AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This AMENDED AND RESTATED AGREEMENT is made as of July 19, 1996, and
amended as of May 16, 1997 and July 18, 1997, by and between COMSAT
Corporation ("COMSAT"), a District of Columbia corporation, and Xxxxx X.
Xxxxxxx, a resident of the Commonwealth of Virginia (the "Executive").
WHEREAS, the COMSAT Board of Directors (the "Board") elected the
Executive as President and Chief Executive Officer and a member of the
Board (a "Director") on July 19, 1996;
WHEREAS, 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
President and Chief Executive 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 President and Chief Executive Officer of COMSAT or
any successor entity for a period (the "Employment Period") commencing on
July 19, 1996 (the "Effective Date") and continuing thereafter for
successive three-year terms from each successive day thereafter until July
19, 2003 unless terminated in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, COMSAT may appoint another person
to serve as President during the Employment Period. In that event, the
Executive's title shall become Chief Executive Officer and the President
shall report to the Executive in her capacity as Chief Executive Officer.
The appointment of a President shall not be deemed to constitute "Good
Reason" for purposes of Section 5 of this Agreement. Each 12-month period
ending on the anniversary date of the Effective Date is sometimes referred
to herein as a "year of the Employment Period."
(b) OFFICES, DUTIES AND RESPONSIBILITIES. The Executive shall
report directly and solely to the Board. Throughout the Employment Period,
COMSAT shall cause Executive to
be nominated and recommended for election as a Director at each meeting of
COMSAT shareholders at which directors are to be elected and to be included
as a recommended nominee for election in any proxy provided to shareholders
in connection with such meeting. 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 chief
executive officer, including, without limitation, the lead responsibility
with full autonomy, subject to the customary authority and direction of the
Board, to manage the overall business and operations of COMSAT. All
employees of COMSAT shall report, directly or indirectly, to the Executive,
and the Executive shall have the authority to hire and fire all such
employees within established budget parameters, PROVIDED that the Board
shall approve (i) any salary actions (including hiring decisions) for
employees of COMSAT which result in an annual salary in excess of the
amount established by the Board from time to time, bu in no event less than
$100,000, and (ii) any bonuses to be awarded to employees of COMSAT under
the COMSAT Annual Incentive Plan (the "AIP") or any other bonuses to be
awarded in excess of the amount established by the Board from time to time.
The Executive's management of COMSAT shall be (x) in accordance with the
policies of the Board and COMSAT's Policies and Procedures, both as in
effect from time to time, and (y) within the limits of an annual budget for
COMSAT which shall be approved by the Board a least 30 days before the
beginning of the fiscal year to which such budget relates. If the Executive
proposes the expenditure of any amounts which exceed the applicable annual
budgets for COMSAT, such excess amounts shall not be committed to
Executive's authority unless and until specifically authorized and approved
by the Board.
(c) DEVOTION TO INTERESTS OF COMSAT. During the Employment
Period, the Executive shall devote her best efforts and full business time
and attention to the performance of her duties hereunder. Notwithstanding
the foregoing, the Executive shall be entitled to serve on the boards of
directors of non-profit organizations and, commencing on the second
anniversary of the Effective Date, the boards of directors of for-profit
organizations that do not compete with COMSAT. Prior to joinin any boards
of directors in addition to those on which she is serving as of the
Effective Date, the Executive shall consult with the Board to confirm that
such memberships shall not unreasonably or materially interfere with the
performance of her duties hereunder. In addition, the Executive may speak
and write independently, if such activity does not conflict with the best
interests of COMSAT. The Executive may keep all fees and other monies paid
for such outside board memberships and activities in accordance with COMSAT
corporate policy.
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 Base Salary for the first year of
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the Employment Period shall be $450,000. Effective on July 19, 1997, the
Base Salary shall be increased to $500,000. Thereafter, the Base Salary for
the Executive shall be reviewed for increases each subsequent year during
the Employment Period commencing the third year of the Employment Period.
