EMPLOYMENT AGREEMENT
This AGREEMENT is made as of April 18, 1997 by and between COMSAT
Corporation ("COMSAT"), a District of Columbia corporation, and Xxxxx
Flower, a resident of the Commonwealth of Virginia (the "Executive").
WHEREAS, the Executive serves as Vice President and Chief Financial
Officer of COMSAT;
WHEREAS, the Board of Directors of COMSAT (the "Board") believes it to
be in the best interests of COMSAT to enter into this Agreement to ensure
the Executive's continuing services to COMSAT; and
WHEREAS, COMSAT desires to continue to employ the Executive as Vice
President and Chief Financial Officer of COMSAT, and the Executive desires
to continue such employment, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, COMSAT
and the Executive agree as follows:
1. Employment; Duties.
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(a) EMPLOYMENT AND EMPLOYMENT PERIOD. COMSAT shall employ the
Executive to serve as Vice President and Chief Financial Officer of COMSAT
or any successor entity for a period (the "Employment Period") commencing
on April 18, 1997 (the "Effective Date") and continuing thereafter until
April 17, 2000 unless terminated in accordance with the provisions of this
Agreement. Each 12-month period ending on the anniversary date of the
Effective Date is referred to herein as a "year of the Employment Period."
(b) OFFICES, DUTIES AND RESPONSIBILITIES. The Executive shall
report to the Chief Executive Officer of COMSAT. The Executive's offices
initially shall be located at COMSAT's present headquarters in Bethesda,
Maryland. The Executive shall have all duties and authority customarily
accorded a Vice President and Chief Financial Officer.
(c) DEVOTION TO INTERESTS OF COMSAT. During the Employment
Period, the Executive shall devote his best efforts and full business time
and attention to the performance of his duties hereunder. Notwithstanding
the foregoing, the Executive shall be entitled to undertake outside
activities (e.g. charitable, educational, personal interests, and board of
directors memberships) that do not compete with COMSAT and do not
unreasonably or materially interfere with the performance of his duties
hereunder as reasonably determined by the Chief Executive Officer in
consultation with the Executive.
2. Compensation and Fringe Benefits.
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(a) BASE COMPENSATION. COMSAT shall pay the Executive a base
salary ("Base Salary") during the Employment Period, with payments made in
installments in accordance with COMSAT's regular practice for compensating
executive personnel, provided that in no event shall such payments be made
less frequently than twice per month. The initial annual Base Salary shall
be $210,000. Thereafter, the Base Salary for the Executive shall be
reviewed for increases annually during the Employment Period, consistent
with COMSAT's normal review process. Any Base Salary increases shall
approved by the Board in its sole discretion.
(b) BONUS COMPENSATION. The Executive will be eligible to receive
bonuses ("Annual Bonus") during the Employment Period under the Annual
Incentive Plan (the "AIP") in accordance with the following parameters: (i)
the target bonus for each year during the Employment Period shall be 50% of
Base Salary for achieving 100% of the target level for the performance
measures and (ii) the performance measures, the relative weight to be
accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the
target level for the performance measures shall be determined for each year
during the Employment Period by the Committee on Compensation and
Management Development of the Board (the "Compensation Committee").
(c) FRINGE BENEFITS. The Executive shall be entitled to the
fringe benefits in effect for COMSAT senior executives from time to time,
including (i) participation in the COMSAT Directors and Executives Deferred
Compensation Plan, the COMSAT Split Dollar Insurance Plan, the COMSAT
Educational Grant Program, the COMSAT Retirement Plan, the COMSAT Savings
and Profit-Sharing Plan, the COMSAT 1995 Key Employee Stock Plan, the
COMSAT Employee Stock Purchase Plan, the COMSAT health and disability
insurance programs and the COMSAT financial planning program and (ii)
reimbursement of reasonable expenses incurred in connection with travel and
entertainment related to COMSAT's business and affairs. The Executive also
shall be entitled to such other or additional fringe benefits as are made
available to COMSAT senior executives during the Employment Period. COMSAT
reserves the right to modify or terminate at any time the fringe benefits
provided to the senior management group.
(d) SERP. The Executive shall continue to participate in the
COMSAT Insurance and Retirement Plan for Executives (the "SERP"). Any
future amendments or changes to the SERP which provide for a reduction,
deferral or elimination of benefits payable to participants in the SERP
shall expressly not apply to the Executive unless the Executive consents
otherwise.
