EMPLOYMENT AGREEMENT
Exhibit
10.2
This
Employment Agreement (this “Agreement”)
is dated as of this 15th
day of
January, 2008, by and between TerreStar
Networks Inc., a Delaware corporation (hereinafter referred to as the “Company”),
and Xxxx Xxxxxx (the “Executive”).
WHEREAS,
the Company and the Executive entered into that
certain employment agreement dated as of May 1, 2007, as amended (the
“Predecessor
Agreement”), which expires by its terms on
January 15, 2008; and
WHEREAS,
the Company and the Executive wish to continue
the Executive’s employment with the Company following the expiration of the
Predecessor Agreement under the terms and conditions set forth
herein.
CONSEQUENTLY,
in consideration of the mutual
covenants herein contained and of the mutual benefits herein provided, the
Company and the Executive agree as follows:
1.
Representations and
Warranties.
(a)
The Executive represents and warrants to the Company that the Executive is
not
bound by any restrictive covenants and has no prior or other obligations or
commitments of any kind that would in any way prevent, restrict, hinder or
interfere with Executive’s acceptance of continued
employment or the performance of all duties and services hereunder to the
fullest extent of the Executive’s ability and
knowledge. The Executive agrees to indemnify and hold harmless the
Company for any liability the Company may incur as the result of the existence
of any such covenants, obligations or commitments.
(b)
The Company acknowledges and agrees that nothing herein shall be deemed to
terminate, modify, alter or eliminate any compensation, benefits or related
rights Executive already earned or in which he became fully vested (without
any
contingency that would result in the loss of such rights, compensation or
benefits) in connection with his employment with the Company prior to the
execution of this Agreement, including but not limited to any vesting in or
contributions made to any pension funds, 401(k) plans, vested stock options
or
restricted stock or other equity interest in the Company.
2.
Term of
Employment. The Company will continue to employ the Executive
and the Executive accepts continued employment by the Company on the terms
and
conditions herein contained for the period (the “Employment
Period”) provided
in Section 5 of
this Agreement.
3.
Duties and Functions.
(a)
(i) The
Executive shall be employed as Chief Financial Officer of the Company and shall
oversee, direct and manage the financial operations of the Company. The
Executive shall report directly to the Chief Executive Officer of the Company
(the “CEO”).
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(ii)
The Executive agrees to undertake the duties and responsibilities inherent
in
the position of Chief Financial Officer, which may encompass different or
additional duties as may, from time to time, be assigned by the CEO, and the
duties and responsibilities undertaken by the Executive may be altered or
modified from time to time by the CEO. In addition, Executive acknowledges
that,
in addition to serving in his capacity as Chief Financial Officer of the
Company, he shall serve as Executive Vice President and Chief Financial Officer
of TerreStar Corporation (“TS Corp”) and shall undertake the duties and
responsibilities inherent in such position as may be assigned by the CEO of
TS
Corp from time to time. The Executive, however, acknowledges he shall
not be entitled to any additional compensation solely for performing such duties
and responsibilities inherent in these positions beyond the compensation
provided pursuant to this Agreement. The Executive agrees to abide by
the rules, regulations, instructions, personnel practices and policies of the
Company and any change thereof which may be adopted at any time by the
Company.
(b)
During the Employment Period, the Executive will devote his full time and
efforts to the business of the Company and, except as expressly provided herein,
will not engage in consulting work or any trade or business for his own account
or for or on behalf of any other person, firm or corporation that competes,
conflicts or interferes with the performance of his duties hereunder in any
way.
The Executive may engage in non-competitive business or charitable activities
for reasonable periods of time each month so long as such activities do not
interfere with the Executive’s responsibilities
under this
Employment Agreement. The Company acknowledges that the Executive
currently serves on the board of directors of the companies and organizations
listed on Schedule
A attached hereto (the “Other
Company Board Obligations”) and that the Other Company Board Obligations
do not violate the terms of this Agreement. The Executive
acknowledges that he does not reasonably expect that such Other Company Board
Obligations will violate the terms of this Agreement during the Executive’s
employment with the Company. The Company acknowledges that, in
addition to the Other Company Board Obligations, from time to time, the
Executive may be asked to serve on the board of directors of other companies
or
organizations. The Company and the Executive agree that, subject to
the prior written approval of the Company, which shall not be unreasonably
withheld, the Company shall permit the Executive to serve on the boards of
up to
two public companies and not more than four (4) boards in total at any one
time
(including the Other Company Board Obligations); provided, however,
that, with
respect to the Other Company Board Obligations and any additional board
positions maintained by the Executive, such services (i) do not materially
interfere with or materially affect the Executive’s service to the Company, (ii)
do not otherwise create a situation where a conflict of interest or ethical
concerns are likely to be created and (iii) are not for companies or
organizations that compete directly with the Company’s business as then
conducted.
4.
Compensation.
(a)
Base
Salary:
(i)
As compensation for his services hereunder, during the Executive’s employment as
Chief Financial Officer, the Company agrees to pay the Executive abase
salary at the rate of Four Hundred Fourteen Thousand ($414,000) per annum (the
“Base
Salary”), payable in accordance with the Company’s normal payroll
schedule, or
on such other periodic basis as may be mutually agreed upon by the Company
and
the Executive. The Company may withhold from any
amounts payable
under this Agreement such federal, state or local taxes as shall be required
to
be withheld pursuant to any applicable law or regulation.
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(ii)
At the end of calendar year 2008 and at the
end of each subsequent calendar year thereafter, the Executive’s salary shall be
reviewed in accordance with corporate policy in effect at the time and
contributions made by the Executive to the Company during such calendar year
subject to the provisions of Section 5 of this
Agreement.
(b)
Bonus: The
Executive shall be eligible to receive an annual cash bonus award (the “Annual Bonus”), which shall
be based on a target of Sixty percent (60%) of the Executive’s then current
Base Salary (the “Target
Annual Bonus”). The Annual Bonus is not guaranteed and is
contingent upon the Executive and the Company achieving deliverables or goals
agreed to by the Executive and the CEO or compensation committee of the
Board (the “Compensation
Committee”). Any Annual Bonus shall be
determined by the Board or the Compensation
Committee.
There will be an opportunity for the Executive to earn more than the Target
Annual Bonus based upon Executive’s success in meeting identified performance
targets during the relevant time period. The Target Annual Bonus shall be paid, if at
all, by no
later than the fifteenth (15th) day of the third (3rd) month after the close
of
the fiscal year with respect to which the Target Bonus Award is
payable. For
purposes of this Agreement, the Executive’s Base Salary and Annual Bonus shall
be referred to collectively as the “Total Cash
Compensation.”
