases that are disparaging to the Executive. The Company's
obligations under this section extend only to then current officers and members
of the board, and only for so long as those individuals are officers or
directors of the Company.
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15.
Binding
Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their heirs, personal representatives,
successors and assigns. In the event the Company is acquired, is a
non surviving party in a merger, or transfers substantially all of its assets,
this Agreement shall not be terminated and the transferee or surviving company
shall be bound by the provisions of this Agreement. The parties
understand that the obligations of the Executive are personal and may not
be
assigned by him.
16.
Entire
Agreement. This Agreement contains the entire understanding of
the Executive and the Company with respect to employment of the Executive
and
supersedes the Predecessor Agreement and any and all prior understandings,
written or oral, except for the Confidentiality Agreement, the Plans and
agreements that have been executed or are to be executed in connection with
any
Award Shares or other equity interests awarded to the Executive during the
course of his employment; provided, however, that any provisions of this
Agreement with respect to the vesting of, lapse of restrictions upon, or
exercise of Award Shares that are more favorable to the Executive than the
provisions set forth in the applicable award agreements shall be controlling
and
shall be treated by the parties as an amendment of such award
agreements. This Agreement may not be amended, waived, discharged or
terminated orally, but only by an instrument in writing, specifically identified
as an amendment to this Agreement, and signed by all parties. By
entering into this Agreement, the Executive certifies and acknowledges that
he
has carefully read all of the provisions of this Agreement and that he
voluntarily and knowingly enters into said Agreement.
17.
Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed severable from the
remainder of this Agreement, and the remaining provisions contained in this
Agreement shall be construed to preserve to the maximum permissible extent
the
intent and purposes of this Agreement.
18.
Tax
Consequences. Company will have no obligation to any Person
entitled to the benefits of this Agreement with respect to any tax obligation
any such Person incurs as a result of or attributable to this Agreement,
including all supplemental agreements and employee benefits plans incorporated
by reference therein, or arising from any payments made or to be made under
this
Agreement or thereunder.
19.
Governing Law and Submission
to
Jurisdiction. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth
of
Virginia, without giving effect to the principles of conflicts of law
thereof.
20.
Notices. Any
notice provided for
in this Agreement shall be provided in writing. Notices shall be
effective from the date of service, if served personally on the party to
whom
notice is to be given, or on the second day after mailing, if mailed by
first
class mail, postage prepaid. Notices shall be properly addressed to
the parties at their respective addresses or to such other address as either
party may later specify by notice to the other.
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21.
ARBITRATION. The
parties agree that, except as discussed in this Agreement, any controversy,
claim or dispute arising out of or relating to this Agreement or the breach
thereof, or arising out of or relating to the employment of the Executive,
or
the termination thereof, including any statutory or common law claims under
federal, state, or local law, including all laws prohibiting discrimination
in
the workplace, shall be resolved by arbitration before a single arbitrator
in
Fairfax County, Virginia in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association. The parties agree that
any award rendered by the arbitrator shall be final and binding, and that
judgment upon the award may be entered in any court having jurisdiction
thereof. The parties further acknowledge and agree that, due to the
nature of the confidential information, trade secrets, and intellectual property
belonging to the Company and its affiliates to which the Executive has or
will
be given access, and the likelihood of significant harm that the Company
and its
affiliates would suffer in the event that such information was disclosed
to
third parties, nothing in this paragraph shall preclude the Company from
going
to court to seek injunctive relief to prevent the Executive from violating
the
obligations established in Sections 7 through
9 of this
Agreement. This agreement to arbitrate does not include claims that,
by law, may not be subject to mandatory arbitration.
22.
Indemnification.
(a)
Corporate
Acts. In his/her capacity as a director, manager, officer, or
employee of the Company or serving or having served any other entity as a
director, manager, officer, or the Executive at the Company’s request, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent allowed by law, the Company’s charter and by-laws, from and against any
and all losses, claims, damages, liabilities, expenses (including legal fees
and
expenses), judgments, fines, settlements and other amounts arising from any
and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Executive may be involved,
or
threatened to be involved, as a party or otherwise by reason of the Executive’s
status, which relate to or arise out of the Company, their assets, business
or
affairs, if in each of the foregoing cases, (i) the Executive acted in good
faith and in a manner the Executive believed to be in, or not opposed to,
the
best interests of the Company, and, with respect to any criminal proceeding,
had
no reasonable cause to believe the Executive’s conduct was unlawful, and (ii)
the Executive’s conduct did not constitute gross negligence or willful or wanton
misconduct (and the Company shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Executive provides
an undertaking to repay advances if it is ultimately determined that Executive
is not entitled to indemnification).The
Company shall advance all expenses incurred by the Executive in connection
with
the investigation, defense, settlement or appeal of any civil or criminal
action
or proceeding referenced in this Section 22, including
but not necessarily limited to legal counsel, expert witnesses or other
litigation-related expenses. The Executive shall be entitled to
coverage under the Company’s directors and officers liability insurance policy
in effect at any time in the future to no lesser extent than any other officers
or directors of the Company. After the Executive is no longer
employed by the Company, the Company shall keep in effect the provisions
of this
Section 22,
which provision shall not be amended except as required by applicable law
or
except to make changes permitted by law that would enlarge the right of
indemnification of the Executive. Notwithstanding anything herein to
the contrary, the provisions of this Section 22 shall
survive the termination of this Agreement and the termination of the Employment
Period for any reason.
