Exhibit 9
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This AMENDED AND RESTATED AGREEMENT is made as of July 19, 1996, and
amended as of May 16, 1997 and July 18, 1997, by and between COMSAT Corporation
("COMSAT"), a District of Columbia corporation, and Xxxxx X. Xxxxxxx, a resident
of the Commonwealth of Virginia (the "Executive").
WHEREAS, the COMSAT Board of Directors (the "Board") elected the Executive
as President and Chief Executive Officer and a member of the Board (a
"Director") on July 19, 1996;
WHEREAS, the Board believes it to be in the best interests of COMSAT to
enter into this Agreement to ensure the Executive's continuing services to
COMSAT; and
WHEREAS, COMSAT desires to continue to employ the Executive as President
and Chief Executive Officer of COMSAT, and the Executive desires to continue
such employment, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, COMSAT and the Executive
agree as follows:
1. Employment; Duties.
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(a) Employment and Employment Period. COMSAT shall employ the
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Executive to serve as President and Chief Executive Officer of COMSAT or any
successor entity for a period (the "Employment Period") commencing on July 19,
1996 (the "Effective Date") and continuing thereafter for successive three-year
terms from each successive day thereafter until July 19, 2003 unless terminated
in accordance with the provisions of this Agreement. Notwithstanding the
foregoing, COMSAT may appoint another person to serve as President during the
Employment Period. In that event, the Executive's title shall become Chief
Executive Officer and the President shall report to the Executive in her
capacity as Chief Executive Officer. The appointment of a President shall not
be deemed to constitute "Good Reason" for purposes of Section 5 of this
Agreement. Each 12-month period ending on the anniversary date of the Effective
Date is sometimes referred to herein as a "year of the Employment Period."
(b) Offices, Duties and Responsibilities. The Executive shall report
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directly and solely to the Board. Throughout the Employment Period, COMSAT
shall cause Executive to be nominated and recommended for election as a Director
at each meeting of COMSAT shareholders at which directors are to be elected and
to be included as a recommended nominee for election in any proxy provided to
shareholders in connection with such
meeting. The Executive's offices initially shall be located at COMSAT's present
headquarters in Bethesda, Maryland. The Executive shall have all duties and
authority customarily accorded a chief executive officer, including, without
limitation, the lead responsibility with full autonomy, subject to the customary
authority and direction of the Board, to manage the overall business and
operations of COMSAT. All employees of COMSAT shall report, directly or
indirectly, to the Executive, and the Executive shall have the authority to hire
and fire all such employees within established budget parameters, provided that
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the Board shall approve (i) any salary actions (including hiring decisions) for
employees of COMSAT which result in an annual salary in excess of the amount
established by the Board from time to time, but in no event less than $100,000,
and (ii) any bonuses to be awarded to employees of COMSAT under the COMSAT
Annual Incentive Plan (the "AIP") or any other bonuses to be awarded in excess
of the amount established by the Board from time to time. The Executive's
management of COMSAT shall be (x) in accordance with the policies of the Board
and COMSAT's Policies and Procedures, both as in effect from time to time, and
(y) within the limits of an annual budget for COMSAT which shall be approved by
the Board at least 30 days before the beginning of the fiscal year to which such
budget relates. If the Executive proposes the expenditure of any amounts which
exceed the applicable annual budgets for COMSAT, such excess amounts shall not
be committed to Executive's authority unless and until specifically authorized
and approved by the Board.
(c) Devotion to Interests of COMSAT. During the Employment Period,
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the Executive shall devote her best efforts and full business time and attention
to the performance of her duties hereunder. Notwithstanding the foregoing, the
Executive shall be entitled to serve on the boards of directors of non-profit
organizations and, commencing on the second anniversary of the Effective Date,
the boards of directors of for-profit organizations that do not compete with
COMSAT. Prior to joining any boards of directors in addition to those on which
she is serving as of the Effective Date, the Executive shall consult with the
Board to confirm that such memberships shall not unreasonably or materially
interfere with the performance of her duties hereunder. In addition, the
Executive may speak and write independently, if such activity does not conflict
with the best interests of COMSAT. The Executive may keep all fees and other
monies paid for such outside board memberships and activities in accordance with
COMSAT corporate policy.
