EXECUTIVE CHANGE OF CONTROL AGREEMENT
EXHIBIT
99.3
EXECUTIVE CHANGE
OF
CONTROL
THIS
AGREEMENT dated as of August 20, 2007 is made by and between Mobile Satellite
Ventures LP, a Delaware limited partnership (the "Company"), and Xxxxx X.
Xxxxxxx (the "Executive").
WHEREAS,
the Company considers it essential and in its best interests and in the best
interests of its equity owners to xxxxxx the continuous employment of certain
key management personnel, including the Executive; and
WHEREAS,
the Company recognizes that the possibility of a Change of Control (as defined
in Section 8.5 hereof) exists and that such possibility, and the uncertainty
and
questions which it may raise among management, may result in the departure
or
distraction of management personnel to the detriment of the Company and its
equity owners; and
WHEREAS,
the Company has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from
the
possibility of a Change in Control.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and the Executive hereby agree as follows:
1. Defined
Terms. For purposes of this Agreement, definitions of certain
capitalized terms used in this Agreement are provided in Section 8 and elsewhere
in this Agreement.
2. Term
of Agreement. This Agreement shall become effective on the date
hereof and shall remain in effect indefinitely thereafter; provided, however,
that (a) except as provided in clause (b) of this Section 2, either the Company
or the Executive may terminate this Agreement by giving the other party at
least
one (1) year advance written notice of such termination, and (b) if a Change
in
Control shall have occurred during the term of this Agreement, this Agreement
may not be terminated until all obligations of either party hereto have been
performed in full and the Coverage Period has expired without the occurrence
of
a Triggering Event. Notwithstanding the foregoing, this Agreement shall
terminate upon the Executive's attaining age sixty-five (65), the Executive's
Disability or death, except as to obligations of the Company hereunder arising
from a Change in Control and a Triggering Event that occurred prior to his
having reached such age or prior to the occurrence of his Disability or
death.
3. Agreement
of the Company. In order to induce the Executive to remain in the
employ of the Company, the Company agrees, under the terms and conditions set
forth herein, that, upon the occurrence of both a Change in Control and a
Triggering Event during the term of this Agreement, the Company shall provide
to
the Executive the benefits described in Sections 3.1 through 3.3 below (the
"Severance Benefits"), unless prior to the date of any Triggering Event, the
Executive's employment with the Company has been terminated by the Executive
for
other than Good Reason or by the Company for Cause or due to the Executive's
Disability or death.
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3.1 Lump-Sum
Severance Payment. In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the Company shall
pay to the Executive a lump sum severance payment, in cash, without discount,
equal to the sum of (i) the Executive's Annual Base Salary and (ii) the
Executive’s Average Bonus.
3.2 Vesting
of Options. The vesting of all options to purchase securities of
the Company granted to the Executive pursuant to the Company's 2001 Unit
Incentive Plan, as adopted by the Company on December 17, 2001, and amended
on
January 24, 2003, or any other Company plan that are then held by the Executive
shall be accelerated to the Date of Termination and shall continue to be
exercisable for a two-year period after such acceleration; any provision
contained in the agreement(s) under which such options were granted that is
inconsistent with the foregoing is hereby modified to the extent necessary
to
provide for such acceleration; such acceleration shall not apply to any option
that by its terms would vest prior to the date provided for in this Section
3.2.
3.3 Continued
Benefits. For a twelve (12) month period (or, if less, the number
of months from the Date of Termination until the date the Executive will reach
age sixty-five (65)) after the Date of Termination (the "Benefits Period"),
the
Company shall provide the Executive with group term life insurance, health
insurance, accident and long-term disability insurance benefits (collectively,
"Welfare Benefits") substantially similar in all respects to those that the
Executive was receiving immediately prior to the Date of Termination (without
giving effect to any reduction in such benefits subsequent to a Potential Change
in Control or a Change in Control). During the Benefits Period, the
Executive shall be entitled to elect to change his or her level of coverage
and/or his or her choice of coverage options (such as Executive only or family
medical coverage) with respect to the Welfare Benefits to be provided by the
Company to the Executive to the same extent that actively employed senior
executives of the Company are permitted to make such changes; provided, however,
that in the event of any such changes the Executive shall pay the amount of
any
cost increase that would actually be paid by an actively employed senior
executive of the Company by reason of making the same changes in his or her
level of coverage or coverage options.