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(b)
Personal
Guarantees. The Company shall indemnify and hold harmless the
Executive for any liability incurred by him/her by reason of his/her execution
of any personal guarantee for the Company’s benefit (including but not limited
to personal guarantees in connection with office or equipment leases, commercial
loans or promissory notes).
(c)
The indemnification provision
of
this Section
22shall be in addition
to
any other liability the Company otherwise may have to the Executive to indemnify
him for his conduct in connection with his efforts on the Company’s
behalf.
23.
Section 409A Safe Harbor.
(a)
This Agreement is intended to comply with, or otherwise be exempt from,
Section 409A of the Code.
(b)
This Company shall undertake to administer, interpret, and construe this
Agreement in a manner that does not result in the imposition on the Executive
of
any additional tax, penalty, or interest under Section 409A of the
Code.
(c)
If the Company determines in good faith that any provision of this Agreement
would cause the Executive to incur an additional tax, penalty, or interest
under
Section 409A of the Code, the Company and the Executive agree that they will execute
any and all
amendments to this Agreement permitted under applicable law as they mutually
agree in good faith may be necessary to ensure compliance with the distribution
provisions of Section 409A of the Code or as otherwise needed to ensure that
this Agreement complies with Section 409A.
(d)
The preceding provisions, however, shall not be construed as a guarantee
by the
Company of any particular tax effect to the Executive under this Agreement.
The
Company shall not be liable to the Executive for any payment made under this
Agreement, at the direction or with the consent of the Executive, that is
determined to result in an additional tax, penalty, or interest under Section
409A of the Code, nor for reporting in good faith any payment made under
this
Agreement as an amount includible in gross income under Section 409A of the
Code.
(e)
For purposes of Section 409A of the Code, the right to a series of installment
payments under this Agreement shall be treated as a right to a series of
separate payments.
(f)
With respect to any reimbursement of expenses of, or any provision of in-kind
benefits to, the Executive, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject
to
the following conditions: (i) the expenses eligible for reimbursement or
the
amount of in-kind benefits provided in one taxable year shall not affect
the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b)
of the
Code; (ii) the reimbursement of an eligible expense shall be made no later
than
the end of the year after the year in which such expense was incurred;
and (iii)
the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.
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(g)
“Termination of
employment,” or words of similar import, as used in this Agreement, means
for purposes of 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 a “separation from service” for purposes of Section 409A of the
Code.
(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)) shall accrue without interest and shall be made 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.
24.
Miscellaneous.
(a)
No delay or omission by the Company in exercising any right under this Agreement
shall operate as a waiver of that or any other right. A waiver or consent
given
by the Company on any one occasion shall be effective only in that instance
and
shall not be construed as a bar or waiver of any right on any other
occasion.
(b)
The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any
section
of this Agreement.
(c)
The language in all parts of this Agreement will be construed, in all cases,
according to its fair meaning, and not for or against either party hereto.
The
parties acknowledge that each party and its counsel have reviewed and revised
this Agreement and that the normalrule
of
construction to the effect that any ambiguities are to be resolved against
the
drafting party will not be employed in the interpretation of this
Agreement.
(d)
The obligations of Company under this Agreement, including its obligation
to pay
the compensation provided for in this Agreement, are contingent upon the
Executive’s performance of the Executive’s obligations under this
Agreement.
[Signature
Page
Follows]
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IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly
executed and delivered, by its authorized officers or individually, on the
date
first set forth above in the opening paragraph of this Agreement.
| TerreStar Networks Inc. | |||
| By: | /s/ Xxxxxxx X. Xxxxxxx | ||
| Xxxxxxx X. Xxxxxxx | |||
| Its: | Chairman of the Board of Directors | ||
| Xxxxxx X. Xxxxxxx | |||
| By: | /s/ Xxxxxx X. Xxxxxxx | ||
| Xxxxxx X. Xxxxxxx | |||
| Executive | |||