(c)
Participation in
Equity Incentive Program: The Executive will be eligible to
participate in the 2006 TerreStar
Corporation Equity Incentive Stock Plan, as the same may be amended from time
to
time, and such other equity or
long-term incentive programs
that
the Company has established or may, from time to time, establish for its
employees or service providers (each, a “Plan”
and, collectively, the “Plans”). The
terms and conditions governing eligibility for, entitlement to, and
participation under any Plan shall be governed by such Plan and any other
documents or agreements to be executed by the Executive or the Company in
accordance therewith.
(d)
Other
Expenses: In addition to the compensation described in this
Section 5,
the
Company agrees to pay and reimburse the Executive during his employment for
all
reasonable, ordinary and necessary, properly vouchered, client-related business
or entertainment expenses incurred in the performance of his services hereunder
in accordance with Company policy in effect from time to time; provided, however,
that the
amount available to the Executive for such travel, entertainment and other
expenses may require advance approval by the Chief Financial Officer or such
other executive officer of the Company pursuant to the Company’s policy then in
effect. The Executive shall submit vouchers and receipts for all
expenses for which reimbursement is sought.
(e)
Vacation: During
each calendar year, the Executive shall be entitled to the standard amount
of
vacation provided by the Company for senior level executives.
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(f)
Fringe
Benefits: In addition to his compensation provided by the
foregoing, the Executive shall be entitled to the benefits available generally
to Company employees pursuant to Company programs, including, by way of
illustration, personal leave, paid holidays, sick leave, profit-sharing,
retirement, disability, dental, vision, group sickness, accident or health
insurance programs of the Company which may now or, if not terminated, shall
hereafter be in effect, or in any other or additional such programs which may be
established by the Company, as and to the extent any such programs are or may
from time to time be in effect, as determined by the Company and the terms
hereof, subject to the applicable terms and
conditions of the benefit plans in effect at that time. Nothing
herein shall affect the Company’s ability to modify, alter, terminate or
otherwise change any benefit plan it has in effect at any given time, to the
extent permitted by law.
5.
Employment Period; Termination.
(a)
Commencement. The
Executive’s employment under this Agreement shall commence on January 1, 2008 (the
“Commencement
Date”), and shall continue thereafter until this Agreement expires on
December 31, 2008 or the Executive’s
employment is terminated by either party pursuant to the terms of this
Agreement. The parties acknowledge that, for purposes of seniority,
benefits entitlement, vacation awards, and vesting in any pension/retirement
programs, the Executive’s initial employment date with the Company shall be the
relevant date for calculating his eligibility for and entitlement to any such
programs, rather than the Commencement Date.
(b)
Employment
Period. The Employment Period shall commence on the
Commencement Date and shall continue until the earlier of: (i) the close of
business on the first anniversary of the Commencement Date (the “Expiration
Date”) (with the period from the Commencement Date through the Expiration
Date being referred to herein the “Initial
Term”); and (ii) the termination of the Executive’s employment pursuant
to the terms of this Section
5. The Initial Term may be renewed or extended for any
additional period or periods after the Initial Term (each, a “Renewal
Term”) if the Executive and the Company mutually consent to such renewal
or extension at any time on or prior to the Expiration Date or the last day of the expiring
Renewal
Term, as applicable. The Initial
Term
plus any Renewal Terms shall be included in the “Employment
Period.”
(c)
Termination By
Executive Without Good Reason. Notwithstanding the provisions
of Sections
5(a) and 5(b) of
this
Agreement, the Executive may terminate the employment relationship at any time
for any reason by giving the Company written notice at least forty-five (45)
days prior to the effective date of termination. The Company, at its
election, may (i) require the Executive to continue to perform his duties
hereunder for the full forty-five (45) day notice period, or (ii) terminate
the
Executive’s employment at any time during such 45-day notice period (but any
such termination by the Company shall not be deemed to be a termination of
the
Executive’s employment without Cause). Unless otherwise provided by
this Section
5, all
compensation and benefits paid by the Company to the Executive shall cease
upon
his last day of employment. The Executive acknowledges and agrees
that the non-compete restrictions set forth in the Company’s Confidentiality,
Non-competition, and Proprietary Rights Agreement or such other similar
agreement by which the Executive is bound containing similar obligations (the
“Confidentiality
Agreement”) will remain in full force and effect for the twelve (12)
month period subsequent to his termination pursuant to this Section
5(c). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other similar agreement executed by the parties shall continue,
notwithstanding the termination of the employment relationship between the
parties. Executive shall be entitled to receive any accrued but
unpaid salary and bonuses declared and
communicated to the Executive but not yet
paid as of
the effective date of his termination (other than
such amounts as are subject to a deferred compensation arrangement)
(collectively, net after deferrals, “Accrued
Current Compensation”), and to be
reimbursed in accordance with applicable Company policy for any reimbursable
expenses that have not been reimbursed prior to such
termination.
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(d)
Termination By Company
For Cause. If the Executive's employment is terminated for
“Cause,” the Executive will not be entitled to and the Company shall not be
obligated to pay any compensation or benefits of any type following the
effective date of termination, but the Executive shall be entitled to receive
any Accrued Current Compensation, and to be
reimbursed in accordance with Company policy for any reimbursable expenses
remaining due and owing that have not been reimbursed prior to his
termination. As used in this Agreement, the term “Cause” shall mean a
termination for (i) the conviction of the Executive of, or the entry of a
pleading of guilty or nolocontendere
by the Executive
to, any crime involving moral turpitude or any felony or fraud (which includes
any acts of embezzlement or misappropriation of funds) or any material violation
of the Xxxxxxxx-Xxxxx Act of 2002; (ii) serious dereliction of a fiduciary
obligation or duty of loyalty owed to the Company; (iii) a refusal to
substantially perform the Executive's duties hereunder or to comply with the
policies and practices of the Company, except in the event that the Executive
becomes permanently disabled as set forth in Section 5(f) of this
Agreement; or (iv) Executive’s material breach of this
Agreement. Anything herein to the contrary notwithstanding, the
Company shall give the Executive written notice prior to terminating the
Executive's employment based upon a material breach of this Agreement (clause
(iv) above), setting forth the exact nature of any alleged breach and the
conduct required to cure such breach. The Executive shall have
forty-five (45) days from the giving of such notice within which to cure the
breach. The Executive acknowledges and agrees that the non-compete
restrictions set forth in the Confidentiality Agreement will remain in full
force and effect for the twelve (12) month period subsequent to his termination
pursuant to this Section
5(d). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
(e)
Termination By
Company
Without Cause. The Company may terminate the Executive without
Cause by delivering written notice to the Executive at least forty-five (45)
days prior to the effective date of such termination.
