AGREEMENT
THIS AGREEMENT dated as of November 25, 1996 is made by and between
American Mobile Satellite Corporation, a Delaware corporation (the "Company"),
and [Name of Executive] (the "Executive").
WHEREAS, the Company considers it essential to its best interests and
to the best interests of its stockholders to xxxxxx the continuous employment of
its key management personnel; and
WHEREAS, the Company recognizes that the possibility of a Change in
Control (as defined in Section 9.4 hereof) exists, as in the case of any
publicly-held corporation, and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the Company has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. Definitions of certain capitalized terms used in
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this Agreement are provided in Section 9 and elsewhere in this Agreement.
2. Term of Agreement. This Agreement shall become effective on the date
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hereof and shall remain in effect indefinitely thereafter; provided, however,
that (a) except as provided in clause (b) of this Section 2, either the Company
or the Executive may terminate this Agreement by giving the other party at least
one (1) year advance written notice of such termination, and (b) if a Potential
Change in Control or a Change in Control shall have occurred during the term of
this Agreement, this Agreement may not be terminated until all obligations of
either party hereto have been performed in full, the Coverage Period has expired
without the occurrence of a Triggering Event, or in the case of a Potential
Change in Control, no Change in Control occurs for at least two years following
such Potential Change in Control. Notwithstanding the foregoing, this Agreement
shall terminate upon the Executive's attaining age sixty-five (65), the
Executive's Disability or death, except as to obligations of the Company
hereunder arising from a Change in Control and a Triggering Event that occurred
prior to his having reached such age or prior to the occurrence of his
Disability or death.
3. Agreement of the Company. In order to induce the Executive to remain
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in the employ of the Company, the Company agrees, under the terms and conditions
set forth herein, that, upon the occurrence of both a Change in Control and a
Triggering Event during the term of this Agreement, the Company shall provide to
the Executive the benefits described in Sections 3.1 through 3.3 below (the
"Severance Benefits"), unless prior to the date of any Triggering Event, the
Executive's employment with the Company has been terminated for Cause or due to
the Executive's Disability or death.
3.1 Lump-Sum Severance Payment. In lieu of any further salary
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payments to the Executive for periods subsequent to the Date of Termination, the
Company shall pay to the Executive a lump sum severance payment, in cash,
without discount, equal to the sum of (i) the Executive's Annual Base Salary and
(ii) the Executive's Average Bonus.
3.2 Vesting of Options. The vesting of all options to purchase
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securities of the Company granted to the Executive pursuant to the Company's
1989 Stock Option Plan, as amended and restated December 7, 1993, or any other
Company plan that are then held by the Executive shall be accelerated to the
later of the Date of Termination or six months after the date such option was
granted, and shall continue to be exercisable for a two-year period after such
acceleration; any provision contained in the agreement(s) under which such
options were granted that is inconsistent with such acceleration is hereby
modified to the extent necessary to provide for such acceleration; such
acceleration shall not apply to any option that by its terms would vest
prior to the date provided for in this Section 3.2.
3.3 Continued Benefits. For a twelve (12) month period (or, if
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less, the number of months from the Date of Termination until the date the
Executive will reach age sixty-five (65)) after the Date of Termination (the
"Benefits Period"), the Company shall provide the Executive with group term life
insurance, health insurance, accident and long-term disability insurance
benefits (collectively, "Welfare Benefits") substantially similar in all
respects to those that the Executive was receiving immediately prior to the Date
of Termination (without giving effect to any reduction in such benefits
subsequent to a Potential Change in Control or a Change in Control). During the
Benefits Period, the Executive shall be entitled to elect to change his level of
coverage and/or his choice of coverage options (such as Executive only or family
medical coverage) with respect to the Welfare Benefits to be provided by the
Company to the Executive to the same extent that actively employed senior
executives of the Company are permitted to make such changes; provided, however,
that in the event of any such changes the Executive shall pay the amount of any
cost increase that would actually be paid by an actively employed senior
executive of the Company by reason of making the same changes in his level of
coverage or coverage options.
3.4 Terminations in Anticipation of Change in Control. The
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Executive shall be entitled to the Severance Benefits under Section 3 hereof if
the Executive's employment is terminated by the Company without Cause prior to a
Change in Control and such termination of employment (a) was at the request of a
third party which has taken steps reasonably calculated to effect a Change in
Control or (b) otherwise arose in anticipation of a Change in Control. The
Executive shall be entitled to the Severance Benefits under Section 3 hereof if
the Executive terminates his employment prior to a Change in Control if at the
time of such termination a circumstance or event which would constitute Good
Reason after a Change in Control has occurred (a) at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(b) in anticipation of a Change in Control.
