July l9, 1996
Xx. Xxxxx X. Xxxxxxxx
000 Xxxxx Xxxx
XxXxxx, XX 00000
Dear Xxxxx:
This letter sets forth the substance of our understandings and
agreements with respect to your employment relationship with COMSAT
Corporation ("COMSAT") as a result of your agreement to resign as President
and Chief Executive Officer of COMSAT and to continue your employment with
COMSAT by providing certain consulting services to COMSAT for a specified
period of time. Subject to the conditions listed below, you will remain in
the employ of COMSAT as described below through January 31, 1998 (the
"Termination Date"). Based on the foregoing and the terms and conditions
stated below, COMSAT and you agree as follows:
1. (a) Effective as of July 19, 1996, you will resign as President and
Chief Executive Officer of COMSAT, as a director of COMSAT and Ascent
Entertainment Group, Inc. ("Ascent"), and as a director or officer of all
direct or indirect subsidiaries and affiliates of COMSAT and Ascent.
(b) Subject to Paragraph 3 below, your employment with COMSAT will
terminate on the Termination Date.
(c) During the period from July 19, 1996 through the Termination Date
(the "Continuation Period"), you will provide consulting services to COMSAT
with respect to matters which may arise in connection with your former
duties as President and Chief Executive Officer of COMSAT ("Consulting
Services"), from time to time as requested by the Vice President, Human
Resources and Organization Development of COMSAT (the "VP of HR"), subject
at all times to your availability to provide such services. In
consideration for your providing the Consulting Services, during the
Continuation Period COMSAT will continue to pay you your salary at your
current rate of compensation and, except as otherwise provided in this
Agreement, will provide you with all benefits that are provided to
full-time COMSAT employees, including, but not limited to, the Retirement
Plan, the Insurance and Retirement Plan for Executives (the "SERP"), the
Directors
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Two
and Executives Deferred Compensation Plan (the "Deferred Compensation
Plan"), the Savings and Profit-Sharing Plan, the Employee Stock Purchase
Plan, the Split Dollar Plan for Executives and the Flexible Benefits
Program, provided that your participation in the Deferred Compensation
Plan, the Savings and Profit-Sharing Plan and the Employee Stock Purchase
Plan during the Continuation Period will continue to be subject to the
one-year suspension which you elected on October 17, 1995, as a condition
to receiving a hardship distribution from the Deferred Compensation Plan.
In addition, during the Continuation Period COMSAT will pay for up to
$7,000 of financial counseling for you per year plus reasonable receipted
expenses related thereto. Thereafter, COMSAT will continue to pay for
financial counseling for you to the same extent until you become employed
with another employer or become substantially engaged in self-employment
("Other Employment"). However, during the Continuation Period, you will not
be eligible for salary increases of any nature, cash or stock-based bonuses
or awards of any nature, short- and long-term disability, or educational
assistance, any or all of which may be available to other COMSAT employees.
Except as otherwise provided in this Agreement, for all purposes of COMSAT
service credit, your last date of employment will be the Termination Date.
(d) During the Continuation Period, you will be eligible for
outplacement assistance, commensurate with your former position as
President and Chief Executive Officer, at COMSAT's expense as determined by
the VP of HR.
(e) During the Continuation Period and thereafter, the stock options
and Restricted Stock Awards ("RSAs") previously granted to you under the
1990 and 1995 Key Employee Stock Plans and the Restricted Stock Units ("AIP
RSUs") and Phantom Stock Units ("PSUs") previously granted to you under the
Annual Incentive Plan will continue to be governed by the terms and
conditions of the specific agreements covering such grants. Accordingly,
you will continue to vest in such grants during the Continuation Period,
and the vesting of performance-based RSAs will continue to be subject to
applicable performance measures during the Continuation Period. All stock
options will terminate three months after the Termination Date (or such
later date as provided in the option agreements), during which three-month
period you may exercise such options only to the extent they were
exercisable at the Termination Date. All RSAs, AIP RSUs and PSUs which have
not vested by the Termination Date will be forfeited on such date.