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(i)
If the Executive's employment is terminated by the Company without Cause, then,
subject to the terms and conditions set forth in this Section 5(e), the
Executive shall be entitled to receive an
aggregate amount equal to one (1) times the
Executive’s then current annual Total Cash Compensation as severance pay. This
severance pay shall be paid in substantially equal
monthly installments (or such other frequency consistent with the Company’s
payroll practice then in effect for active employees at the executive level)
over a period of twelve (12) months, commencing no later than thirty (30) days
after the Executive’s employment is terminated by the Company without Cause,
except as otherwise provided in this Agreement. In addition,
to
the extent that the Executive qualifies for, complies with the requirements
of
and otherwise remains eligible for continuation of his health care insurance
benefits under COBRA, and payment of COBRA premiums is permitted under
applicable laws and regulations, the Company shall pay the COBRA premiums until
the earlier of (A) such time as the Executive obtains alternative employment
and
becomes eligible for health insurance through his new employer and (B) eighteen
(18) months following the date of his termination. For purposes of
determining severance pursuant to this Section 5(e)(i), the
Total Cash Compensation shall be calculated based on the Executive’s current
Base Salary as of the effective date of his termination, and the full Target
Annual Bonus for the relevant year. Further, the Executive shall be entitled to
receive any
Accrued Current Compensation, and to be reimbursed in accordance with Company
policy for any reimbursable expenses remaining due and owing that have not
been
reimbursed prior to his termination.
(ii)
In addition to the Executive’s severance calculated in accordance with Section 5(e)(i),
if
the Executive's employment is terminated by the
Company without Cause,
the
vesting period shall be
accelerated for all of Executive’s unvested
options, shares of restricted stock, or other rights to purchase equity
securities of the Company (collectively, the “Award
Shares”) awarded to Executive pursuant to any Plan, such that any then-unvested
Award Shares awarded
to Executive shall become fully vested effective immediately prior to the
effective date of Executive’s termination of employment.
(iii)
The Executive acknowledges and agrees that the non-compete restrictions set
forth in the Confidentiality Agreement will remain in full force and effect
for
the twelve (12) month period subsequent to his termination pursuant to this
Section
5(e). Furthermore, the obligations imposed on Executive with
respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
(iv)
The severance pay, COBRA premium payment and accelerated vesting of Award Shares
to be provided under this Section 5(e) are
referred to herein collectively as the “Termination
Compensation.” The
Executive
shall not be entitled to any Termination Compensation unless (i) the Executive
complies with all surviving provisions of any Confidentiality
Agreement by which the Executive is bound, and (ii) the Executive executes
and
delivers to the Company after a notice of termination and
on or before the last date on which the severance
pay is scheduled to commence, a mutual release
in form and
substance acceptable to the Company by which the Executive releases the Company
from any obligations and liabilities of any type whatsoever under this
Agreement, except for the Company's obligations with respect to the Termination
Compensation, which release shall not affect the Executive’s right to
indemnification, if any, for actions taken within the scope of his
employment. Notwithstanding anything herein to the contrary, no
Termination Compensation shall be paid or otherwise provided until all
applicable revocation periods have fully expired, and the mutual release becomes
fully and finally enforceable. The parties hereto acknowledge that
the Termination Compensation to be provided under this Section 5(e)(iv) is
to be provided in part in consideration for the above-specified
release.
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(v)
Except as otherwise provided under Section
11, the Termination Compensation described
in this
Section 5(e) is
intended to supersede any other severance payment provided by any Company
policy, plan or practice. Therefore, the Executive shall be
disqualified from receiving any severance payment under any other Company
severance policy, plan or practice.
(f)
Termination for
Executive’s Permanent Disability. To the extent permissible
under applicable law, in the event the Executive becomes permanently disabled
during employment with the Company, the Company may terminate Executive’s
employment under this Agreement by giving forty-five (45) days prior written
notice to the Executive of its intent to terminate, and unless the Executive
resumes performance of the duties set forth in Section 3 within
forty-five (45) days of the date of the notice, Executive’s employment under
this Agreement shall terminate at the end of such forty-five (45) day
period. If the Executive’s employment is terminated pursuant to this
Section 5(f),
he shall be entitled to receive any Accrued
Current Compensation, an aggregate amount equal
to one-half
of his then-current annual Total Cash Compensation as severance pay, and reimbursement in
accordance with Company
policy for any reimbursable expenses remaining
due and owing that have not been reimbursed prior to his
termination. For purposes of determining severance pursuant to this
Section
5(f), the Total Cash Compensation shall be
calculated based on the Executive’s current Base Salary as of the effective date
of his termination, and the full Target Annual Bonus for the relevant
year. This severance pay shall
be paid in substantially equal monthly
installments (or such other frequency consistent with the Company’s payroll
practice then in effect for active employees at the executive level) over a
period of twelve (12) months, commencing no later than thirty (30) days after
the Executive’s employment is terminated because he becomes permanently
disabled, except as otherwise provided in this Agreement, and shall be
offset by amounts paid to the Executive under any disability insurance policy
maintained or provided by the Company on the Executive. If
the Executive’s employment is terminated pursuant to
this Section
5(f), the vesting period shall be
accelerated for all of Executive’s Award Shares awarded to Executive pursuant to
any Plan, such that any then-unvested Award Shares awarded to Executive shall
become fully vested effective immediately prior to the effective date of
Executive’s termination of employment. For the purposes
of this Agreement, “permanently
disabled” means the
inability, due to physical or mental ill health, to perform the essential
functions of the Executive's job,
with
a reasonable accommodation,
if
applicable, for ninety (90) days
during any one year of employment irrespective of whether such days are
consecutive. The Executive acknowledges and agrees that the
non-compete restrictions set forth in any Confidentiality Agreement will remain
in full force and effect for the twelve (12) month period subsequent to his
termination pursuant to this Section
5(f). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the
parties.
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(g)
Termination Due
To
Executive’s Death. Executive’s employment under this Agreement
will terminate immediately upon the Executive's death, and the Company shall
not
have any further liability or obligation to the Executive, his executors, heirs,
assigns or any other person claiming under or through his estate, except that
the Executive’s estate shall receive any Accrued
Current Compensation,
and the Company
shall provide severance pay to the Executive’s estate in
an amount equal to one-half of his then-current annual Total Cash
Compensation. For
purposes of determining severance pursuant to this
Section
5(g), the Total Cash Compensation shall be
calculated based on the Executive’s current Base Salary as of the effective date
of his death, and the full Target Annual Bonus for the relevant year. Any severance
pay shall
be paid
in a lump sum within ninety (90) days after the
Executive’s death. If the
Executive’s
employment is
terminated upon his death, the vesting period shall
be accelerated for all of Executive’s Award Shares awarded to Executive pursuant
to any Plan, such that any then-unvested Award Shares awarded to Executive
shall
become fully vested effective as of his date of death and shall be exercisable
thereafter in accordance with the terms of the applicable award
agreement. At the Company’s discretion, the Company shall have the
option to provide for payment of the cash severance pay called for under this
Section
5(g) by means of a life insurance policy
owned by the Company on the Executive’s life, and the Executive agrees to take
all steps reasonably necessary to fulfill any underwriting requirements in
order
for the Company to obtain such life insurance policy. Any death
benefit payment from such policy to the Executive’s estate or designated
beneficiary shall offset, and not be paid in duplication of, the cash severance
amount described in this Section 5(g).