3.4 Terminations
in Anticipation of Change in Control. The Executive shall be
entitled to the Severance Benefits under Section 3 hereof if the Executive's
employment is terminated by the Company without Cause prior to a Change in
Control and such termination of employment (a) was at the request of a third
party which has taken steps reasonably calculated to effect a Change in Control
or (b) otherwise arose in anticipation of a Change in Control, in each case
as
determined by the Board or the Compensation Committee of the Company and/or
its
general partner. The Executive shall be entitled to the Severance
Benefits under Section 3 hereof if the Executive terminates his or her
employment prior to a Change in Control if at the time of such termination
a
circumstance or event which would constitute Good Reason after a Change in
Control has occurred (a) at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (b) in anticipation
of a
Change in Control, in each case as determined by the Board or the Compensation
Committee of the Company and/or its general partner.
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4. Certain
Limitations on Payments and Benefits. The Severance
Benefits payable under Section 3.1 hereof shall be reduced by the amount of
any
other payment or the value of any benefit received or to be received by the
Executive that, in the opinion of tax counsel ("Tax Counsel") selected by the
Executive and acceptable to the Company's independent auditors, is likely to
constitute a "parachute payment" under section 280G(b)(2) of the Code (whether
pursuant to the terms of this Agreement or any other plan, agreement or
arrangement with the Company or any subsidiary, any person whose actions result
in a Change in Control, or any person affiliated with the Company or such
person) unless (A) the Executive shall have effectively waived his receipt
or
enjoyment of such payment or benefit prior to the date of payment of such
Severance Benefits, (B) or in the opinion of Tax Counsel, the Severance Benefits
(in their full amount or as partially reduced under this Section 4, as the
case
may be) plus all other payments or benefits that constitute "parachute payments"
within the meaning of section 280(b)(2) of the Code are likely to be reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4) of the Code or are otherwise not likely to be subject to disallowance
as a deduction by reason of section 280G of the Code. The value of
any noncash benefit or any deferred payment or benefit shall be determined
by
the Company's independent auditors in accordance with the principles of section
280G(d)(3) and (4) of the Code.
5. Timing
of Payments. The payment provided for in Section 3.1 hereof shall
be made on the Date of Termination, provided, however, that if the amounts
of
such payment cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payment and shall pay the
remainder of such payment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code from the Date of Termination to the payment
of
such remainder) as soon as the amount thereof can be determined but in no event
later than the thirtieth (30th) day after the Date of Termination. In
the event that the amount of the estimated payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by
the Company to the Executive, payable on the fifth (5th) business day after
demand by the Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code from the Date of Termination to the repayment of
such
excess).
6. Termination
Procedures.
6.1 Notice
of Termination. After a Change in Control, any termination of the
Executive's employment (other than by reason of death) must be preceded by
a
written Notice of Termination from the terminating party to the other party
hereto in accordance with Section 7.5 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall (i) specify
the date of termination (the "Date of Termination") which shall not be more
than
sixty (60) days from the date such Notice of Termination is given, (ii) indicate
the notifying party's opinion regarding the specific provisions of this
Agreement that will apply upon such termination and (iii) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
the
application of the provisions indicated. Termination of the
Executive's employment shall occur on the specified Date of Termination even
if
there is a dispute between the parties pursuant to Section 6.2 hereof relating
to the provisions of this Agreement applicable to such
termination.
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6.2 Dispute
Concerning Applicable Termination Provisions. If within thirty
(30) days of receiving the Notice of Termination the party receiving such notice
notifies the other party that a dispute exists concerning the provisions of
this
Agreement that apply to such termination, the dispute shall be resolved either
by mutual written agreement of the parties or by expedited commercial
arbitration under the rules of the American Arbitration Association, pursuant
to
the procedures set forth in Section 7.14 herein. The parties shall
pursue the resolution of such dispute with reasonable
diligence. Within five (5) days of such a resolution, any party owing
any payments pursuant to the provisions of this Agreement shall make all such
payments together with interest accrued thereon at the rate provided in Section
1274(b)(2)(B) of the Code.