(f) The COMSAT Board of Directors (the "Board") has approved your
early retirement under the SERP on April 1, 1999
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Three
(the "Retirement Date"), the first day of the month after your 55th
birthday. Beginning on the Retirement Date, you will receive SERP
retirement benefits as reduced by (i) the early retirement factor in
Section 5.2(b) of the Plan, and (ii) the termination of employment factor
in Section 7.1 of the Plan. Based on estimated calculations which are
subject to final adjustment, the annual SERP retirement benefit you will
receive beginning on the Retirement Date is $234,984 plus an early
retirement supplement of $15,696 payable until you reach age 65. The lump
sum payments you elected to receive on January 1, 2000 and January 1, 2001
pursuant to Sections 9.3 and 9.4 of the Plan, respectively, will be paid to
you in accordance with your elections unless you revoke these elections
prior to the specified payment dates. As a condition to receiving SERP
retirement benefits beginning on the Retirement Date, you agree to elect
early retirement under the Retirement Plan on the same date. If you die
during the period from the Termination Date to the Retirement Date (the
"Transition Period"), your spouse will receive the annual death benefit
provided in Section 10.1(a) of the Plan, and your beneficiary designated
under the Plan will receive the lump sum death benefit provided in Section
10.1(b) of the Plan. If you become disabled during the Continuation Period
or the Transition Period, COMSAT will recommend to the Board that the Board
approve the commencement of your SERP retirement benefits on February 1,
1998, or the first day of the month after you become disabled, whichever is
later. The Board will have the sole discretion to approve the commencement
of your SERP retirement benefits prior to the Retirement Date if you become
disabled. For this purpose, you will be deemed "disabled" if you incur a
total disability as defined in COMSAT's Long-Term Disability Plan. In
addition, at the end of the Continuation Period COMSAT will request the
Board to review whether the non-competition periods in Section 11.2 of the
Plan and Paragraph 3(b) of this Agreement should run concurrently. The
Board will make this determination in its sole discretion after a good
faith review of the relevant circumstances at such time.
(g) Your rights under the Split Dollar Plan for Executives after the
Termination Date will be governed by the terms and conditions of the Split
Dollar Agreement between COMSAT and you dated February 12, 1992 (the
"SDA"). Accordingly, you will have the option for 60 days after the
Termination Date to obtain the release of the assignment encumbering the
life insurance policies covered by the SDA by reimbursing COMSAT for the
total amount of the premium payments made by COMSAT under the SDA, less any
indebtedness secured by the life insurance policies which was incurred by
COMSAT and which remains outstanding as of the Termination Date, including
any interest due on such indebtedness.
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Four
(h) After the Termination Date, COMSAT will pay up to $8,500 per year
for medical and dental insurance coverage for you and your family until you
become engaged in Other Employment.
(i) You will be entitled to keep the mobile telephone in your personal
automobile provided by COMSAT, plus the computer and other office equipment
provided by COMSAT for use in your home which is listed on the attached
Schedule A.
(j) The COMSAT Foundation will donate the deferred gift amount payable
under the Educational Grant Program to your designated beneficiary, the
University of Rochester, following the death of you or your spouse,
whichever occurs last.
(k) During the Continuation Period, you will be free at all times to
seek, take on and perform other business and employment opportunities and
responsibilities outside COMSAT ("Other Business"), whether or not for
compensation, without limitation and without any effect on the obligations
of COMSAT to you under this Agreement, subject only to the express terms
and conditions of this Agreement. In the event of a conflict between a
COMSAT request for Consulting Services and your Other Business, you shall
resolve such conflict in your reasonable discretion after consulting with
the VP or HR.