Any further Base Salary increases shall be 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 AIP in
accordance with the following parameters: (i) the target bonus for each
year during the Employment Period shall be 70% 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") after consultation with the Executive. As part of
the consultation process set forth in the preceding sentence, the Executive
shall prepare before the end of each fiscal year ending during the
Employment Period a business plan for COMSAT with respect to at least the
following three-year period. The Board shall consider and approve such
plans on an annual basis, subject to such modifications as are otherwise
consistent with this Agreement, and each fiscal year the current plan shall
be considered by the Compensation Committee as the basis for establishing
the bonus standards for such year with such reasonable modifications as the
Compensation Committee may reasonably determine and which are consistent
with this Agreement.
(c) FRINGE BENEFITS. The Executive shall continue to be entitled
to the fringe benefits for COMSAT senior executives which she enjoyed
immediately prior to the Effective Date, 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 "Stock Plan"), the COMSAT Employee
Stock Purchase Plan, the COMSAT health and disability insurance programs
and the COMSAT financial planning program, (ii) an annual physical
examination by a physician of her choice in the Washington, D.C.
metropolitan area at COMSAT's expense, and (iii) 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 additional fringe benefits as are made available to COMSAT
senior executives during the Employment Period on a most favored nations
basis. The Executive further shall be entitled to reimbursement of the
Executive's reasonable legal fees and costs incurred in connection with the
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negotiation and execution of this Agreement, subject to a cap of $12,000.
COMSAT reserves the right to modify or terminate from time to time the
fringe benefits provided to the senior management group.
(d) STOCK OPTIONS. On October 17, 1996 (the "Grant Date"), COMSAT
shall grant to the Executive non-statutory stock options (the "Options")
under the Stock Plan to purchase 150,000 shares of COMSAT's common stock,
without par value ("Common Stock"), at a purchase price equal to the
average of the high and low selling price of the Common Stock as reported
under New York Stock Exchange-Composite Transactions on the Grant Date. The
Options shall carry a term of ten years and shall be exercisable by the
Executive in accordance with the following schedule: (i) 25% of the Options
on and after the first anniversary of the Grant Date; (ii) an additional
25% of the Options on and after the second anniversary of the Grant Date;
and (iii) the remaining 50% of the Options on and after the third
anniversary of the Grant Date. The Options shall be represented by a stock
option agreement in the form customarily used by COMSAT for such agreements
which shall contain appropriate terms consistent with the provisions of
this Agreement. During the Employment Period, the Executive may be granted
additional non-statutory stock options as determined by the Compensation
Committee in its sole discretion.
(e) RSAS. On February 20, 1997, COMSAT shall grant to the
Executive 20,000 Restricted Stock Awards ("RSAs") under the Stock Plan.
Such RSAs shall vest in accordance with (i) the performance standards for
the two-year performance period following the date of grant which are
adopted by the Compensation Committee for RSAs granted generally on such
date, and (ii) the following schedule thereafter for the portion of such
RSAs which are earned during the performance period: (x) 20% of such
portion on and after February 20, 2000; (y) an additional 40% of such
portion on and after February 20, 2001; and (z) the remaining 40% of such
portion on and after February 20, 2002.
(f) RSUS. On the Grant Date, COMSAT shall grant to the Executive
5,000 Restricted Stock Units ("RSUs") under the Stock Plan. Such RSUs shall
entitle the Executive to receive "dividend equivalents" (when and in the
same amounts as dividends are paid on the Common Stock) as provided under
the Stock Plan, and shall vest three (3) years from the Grant Date if the
Executive is still employed by COMSAT at such time.
(g) 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.
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3. TRADE SECRETS; RETURN OF DOCUMENTS AND PROPERTY.
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(a) Executive acknowledges that during the course of her
employment she 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 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 processe
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 Executive shall be deemed to be the
exclusive property of COMSAT (as the context may require). 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. 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 Executive
during the term of this Agreement except (i) when 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 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 her 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 her heirs or personal
representatives). The Executive shall be entitled to keep her personal
records (including Rolodex) relating to COMSAT's business and affairs
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except to the extent those contain documents or materials described in
clause (i) of the preceding sentence.