(h)
Termination by
Executive for “Good Reason”.
(i)
Subject to the
provisions of this Section
5(h),
the
Executive shall have the right to terminate his employment under this
Agreement for Good Reason.
(ii) For
purposes of this Agreement, “Good Reason” means
the occurrence of any of the following without
the Executive’s consent:
(1)
the
Company’s willful material breach of any provision of this
Agreement;
(2)
any
material adverse change in the Executive’s compensation, position (including
his position as Chief Financial Officer of
the Company and/or as Executive Vice President and Chief Financial Officer
of TS
Corp), authority,
duties or responsibilities, orany
other
action by the Company (other than a change because the
Executive becomes
permanently disabled or as an
accommodation under the Americans With Disabilities Act) which results in:
a
diminution in any material respect in Executive’s position, authority, duties,
responsibilities or base compensation,
which diminution continues in time over at least thirty (30) days, such that
it
constitutes an effective demotion (provided, however,
that, for
the avoidance of doubt, no diminution of title, position, duties or
responsibilities shall be deemed to occur solely because the Company becomes
a
division, unit or subsidiary of another corporation or entity or because there
has been a change in the reporting hierarchy incident thereto involving the
Executive), excluding for this purpose material adverse changes made due to
the
Executive’s termination for Cause or termination by the Executive without Good
Reason;
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(3)
relocation of the Company’s headquarters
and/or the Executive’s regular work address to a location which requires the
Executive to travel more than fifty (50) miles from the Executive’s residence
(provided that it shall not qualify as “Good Reason” if the Company moves its
headquarters within the Washington, D.C. Metropolitan Area -- i.e., anywhere
within thirty (30) miles of Capitol Hill -- even if the new headquarters
location is more than fifty (50) miles from Executive’s residence); or
(4)
any other action or inaction that constitutes a
material breach by the Company of this Agreement;
provided, however,
that it
shall not constitute Good Reason unless the Executive shall have provided the
Company with written notice of the Company’s alleged actions constituting Good
Reason (which notice shall specify in reasonable detail the particulars of
such
actions constituting Good Reason) within thirty
(30) days after the initial existence of any such alleged actions and the
Company has not cured any such alleged actions constituting Good Reason or
substantially commenced its effort to cure such breach within thirty
(30) days of the Company’s receipt of such written
notice;
provided further, that a termination by the Executive
for Good Reason shall not be deemed to have occurred unless the termination
occurs within two (2) years after the initial existence of any of the conditions
specified in this Section 5(h)(ii). Notwithstanding
the
foregoing, in order to avoid any confusion, any consolidation, merger or other corporate
restructuring of or between the Company and TerreStar Corporation (“TS Corp”) (including
but not
limited to any transaction or series of transactions that results in TS Corp becoming
the sole
shareholder of the Company, or that results in TS
Corp and the
Company being merged into one another), or any change in the reporting hierarchy
incident thereto involving the Executive, shall not trigger “Good Reason” as
long as Executive’s duties, responsibilities and compensation are not materially
altered in an adverse manner with respect to the Company, regardless of whether
the Company remains an independent corporate entity, or becomes a part of,
or a
unit, division or subsidiary of, TS
Corp or any
related company.
(iii) A
termination for Good Reason shall be treated for all severance purposes as
a
Termination without Cause, and the Executive shall be entitled to receive all of the payments
identified in Section
5(e), subject to the terms and conditions
of Section
5(e), and Executive’s
Award Shares
in the Company or TS
Corp, as applicable, shall be accelerated
consistent with Section 5(e)(ii);
provided,
however,
that in
connection with a termination for Good Reason, the Executive shall be entitled
to exercise stock options in accordance with the terms
of
the Plan and any applicable agreements governing such stock
options. The Executive acknowledges and agrees that the non-compete
restrictions set forth in any Confidentiality Agreement will remain in full
force and effect for the twelve (12) month period subsequent to his termination
pursuant to this Section
5(h). Furthermore, the obligations imposed on the Executive
with respect to confidentiality, non-disclosure and assignment of rights to
inventions or developments in this Agreement, any Confidentiality Agreement
or
any other agreement executed by the parties shall continue, notwithstanding
the
termination of the employment relationship between the parties.
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(i)
Expiration of the
Agreement. If this Agreement expires at the end of the Initial
Term as a result of the Company not renewing or extending the Employment Period
for a Renewal Term where the Executive was willing
and able to execute a new contract providing terms and conditions substantially
similar to those in the expiring contract and to continue performing such
services, then upon the Executive’s termination of employment at or after
such expiration
of the
Agreement, subject to the terms and conditions set forth in Section 5(e), the
Executive shall be entitled to receive severance
pay equivalent to nine (9) months of Total Cash Compensation. The amount payable pursuant to the
immediately preceding sentence shall be paid in substantially equal monthly
installments (or such other frequency consistent with the Company’s payroll
practice then in effect for active employees at the executive level) over a
period of twelve (12) months, commencing no later than thirty (30) days after
the Executive’s employment is terminated, except as otherwise provided in this
Agreement. For purposes of determining severance pay pursuant to this
Section
5(i), the Total Cash Compensation shall be
calculated based on the Executive’s current Base Salary as of the effective date
of his termination, and the full Target Annual Bonus for the relevant
year. In addition, if the Executive’s employment terminates at or
after the expiration of the Agreement under the conditions described in this
Section
5(i), to the extent that the Executive
qualifies for, complies with the requirements of and otherwise remains eligible
for continuation of his health care insurance benefits under COBRA, and payment
of COBRA premiums is permitted under applicable laws and regulations, the
Company shall pay the COBRA premiums until the earlier of (A) such time as
the
Executive obtains alternative employment and becomes eligible for health
insurance through his new employer and (B) eighteen (18) months following the
date of his termination. Further, upon the Executive’s termination of
employment at or after the expiration of this Agreement, the Executive shall
be
entitled to receive any Accrued Current Compensation, and to be reimbursed
in
accordance with Company policy for any reimbursable expenses remaining due
and
owing that have not been reimbursed prior to his termination. The
Executive acknowledges and agrees that the non-compete restrictions set forth
in
any Confidentiality Agreement will remain in full force and effect for the
twelve (12) month period subsequent to his termination of employment on or
after
the expiration of this Agreement. Furthermore, the obligations
imposed on the Executive with respect to confidentiality, non-disclosure and
assignment of rights to inventions or developments in this Agreement, any
Confidentiality Agreement or any other agreement executed by the parties shall
continue, notwithstanding the termination of the employment relationship between
the parties.