2. In consideration of COMSAT's agreement to enter into this Agreement
and in return for your receipt of the benefits thereof, you agree to the
general release and covenant not to sue contained in this paragraph 2 and
the other provisions of this Agreement. It is understood, however, that
this release shall not waive any claim for benefits or any rights to which
you are or may be entitled under this Agreement, your employment by COMSAT
from the date of this Agreement through the Termination Date in accordance
with this Agreement, the COMSAT Retirement Plan, or any other payments or
other benefits to which you are entitled, or will become entitled after
your termination from COMSAT, pursuant to the specific terms of any other
COMSAT employee benefit plans in which you are a participant.
(a) You, on behalf of yourself and your heirs, executors,
administrators, successors and assigns, agree to release, discharge and
covenant not to sue COMSAT, its affiliated companies and its and their
predecessors, successors, assigns, shareholders, directors, officers,
employees, administrators, fiduciaries and agents, in their individual and
representative capacities (hereinafter referred to collectively as
"COMSAT") with respect to all claims, charges, causes of action,
liabilities, suits, debts and demands, of any kind or nature,
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Five
which you had, have or may have against COMSAT up to the effective date of
this Agreement (collectively, "Waived Claims"), including, without
limitation, (i) any claims relating to your employment with COMSAT; (ii)
any claims relating to the termination of your employment pursuant to the
terms of this Agreement, including but not limited to your agreement to
terminate employment effective on the Termination Date, under the
arrangement as set forth herein; (iii) any claims relating to the terms,
conditions and benefits associated with such employment or your termination
from employment; (iv) any claims under any local, state or federal
antidiscrimination law, including, without limitation, Title VII of the
Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act, the Americans With Disabilities Act, the Employee Retirement Income
Security Act of 1974, as amended, and the Fair Labor Standards Act; (v) any
claims at common law, including, without limitation, claims for breach of
an express or implied contract, or wrongful discharge; or (vi) any other
claims, statutory or otherwise.
(b) You agree not to encourage, initiate or participate in or assist
in any way in any individual or class action lawsuit or administrative,
arbitral or other proceeding against COMSAT with respect to any Waived
Claims in any forum on behalf of yourself or others, unless compelled to do
so by legal process or court order. You further agree to waive any remedy
or recovery in any action which may be brought on your behalf by any
governmental agency or other person with respect to any Waived Claims.
3. Except to the extent provided herein, you release and waive any and
all rights or claims you may have to reemployment with COMSAT or any of its
affiliated companies after the Termination Date, and agree that you will
not apply for employment with COMSAT or any of its affiliated companies
after such date. You further understand and agree that your employment
status with COMSAT during the Continuation Period and the salary and
benefits provided are conditioned upon the following and that if you breach
any of the following during such period, your employment, salary and
benefits will terminate on the date upon which COMSAT provides written
notice to you of such termination:
(a) During the Continuation Period you will not disparage, slander,
defame, impugn or make any statement to third parties orally or in writing,
or take, or omit to take, any other actions that will damage or harm COMSAT
or any of its subsidiaries or affiliates, or their respective officers and
directors, or the reputations of any of them, provided that this clause (a)
will not apply to any testimony you give under oath in connection with any
lawsuit or other proceeding.
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Six
(b) Without the prior written approval of the VP of HR, you may not
accept or enter into any employment or direct or indirect consulting
arrangement during the Continuation Period (i) with any competitor of
COMSAT or its subsidiaries and affiliates, or (ii) which violates or is
otherwise prohibited by the Conflicts of Interest or Confidentiality
policies of COMSAT, including the Standard Invention and Information
Agreement you signed regarding nondisclosure of corporate proprietary
information.
(c) You will cooperate as requested by the Vice President and General
Counsel of COMSAT in assisting COMSAT to defend the PanAmSat and Kinzie
lawsuits or any other existing or prospective lawsuits or regulatory
proceedings that arise out of or involve matters or events which occurred
on or before July 19, 1996, to the extent that any statements you are
required to make in such capacity are truthful and to the extent that your
cooperation is not adverse to your own interests.