(e) LEGAL EXPENSES. The Executive shall be entitled to
reimbursement of the Executive's reasonable legal fees and costs incurred in
connection with the negotiation and execution of this Agreement, subject to a
maximum reimbursement of $5,000.
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3. Trade Secrets; Return of Documents and Property.
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(a) The Executive acknowledges that during the course of his
employment he will receive secret, confidential and proprietary information
("Trade Secrets") of COMSAT and of other companies with which COMSAT does
business on a confidential basis and that the Executive will create and
develop Trade Secrets for the benefit of COMSAT. Trade Secrets shall
include, without limitation, matters of a technical nature, such as
scientific and engineering secrets, "know-how," formulae, secret processes
or machines, inventions and computer programs (including documentation of
such programs), and matters of a business nature, such as customer data and
proprietary information about costs, profits, markets, sales and customer
databases, and other information of a similar nature to the extent not
available to the public, and plans for future development. All Trade
Secrets disclosed to or created by the Executive shall be deemed to be the
exclusive property of COMSAT. The Executive acknowledges that Trade Secrets
have economic value to COMSAT due to the fact that Trade Secrets are not
generally known to the public or the trade and that the unauthorized use or
disclosure of Trade Secrets is likely to be detrimental to the interests of
COMSAT and its subsidiaries. The Executive therefore agrees to hold in
strict confidence and not to disclose to any third party any Trade Secret
acquired or created or developed by the Executive during the term of this
Agreement except (i) when the Executive uses or discloses any Trade Secret
in the proper course of the Executive's rendition of services to COMSAT
hereunder, (ii) when such Trade Secret becomes public knowledge other than
through a breach of this Agreement, or (iii) when the Executive is required
to disclose any Trade Secret pursuant to any valid legal process. The
Executive shall notify COMSAT immediately of any such legal process in
order to enable COMSAT to contest such legal process's validity. After
termination of this Agreement, the Executive shall not use or otherwise
disclose Trade Secrets unless such information (x) becomes public knowledge
other than through a breach of this Agreement, (y) is disclosed to the
Executive by a third party who is entitled to receive and disclose such
Trade Secret, or (z) is required to be disclosed pursuant to any valid
legal process, in which case the Executive shall notify COMSAT immediately
of any such legal process in order to enable COMSAT to contest such legal
process's validity.
(b) Upon the effective date of notice of the Executive's or
COMSAT's election to terminate this Agreement, or at any time upon the
request of COMSAT, the Executive (or his heirs or personal representatives)
shall deliver to COMSAT (i) all documents and materials containing or
otherwise relating to Trade Secrets or other information relating to
COMSAT's business and affairs, and (ii) all documents, materials and other
property belonging to COMSAT, which in either case are in the possession or
under the control of the Executive (or his heirs or personal
representatives). The Executive shall be entitled to keep his personal
records (including Rolodex) relating to COMSAT's business and affairs
except to the extent those contain documents or materials described in
clause (i) of the preceding sentence.
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4. DISCOVERIES AND WORKS. All discoveries and works made or
conceived by the Executive during his employment by COMSAT pursuant to this
Agreement, jointly or with others, that relate to COMSAT's activities
("Discoveries and Works") shall be owned by COMSAT. Discoveries and Works
shall include, without limitation, inventions, computer programs (including
documentation of such programs), technical improvements, processes,
drawings and works of authorship. The Executive shall (a) promptly notify,
make full disclosure to, and execute and deliver any documents requested
by, COMSAT to evidence or better assure title to such Discoveries and Works
in COMSAT, (b) assist COMSAT in obtaining or maintain for itself at its own
expense United States and foreign patents, copyrights, trade secret
protection or other protection of any and all such Discoveries and Works,
and promptly execute, whether during his employment by COMSAT or
thereafter, all applications or other endorsements necessary or appropriate
to maintain patents and other rights for COMSAT and to protect its title
thereto. Any Discoveries and Works which, within six months after the
termination of the Executive's employment by COMSAT, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to
practice by the Executive and which pertain to work performed by the
Executive while with COMSAT shall, as between the Executive and COMSAT, be
presumed to have been made during the Executive's employment by COMSAT.