7. Miscellaneous.
7.1 No
Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated in a manner that results in the payment
of Severance Benefits hereunder, the Executive shall not be required to seek
other employment or to attempt in any way to reduce any amounts payable to
the
Executive by the Company pursuant to this Agreement. Further,
the amount of any payment or benefit provided for under this Agreement shall
not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or
otherwise.
7.2 Successors. In
a transaction constituting a Change of Control or if the Board otherwise
determines to reorganize the Company, in addition to any obligations imposed
by
law upon any successor to the Company, the Company shall be obligated to require
any successor (whether direct or indirect, by purchase, merger, consolidation,
operation of law, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place, or, in the
alternative, shall otherwise adequately provide for performance of the Company’s
obligations hereunder in the judgment of the Board or the Compensation Committee
of the Company and/or its general partner.
7.3 Incompetency. Any
benefit payable to or for the benefit of the Executive, if legally incompetent,
or incapable of giving a receipt therefor, shall be deemed paid when paid to
the
Executive's guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge
the
Company.
7.4 Death. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while
any amount would still be payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive's
estate.
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7.5 Notices. For
the purpose of this Agreement, notices and all other communications provided
for
in the Agreement shall be in writing and shall be deemed to have been duly
given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below, or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address
shall
be effective only upon actual receipt:
To
the
Company:
Mobile
Satellite Ventures LP
00000
Xxxxxxxxx Xxxxxxxxx
Xxxxxx,
Xxxxxxxx 00000-0000
Attention: Secretary
or Legal Counsel
To
the
Executive:
Xxxxx
X.
Xxxxxxx
0000
Xxxxxxx Xxxxx
Xxxxxx,
X
00000
7.6 Modification,
Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer as may be specifically designated
by the Board or its delegee. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions
at
the same or at any prior or subsequent time.
7.7 Entire
Agreement. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by
either party which are not expressly set forth in this
Agreement. Executive and Company agree that this Agreement shall
supersede and entirely replace any prior agreements between the Company and
the
Executive regarding Change in Control.
7.8 Governing
Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Delaware without
regard to principles of conflicts of laws thereof.
7.9 Statutory
Changes. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such
sections.
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7.10 Withholding. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to
which the Executive has agreed.
7.11 Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
7.12 No
Right to Continued Employment. Nothing in this Agreement shall be
deemed to give any Executive the right to be retained in the employ of the
Company, or to interfere with the right of the Company to discharge the
Executive at any time and for any lawful reason, subject in all cases to the
terms of this Agreement.
7.13 No
Assignment of Benefits. Except as otherwise provided herein or by
law, no right or interest of any Executive under the Agreement shall be
assignable or transferable, in whole or in part, either directly or by operation
of law or otherwise, including without limitation by execution, levy,
garnishment, attachment, pledge or in any manner; no attempted assignment or
transfer thereof shall be effective; and no right or interest of any Executive
under this Agreement shall be liable for, or subject to, any obligation or
liability of such Executive.
7.14 Arbitration
Procedures. All disputes relating to this Agreement, including
without limitation any disputes under Section 6.2 hereof, shall be submitted
to
expedited commercial arbitration under the rules of the American Arbitration
Association in Washington, D.C., with an arbiter who is mutually acceptable
to
both parties being selected to preside over such arbitration. The
Federal Rules of Evidence shall apply, and the arbiter shall establish the
applicable rules of discovery. The prevailing party in any
arbitration shall be entitled to recover from the other party all fees and
expenses (including, without limitation, reasonable attorney's fees and
disbursements) incurred in connection with such arbitration. The
arbiter shall determine the scope of arbitrability. The only judicial
relief shall be (a) interim equitable relief and (b) relief in aid of or to
enforce arbitration.
7.15 Headings. The
headings and captions herein are provided for reference and convenience only,
shall not be considered part of this Agreement, and shall not be employed in
the
construction of this Agreement.