4. DISCOVERIES AND WORKS. All discoveries and works made or
conceived by the Executive during her 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 maintaining 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 (c) promptly execute, whether during her employment by COMSAT or
thereafter, all applications or other endorsements necessary or appropriate
to maintain patents and other rights for COMSAT and to protect their 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 b 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 as follows:
(a) By the Executive at any time upon forty-five (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 earlier of (i) three (3) years from the
effective date of such termination, or (ii) the later of (A) July 19, 2003
or (B) one year from such effective date: (i) her then current Base Salary;
(ii) an Annual Bonus equal to seventy percent (70%) of her then current
Base Salary; and (iii) all other benefits provided pursuant to Sections
2(c), (d), (e), (f) and (g) of this Agreement, which shall be deemed to
vest fully and immediately if subject to vesting. The Executive shall have
no obligation to seek other employment in the event of her termination
pursuant to this paragraph (a), and any such employment shall not mitigate
COMSAT's obligations hereunder.
"Good Reason" shall mean any of the following: (I) any
substantial reduction (except in connection with the termination of her
employment voluntarily by the Executive or by COMSAT for "cause" as defined
below) by COMSAT, without the Executive's express written consent, of her
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responsibilities as President and Chief Executive Officer of COMSAT; (II)
any change in the reporting structure set forth in Section 1(b) above;
(III) any reduction in Executive's title; (IV) any relocation of the
Executive's offices outside the Washington, D.C. metropolitan area by
COMSAT without the Executive's express written consent prior to the third
anniversary of the Effective Date; (V) any material default of the
provisions of Section 2 of this Agreement which continues for twenty (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; (VI) the Executive is not reelected to or is removed from the
Board; or (VII) any officer superior to the Executive is appointed by
COMSAT.
(b) By COMSAT at any time upon ten (10) days written notice to
the Executive, and after an opportunity to discuss such decision with the
Board, for "cause." 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 her 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 her incapacity due to physical
or mental illness), which failure continues for twenty (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 her 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 twenty (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 involving a crime of moral turpitude, whether or not
such felony was committed in connection with COMSAT's business, or (iv) any
material breach by the Executive of Section 8 hereof, which breach, if it
is reasonably capable of being cured, is not cured by the Executive within
twenty (20) business days following the Executive's receipt of written
notice from the Board specifying the breach of Section 8 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 her Base Salary and all other compensation,
benefits and reimbursement through the date of termination of her
employment.
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(c) If, prior to the expiration or termination of the Employment
Period, the Executive shall have been unable to perform substantially her
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 sixty (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 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 paragraph (a),
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.
(d) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, COMSAT shall pay to the Executive's estate
her 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.
(e) 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
August 1, 2003, the first day of the month after the end of such period,
calculated in accordance with the provisions of the plan 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
plan 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," the Executive shall be entitled to receive payments
under the SERP beginning on June 1, 2003, the first day of the month after
the Executive's 55th birthday, calculated in accordance with the provisions
of the plan as if the Executive retired on that date, PROVIDED that the
Board reserves the discretion to waive the applicable early retirement
reduction under the plan in such event.
6. CHANGE OF CONTROL.
(a) In the event that the Board in its sole discretion determines
that repeal of the ownership restrictions on COMSAT capital stock in the
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Communications Satellite Act of 1962 is reasonably imminent, the parties
shall negotiate in good faith to adopt a "change of control" provision
applicable to this Agreement which shall set forth (i) the events that
shall constitute a "change of control" for this purpose, (ii) the
consequences under this Agreement if such a "change of control" occurs and
(iii) such other terms and conditions as the parties shall mutually agree
to.
(b) Any "change of control" provisions adopted by COMSAT
applicable to any COMSAT benefits plans which provide for the accelerated
vesting and/or payment of any benefits for its senior executives shall
apply to the Executive to the same extent as other COMSAT senior executives
on a most favored nations basis with respect to the benefits affected by
such COMSAT provisions.
(c) If a change of control (as defined for purposes of COMSAT's
benefit plans) occurs during the Employment Period, 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 this Agreement
or COMSAT's applicable plans, whichever is more favorable.
