EXHIBIT 10.42
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between Motient
Corporation, a corporation organized under the laws of the State of Delaware
("Company"), and XXXXXXXXXXX X. XXXXXX ("Employee") is hereby entered into
effective as of November 21, 2005 (the "Effective Date").
RECITALS
WHEREAS, the Company desires to employ Employee as Executive Vice
President and Chief Operating Officer of the Company, and Employee desires to
accept employment with the Company as Executive Vice President and Chief
Operating Officer, all on the terms and conditions set forth in this Agreement;
and
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein and the performance of each, it is
hereby agreed as follows:
AGREEMENTS
1. Employment and Duties.
(a) The Company hereby employs Employee as Executive Vice
President and Chief Operating Officer of the Company to be headquartered in
Lincolnshire, Illinois. As such, Employee shall have responsibilities, duties
and authority reasonably accorded to, expected of, and consistent with
Employee's position as the Executive Vice President and Chief Operating Officer.
Employee hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c), agrees to devote substantially all of
his time, attention and efforts to promote and further the business and
interests of the Company and its subsidiary entities (including joint ventures)
or any other entity within the current or future ownership structure.
(b) The Company and Employee agree that this Agreement may be
assigned to any majority-owned subsidiary of the Company or any other
majority-owned entity (in either case, and including any successor in interest
through merger or otherwise, the "Successor Employer") within the current or
future ownership structure. In the event of any such assignment, the Company and
the Successor Employer shall each be directly and jointly and severally
responsible for the timely and full satisfaction of all obligations of the
Company as set forth in this Agreement. References to the Company shall include
and also mean each Successor Employer.
(c) Subject to the specific terms of this Agreement, Employee
shall faithfully adhere to, execute and fulfill all lawful policies established
by the Company.
(d) Employee shall not, during the term of his employment
hereunder, engage in any other business activity pursued for gain, profit or
other pecuniary advantage. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made.
1
2. Compensation. For all services rendered by Employee, the Company
shall pay to Employee the following compensation:
(a) Base Salary. The base salary payable to Employee during
the term shall be not less than $240,000 per year, payable in accordance with
the Company's normal payroll procedures, but not less frequently than monthly.
Such base salary will be increased by four (4%) percent annually during the term
of this Agreement and may be increased by a larger amount from time to time, at
the discretion of the Company's Board of Directors in light of the Employee's
position, responsibilities and performance, and, as increased from time to time,
may not be reduced.
(b) Benefits. Employee shall be entitled to retirement and
health and welfare benefits as provided by the Company from time to time to, and
on a basis which is as least as favorable as that provided to, other similarly
situated employees of the Company.
(c) Performance Bonus. Employee shall be entitled to
Performance Bonuses as follows:
(i) For 2005, Employee shall be paid a Performance Bonus of
$191,250, which amount the Company acknowledges and agrees that Employee has
earned by services rendered by Employee to the Company through (and including)
the Effective Date and that the payment of such amount is unconditional. The
aforesaid amount shall be paid to the Employee on the first to occur of: (1) the
Closing (as defined below); (2) termination of Employee's employment, without
regard to whether such termination is effected by the Employee or the Company,
is effected with or without Cause or Good Reason (as discussed below), or does
or does not entitle Employee to Severance Payment (as discussed below); or (3)
December 31, 2005.
(ii) Employee will be eligible to receive for each Company
fiscal year after 2005 a performance bonus of up to a maximum of fifty percent
(50%) of Base Salary upon the achievement of performance goals to be established
in a Bonus Plan at a later date (or based upon the achievement of other
Company-wide performance objectives established by the Company, if no such Bonus
Plan exists).
(d) Deferrals. The Company shall not take or fail to take any
action, which action or failure to act, either alone or together with other
facts and conditions, would result in adverse tax treatment of the Employee
under Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury regulations thereunder. This shall include, but shall
not be limited to, the deferral of payments or other events as necessary to
comply with Section 409A(a)(2)(B) of the Code, to the extent applicable.