2. Compensation and Fringe Benefits.
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(a) Base Compensation. COMSAT shall pay the
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Executive a base salary ("Base Salary") during the Employment Period with
payments made in installments in accordance with COMSAT's regular practice for
compensating executive personnel, provided that in no event shall such payments
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be made less frequently than twice per month. The Base Salary for the first
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year of the Employment Period shall be $450,000. Effective on July 19, 1997,
the Base Salary shall be increased to $500,000. Thereafter, the Base Salary for
the Executive shall be reviewed for increases each subsequent year during the
Employment Period commencing the third year of the Employment Period. Any
further Base Salary increases shall be approved by the Board in its sole
discretion.
(b) Bonus Compensation. The Executive will be eligible to receive
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bonuses ("Annual Bonus") during the Employment Period under the AIP in
accordance with the following parameters: (i) the target bonus for each year
during the Employment Period shall be 70% of Base Salary for achieving 100% of
the target level for the performance measures; and (ii) the performance
measures, the relative weight to be accorded each performance measure and the
amount of bonus payable in relation to the target bonus for achieving more or
less than 100% of the target level for the performance measures shall be
determined for each year during the Employment Period by the Committee on
Compensation and Management Development of the Board (the "Compensation
Committee") after consultation with the Executive. As part of the consultation
process set forth in the preceding sentence, the Executive shall prepare before
the end of each fiscal year ending during the Employment Period a business plan
for COMSAT with respect to at least the following three-year period. The Board
shall consider and approve such plans on an annual basis, subject to such
modifications as are otherwise consistent with this Agreement, and each fiscal
year the current plan shall be considered by the Compensation Committee as the
basis for establishing the bonus standards for such year with such reasonable
modifications as the Compensation Committee may reasonably determine and which
are consistent with this Agreement.
(c) Fringe Benefits. The Executive shall continue to be entitled to
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the fringe benefits for COMSAT senior executives which she enjoyed immediately
prior to the Effective Date, including (i) participation in the COMSAT Directors
and Executives Deferred Compensation Plan, the COMSAT Split Dollar Insurance
Plan, the COMSAT Educational Grant Program, the COMSAT Retirement Plan, the
COMSAT Savings and Profit-Sharing Plan, the COMSAT 1995 Key Employee Stock Plan
(the "Stock Plan"), the COMSAT Employee Stock Purchase Plan, the COMSAT health
and disability insurance programs and the COMSAT financial planning program,
(ii) an annual physical examination by a physician of her choice in the
Washington, D.C. metropolitan area at COMSAT's expense, and (iii) reimbursement
of reasonable expenses incurred in connection with travel and entertainment
related to COMSAT's business and affairs. The Executive also shall be entitled
to such additional fringe benefits as are made available to COMSAT senior
executives during the Employment Period on a most favored nations basis. The
Executive further shall be entitled to reimbursement of the Executive's
reasonable legal fees and costs incurred in connection with the negotiation and
execution of this
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Agreement, subject to a cap of $12,000. COMSAT reserves the right to modify or
terminate from time to time the fringe benefits provided to the senior
management group.
(d) Stock Options. On October 17, 1996 (the "Grant Date"), COMSAT
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shall grant to the Executive non-statutory stock options (the "Options") under
the Stock Plan to purchase 150,000 shares of COMSAT's common stock, without par
value ("Common Stock"), at a purchase price equal to the average of the high and
low selling price of the Common Stock as reported under New York Stock Exchange-
Composite Transactions on the Grant Date. The Options shall carry a term of ten
years and shall be exercisable by the Executive in accordance with the following
schedule: (i) 25% of the Options on and after the first anniversary of the
Grant Date; (ii) an additional 25% of the Options on and after the second
anniversary of the Grant Date; and (iii) the remaining 50% of the Options on and
after the third anniversary of the Grant Date. The Options shall be represented
by a stock option agreement in the form customarily used by COMSAT for such
agreements which shall contain appropriate terms consistent with the provisions
of this Agreement. During the Employment Period, the Executive may be granted
additional non-statutory stock options as determined by the Compensation
Committee in its sole discretion.