8. Definitions.
8.1 "Annual
Base Salary" means the greater of (a) the Executive's highest annual base
salary in effect during the one (1) year period preceding a Change in Control
and (b) the Executive's highest annual base salary in effect during the one
(1)
year period preceding the Executive's Date of Termination.
8.2 “Average
Bonus” means the greater of (a) the Executive’s average annual bonus for the
two fiscal years (or such shorter period (which shall be annualized) during
which the Executive has been employed by the Company) immediately preceding
the
fiscal year in which a Change of Control occurs and (b) the Executive’s average
bonus for the two fiscal years (or such shorter period (which shall be
annualized) during which the Executive has been employed by the Company)
immediately preceding the fiscal year which includes the Executive’s Date of
Termination. For purposes of the foregoing definition, references to
the “Company” and references to employment by the “Company” shall be deemed also
to refer to the Executive’s employment by the Company’s predecessor(s) in the
mobile satellite services business, including Motient Corporation and affiliates
and TMI Communications and Company, Limited Partnership.
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8.3 "Board"
means the Board of Directors of the Company’s general partner, Mobile Satellite
Ventures GP Inc.
8.4 "Cause"
means:
(a) the
willful and continued failure of the Executive to substantially perform the
Executive's duties with the Company (other than any such failure resulting
from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board of the
Company which specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the Executive's
duties;
(b) the
willful engaging by the Executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company;
(c) personal
dishonesty or breach of fiduciary duty to the Company that in either case
results or was intended to result in personal profit to the Executive at the
expense of the Company; or
(d) willful
violation of any law, rule or regulation (other than traffic violations,
misdemeanors or similar offenses) or cease-and-desist order, court order,
judgment or supervisory agreement, which violation is materially and
demonstrably injurious to the Company.
For
purposes of the preceding clauses, no act or failure to act, on the part of
the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon prior approval given
by the Board or upon the instructions or with the approval of the Executive's
superior or based upon the advice of counsel for the Company, shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until
there shall have been delivered to the Executive, as part of the Notice of
Termination, a copy of a resolution duly adopted by the affirmative vote of
not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for the purpose of considering such
termination (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the
Board) finding that, in the good faith opinion of the Board, the Executive
is
guilty of the conduct described in clause (a), (b), (c), or (d) above, and
specifying the particulars thereof in detail.
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8.5 A
"Change in Control" means the occurrence of any of the following events
after the date hereof:
(a) any
person or group of persons (as defined in Section 13(d) and 14(d) of the
Exchange Act) together with its affiliates, excluding employee benefit plans
of
the Partnership, is or becomes, directly or indirectly, the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) (other than persons who are
Members of the Partnership or Affiliates immediately prior to the transaction)
of securities of the Partnership representing 50% or more of the combined voting
power of the Partnership's then outstanding securities, other than in place
as
of the date hereof;
(b)
the
dissolution or liquidation of the Partnership or a merger, consolidation, or
reorganization of the Partnership with one or more other entities in which
the
Partnership is not the surviving entity, or the sale of substantially all of
the
assets of the Partnership to another person or entity;
(c) any
transaction (including without limitation a merger or reorganization in which
the Partnership is the surviving entity) which results in any person or entity
(other than persons who are Members of the Partnership or Affiliates immediately
prior to the transaction) owning more than 50% of the combined voting power
of
all classes of securities/interests of the Partnership; or
(d) individuals
who at the beginning of any two-year period constitute the Board, plus new
directors of the Partnership whose election or nomination for election by the
Partnership's Members is approved by a vote of at least two-thirds of the
directors of the Partnership still in office who were directors of the
Partnership at the beginning of such two-year period, cease for any reason
during such two-year period to constitute at least two-thirds of the members
of
the Board.