3. Term; Termination; Rights on Termination; Severance Payment.
(a) The term of this Agreement shall begin on the Effective
Date and continue until thirty (30) days following the Closing, as defined
below, or the second anniversary of the Effective Date, whichever is the first
to occur. The term may be extended by agreement of the parties.
2
(b) This Agreement and Employee's employment may be terminated
in any of the following ways:
(i) The lapse of thirty (30) days following the occurrence of
the Closing without an extension of the term by agreement of the parties;
(ii) Death. The death of Employee shall immediately terminate
this Agreement and no Severance Payment as defined below will be due Employee's
estate;
(iii) Disability. If Employee becomes entitled to receive
benefits under an insured long-term disability plan of the Company that includes
its officers, either the Employee or the Company may terminate Employee's
employment hereunder with no Severance Payment due Employee;
(iv) By Company with Cause. The Company may terminate this
Agreement and Employee's employment upon written notice to Employee for "Cause,"
which shall be: (1) Employee's willful failure in the performance or
nonperformance of any of Employee's duties and responsibilities hereunder; (2)
Employee's dishonesty or fraud with respect to the business, reputation or
affairs of the Company; (3) Employee's conviction of a felony crime involving
moral turpitude; or (4) Employee's willful failure to abide by any substantial
lawful policy or directive of the Company. Employee's absence during a required
or permitted leave of absence shall not constitute Cause. The Company recognizes
that the audit committee of the board of directors of the Company has
investigated certain matters that are substantially similar to ongoing
litigation in Delaware initiated by affiliates of Xxxxx Xxxxxxx. Based on this
investigation, the Company hereby agrees that no wrongdoing has occurred with
respect to the allegations in such lawsuits, and in no event shall such
allegations give rise to a termination of the Employee for "Cause." Prior to
termination of Employee for "Cause" pursuant to clauses (1) or (4) above,
Company shall, to the extent reasonably practicable, grant Employee five (5)
business days' written notice to cure any defect giving rise to such "Cause". In
the event of a termination for Cause, Employee shall have no right to receive
any Severance Payment, as defined below.
(v) By Company Without Cause. The Company may terminate this
Agreement and Employee's employment without Cause upon written notice to
Employee. In the event of a termination by the Company Without Cause, the
Employee will be entitled to any Severance Payment as defined below;
(vi) By Employee Without Good Reason. Employee may, without
Good Reason (as hereinafter defined), resign or otherwise terminate this
Agreement and Employee's employment effective upon written notice is provided to
the Company. If Employee resigns or otherwise terminates his employment without
Good Reason, Employee shall have no right to receive any Severance Payment as
defined below; and
(vii) By Employee for Good Reason. Employee shall have "Good
Reason" to terminate his employment hereunder upon the occurrence of any of the
following
3
events, unless Employee agrees in a writing executed contemporaneously with or
after the occurrence of the event that it shall not constitute "Good Reason":
(1) Employee is demoted by means of a material reduction in authority,
responsibilities or duties to a position of less stature or importance within
the Company than the position described in paragraph 1(a) hereof, (2) Employee
terminates his employment (for any reason) within ninety (90) days following a
Change of Control (as defined below), (3) Employee is required to work from a
location not in the greater New York City area for an average of more than three
days per week, including travel time to and from such location, over the course
of any calendar month, or (4) any breach by Company of the terms of this
Agreement. Prior to termination of employment for "Good Reason" pursuant to
clauses (1), (3) or (4) above, Employee shall be required to grant Company five
(5) business days' written notice to cure the event or condition giving rise to
such "Good Reason." In the event the Employee terminates his employment for Good
Reason, Employee will be entitled to Severance Payment as defined below.