6.
Company Property. All
correspondence,
records, documents, software, promotional materials, and other Company property,
including all copies, which come into the Executive's possession by, through
or
in the course of his employment, regardless of the source and
whether created by the Executive, are the sole and exclusive property of the
Company, and immediately upon the termination of the Executive's employment,
or
at any time the Company shall request, the Executive shall return to the Company
all such property of the Company, without retaining any copies, summaries or
excerpts of any kind or in any format whatsoever. The Executive
further agrees that should he discover any Company property or Confidential
Information (as hereinafter defined) in his possession after the return of
such
property has been requested, the Executive agrees to return it promptly to
the
Company without retaining copies, summaries or excerpts of any kind or in any
format whatsoever.
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7.
Non-Competition;
Non-Solicitation. Executive acknowledges and agrees that, as a
condition of his employment under this Agreement, he shall be required to
execute a copy of a Confidentiality Agreement to the extent that he has not
already done so, and he shall be bound by the terms and conditions of that
Confidentiality Agreement, including those provisions addressing non-competition
and non-solicitation of customers and employees, which shall continue in full
force and effect throughout the course of his employment and shall survive
the
termination of this Agreement and the Executive’s employment with the Company
for any reason. The Executive acknowledges that he has received a
copy of the Company’s Confidentiality Agreement and he fully understands its
terms. The Confidentiality Agreement, as well as all of the terms and
obligations imposed on the Executive therein, is incorporated into this
Agreement in their entirety by reference. It shall not be a defense
to any action seeking to enforce the terms of the Confidentiality Agreement
that
the Executive has failed to execute a copy of the Confidentiality
Agreement. The existence of a claim, charge, or cause of action by
the Executive against the Company under this Agreement or otherwise shall not
constitute a defense to the enforcement by the Company of the foregoing
restrictive covenants contained in the Confidentiality Agreement, but such
claim, charge, or cause of action shall be litigated separately.
8.
Protection of Confidential
Information. The Executive
agrees
that all information, whether or not in writing, relating to the business,
technical or financial affairs of the Company and that is generally understood
in the industry as being confidential and/or proprietary information, is the
exclusive property of the Company. The Executive agrees to hold in a
fiduciary capacity for the sole benefit of the Company all secret, confidential
or proprietary information, knowledge, data, or trade secret (“Confidential
Information”) relating to the
Company or any of its affiliates or their respective clients, which Confidential
Information shall have been obtained during his employment with the
Company. The Executive acknowledges and agrees that, as a condition
of his employment under this Agreement, he is and shall remain bound by the
terms and conditions of the Confidentiality Agreement, including those
provisions addressing the confidentiality and non-disclosure of Company
Confidential Information, and those provisions, and he obligations they impose
on the Executive shall continue in full force and effect throughout the course
of his employment and shall survive the termination of this Agreement and the
Executive’s employment with the Company for any reason. The Executive
agrees that he will not at any time, either during the Term of this Agreement
or
after its termination, disclose to anyone any Confidential Information, or
utilize such Confidential Information for his own benefit, or for the benefit
of
third parties without written approval by an officer of the
Company. The Executive further agrees that all documents, memoranda,
notes, records, data, schematics, sketches, computer programs, presentations,
prototypes, or written, photographic,
magnetic or other documents or tangible objects developed, created or compiled
by him or made available to him at any time during his employment concerning
the
business of the Company and/or its clients, including any copies of such
materials, shall be the property of the Company and shall be delivered to the
Company on the termination of his employment, or at any other time upon request
of the Company, and he shall not retain any such materials or copies of such
materials subsequent to the termination of his employment for any
reason.
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9.
Intellectual
Property. The
Executive
acknowledges and agrees that he is and shall at all times remain bound by the
terms and conditions of the Confidentiality Agreement during the course of
his
employment with the Company and thereafter, including those provisions
addressing his obligations to the Company with respect to intellectual property
belonging to the Company. These obligations shall continue in full
force and effect throughout the course of his employment and shall survive
the
termination of this Agreement and the Executive’s employment with the Company
for any reason.
10.
Injunctive
Relief. The Executive acknowledges that he understands that,
in the event of a breach or threatened breach of this Agreement by the Executive
(including the terms of the Confidentiality Agreement expressly incorporated
herein by reference), the Company may suffer irreparable harm and will therefore
be entitled to injunctive relief, without prior notice to the Executive and
without the posting of a bond or other guarantee, to enforce this
Agreement. This provision is not a waiver of any other rights which
the Company may have under this Agreement, including the right to recover
attorneys’ fees and costs to cover the expenses it incurs in seeking to enforce
this Agreement, as well as to any other
remedies available to it, including money damages.
11.
Change of Control
Benefits.
(a) In the
event that, at any time during the Executive’s employment under this Agreement,
the Company and/or TS Corp experiences a
Change of Control (as hereinafter defined) and Executive experiences a Change
of
Control Position Modification (as hereinafter defined) in
connection with such Change of Control then,
provided that Executive shall have executed a release in form and substance
acceptable to the Company, and subject to the other terms and conditions
contained in this Agreement, the Executive shall be entitled to receive a lump
sum payment in an amount equal to two (2) times
the Executive’s then current annual Total Cash Compensation as
severance pay, in recognition of his
contributions leading up to the Change of Control. Such
lump sum payment shall be reduced by the gross
amount of severance, if any, received by the Executive pursuant to Section 5
of this Agreement prior to the date of payment under
this Section
11. For purposes of determining
severance pursuant to this Section 11(a),
the Total Cash Compensation shall be calculated based
on the Executive’s current Base Salary as of the effective date of his
termination (without giving effect to any reduction in Base Salary which gave
rise to the Good Reason termination, if applicable), and the full Target Annual
Bonus for the relevant year. This severance pay shall be paid no
later than thirty (30) days after the effective date of the Change of Control or,
if later, the Change of Control Position Modification,
except as otherwise specified under Section 11(c).
In
addition, vesting in
all of Executive’s
unvested Award Shares shall be accelerated such
that Executive’s then unvested
Award Shares
shall become vested immediately prior to the effective date of Executive’s
termination, subject to the terms and conditions of the applicable Plan and
other agreements. In addition, to the
extent that the Executive qualifies for, complies with the requirements of
and
otherwise remains eligible for continuation of his health care insurance
benefits under COBRA, and payment of COBRA premiums is permitted under
applicable laws and regulations, the Company shall pay the COBRA premiums until
the earlier of (A) such time as the Executive obtains alternative employment
and
becomes eligible for health insurance through his new employer and (B) eighteen
(18) months following the date of his termination. The severance
provisions under this Section 11
shall supersede, and not be in duplication of, the
severance provisions contained in Section 5(e), except
as otherwise specified under Section 11(c).