4. This Agreement is strictly confidential. You agree, that, until
such time as this Agreement becomes public as a result of its required
filing by COMSAT with the Securities and Exchange Commission (the "SEC"),
or except as agreed upon in writing by COMSAT, you will not communicate,
publish or disclose, in any manner, the terms, nature or scope of this
Agreement to any person except: (a) as may be required by law; (b) to your
attorneys, accountants, financial counselors, or tax consultants; (c) to
prospective employers; or (d) to members of your immediate family. In the
event that information described in this Agreement is revealed to your
attorneys, accountants, financial counselors, tax consultants, prospective
employers or immediate family as permitted herein before this Agreement
becomes public as a result of its required filing by COMSAT with the SEC,
such person(s) shall be advised of this non-disclosure covenant and be
instructed that they are bound not to publish, disclose, or otherwise
disseminate such information in the same way you are bound and that you are
responsible for any unauthorized disclosure by such recipient.
5. COMSAT agrees that it will not communicate, publish or disclose, in
any manner, the terms, nature or scope of this Agreement to any person
except: (a) as may be required by law; (b) to its attorneys, accountants,
financial counselors, or tax consultants; or as may be required in the
ordinary course of its business. In the event that information described in
this Agreement is disclosed pursuant to this Paragraph 5 before this
Agreement becomes public as a result of its required filing by COMSAT with
the SEC, the person(s) to whom such disclosure is made shall be advised of
this non-disclosure covenant and be instructed that they are bound not to
publish, disclose, or
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Seven
otherwise disseminate such information to the same extent that COMSAT is
bound.
6. Because of the nature of the terms of this Agreement, and the
general release and covenant not to sue contained herein, by agreeing to
this Agreement you acknowledge that you have been advised, in writing, by
COMSAT to consult with an attorney prior to executing this Agreement, that
you have had an opportunity to do so and that you understand the nature,
terms and effects of this Agreement, and the general release and covenant
not to sue. You further acknowledge that COMSAT has not made any
representations to you, or your agents or successors and assigns,
concerning this Agreement, or the general release and covenant not to sue,
other than those contained herein. In addition, you acknowledge that you
have been informed that you have the right to consider and review this
Agreement for a period of at least twenty-one (21) days, and that you have
the right to revoke this Agreement for a period of seven (7) days following
its execution, and that this Agreement shall not become effective or
enforceable until such seven (7) day period has expired.
7. Finally, you agree and acknowledge that this Agreement, and the
general release and covenant not to sue contained herein, shall not operate
or be construed as an admission by COMSAT of any violation of any local,
state or federal statute or regulation or of any duty at common law or
otherwise owed to you, your successors or assigns.
8. You will be entitled to indemnification to the extent provided in
COMSAT's Articles of Incorporation and By-Laws and to coverage under
COMSAT's liability insurance policy for directors and officers to the
extent provided therein.
9. This Agreement shall inure to the benefit of, and is binding upon,
COMSAT and you and our respective heirs, executors, administrators,
successors, representatives and assigns.
10. This Agreement may not be modified or amended except in writing signed
by the parties.
11. A waiver of a breach of any provision of this Agreement will not
constitute a waiver of any subsequent breach of the same provision or a
waiver of a breach of any other provision of this Agreement.
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland without giving effect to conflicts of
laws principles thereof.
Xxxxx X. Xxxxxxxx
July 19, 1996
Page Eight
If you agree to the foregoing, please sign both originals of this
Agreement in the space provided below and return one original to the
undersigned.
COMSAT Corporation
/s/ Xxxxx Xxxx
-----------------------------------
By: Xxxxx Xxxx, Vice President
Human Resources and
Organization Development
Agreed and Acknowledged:
/s/ X. X. Xxxxxxxx
----------------------------
Xxxxx X. Xxxxxxxx
7-19-96
----------------------------
Date
Enclosure: Duplicate Original