(viii) Change of Control. A "Change of Control" means the
occurrence of any of the following events; provided that in no event shall the
Closing (hereinafter defined) constitute a Change of Control:
(1) any person or group of persons (as defined in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended and
in effect from time to time (the "Exchange Act")) (other than persons who are
stockholders of the Company immediately prior to the transaction) together with
its affiliates, excluding employee benefit plans of the Company, is or becomes,
directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities;
(2) the dissolution or liquidation of the Company or a merger,
consolidation, or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or the sale of substantially
all of the assets of the Company to another person or entity;
(3) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity (other than persons who are shareholders of the Company or
affiliates immediately prior to the transaction) owning more than 50% of the
combined voting power of all classes of securities/interests of the Company; or
(4) individuals who at the beginning of any two-year period
constitute the board of directors, plus new directors of the Company whose
election or nomination for election by the Company's shareholders is approved by
a vote of at least two-thirds of the directors of the Company still in office
who were directors of the Company at the beginning of such two-year period,
cease for any reason during such two-year period to constitute at least
two-thirds of the members of the board of directors.
(c) As used herein, "Severance Payment" shall mean the product
of x and y, where:
4
"x" means eighteen (18), and
"y" means the sum of (i) the Employee's monthly base salary
(as in effect on the date of the termination of employment giving rise to the
Severance Payment), (ii) the total amount of bonus (both Performance and
Discretionary Bonus) paid to Employee under this Agreement, divided by the
number of whole months from the Effective Date to the date Employee's employment
under this Agreement is terminated, and (iii) $610 (which amount (1) shall be
increased by twelve (12%) percent each year on the anniversary of the Effective
Date, and (2) as adjusted, is intended to compensate Employee for the
approximate monthly value of employee benefits lost by Employee due to the
termination).
(d) Upon termination of this Agreement for any reason provided
above, in addition to the above payments, if any, Employee shall be entitled to
receive all compensation earned and all benefits and reimbursements due through
the effective date of termination. All other rights and obligations of the
Company and Employee under this Agreement shall cease as of the effective date
of termination, except that the Employee's obligations under paragraphs 7, 8, 9,
and 10 herein shall survive such termination if applicable in accordance with
their terms.
(e) Unless otherwise required by paragraph 2(e), the Severance
Payment shall be paid to Employee in a single lump sum by no later than ten (10)
days following the termination giving rise to such Severance Payment.
4. Existing Motient Options. As of the Effective Date, Employee is the
holder of certain outstanding and unexpired compensatory options (the "Existing
Motient Options") entitling Employee to purchase shares of common stock of the
Company. To the extent the terms of the Existing Motient Options do not already
so provide, the Company agrees to amend them (without any other changes or
amendments to the detriment of Employee's rights thereunder) so that as of and
after the Effective Date:
(a) The vesting of Employee's right to exercise the Existing
Motient Options and his rights to the underlying stock to be acquired under the
Existing Motient Options shall be accelerated so that Employee shall become
fully vested in all such rights as of the first of the following to occur:
(i) the Closing, as defined below;
(ii) a Change of Control, as defined in this Agreement; or
(iii) the Employee becoming entitled to a Severance Payment
under this Agreement.
The Company currently anticipates entering into an Agreement and Plan
of Merger with, among others, SkyTerra Communications, Inc., a Delaware
corporation ("SkyTerra"), providing for the merger of SkyTerra, on the one hand,
and the Company or a subsidiary of the Company, on the other. As used herein,
the term "Closing" shall refer to the closing of that merger, as provided and
defined in the Agreement and Plan of Merger.
5
(b) The expiration of the Existing Motient Options following
the termination of this Agreement for or upon any reason other than for Cause
and, in turn, the Employee's right to exercise each of his Existing Motient
Options, shall be extended until the later of:
(i) the fifteenth (15th) day of the third month following the
date on which the Existing Motient Option would have otherwise expired, or
(ii) December 31 of the calendar year in which the Existing
Motient Option would have otherwise expired.