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(b)
For purposes of this Agreement, the following terms shall have the following
meanings:
(i)
“Affiliate”
shall mean, with respect to any Person, any other Person that controls, is
controlled by or is under common control with the first Person.
(ii)
“Change
of Control” shall mean the earliest to
occur of any
of the following events,
construed in accordance with Section 409A of the
Internal Revenue Code of 1986, as amended, and the Treasury guidance promulgated
thereunder (the “Code”):
(A)
any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified
in Section 13(d) and 14(d) of the Exchange Act), other than (1)
Parent or any
of its Subsidiaries, (2) any employee benefit plan of Parent or any of its
Subsidiaries, (3) any Affiliate of
Parent or any of its Subsidiaries, (4) a
company owned, directly or indirectly, by stockholders of Parent in
substantially the same proportions as their ownership of Parent or (5) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or more than one person acting as a
group, acquires ownership of securities
of
Parent or
of the Company that, together with securities held by
such person or group, constitutes more than
50% of the
shares of voting stock of Parent or of the Company
then outstanding (for
the avoidance of
doubt, the consummation of any merger, reorganization, business combination or
consolidation of Parent or one of its Subsidiaries (including the Company)
with
or into any other entity, other than a merger, reorganization, business
combination or consolidation which would result in the holders of the voting
securities of Parent or the Company outstanding
immediately
prior thereto holding securities which represent immediately after such merger,
reorganization, business combination or consolidation more than 50% of the
combined voting power of the voting securities of Parent or the Company or the surviving
company or the
parent of such surviving company, may constitute
a Change of Control under this Section
11(b)(ii)(A));
(B)
the
consummation
of
a sale or disposition by Parent or the
Company of
all or substantially all of Parent’s or the
Company’s assets that, immediately after
such sale or disposition, results in Parent or the Company no longer owning
more
than 80% of the total gross fair market value of the assets of Parent or
the
Company as applicable, but excluding any
sale or disposition if the holders of the
voting securities of Parent or
the Company outstanding immediately prior
thereto hold securities immediately thereafter which represent more than
50% of
the combined voting power of the voting securities of the acquiror, or parent
of
the acquiror, of such assets;
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(C)
individuals who, as of the beginning of any twelve
(12) month period,
constitute
the Board of
Directors of the Parent or the Company
(each, an“Incumbent Board”) cease for any
reason to constitute at least a majority of such Board within
such twelve (12) month period; provided,
however, that any individual becoming a director whose election to the Board of
Directors of the Parent or the Company was approved
by a vote
of at least a majority of the directors then comprising the applicable
Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for
this purpose, any such individual whose initial assumption of office occurs
as a
result of an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on behalf of
a
person other than the Board of Directors of the
Parent or the Company; provided further, that a change to the membership
of the current Board of the Parent or
the Company
or any portion thereof as a result of or in connection with any consolidation,
merger or other corporate restructuring of or between the Company and TS Corp (or the consolidation of the boards
of
directors of TS Corp and the Company as a
result of such consolidation, merger or other corporate restructuring) shall
not
constitute a Change of Control for purposes of this
Agreement.
(iii)
“Change
of Control Position Modification” shall mean that, coincident with or within three (3) months after
a Change of Control, Executive’s employment with the Company is terminated by the Company or its successor without
Cause (as
defined in Section
5(d) above) or Executive terminates his employment with
the Company or its successor with Good Reason (as
defined in Section 5(h)
above). For the avoidance
of
doubt, no diminution of title, position, duties or responsibilities shall be
deemed to occur solely because the Company has experienced a Change of Control
or has been merged into or becomes a division, unit or subsidiary of another
corporation or entity or because there has been a change in the reporting
hierarchy incident thereto involving the Executive. A
Change of Control Position Modification shall also be
deemed to have occurred coincident with the Change of Control if the Executive’s
employment with the Company had been terminated by the Company without Cause
within the three- (3-) month period prior to the date on which the Change of
Control occurred, and if it is reasonably demonstrated by the Executive to
the
Board that such termination of employment either was at the request of a third
party who had taken steps reasonably calculated to effect the Change of Control
or otherwise arose in connection with or in anticipation of the Change of
Control. Any determination by the Board in this regard shall be made
in good faith taking into account all facts and circumstances surrounding the
termination of employment. In any event, a Change
of
Control Position Modification shall not be deemed to have occurred unless (a) the
Executive shall have
provided the Company with written notice of the Company’s alleged actions
constituting a Change of Control Position Modification (which notice shall
specify in reasonable detail the particulars of such actions) within
thirty (30) days after the initial existence of
any such alleged actions, and the Company has not cured any such alleged
actions or substantially commenced its effort to cure such breach within thirty (30)
days of the Company’s receipt of such written notice,
and (b) the termination occurs within six (6) months
after the initial existence of any one of the conditions specified in this
Section
11(b)(3) upon which the termination is
based.
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(iv)
“control”,
“controlled
by” and “under
common control with”, as used with respect to any Person, means the
possession, directly or indirectly, through one or more intermediaries or
otherwise, of the power to direct or cause the direction of the management
or
policies of such Person, whether through the ownership of voting securities,
contractually or in any other manner whatsoever.
(v)
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.
(vi)
“Parent”
means TS Corp (including
its successor
through any internal reorganization) or, in case TS Corp is not the ultimate parent of the
Company, the entity that is the ultimate
parent corporation of the Company.
(vii)
“Person”
means any individual, firm, corporation, limited liability company, partnership,
sole proprietorship, trust or other legally cognizable entity.
(viii) “Subsidiary”
with respect to any specified Person, means:
(A)
any corporation, association or other business entity of which more than 50%
of
the total voting power of shares of capital stock entitled (without regard
to
the occurrence of any contingency and after giving effect to any voting
agreement or stockholders’ agreement that effectively transfers voting power) to
vote in the election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
(B)
any partnership (1) the sole general partner or the managing general partner
of
which is such Person or a Subsidiary (as defined in clause (A))
of such
Person or (2) the only general partners of which are that Person or one or
more
Subsidiaries (as defined in clause (A))
of that Person (or any combination
thereof).
(c)
In the event that Executive suffers a
Change of Control Position Modification that results in his termination of
employment prior to the date that the Change of Control occurs, then, provided
that Executive shall have executed a release in form and substance
acceptable to the Company, and subject to the
other terms and conditions contained in this Agreement, the Executive shall
receive such benefits to which he is entitled under Section 5
of
this Agreement absent the occurrence a Change of
Control. Notwithstanding the preceding sentence, within thirty (30)
days after the effective date of the Change of Control, Executive shall cease
receiving further severance pay payments under Section 5and
shall receive the balance of the benefits (without
interest) to which he is entitled under Section 11(a). For
the avoidance of doubt, the benefits
provided under this Section 11shall
not be made in duplication of any benefits
provided under Section 5of
this Agreement.