(e) RSAs. On February 20, 1997, COMSAT shall grant to the Executive
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20,000 Restricted Stock Awards ("RSAs") under the Stock Plan. Such RSAs shall
vest in accordance with (i) the performance standards for the two-year
performance period following the date of grant which are adopted by the
Compensation Committee for RSAs granted generally on such date, and (ii) the
following schedule thereafter for the portion of such RSAs which are earned
during the performance period: (x) 20% of such portion on and after February
20, 2000; (y) an additional 40% of such portion on and after February 20, 2001;
and (z) the remaining 40% of such portion on and after February 20, 2002.
(f) RSUs. On the Grant Date, COMSAT shall grant to the Executive
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5,000 Restricted Stock Units ("RSUs") under the Stock Plan. Such RSUs shall
entitle the Executive to receive "dividend equivalents" (when and in the same
amounts as dividends are paid on the Common Stock) as provided under the Stock
Plan, and shall vest three (3) years from the Grant Date if the Executive is
still employed by COMSAT at such time.
(g) SERP. The Executive shall continue to participate in the COMSAT
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Insurance and Retirement Plan for Executives (the "SERP"). Any future
amendments or changes to the SERP which provide for a reduction, deferral or
elimination of benefits payable to participants in the SERP shall expressly not
apply to the Executive unless the Executive consents otherwise.
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3. Trade Secrets; Return of Documents and Property.
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(a) Executive acknowledges that during the course of her employment
she will receive secret, confidential and proprietary information ("Trade
Secrets") of COMSAT and of other companies with which COMSAT does business on a
confidential basis and that Executive will create and develop Trade Secrets for
the benefit of COMSAT. Trade Secrets shall include, without limitation, matters
of a technical nature, such as scientific and engineering secrets, "know-how,"
formulae, secret processes or machines, inventions and computer programs
(including documentation of such programs), and matters of a business nature,
such as customer data and proprietary information about costs, profits, markets,
sales and customer databases, and other information of a similar nature to the
extent not available to the public, and plans for future development. All Trade
Secrets disclosed to or created by Executive shall be deemed to be the exclusive
property of COMSAT (as the context may require). Executive acknowledges that
Trade Secrets have economic value to COMSAT due to the fact that Trade Secrets
are not generally known to the public or the trade and that the unauthorized use
or disclosure of Trade Secrets is likely to be detrimental to the interests of
COMSAT and its subsidiaries. Executive therefore agrees to hold in strict
confidence and not to disclose to any third party any Trade Secret acquired or
created or developed by Executive during the term of this Agreement except (i)
when Executive uses or discloses any Trade Secret in the proper course of the
Executive's rendition of services to COMSAT hereunder, (ii) when such Trade
Secret becomes public knowledge other than through a breach of this Agreement,
or (iii) when Executive is required to disclose any Trade Secret pursuant to any
valid legal process. The Executive shall notify COMSAT immediately of any such
legal process in order to enable COMSAT to contest such legal process's
validity. After termination of this Agreement, the Executive shall not use or
otherwise disclose Trade Secrets unless such information (x) becomes public
knowledge other than through a breach of this Agreement, (y) is disclosed to the
Executive by a third party who is entitled to receive and disclose such Trade
Secret, or (z) is required to be disclosed pursuant to any valid legal process,
in which case the Executive shall notify COMSAT immediately of any such legal
process in order to enable COMSAT to contest such legal process's validity.
(b) Upon the effective date of notice of the Executive's or COMSAT's
election to terminate this Agreement, or at any time upon the request of COMSAT,
the Executive (or her heirs or personal representatives) shall deliver to COMSAT
(i) all documents and materials containing or otherwise relating to Trade
Secrets or other information relating to COMSAT's business and affairs, and (ii)
all documents, materials and other property belonging to COMSAT, which in either
case are in the possession or under the control of the Executive (or her heirs
or personal representatives). The Executive shall be entitled to keep her
personal records (including Rolodex) relating to COMSAT's
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business and affairs except to the extent those contain documents or materials
described in clause (i) of the preceding sentence.