5. Existing TerreStar Options. As of the Effective Date, Employee is
the holder of certain outstanding and unexpired compensatory options ("Existing
TerreStar Options") granted pursuant to the TerreStar Networks Inc. 2002 Stock
Incentive Plan, which, subject to vesting, entitle Employee to purchase shares
of common stock of TerreStar Networks Inc. ("TerreStar"). To the extent the
terms of the Existing TerreStar Options do not already so provide, the Company
agrees to cause the amendment of such options (without any other changes or
amendments to the detriment of Employee's rights thereunder) so that as of and
after the Effective Date:
(a) The vesting of Employee's right to exercise the Existing
TerreStar Options and his rights to the underlying share of TerreStar stock to
be acquired under such options shall be accelerated so that Employee shall
become fully vested in all such rights as of the first of the following to
occur:
(i) the Closing, as defined in this Agreement;
(ii) a Change of Control, as defined in this Agreement; or
(iii) the Employee becoming entitled to a Severance Payment
under this Agreement.
(b) The expiration of the Existing TerreStar Options following
the termination of this Agreement for or upon any reason other than termination
for Cause and, in turn, the Employee's right to exercise each of his Existing
TerreStar Options, shall be extended until the later of:
(i) the fifteenth (15th) day of the third month following the
date on which the Existing TerreStar Option would have otherwise expired, or
(ii) December 31 of the calendar year in which the Existing
TerreStar Option would have otherwise expired.
6. Motient Stock. As of the Effective Date, the Company shall grant to
Employee pursuant to the Motient Corporation 2004 Restricted Stock Plan 125,000
restricted shares of common stock of the Company (the "Motient Restricted
Shares"), which under the term of the grant, shall vest as of the Closing.
Except for those items to be completed when the necessary information is
available (including the grant number and date of grant), the Restricted Stock
Agreement containing the terms and conditions of the grant of the Motient
Restricted Shares shall be identical in substance, and substantially similar in
form, to Exhibit A, attached hereto and incorporated by reference.
6
7. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or its
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company and be subject at all
times to its discretion and control. Likewise, all correspondence, reports,
records, charts, advertising materials and other similar data pertaining to the
business, activities or future plans of the Company or which is collected by
Employee shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
8. Inventions. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
year thereafter, if conceived during employment, and which are directly related
to the business of the Company and which Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
letters patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
9. Trade Secrets. Employee agrees that he will not, during or after the
term of this Agreement, disclose the specific terms of the Company's
relationships or agreements with their significant vendors or customers or any
other significant and material trade secret of the Company, whether in existence
or proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever, and except as required to be disclosed under
applicable securities or other laws, or as such terms or secrets are otherwise
in the public domain independent of any actions taken by Employee.
10. Confidentiality.
(a) Employee acknowledges and agrees that all Confidential
Information (as defined below) of the Company is confidential and a valuable,
special and unique asset of the Company that gives the Company an advantage over
its actual and potential, current and future competitors. Employee further
acknowledges and agrees that Employee owes the Company a fiduciary duty to
preserve and protect all Confidential Information from unauthorized disclosure
or unauthorized use, that certain Confidential Information constitutes "trade
secrets" under applicable laws and, that unauthorized disclosure or unauthorized
use of the Company's Confidential Information would irreparably injure the
Company.
(b) Both during the term of Employee's employment and after
the termination of Employee's employment for any reason (including wrongful
termination), Employee shall hold all Confidential Information in strict
confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to Employee.
Employee shall not, at any time (either during or after the term of Employee's
7
employment), disclose any Confidential Information to any person or entity
(except other employees of the Company who have a need to know the information
in connection with the performance of their employment duties), or copy,
reproduce, modify, decompile or reverse engineer any Confidential Information,
or remove any Confidential Information from the Company's premises, without the
prior written consent of the Board of Directors of the Company, or permit any
other person to do so. Employee shall take reasonable precautions to protect the
physical security of all documents and other material containing Confidential
Information (regardless of the medium on which the Confidential Information is
stored). This Agreement applies to all Confidential Information, whether now
known or later to become known to Employee.