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12. Excise
Tax on Parachute Payments
(a)
The Executive shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any payment received
hereunder, including, without limitation, any excise tax imposed by Section
4999
of the Code; provided, however, that
any payment or
benefit received or to be received by the Executive in connection with a Change
of Control or the termination of the Executive’s employment (whether payable
pursuant to the terms of this Agreement (“Contract
Payments”)
or any other plan, arrangements or agreement with the Company or any affiliate
(collectively with the Contract Payments, the “Total
Payments”))
shall be reduced to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code but only if,
by
reason of such reduction, the net after-tax benefit received by the Executive
shall exceed the net after-tax benefit that would be received by the Executive
if no such reduction was made.
(b)
For purposes of this Section 12, “net
after-tax benefit” shall mean (i) the total of all payments and the value of all
benefits which the Executive receives or is then entitled to receive from the
Company that would constitute “excess parachute payments” within the meaning of
Section 280G of the Code, less (ii) the amount of all federal, state and local
income taxes payable with respect to the foregoing calculated at the maximum
marginal income tax rate for each year in which the foregoing shall be paid
to
the Executive (based on the rate in effect for such year as set forth in the
Code as in effect at the time of the first payment of the foregoing), less
(iii)
the amount of excise taxes imposed with respect to the payments and benefits
described in (i) above by Section 4999 of the Code.
(c)
The foregoing determination shall be made by a nationally recognized accounting
firm (the “Accounting
Firm”) selected by the Company and
reasonably acceptable to the Executive (which may be, but will not be required
to be, the Company’s independent auditors). The Accounting Firm shall
submit its determination and detailed supporting calculations to both the
Executive and the Company within fifteen (15) days after receipt of a notice
from either the Company or the Executive that the Executive may receive payments
which may be “parachute payments.” If
the Accounting Firm determines
that a reduction is required by this Section 12, the
Executive, in the Executive’s discretion, may determine which of the Total
Payments shall be reduced to the extent necessary so that no portion of the
Total Payments shall be subject to the excise tax imposed by Section 4999 of
the
Code, and the Company shall pay such reduced amount to the Executive; provided
that, if the Executive does not make such determination within ten (10) business
days after the receipt of the calculations made by the Accounting Firm, the
Company shall elect which and how much of the Total Payments shall be eliminated
or reduced consistent with the requirements of this Section 12 and shall
notify the Executive promptly of such election.
(d)
The Executive and the Company shall each provide the Accounting Firm access
to
and copies of any books, records, and documents in the possession of the
Executive or the Company, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by this Section
12. The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated
by
this Section 12
shall be borne by the Company.
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13.
Publicity. Except
as otherwise required by law, including but not limited to the disclosure
obligations imposed on public companies under the federal and/or state
securities laws, neither party shall issue, without consent of the other party,
any press release or make any public announcement with respect to this Agreement
or the employment relationship between them. Following the date of
this Agreement and regardless of any dispute that may arise in the future,
the
Executive and the Company jointly and mutually agree that they will not
disparage, criticize or make statements that are negative, detrimental or
injurious to the other to any individual, company or client, including within
the Company.
14.
Non-disparagement. The
Executive shall not, while executive is employed by the Company or at any time
thereafter, directly, or through any other personal entity, make any public
or
private statements that are disparaging of the Company, its business or its
employees, officers, directors, or stockholders. The Company agrees
to refrain from any public statements after the Executive’s employment with the
Company ceases that are disparaging to the Executive. The Company’s
obligations under this section extend only to then current officers and members
of the board, and only for so long as those individuals are officers or
directors of the Company.
15.
Binding
Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their heirs, personal representatives,
successors and assigns. In the event the Company is acquired, is a
non surviving party in a merger, or transfers substantially all of its assets,
this Agreement shall not be terminated and the transferee or surviving company
shall be bound by the provisions of this Agreement. The parties
understand that the obligations of the Executive are personal and may not be
assigned by him.
16.
Entire
Agreement. This Agreement contains the entire understanding of
the Executive and the Company with respect to employment of the Executive and
supersedes the
Predecessor Agreement and any and all
prior
understandings, written or oral, except for the Confidentiality Agreement,
the
Plans and agreements that have been executed or are to be executed in connection
with any Award Shares or other equity interests awarded to the Executive during
the course of his employment; provided, however,
that any provisions of this Agreement with respect to the vesting of, lapse
of
restrictions upon, or exercise of Award Shares that are more favorable to the
Executive than the provisions set forth in the applicable award agreements
shall
be controlling and shall be treated by the parties as an amendment of such
award
agreements. This Agreement
may not be amended, waived, discharged or terminated orally, but only
by
an instrument in writing, specifically identified as an amendment to this
Agreement, and signed by all parties. By entering into this
Agreement, the Executive certifies and acknowledges that he has carefully read
all of the provisions of this Agreement and that he voluntarily and knowingly
enters into said Agreement.
17.
Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed severable from the
remainder of this Agreement, and the remaining provisions contained in this
Agreement shall be construed to preserve to the maximum permissible extent
the
intent and purposes of this Agreement.
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18.
Tax
Consequences. Company will have no obligation to any Person
entitled to the benefits of this Agreement with respect to any tax obligation
any such Person incurs as a result of or attributable to this Agreement,
including all supplemental agreements and employee benefits plans incorporated
by reference therein, or arising from any payments made or to be made under
this
Agreement or thereunder.
19.
Governing Law and Submission
to
Jurisdiction. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Virginia, without giving effect to the principles of conflicts of law
thereof.
20.
Notices. Any
notice provided for in this Agreement shall be provided in
writing. Notices shall be effective from the date of service, if
served personally on the party to whom notice is to be given, or on the second
day after mailing, if mailed by first class mail, postage
prepaid. Notices shall be properly addressed to the parties at their
respective addresses or to such other address as either party may later specify
by notice to the other.
21.
ARBITRATION. The
parties agree that, except as discussed in this Agreement, any controversy,
claim or dispute arising out of or relating to this Agreement or
the breach thereof,
or arising out of or relating to the employment of the Executive, or the
termination thereof, including any statutory or common law claims under federal,
state, or local law, including all laws prohibiting discrimination in the
workplace, shall be resolved by arbitration before a single arbitrator in
Fairfax County, Virginia in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association. The parties agree that
any award rendered by the arbitrator shall be final and binding, and that
judgment upon the award may be entered in any court having jurisdiction
thereof. The parties further acknowledge and agree that, due to the
nature of the confidential information, trade secrets, and intellectual property
belonging to the Company and its affiliates
to which the Executive has or will be given
access, and the likelihood of significant harm that the Company and
its affiliates would suffer in the event that
such information was disclosed to third parties, nothing in this paragraph
shall
preclude the Company from going to court to seek injunctive relief to prevent
the Executive from violating the obligations established in Sections 7 through
9
of this Agreement.