4. Discoveries and Works. All discoveries and works made or conceived by
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the Executive during her employment by COMSAT pursuant to this Agreement,
jointly or with others, that relate to COMSAT's activities ("Discoveries and
Works") shall be owned by COMSAT. Discoveries and Works shall include, without
limitation, inventions, computer programs (including documentation of such
programs), technical improvements, processes, drawings and works of authorship.
The Executive shall (a) promptly notify, make full disclosure to, and execute
and deliver any documents requested by, COMSAT to evidence or better assure
title to such Discoveries and Works in COMSAT, (b) assist COMSAT in obtaining or
maintaining for itself at its own expense United States and foreign patents,
copyrights, trade secret protection or other protection of any and all such
Discoveries and Works, and (c) promptly execute, whether during her employment
by COMSAT or thereafter, all applications or other endorsements necessary or
appropriate to maintain patents and other rights for COMSAT and to protect their
title thereto. Any Discoveries and Works which, within six months after the
termination of the Executive's employment by COMSAT, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to practice
by the Executive and which pertain to work performed by the Executive while with
COMSAT shall, as between the Executive and COMSAT, be presumed to have been made
during the Executive's employment by COMSAT.
5. Termination. This Agreement shall remain in effect during the
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Employment Period, and this Agreement and Executive's employment with COMSAT may
be terminated only as follows:
(a) By the Executive at any time upon forty-five (45) days advance
written notice to COMSAT for "Good Reason" (as defined below). In such event or
if the Executive's employment is terminated by COMSAT without "cause" (as
defined below), the Executive shall be entitled to receive the following
benefits until the earlier of (i) three (3) years from the effective date of
such termination, or (ii) the later of (A) July 19, 2003 or (B) one year from
such effective date: (i) her then current Base Salary; (ii) an Annual Bonus
equal to seventy percent (70%) of her then current Base Salary; and (iii) all
other benefits provided pursuant to Sections 2(c), (d), (e), (f) and (g) of this
Agreement, which shall be deemed to vest fully and immediately if subject to
vesting. The Executive shall have no obligation to seek other employment in the
event of her termination pursuant to this paragraph (a), and any such employment
shall not mitigate COMSAT's obligations hereunder.
"Good Reason" shall mean any of the following: (I) any substantial
reduction (except in connection with the termination of her employment
voluntarily by the Executive or by COMSAT for "cause" as defined below) by
COMSAT, without the Executive's
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express written consent, of her responsibilities as President and Chief
Executive Officer of COMSAT; (II) any change in the reporting structure set
forth in Section 1(b) above; (III) any reduction in Executive's title; (IV) any
relocation of the Executive's offices outside the Washington, D.C. metropolitan
area by COMSAT without the Executive's express written consent prior to the
third anniversary of the Effective Date; (V) any material default of the
provisions of Section 2 of this Agreement which continues for twenty (20)
business days following COMSAT's receipt of written notice from the Executive
specifying the manner in which COMSAT is in default of such provisions; (VI) the
Executive is not reelected to or is removed from the Board; or (VII) any officer
superior to the Executive is appointed by COMSAT.