Notwithstanding
the immediately foregoing, a Change of Control shall not be deemed to occur
solely as a result of any of the following: (i) an initial public offering
by
the Partnership or any successor thereto, (ii) the consummation of the
conversion of the Partnership or its business into a corporation, or (iii)
a
transaction, or series of related transactions, the result of which is that
either SkyTerra share ownership and rights in SkyTerra or Motient, as the case
may be (excluding, if applicable, any structures designed specifically to
address an individual investor’s tax situation), generally reflects the
pre-transaction beneficial ownership structure of the Partnership (including
pre-transaction indirect ownership by the beneficial shareholders of SkyTerra
and Motient). For purposes of the foregoing definition, references to
the Company's outstanding securities shall also be deemed to include the
outstanding securities of the Company’s general partner, Mobile Satellite
Ventures GP Inc.
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8.6 "Code"
means the Internal Revenue Code of 1986, as amended from time to
time.
8.7 "Company"
means Mobile Satellite Ventures LP. If the Executive is or becomes
employed by a direct or indirect Subsidiary of Mobile Satellite Ventures LP,
the
"Company" shall also be deemed to refer to the Subsidiary thereof by which
the
Executive is employed. In such case, references to payments,
benefits, privileges or other rights to be accorded by the "Company" shall
be
deemed to include such payments, benefits, privileges or other rights to be
provided by the Subsidiary by which the Executive is employed or Mobile
Satellite Ventures LP, as the case may be, to correspond to the corporate entity
obligated to make payments or provide benefits, privileges or other rights
pursuant to employee benefit plans affected by the provisions hereof, and in
the
absence of any such existing plans or provisions, such reference shall be deemed
to be to Mobile Satellite Ventures LP.
8.8 "Coverage
Period" means the period commencing on the date on which a Change in Control
occurs and ending on the second anniversary date thereof.
8.9 "Date
of Termination" has the meaning assigned to such term in Section 6.1
hereof.
8.10 "Disability"
means the complete disability of the Executive under the Company's disability
policy, as in effect from time to time.
8.11 "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to
time.
8.12 "Good
Reason" means: the occurrence during the Coverage Period of any
of the following events:
(a) the
assignment to the Executive of any duties inconsistent in any respect with
the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to a
Change in Control or any other action by the Company which results in a
diminution in any respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(b) a
reduction by the Company in the Executive's annual base salary as in effect
on
the date hereof or as the same may be increased from time to time;
(c) the
Company's requiring the Executive to be based at any office or location that
is
more than fifty (50) miles from the Executive's office or location immediately
prior to a Change in Control;
(d) the
failure by the Company (a) to continue in effect any compensation plan in which
the Executive participates immediately prior to a Change in Control that is
material to the Executive's total compensation, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or (b) to continue the Executive's participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of
the
Executive's participation relative to other participants, than existed
immediately prior to a Change in Control;
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(e) the
failure by the Company to continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive under any of the
Company's pension, life insurance, medical, health and accident, disability
or
other welfare plans in which the Executive was participating immediately prior
to a Change in Control;
(f) the
failure by the Company to pay to the Executive any deferred compensation when
due under any deferred compensation plan or agreement applicable to the
Executive; or
(g) the
failure by the Company to honor all the terms and provisions of this
Agreement.
8.13 "Notice
of Termination" shall have the meaning assigned to such term in Section 6.1
hereof.
8.14 "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act and shall
also include any syndicate or group deemed to be a "person" under Section
13(d)(3) of the Exchange Act.
8.15 "Severance
Benefits" has the meaning assigned to such term in Section 3
hereof.
8.16 "Triggering
Event" means (i) the termination of the Executive's employment by the
Company at any time during the Coverage Period, other than a termination for
Cause or a termination due to the Executive's Disability or death or (ii) a
termination of the Executive's employment by the Executive at any time during
the Coverage Period when Good Reason exists.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officer, thereunto duly authorized, and the Executive has executed this
Agreement, all as of the day and year first above written.
| MOBILE SATELLITE VENTURES LP | |||
|
|
By:
|
/s/ XXXXXXXXX X. GOOD | |
| Name: | Xxxxxxxxx X. Good | ||
| Title: | Vice Chairman, Chief | ||
| Executive Officer and President | |||
| /s/ XXXXX XXXXXXX | |||
| Xxxxx X. Xxxxxxx | |||
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