4. Certain Limitations on Payments and Benefits. The Severance Benefits
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payable under Section 3.1 hereof shall be reduced by the amount of any other
payment or the value of any benefit received or to be received by the Executive
that, in the opinion of tax counsel ("Tax Counsel") selected by the Executive
and acceptable to the Company's independent auditors, is likely to constitute a
"parachute payment" under section 28OG(b)(2) of the Code (whether pursuant to
the terms of this Agreement or any other plan, agreement or arrangement with the
Company or any subsidiary, any person whose actions result in a Change in
Control, or any person affiliated with the Company or such person) unless (A)
the Executive shall have effectively waived his receipt or enjoyment of such
payment or benefit prior to the date of payment of such Severance Benefits, (B)
or in the opinion of Tax Counsel, the Severance Benefits (in their full amount
or as partially reduced under this Section 4, as the case may be) plus all other
payments or benefits that constitute "parachute payments" within the meaning of
section 280(b)(2) of the Code are likely to be reasonable compensation for
services actually rendered, within the meaning of section 28OG(b)(4) of the Code
or are otherwise not likely to be subject to disallowance as a deduction by
reason of section 28OG of the Code. The value of any noncash benefit or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of section 28OG(d)(3) and (4) of the
Code.
5. Timing of Payments. The payment provided for in Section 3.1 hereof
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shall be made on the Date of Termination, provided, however, that if the amounts
of such payment cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payment and shall pay the
remainder of such payment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code from the Date of Termination to the payment of
such remainder) as soon as the amount thereof can be determined but in no event
later than the thirtieth (30th) day after the Date of Termination. In the event
that the amount of the estimated payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to the Executive, payable on the fifth (5th) business day after demand by the
Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code from the
Date of Termination to the repayment of such excess).
6. Reimbursement of Legal Costs. The Company shall pay to the Executive
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all reasonable legal fees and expenses incurred by the Executive as a result of
a termination that entitles the Executive to any payments under this Agreement
including all such fees and expenses, if any, incurred in contesting or
disputing any Notice of Termination under Section 7.2 hereof or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder. Such payments shall be made within five (5) business days after
delivery of the Executive's respective written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures.
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7.1 Notice of Termination. After a Potential Change in Control
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or a Change in Control, any termination of the Executive's employment (other
than by reason of death) must be preceded by a written Notice of Termination
from the terminating party to the other party hereto in accordance with Section
8.5 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall (i) specify the date of termination (the "Date of
Termination") which shall not be more than sixty (60) days from the date such
Notice of Termination is given, (ii) indicate the notifying party's opinion
regarding the specific provisions of this Agreement that will apply upon such
termination and (iii) set forth in reasonable detail the facts and circumstances
claimed to provide a basis for the application of the provisions indicated.
Termination of the Executive's employment shall occur on the specified Date of
Termination even if there is a dispute between the parties pursuant to Section
7.2 hereof relating to the provisions of this Agreement applicable to such
termination.
7.2 Dispute Concerning Applicable Termination Provisions. If
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within thirty (30) days of receiving the Notice of Termination the party
receiving such notice notifies the other party that a dispute exists concerning
the provisions of this Agreement that apply to such termination, the dispute
shall be resolved either by mutual written agreement of the parties or by
expedited commercial arbitration under the rules of the American Arbitration
Association, pursuant to the procedures set forth in Section 8.14 herein. The
parties shall pursue the resolution of such dispute with reasonable diligence.
Within five (5) days of such a resolution, any party owing any payments pursuant
to the provisions of this Agreement shall make all such payments together with
interest accrued thereon at the rate provided in Section 1274(b)(2)(B) of the
Code.
8. Miscellaneous.
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8.1 No Mitigation. The Company agrees that, if the Executive's
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employment by the Company is terminated in a manner that results in the payment
of Severance Benefits hereunder, the Executive shall not be required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to this Agreement. Further, the amount of any
payment or benefit provided for under this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
8.2 Successors. In addition to any obligations imposed by law
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upon any successor to the Company, the Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger, consolidation,
operation of law, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place; in the event of
such a succession, references to the "Company" herein shall thereafter be deemed
to include such successor. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to terminate his employment and
thereafter to receive Severance Benefits, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
8.3 Incompetency. Any benefit payable to or for the benefit of
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the Executive, if legally incompetent, or incapable of giving a receipt
therefor, shall be deemed paid when paid to the Executive's guardian or to the
party providing or reasonably appearing to provide for the care of such person,
and such payment shall fully discharge the Company.