(b) By COMSAT at any time upon ten (10) days written notice to the
Executive, and after an opportunity to discuss such decision with the Board, for
"cause." For purposes of this Agreement, COMSAT shall have "cause" to terminate
the Executive's employment hereunder upon (i) the continued and deliberate
failure of the Executive to perform her material duties, in a manner
substantially consistent with the manner reasonably prescribed by the Board and
in accordance with the terms of this Agreement (other than any such failure
resulting from her incapacity due to physical or mental illness), which failure
continues for twenty (20) business days following the Executive's receipt of
written notice from the Board specifying the manner in which the Executive is in
default of her duties, (ii) the engaging by the Executive in intentional serious
misconduct that is materially and demonstrably injurious to COMSAT or its
reputation, which misconduct, if it is reasonably capable of being cured, is not
cured by the Executive within twenty (20) business days following the
Executive's receipt of written notice from the Board specifying the serious
misconduct engaged in by the Executive, (iii) the conviction of the Executive of
commission of a felony involving a crime of moral turpitude, whether or not such
felony was committed in connection with COMSAT's business, or (iv) any material
breach by the Executive of Section 8 hereof, which breach, if it is reasonably
capable of being cured, is not cured by the Executive within twenty (20)
business days following the Executive's receipt of written notice from the Board
specifying the breach of Section 8 by the Executive. If COMSAT shall terminate
the Executive's employment for "cause," COMSAT, in full satisfaction of all of
COMSAT's obligations under this Agreement and in respect of the termination of
the Executive's employment with COMSAT, shall pay the Executive her Base Salary
and all other compensation, benefits and reimbursement through the date of
termination of her employment.
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(c) If, prior to the expiration or termination of the Employment
Period, the Executive shall have been unable to perform substantially her duties
by reason of disability or impairment of health for at least six consecutive
calendar months, COMSAT shall have the right to terminate this Agreement by
giving sixty (60) days written notice to the Executive to that effect, but only
if at the time such notice is given such disability or impairment is still
continuing. Following the expiration of the notice period, the Employment
Period shall terminate with the payment of the Executive's Base Salary for the
month in which notice is given and a prorated Annual Bonus through such month.
In the event of a dispute as to whether the Executive is disabled within the
meaning of this paragraph (a), or the duration of any disability, either party
may request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examinations shall be borne by COMSAT. In no event shall this Agreement
terminate before COMSAT's long-term disability benefits under applicable plans
become payable to the Executive.
(d) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, COMSAT shall pay to the Executive's estate her
Base Salary and a prorated Annual Bonus through the end of the month in which
the Executive's death occurred, at which time the Employment Period shall
terminate without further notice.
(e) If either the Executive or COMSAT elects not to renew the
Executive's employment with COMSAT at the end of the Employment Period, the
Executive shall be entitled to receive payments under the SERP beginning on
August 1, 2003, the first day of the month after the end of such period,
calculated in accordance with the provisions of the plan based on the
Executive's retirement on that date, provided that the Board reserves the
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discretion to waive the applicable early retirement reduction under the plan in
such event. If the Executive's employment with COMSAT under this Agreement is
terminated either by the Executive for Good Reason or by COMSAT without "cause,"
the Executive shall be entitled to receive payments under the SERP beginning on
June 1, 2003, the first day of the month after the Executive's 55th birthday,
calculated in accordance with the provisions of the plan as if the Executive
retired on that date, provided that the Board reserves the discretion to waive
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the applicable early retirement reduction under the plan in such event.
6. Change of Control.
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(a) In the event that the Board in its sole discretion determines that
repeal of the ownership restrictions on COMSAT
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capital stock in the Communications Satellite Act of 1962 is reasonably
imminent, the parties shall negotiate in good faith to adopt a "change of
control" provision applicable to this Agreement which shall set forth (i) the
events that shall constitute a "change of control" for this purpose, (ii) the
consequences under this Agreement if such a "change of control" occurs and (iii)
such other terms and conditions as the parties shall mutually agree to.
(b) Any "change of control" provisions adopted by COMSAT applicable to
any COMSAT benefits plans which provide for the accelerated vesting and/or
payment of any benefits for its senior executives shall apply to the Executive
to the same extent as other COMSAT senior executives on a most favored nations
basis with respect to the benefits affected by such COMSAT provisions.
(c) If a change of control (as defined for purposes of COMSAT's
benefit plans) occurs during the Employment Period, the change of control shall
not adversely affect any of the Executive's rights under this Agreement, and
this Agreement shall continue in effect according to its terms. In the event of
a change of control, the Executive shall be entitled to vesting and payment of
benefits according to the terms of this Agreement or COMSAT's applicable plans,
whichever is more favorable.