5. TERMINATION. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with COMSAT
may be terminated only a
follows:
(a) The Executive's employment may be terminated by the Executive
at any time upon 45 days advance written notice to COMSAT for "Good Reason"
(as defined below). In such event, or if the Executive's employment is
terminated by COMSAT without "Cause" (as defined below), the Executive
shall be entitled to receive the following benefits until the later of (x)
one year after the date of the Executive's termination of employment or (y)
April 17, 2000:
(i) The Executive's Base Salary in effect at the date of
termination;
(ii) An Annual Bonus equal to 50% of his then current Base
Salary; and
(iii) All benefits provided pursuant to Sections 2(c) and (d) of
this Agreement, which shall be deemed to vest fully and immediately if
subject to vesting; provided, however, that in the event COMSAT is
precluded from providing coverage under any such benefit plan by
applicable law or regulation, COMSAT may provide the Executive with a
payment equal to the cost of such coverage without regard to tax
effect. The foregoing benefits shall be calculated in accordance with
the provisions of the applicable plans as if the Executive had retired
on his date of termination, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under
the SERP in such event.
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(b) "Good Reason" shall mean the occurrence of any of the
following (other than for "Cause"), without the Executive's express written
consent: (i) the assignment to the Executive of duties inconsistent with
the Executive's status as an executive officer of COMSAT or a substantial
reduction by COMSAT of the Executive's responsibilities as an executive
officer of COMSAT; (ii) any relocation of the Executive's offices outside
the Washington, D.C. metropolitan area by COMSAT prior to the third
anniversary of the Effective Date; or (iii) any material default of the
provisions of Section 2 of this Agreement which continues for 20 business
days following COMSAT's receipt of written notice from the Executive
specifying the manner in which COMSAT is in default of such provisions. In
order for the Executive to terminate employment for "Good Reason", the
Executive must give COMSAT written notice of his termination of employment
for "Good Reason", stating the basis for the termination, within 90 days
after the Executive learns of the occurrence of the event constituting
"Good Reason".
(c) The Executive's employment may be terminated by COMSAT for
Cause at any time upon ten days written notice to the Executive, and after
giving the Executive an opportunity to discuss such decision with the
Board. For purposes of this Agreement, COMSAT shall have "Cause" to
terminate the Executive's employment hereunder upon (i) the continued and
deliberate failure of the Executive to perform his material duties, in a
manner substantially consistent with the manner reasonably prescribed by
the Board and in accordance with the terms of this Agreement (other than
any such failure resulting from his incapacity due to physical or mental
illness), which failure continues for 20 business days following the
Executive's receipt of written notice from the Board specifying the manner
in which the Executive is in default of his duties, (ii) the engaging by
the Executive in intentional serious misconduct that is materially and
demonstrably injurious to COMSAT or its reputation, which misconduct, if it
is reasonably capable of being cured, is not cured by the Executive within
20 business days following the Executive's receipt of written notice from
the Board specifying the serious misconduct engaged in by the Executive,
(iii) the conviction of the Executive of commission of a felony, whether or
not such felony was committed in connection with COMSAT's business, or (iv)
any material breach by the Executive of Section 9 hereof, which breach, if
it is reasonably capable of being cured, is not cured by the Executive
within 20 business days following the Executive's receipt of written notice
from the Board specifying the breach of Section 9 by the Executive. If
COMSAT shall terminate the Executive's employment for "Cause", COMSAT, in
full satisfaction of all of COMSAT's obligations under this Agreement and
in respect of the termination of the Executive's employment with COMSAT,
shall pay the Executive his Base Salary and any other compensation,
benefits and reimbursements due him under COMSAT plans through the date of
termination of his employment.
(d) If, prior to the expiration or termination of the Employment
Period, the Executive shall have been unable to perform substantially his
duties by reason of disability or impairment of health for at least six
consecutive calendar months, COMSAT shall have the right to terminate this
Agreement by giving 60 days written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment
is still continuing. Following the expiration of the notice period, the
Employment Period shall terminate with the payment of the Executive's Base
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Salary for the month in which notice is given and a prorated Annual Bonus
through such month. In the event of a dispute as to whether the Executive
is disabled within the meaning of this Section 5(d), or the duration of any
disability, either party may request a medical examination of the Executive
by a doctor appointed by the Chief of Staff of a hospital selected by
mutual agreement of the parties, or as the parties may otherwise agree, and
the written medical opinion of such doctor shall be conclusive and binding
upon the parties as to whether the Executive has become disabled and the
date when such disability arose. The cost of any such medical examinations
shall be borne by COMSAT. In no event shall this Agreement terminate before
COMSAT's long-term disability benefits under applicable plans become
payable to the Executive.