8.4 Death. This Agreement shall inure to the benefit of and be
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enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
8.5 Notices. For the purpose of this Agreement, notices and
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all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
American Mobile Satellite Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention:
To the Executive:
[Name of Executive]
[Address of Executive]
8.6 Modification, Waiver. No provision of this Agreement may
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be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board or its delegee. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
8.7 Entire Agreement. No agreements or representations, oral
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or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
8.8 Governing Law. The validity, interpretation, construction
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and performance of this Agreement shall be governed by the laws of the
Commonwealth of Virginia without regard to principles of conflicts of laws
thereof.
8.9 Statutory Changes. All references to sections of the
-----------------
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
8.10 Withholding. Any payments provided for hereunder shall be
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paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed.
8.11 Validity. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
8.12 No Right to Continued Employment. Nothing in this
------------------------------------
Agreement shall be deemed to give any Executive the right to be retained in the
employ of the Company, or to interfere with the right of the Company to
discharge the Executive at any time and for any lawful reason, subject in all
cases to the terms of this Agreement.
8.13 No Assignment of Benefits. Except as otherwise provided
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herein or by law, no right or interest of any Executive under the Agreement
shall be assignable or transferable, in whole or in part, either directly or by
operation of law or otherwise, including without limitation by execution, levy,
garnishment, attachment, pledge or in any manner; no attempted assignment or
transfer thereof shall be effective; and no right or interest of any Executive
under this Agreement shall be liable for, or subject to, any obligation or
liability of such Executive.
8.14 Arbitration Procedures. All disputes relating to this
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Agreement, including without limitation any disputes under Section 7.2 hereof,
shall be submitted to expedited commercial arbitration under the rules of the
American Arbitration Association in Washington, D.C., with an arbiter who is
mutually acceptable to both parties being selected to preside over such
arbitration. The Federal Rules of Evidence shall apply, and the arbiter shall
establish the applicable rules of discovery. The prevailing party in any
arbitration shall be entitled to recover from the other party all fees and
expenses (including, without limitation, reasonable attorney's fees and
disbursements) incurred in connection with such arbitration. The arbiter shall
determine the scope of arbitrability. The only judicial relief shall be (a)
interim equitable relief and (b) relief in aid of or to enforce arbitration.
8.15 Headings. The headings and captions herein are provided
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for reference and convenience only, shall not be considered part of this
Agreement, and shall not be employed in the construction of this Agreement.
9. Definitions.
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9.1 "Annual Base Salary" means the greater of (a) the
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Executive's highest annual base salary in effect during the one (1) year period
preceding a Change in Control and (b) the Executive's highest annual base salary
in effect during the one (1) year period preceding the Executive's Date of
Termination.
9.2 "Average Bonus" means the greater of (a) the Executive's
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average annual bonus for the two fiscal years (or such shorter period (which
shall be annualized) during which the Executive has been employed by the
Company) immediately preceding the fiscal year in which a Change in Control
occurs and (b) the Executive's average Bonus for the two fiscal years (or such
shorter period (which shall be annualized) during which the Executive has been
employed by the Company) immediately preceding the fiscal year which includes
the Executive's Date of Termination.
9.3 "Board" means the Board of Directors of the Company.
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9.4 "Cause" means:
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(a) the willful and continued failure of the Executive
to substantially perform the Executive's duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive by
the Board of the Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed the
Executive's duties;
(b) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company;
(c) personal dishonesty or breach of fiduciary duty to
the Company that in either case results or was intended to result in personal
profit to the Executive at the expense of the Company; or
(d) willful violation of any law, rule or regulation
(other than traffic violations, misdemeanors or similar offenses) or cease-and-
desist order, court order, judgment or supervisory agreement, which
violation is materially and demonstrably injurious to the Company.
For purposes of the preceding clauses, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith and without reasonable belief
that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon prior approval given by the
Board or upon the instructions or with the approval of the Executive's superior
or based upon the advice of counsel for the Company, shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive, as part of the Notice of Termination, a copy of
a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for the purpose of considering such termination (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in clause (a), (b), (c), or (d) above, and specifying the particulars
thereof in detail.