This
agreement to arbitrate
does not include claims that, by law, may not be subject to mandatory
arbitration.
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22.
Indemnification.
(a)
Corporate
Acts. In his/her capacity as a director, manager, officer, or
employee of the Company or serving or having served any other entity as a
director, manager, officer, or the Executive at the Company’s request, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent allowed by law, the Company’s charter and by-laws, from and against any
and all losses, claims, damages, liabilities, expenses (including legal fees
and
expenses), judgments, fines, settlements and other amounts arising from any
and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Executive may be involved, or
threatened to be involved, as a party or otherwise by reason of the Executive’s
status, which relate to or arise out of the Company, their assets, business
or
affairs, if in each of the foregoing cases, (i) the Executive acted in good
faith and in a manner the Executive believed to be in, or not opposed to, the
best interests of the Company, and, with respect to any criminal proceeding,
had
no reasonable cause to believe the Executive’s conduct was unlawful, and (ii)
the Executive’s conduct did not constitute gross negligence or willful or wanton
misconduct (and the Company shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Executive provides
an undertaking to repay advances if it is ultimately determined that Executive
is not entitled to indemnification). The Company shall advance all expenses
incurred by the Executive in connection with the investigation, defense,
settlement or appeal of any civil or criminal action or proceeding referenced
in
this Section
22, including but not necessarily limited to legal counsel, expert
witnesses or other litigation-related expenses. The Executive shall
be entitled to coverage under the Company’s directors and officers liability
insurance policy in effect at any time in the future to no lesser extent than
any other officers or directors of the Company. After the Executive
is no longer employed by the Company, the Company shall keep in effect the
provisions of this Section 22, which
provision shall not be amended except as required by applicable law or except
to
make changes permitted by law that would enlarge the right of indemnification
of
the Executive. Notwithstanding anything herein to the contrary, the
provisions of this Section 22 shall
survive the termination of this Agreement and the termination of the Employment
Period for any reason.
(b)
Personal
Guarantees. The Company shall indemnify and hold harmless the
Executive for any liability incurred by him/her by reason of his/her execution
of any personal guarantee for the Company’s benefit (including but not limited
to personal guarantees in connection with office or equipment leases, commercial
loans or promissory notes).
(c)
The indemnification provision of this Section 22 shall be
in addition to any other liability the Company otherwise may have to the
Executive to indemnify him for his conduct in connection with his efforts on
the
Company’s behalf.
23. Section
409A Safe
Harbor.
(a)
This Agreement is intended to comply
with,
or otherwise be exempt from, Section 409A of the Code.
(b)
This Company shall undertake to administer,
interpret, and construe this Agreement in a manner that does not result
in the
imposition on the Executive of any additional tax, penalty, or interest
under
Section 409A of the Code.
(c)
If the Company determines in good
faith
that any provision of this Agreement would cause the Executive to incur
an
additional tax, penalty, or interest under Section 409A of the Code,
theCompany and the Executive agree that
they will execute any and all amendments to this Agreement permitted under applicable law as
they mutually agree in good faith may be necessary to
ensure compliance with the distribution provisions of Section 409A of the
Code
or as otherwise needed to ensure that this Agreement complies with Section
409A.
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(d)
The preceding provisions, however,
shall
not be construed as a guarantee by the Company of any particular tax effect
to
the Executive under this Agreement. The Company shall not be liable
to the Executive for any payment made under this Agreement, at the direction
or
with the consent of the Executive, that is determined to result in an additional
tax, penalty, or interest under Section 409A of the Code, nor for reporting
in
good faith any payment made under this Agreement as an amount includible
in
gross income under Section 409A of the Code.
(e)
For purposes of Section 409A of the
Code,
the right to a series of installment payments under this Agreement shall
be
treated as a right to a series of separate payments.
(f)
With respect to any reimbursement
of
expenses of, or any provision of in-kind benefits to, the Executive, as
specified under this Agreement, such reimbursement of expenses or provision
of
in-kind benefits shall be subject to the following conditions: (i) the
expenses
eligible for reimbursement or the amount of in-kind benefits provided in
one
taxable year shall not affect the expenses eligible for reimbursement or
the
amount of in-kind benefits provided in any other taxable year, except for
any
medical reimbursement arrangement providing for the reimbursement of expenses
referred to in Section 105(b) of the Code; (ii) the reimbursement of an
eligible
expense shall be made no later than the end of the year after the year
in which
such expense was incurred; and (iii) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another
benefit.
(g)
“Termination of employment,” or words of
similar import, as used in this Agreement, means for purposes of Section
409A of
the Code the date as of which the Company and the Executive reasonably
anticipate that no further services will be performed by the Executive
and shall
be construed as the date that the Executive first incurs a “separation from
service” for purposes of Section 409A of the Code.
(h)
If a payment obligation under this
Agreement arises on account of the Executive’s separation from service while the
Executive is a “specified employee” (as defined under Section 409A of the Code
and determined in good faith by the Compensation Committee), any payment
of
“deferred compensation” (as defined under Treasury Regulation Section
1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation
Sections 1.409A-1(b)(3) through (b)(12)) shall accrue without interest
and shall
be made within 15 days after the end of the six-month period beginning
on the
date of such separation from service or, if earlier, within 15 days
afterthe
appointment of the personal representative or
executor of the Executive’s estate following his death.
24. Miscellaneous.
(a)
No delay or omission by the Company in exercising any right under this
Agreement
shall operate as a waiver of that or any other right. A waiver or consent
given
by the Company on any one occasion shall be effective only in that instance
and
shall not be construed as a bar or waiver of any right on any other
occasion.
(b)
The captions of the sections of this Agreement are for convenience of
reference
only and in no way define, limit or affect the scope or substance of
any section
of this Agreement.
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(c)
The language in all parts of this Agreement will be construed, in all cases,
according to its fair meaning, and not for or against either party hereto.
The
parties acknowledge that each party and its counsel have reviewed and revised
this Agreement and that the normal rule of construction to the effect that
any
ambiguities are to be resolved against the drafting party will not be employed
in the interpretation of this Agreement.
(d)
The obligations of Company under this Agreement, including its obligation to
pay
the compensation provided for in this Agreement, are contingent upon the
Executive’s performance of the Executive’s obligations under this
Agreement.
[Signature
Page
Follows]
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IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly
executed and delivered, by its authorized officers or individually, on the
date
first set forth above in the opening paragraph of this Agreement.
| TerreStar Networks Inc. | ||||
| By: | /s/ | Xxxxxx X. Xxxxxxx | ||
| Xxxxxx X. Xxxxxxx | ||||
| Its: | President and CEO | |||
| Xxxx Xxxxxx | ||||
| By: | /s/ | Xxxx Xxxxxx | ||
| Xxxx Xxxxxx | ||||
| Executive | ||||