(e) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, COMSAT shall pay to the Executive's estate
his Base Salary and a prorated Annual Bonus through the end of the month in
which the Executive's death occurred, at which time the Employment Period
shall terminate without further notice.
(f) If COMSAT elects not to renew the Executive's employment with
COMSAT at the end of the Employment Period and the Executive terminates
employment at the end of the Employment Period, the Executive shall be
entitled to receive the payments described in Section 5(a)(i), (ii) and
(iii) for the period beginning on the date of the Executive's termination
of employment and ending one year after the Executive's termination of
employment.
(g) If either the Executive or COMSAT elects not to renew the
Executive's employment with COMSAT at the end of the Employment Period, the
Executive shall be entitled to receive payments under the SERP beginning on
May 1, 2000 (the first day of the month after the end of such period),
calculated in accordance with the provisions of the SERP based on the
Executive's retirement on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive's employment with COMSAT under this
Agreement is terminated either by the Executive for Good Reason or by
COMSAT without Cause before the Executive attains age 55, the Executive
shall be entitled to receive payments under the SERP beginning on December
1, 1998 (the first day of the month after the Executive's 55th birthday),
calculated in accordance with the provisions of the SERP as if the
Executive retired on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive dies before payments begin under the
SERP, the Executive's surviving spouse, if any, shall receive under the
SERP a $200,000 lump sum death benefit, plus annual benefit payments for a
ten year period equal to 50% of the Executive's accrued benefit under the
SERP, according to the terms of the SERP. The provisions of this Section
5(g) shall be administered consistent with the terms of the SERP.
(h) If the Executive voluntarily terminates employment with
COMSAT, such termination shall not be considered a breach of this Agreement
by the Executive and shall not adversely affect the Executive's right to
receive such benefits as may be payable to the Executive on account of his
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termination of employment under applicable COMSAT plans. The Executive
shall remain obligated to comply with the provisions of Sections 3, 4, 9
and 11 of this Agreement.
6. CHANGE OF CONTROL. If a change of control (as defined for purposes
of COMSAT's benefit plans) occurs during the Employment Term, the change of
control shall not adversely affect any of the Executive's rights under this
Agreement, and this Agreement shall continue in effect according to its
terms. In the event of a change of control, the Executive shall be entitled
to vesting and payment of benefits according to the terms of COMSAT's
applicable plans.
7. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive's employment and the
Employment Term to the extent necessary to the intended preservation of such
rights and obligations.
8. MITIGATION AND NO OFFSETS. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this
Agreement by seeking other employment or otherwise and there shall be no
offset against amounts due the Executive under this Agreement on account of
any remuneration attributable to any subsequent employment that he may
obtain. COMSAT's obligations to make payments under this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which COMSAT may have against the
Executive or others.
9. Non-Competition.
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(a) NON-COMPETITION AGREEMENT. As an inducement for COMSAT to
enter into this Agreement, the Executive agrees that, during the
Non-Competition Period (as defined below), the Executive shall not, without
the prior written consent of the Board, engage or participate, directly or
indirectly, as principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual capacity whatsoever, in the
conduct or management of, or own any stock or any other equity investment
in or debt of, any business which is competitive with any business
conducted by COMSAT. The Non-Competition Period is the period commencing as
of the Effective Date and running through the date that is one year
following the date on which the Executive's employment with COMSAT
terminates for any reason.
(b) COMPETITIVE BUSINESS. For the purpose of this Agreement, a
business shall be considered to be competitive with any business of COMSAT
only if such business is engaged in providing services or products (i)
comparable to or competitive with (A) any service or product currently
provided by COMSAT during the Employment Period; (B) any service or product
which evolves from or results from enhancements in the ordinary course
during the Non-Competition Period to the services or products provided by
COMSAT as of the date hereof or during the Employment Period; or (C) any
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future service or product of COMSAT as to which the Executive materially
and substantially participated in the development or enhancement, and (ii)
to customers, distributors or clients of the type served by COMSAT during
the Non-Competition Period.
(c) NON-SOLICITATION OF EMPLOYEES. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of
any person or entity other than COMSAT) solicit, or assist any person or
entity other than COMSAT to solicit, any officer, director, executive or
employee (other than an administrative or clerical employee) of COMSAT to
leave his or her employment.