7. CERTAIN ADDITIONAL PAYMENTS.
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(a) Notwithstanding anything in this Agreement to the contrary,
in the event that it shall be determined that any payment or benefit to the
Executive, whether pursuant to the terms of this Agreement or otherwise (a
"Payment"), would constitute an "excess parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the Executive shall be paid an additional amount (a "Gross-Up
Payment") such that the net amount retained by the Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment taxes and excise tax,
including any interest and penalties with respect thereto, imposed upon the
Gross-Up Payment shall be equal to the Payment. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive's residence on the date the Payment is made, net of the reduction
in federal income taxes that the Executive may obtain from the deduction of
such state and local income taxes.
(b) All determinations to be made under this Section 7 shall be
made by COMSAT's independent public accountant immediately prior to the
date the Payment is made (the "Accounting Firm"), which firm shall provide
its determinations and any supporting calculations and workpapers both to
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COMSAT and the Executive within 10 days of such date. Any such
determination by the Accounting Firm shall be binding upon COMSAT and the
Executive. Within five days after receipt of the Accounting Fir s
determination, COMSAT shall pay to the Executive the Gross-Up Payment
determined by the Accounting Firm.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of a Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of
taxes paid by the Executive, appropriate adjustments shall be made under
this Section such that the net amount which is payable to the Executive
after taking into account the provisions of Section 4999 of the Code and
any interest and penalties shall reflect the intent of the parties as
expressed in paragraph (a) above, in the manner determined by the
Accounting Firm. The Executive shall notify COMSAT in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by COMSAT of a Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise COMSAT of
the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which it gives such notice to
COMSAT (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If COMSAT notifies the Executive in
writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall: (i) give COMSAT any information reasonably
requested by COMSAT relating to such claim; (ii) take such action in
connection with contesting such claim as COMSAT shall reasonably request in
writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by COMSAT; (iii) cooperate with COMSAT in good faith in order
effectively to contest such claim; and (iv) permit COMSAT to participate in
any proceedings relating to such claim; PROVIDED, HOWEVER, that COMSAT
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any
excise tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this
Section 7, COMSAT shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as COMSAT shall
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determine. COMSAT's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in paragraphs (b) and (c) above
shall be borne solely by COMSAT. COMSAT agrees to indemnify and hold
harmless the Accounting Firm from any and all claims, damages and expenses
resulting from or relating to its determinations pursuant to paragraphs (b)
and (c) above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
8. NON-COMPETITION.
(a) As an inducement for COMSAT to enter into this Agreement, the
Executive agrees that for a period commencing as of the Effective Date and
running through the earlier of (i) the end of the Employment Period if the
Executive remains employed by COMSAT for the entire Employment Period or
(ii) one year following termination of the Executive's employment by COMSAT
for "cause" as defined in Section 5(b) hereof, or by the Executive for any
reason (other than Good Reason, in which case the provisions of this
paragraph (a) shall not apply) (the "Non-Competition Period"), 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.
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 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.
(b) NON-SOLICITATION OF EMPLOYEES. During the Non-Competition
Period, the Executive will not (for her 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
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employee (other than an administrative or clerical employee) of COMSAT to
leave his or her employment.
(c) REASONABLENESS; INTERPRETATION. The Executive acknowledges
and agrees, solely for purposes of determining the enforceability of this
Section 8 (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 th term of the
Employment Period and the severance benefit provided for in Section 5(a);
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 8 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.
(d) 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 (5%) 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.
9. INDEMNIFICATION; LIABILITY INSURANCE. The Executive shall be
entitled to indemnification and coverage under COMSAT's liability insurance
policy for directors and officers to the same extent as other directors and
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.
10. ENFORCEMENT.
-----------
(a) The Executive acknowledges that a breach of the covenants or
provisions contained in Sections 3, 4 and 8 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
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contained in Sections 3, 4 and 8 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 paragraph (a) of this Section 10,
shall be brought in a court of competent jurisdiction in the State of
Maryland.
11. 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.
12. 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.
13. 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
sent for next day delivery to a domestic address by recognize 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 Executive, addressed to:
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
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With a copy (not constituting notice) to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to COMSAT, addressed to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Vice President, Human Resources
and Organization Development
Telecopier No.: (000) 000-0000
With a copy (not constituting notice) to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Telecopier No.: (000) 000-0000
14. 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 o this
Agreement. This Agreement may be signed in two (2) 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 July 18, 1997.
/s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx, Executive
COMSAT Corporation
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx, Chairman
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