7. Certain Additional Payments.
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(a) Notwithstanding anything in this Agreement to the contrary, in the
event that it shall be determined that any payment or benefit to the Executive,
whether pursuant to the terms of this Agreement or otherwise (a "Payment"),
would constitute an "excess parachute payment" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), the
Executive shall be paid an additional amount (a "Gross-Up Payment") such that
the net amount retained by the Executive after deduction of any excise tax
imposed under Section 4999 of the Code, and any federal, state and local income
and employment taxes and excise tax, including any interest and penalties with
respect thereto, imposed upon the Gross-Up Payment shall be equal to the
Payment. For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income tax and employment taxes at the
highest marginal rate of federal income and employment taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the
Executive's residence on the date the Payment is made, net of the reduction in
federal income taxes that the Executive may obtain from the deduction of such
state and local income taxes.
(b) All determinations to be made under this Section 7 shall be made
by COMSAT's independent public accountant immediately prior to the date the
Payment is made (the "Accounting Firm"), which firm shall provide its
determinations
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and any supporting calculations and workpapers both to COMSAT and the Executive
within 10 days of such date. Any such determination by the Accounting Firm shall
be binding upon COMSAT and the Executive. Within five days after receipt of the
Accounting Firm's determination, COMSAT shall pay to the Executive the Gross-Up
Payment determined by the Accounting Firm.
(c) In the event that upon any audit by the Internal Revenue Service,
or by a state or local taxing authority, of a Payment or Gross-Up Payment, a
change is finally determined to be required in the amount of taxes paid by the
Executive, appropriate adjustments shall be made under this Section such that
the net amount which is payable to the Executive after taking into account the
provisions of Section 4999 of the Code and any interest and penalties shall
reflect the intent of the parties as expressed in paragraph (a) above, in the
manner determined by the Accounting Firm. The Executive shall notify COMSAT in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by COMSAT of a Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise COMSAT of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to COMSAT (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If COMSAT notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall: (i) give COMSAT any information reasonably requested by COMSAT relating
to such claim; (ii) take such action in connection with contesting such claim as
COMSAT shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by COMSAT; (iii) cooperate with COMSAT in good
faith in order effectively to contest such claim; and (iv) permit COMSAT to
participate in any proceedings relating to such claim; provided, however, that
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COMSAT shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any excise
tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 7, COMSAT shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as COMSAT
shall determine.
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COMSAT's control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in paragraphs (b) and (c) above shall be borne
solely by COMSAT. COMSAT agrees to indemnify and hold harmless the Accounting
Firm from any and all claims, damages and expenses resulting from or relating to
its determinations pursuant to paragraphs (b) and (c) above, except for claims,
damages or expenses resulting from the gross negligence or willful misconduct of
the Accounting Firm.
8. Non-Competition.
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(a) As an inducement for COMSAT to enter into this Agreement, the
Executive agrees that for a period commencing as of the Effective Date and
running through the earlier of (i) the end of the Employment Period if the
Executive remains employed by COMSAT for the entire Employment Period or (ii)
one year following termination of the Executive's employment by COMSAT for
"cause" as defined in Section 5(b) hereof, or by the Executive for any reason
(other than Good Reason, in which case the provisions of this paragraph (a)
shall not apply) (the "Non-Competition Period"), the Executive shall not,
without the prior written consent of the Board, engage or participate, directly
or indirectly, as principal, agent, employee, employer, consultant, stockholder,
partner or in any other individual capacity whatsoever, in the conduct or
management of, or own any stock or any other equity investment in or debt of,
any business which is competitive with any business conducted by COMSAT.
For the purpose of this Agreement, a business shall be considered to
be competitive with any business of COMSAT only if such business is engaged in
providing services or products (i) comparable to or competitive with (A) any
service or product currently provided by COMSAT during the Employment Period;
(B) any service or product which evolves from or results from enhancements in
the ordinary course during the Non-Competition Period to the services or
products provided by COMSAT as of the date hereof or during the Employment
Period; or (C) any future service or product of COMSAT as to which the Executive
materially and substantially participated in the development or enhancement, and
(ii) to customers, distributors or clients of the type served by COMSAT during
the Non-Competition Period.