(c) Upon the termination of Employee's employment with the
Company for any reason, and upon request of the Company at any other time,
Employee shall promptly surrender and deliver to the Company all documents and
other written material of any nature containing or pertaining to any
Confidential Information and shall not retain any such document or other
material. Within five days of any such request, Employee shall certify to the
Company in writing that all such materials have been returned.
(d) As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by or for
the Company (whether or not owned or developed by the Company and whether or not
developed by Employee) that is not generally known to any person in the same
business as the Company. Confidential Information includes, but is not limited
to, the following: all trade secrets of the Company; all non-public information
that the Company has marked as confidential or has otherwise described to
Employee (either in writing or orally) as confidential; all non-public
information concerning the Company's products, services, prospective products or
services, research, product designs, prices, discounts, costs, marketing plans,
marketing techniques, market studies, test data, customers, customer lists and
records, suppliers and contracts; all business records and plans; all personnel
files; all financial information of or concerning the Company; all information
relating to the Company's operating system software, application software,
software and system methodology, hardware platforms, technical information,
inventions, computer programs and listings, source codes, object codes,
copyrights and other intellectual property; all technical specifications; any
proprietary information belonging to the Company; all Company computer hardware
or software manuals; all Company training or instruction manuals; and all
Company data and all computer system passwords and user codes.
11. No Prior Agreements. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee, his employment by the
Company and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, reasonable attorneys' fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between Employee and
such third party which was in existence as of the date of this Agreement.
8
12. Assignment; Binding Effect. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding and paragraph 1(b), this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns.
13. No Mitigation or Offset. Employee shall not be required to mitigate
the amount of any Company payment provided for in this Agreement by seeking
other employment or otherwise. The amount of any payment required to be paid to
Employee by the Company pursuant to this Agreement shall not be reduced by any
amounts that are owed to the Company by Employee, or by any setoff,
counterclaim, recoupment, defense or other claim, right or action.
14. Release. Notwithstanding anything in this Agreement to the
contrary, upon termination of employment hereunder, Employee shall not be
entitled to receive any payments pursuant to this Agreement unless Employee and
Company have executed a mutual general release of all claims each may have
against the other and its affiliates in a form of release reasonably mutually
acceptable to all parties thereto, and such release has become final; provided
that in no event shall the Company be released from any indemnification
obligations to the Employee arising by virtue of the Company's Articles of
Incorporation or otherwise required by law; and further provided, that Employee
may waive Company's obligation to execute such release in Employee's sole
discretion.
15. Complete Agreement. Employee has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and expression
of the agreement between the Company and Employee and of all the terms of this
Agreement. This written Agreement may not be later modified except by a further
writing signed by a duly authorized officer of the Company and Employee, and no
term of this Agreement may be waived except by writing signed by the party
waiving the benefit of such term. Without limiting the generality of the
foregoing, either party's failure to insist on strict compliance with this
Agreement shall not be deemed a waiver thereof.
16. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: Motient Corporation
000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx
Attention: Human Resources
Facsimile: 000-000-0000
To Employee: XXXXXXXXXXX X. XXXXXX
9
Notice shall be deemed given and effective on the earlier of three days after
the deposit in the U.S. mail of a writing addressed as above and sent first
class mail, certified, return receipt requested, or when actually received. In
addition, notice must be e-mailed on the date of mailing. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 16.
17. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
18. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Illinois, without regard to its conflicts
of law provisions.
19. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
20. Employee's Legal Expenses. The Company will pay to Employee an
amount equal to his actual reasonable legal expenses incurred in successfully
negotiating and documenting this Agreement and all collateral agreements,
including tax advice related thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
Motient Corporation
By: /s/ Xxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chairman, Compensation Committee
EMPLOYEE:
/s/ Xxxxx Xxxxxx
--------------------------------------------
XXXXXXXXXXX X. XXXXXX
10