(d) REASONABLENESS; INTERPRETATION. The Executive acknowledges
and agrees, solely for purposes of determining the enforceability of this
Section 9 (and not for purposes of determining the amount of money damages
or for any other reason), that (i) the markets served by COMSAT are
national and international and are not dependent on the geographic location
of executive personnel or the businesses by which they are employed; (ii)
the length of the Non-Competition Period is linked to the term of the
Employment Period; and (iii) the above covenants are manifestly reasonable
on their face, and the parties expressly agree that such restrictions have
been designed to be reasonable and no greater than is required for the
protection of COMSAT. In the event that the covenants in this Section 9
shall be determined by any court of competent jurisdiction in any action to
be unenforceable by reason of their extending for too great a period of
time or over too great a geographical area or by reason of their being too
extensive in any other respect, they shall be interpreted to extend only
over the maximum period of time for which they may be enforceable, and/or
over the maximum geographical area as to which they may be enforceable
and/or to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
(e) INVESTMENT. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with COMSAT,
provided that such investments (i) are passive investments and constitute
five percent or less of the outstanding equity securities of such an entity
the equity securities of which are traded on a national securities exchange
or other public market, or (ii) are approved by the Board.
10. INDEMNIFICATION; LIABILITY INSURANCE. The Executive shall be
entitled to indemnification and coverage under COMSAT's liability insurance
policy for officers to the same extent as other officers of COMSAT. In
addition, the Executive shall be indemnified to the maximum extent
permitted by law of the jurisdiction in which COMSAT is incorporated, as it
may be amended from time to time.
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11. Enforcement.
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(a) The Executive acknowledges that a breach of the covenants or
provisions contained in Sections 3, 4 and 9 of this Agreement will cause
irreparable damage to COMSAT, the exact amount of which will be difficult
to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Executive agrees that if the Executive
breaches or threatens to breach any of the covenants or provisions
contained in Sections 3, 4 and 9 of this Agreement, in addition to any
other remedy which may be available at law or in equity, COMSAT shall be
entitled to seek specific performance and injunctive relief in a court of
competent jurisdiction after notice and a hearing.
(b) The parties expressly agree that any litigation directly or
indirectly arising out of or relating to this Agreement, including an
action brought by COMSAT pursuant to this Section 11, shall be brought in a
court of competent jurisdiction in the State of Maryland.
12. EXPENSES OF ENFORCING THE AGREEMENT. If the Executive brings an
action to enforce any of the obligations of COMSAT under this Agreement and
prevails on any material issue, COMSAT shall pay the Executive on demand
the amount necessary to reimburse the Executive in full for all reasonable
expenses (including reasonable attorneys' fees and legal expenses) incurred
by the Executive in enforcing the obligations of COMSAT under this
Agreement.
13. SEVERABILITY. Should any provision of this Agreement be determined
to be unenforceable or prohibited by any applicable law, such provision
shall be ineffective to the extent, and only to the extent, of such
unenforceability or prohibition without invalidating the balance of such
provision or any other provision of this Agreement, and any such
unenforceability or prohibition in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
14. ASSIGNMENT. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. COMSAT's rights and
obligations under this Agreement shall not be assignable by COMSAT except
as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of COMSAT. In the event of any such
assignment by COMSAT, all rights of COMSAT hereunder shall inure to the
benefit of the assignee, provided that all references herein to COMSAT
shall be deemed to refer with equal force and effect to any corporate or
other successor of COMSAT.
15. NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method, provided that in such case it shall also be sent by certified or
registered mail, return receipt requested; the day after it is sent, if
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sent for next day delivery to a domestic address by recognized overnight
delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. Unless otherwise
changed by notice, in each case notice shall be sent to:
If to the Executive, addressed to:
With a copy (not constituting notice) to:
Xxxxxx X. Xxxxxxxxx, Esquire
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
If to COMSAT, addressed to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
With a copy (not constituting notice) to:
16. MISCELLANEOUS. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The
validity, interpretation, performance and enforcement of the Agreement
shall be governed by the laws of the State of Maryland without giving
effect to conflicts of laws principles thereof. The headings contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. The waiver by any party of a
breach of any term or condition of this Agreement by the other party shall
not operate as nor be construed as a waiver of any subsequent breach
thereof or a waiver of a breach of any other term or condition of this
Agreement. This Agreement may be signed in two or more counterparts, each
of which shall constitute an original but all of which together shall form
only a single instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ Xxxxx Flower
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Xxxxx Flower, Executive
COMSAT Corporation
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President and Chief Executive Officer