9.5 A "Change in Control" means the occurrence of any of
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the following events:
(a) any Person or Persons acting together, excluding
employee benefit plans of the Company, are or become the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor
provisions thereto except that a Person that has the right to acquire securities
of the Company shall be deemed to be the "beneficial owner" of such securities
whether or not such right is immediately exercisable), directly or indirectly,
of securities of the Company representing forty percent (40%) or more of the
combined voting power of the Company's then outstanding securities determined as
if all rights of such Person or Persons to acquire such securities had been
exercised immediately prior to such determination whether or not such rights
are then immediately exercisable;
(b) the Company's shareholders approve (or, in the
event no approval of the Company's shareholders is required, the Company
consummates) a merger, consolidation, share exchange, division or other
reorganization or transaction of the Company (a "Fundamental Transaction") with
any other corporation, other than a Fundamental Transaction which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least eighty percent (80%) of
the combined voting power immediately after such Fundamental Transaction of (i)
the Company's outstanding securities, (ii) the surviving entity's outstanding
securities, or (iii) in the case of a division, the outstanding securities of
each entity resulting from the division, in each case determined as if all
rights to acquire such securities had been exercised immediately prior to such
determination, whether or not such rights are then immediately exercisable;
(c) the shareholders of the Company approve a plan of
complete liquidation or winding-up of the Company or an agreement for the sale
or disposition (in one transaction or a series of transactions) of all or
substantially all of the Company's assets;
(d) during any period of twenty-four consecutive
months, individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination
for election by the Company's shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who were directors
at the beginning of such period) cease for any reason to constitute at least a
majority of the Board.
9.6 "Code" means the Internal Revenue Code of 1986, as amended
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from time to time.
9.7 "Company" means American Mobile Satellite Corporation. If
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the Executive becomes employed by a direct or indirect Subsidiary of American
Mobile Satellite Corporation, the "Company" shall also be deemed to refer to the
Subsidiary thereof by which the Executive is employed. In such case, references
to payments, benefits, privileges or other rights to be accorded by the
"Company" shall be deemed to include such payments, benefits, privileges or
other rights to be provided by the Subsidiary by which the Executive is employed
or American Mobile Satellite Corporation, as the case may be, to correspond to
the corporate entity obligated to make payments or provide benefits, privileges
or other rights pursuant to employee benefit plans affected by the provisions
hereof, and in the absence of any such existing plans or provisions, such
reference shall be deemed to be to American Mobile Satellite Corporation.
9.8 "Coverage Period" means the period commencing on the date
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on which a Change in Control occurs and ending on the second anniversary date
thereof.
9.9 "Date of Termination" has the meaning assigned to such
---------------------
term in Section 7.1 hereof.
9.10 "Disability" means the complete disability of the
------------
Executive under the Company's [appropriate plan], as amended from time to time.
9.11 "Exchange Act" means the Securities Exchange Act of
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1934, as amended from time to time.
9.12 "Good Reason" means: the occurrence during the Coverage
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Period of any of the following events:
(a) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities immediately prior to either a Potential Change in Control that
precedes the Change in Control or a Change in Control or any other action by the
Company which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Company promptly after receipt of notice thereof given by the Executive;
(b) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the same may be
increased from time to time;
(c) the Company's requiring the Executive to be based
at any office or location that is more than fifty (50) miles from the
Executive's office or location immediately prior to either a Potential Change
in Control that precedes a Change in Control or a Change in Control;
(d) the failure by the Company (a) to continue in
effect any compensation plan in which the Executive participates immediately
prior to either a Potential Change in Control preceding a Change in Control or
a Change in Control that is material to the Executive's total compensation,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or (b) to continue
the Executive's participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation relative to
other participants, than existed immediately prior to a Potential Change in
Control that precedes a Change in Control or a Change in Control;
(e) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical, health
and accident, disability or other welfare plans in which the Executive was
participating immediately prior to a Potential Change in Control that precedes
a Change in Control or a Change in Control;
(f) the failure by the Company to pay to the Executive
any deferred compensation when due under any deferred compensation plan or
agreement applicable to the Executive; or
(g) the failure by the Company to honor all the terms
and provisions of this Agreement.
9.13 "Notice of Termination" shall have the meaning assigned
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to such term in Section 6.1 hereof.
9.14 "Person" shall have the meaning given in Section 3(a)(9)
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of the Exchange Act and shall also include any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
9.15 "Potential Change in Control" means the occurrence of
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any of the following:
(a) the Board approves a transaction described in
subsection (a), (b), (c) or (d) of the definition of Change in Control contained
in Section 9.4 hereof; or
(b) the commencement of a proxy contest in which any
Person seeks to replace or remove a majority of the members of the Board.
9.16 "Severance Benefits" has the meaning assigned to such
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term in Section 3 hereof.
9.17 "Triggering Event" means (i) the termination of the
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Executive's employment by the Company at any time during the Coverage Period,
other than a termination for Cause or a termination due to the Executive's
Disability or death or (ii) a termination of the Executive's employment by the
Executive at any time during the Coverage Period when Good Reason exists.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its officer, thereunto duly authorized, and the Executive has
executed this Agreement, all as of the day and year first above written.
AMERICAN MOBILE SATELLITE CORPORATION
By:
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
[Name of Executive]