(b) Non-Solicitation of Employees. During the Non-Competition Period,
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the Executive will not (for her own benefit or for the benefit of any person or
entity other than COMSAT) solicit, or assist any person or entity other than
COMSAT to solicit, any officer, director, executive or employee (other than
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an administrative or clerical employee) of COMSAT to leave his or her
employment.
(c) Reasonableness; Interpretation. The Executive acknowledges and
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agrees, solely for purposes of determining the enforceability of this Section 8
(and not for purposes of determining the amount of money damages or for any
other reason), that (i) the markets served by COMSAT are national and
international and are not dependent on the geographic location of executive
personnel or the businesses by which they are employed; (ii) the length of the
Non-Competition Period is linked to the term of the Employment Period and the
severance benefit provided for in Section 5(a); and (iii) the above covenants
are manifestly reasonable on their face, and the parties expressly agree that
such restrictions have been designed to be reasonable and no greater than is
required for the protection of COMSAT. In the event that the covenants in this
Section 8 shall be determined by any court of competent jurisdiction in any
action to be unenforceable by reason of their extending for too great a period
of time or over too great a geographical area or by reason of their being too
extensive in any other respect, they shall be interpreted to extend only over
the maximum period of time for which they may be enforceable, and/or over the
maximum geographical area as to which they may be enforceable and/or to the
maximum extent in all other respects as to which they may be enforceable, all as
determined by such court in such action.
(d) Investment. Nothing in this Agreement shall be deemed to prohibit
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the Executive from owning equity or debt investments in any corporation,
partnership or other entity which is competitive with COMSAT, provided that such
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investments (i) are passive investments and constitute five percent (5%) or less
of the outstanding equity securities of such an entity the equity securities of
which are traded on a national securities exchange or other public market, or
(ii) are approved by the Board.
9. Indemnification; Liability Insurance. The Executive shall be entitled
------------------------------------
to indemnification and coverage under COMSAT's liability insurance policy for
directors and officers to the same extent as other directors and officers of
COMSAT. In addition, the Executive shall be indemnified to the maximum extent
permitted by law of the jurisdiction in which COMSAT is incorporated, as it may
be amended from time to time.
10. Enforcement.
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(a) The Executive acknowledges that a breach of the covenants or
provisions contained in Sections 3, 4 and 8 of this Agreement will cause
irreparable damage to COMSAT, the exact amount of which will be difficult to
ascertain, and that the remedies at law for any such breach will be inadequate.
Accordingly, the Executive agrees that if the Executive breaches or threatens to
breach any of the covenants or provisions
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contained in Sections 3, 4 and 8 of this Agreement, in addition to any other
remedy which may be available at law or in equity, COMSAT shall be entitled to
seek specific performance and injunctive relief in a court of competent
jurisdiction after notice and a hearing.
(b) The parties expressly agree that any litigation directly or
indirectly arising out of or relating to this Agreement, including an action
brought by COMSAT pursuant to paragraph (a) of this Section 10, shall be brought
in a court of competent jurisdiction in the State of Maryland.
11. Severability. Should any provision of this Agreement be determined to
------------
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. Assignment. The Executive's rights and obligations under this
----------
Agreement shall not be assignable by the Executive. COMSAT's rights and
obligations under this Agreement shall not be assignable by COMSAT except as
incident to the transfer, by merger or otherwise, of all or substantially all of
the business of COMSAT. In the event of any such assignment by COMSAT, all
rights of COMSAT hereunder shall inure to the benefit of the assignee, provided
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that all references herein to COMSAT shall be deemed to refer with equal force
and effect to any corporate or other successor of COMSAT.
13. Notices. All notices and other communications which are required or
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may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method, provided
that in such case it shall also be sent by certified or registered mail, return
receipt requested; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
----
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. Unless otherwise changed by notice, in each case notice
shall be sent to:
If to Executive, addressed to:
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
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With a copy (not constituting notice) to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to COMSAT, addressed to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Vice President, Human Resources
and Organization Development
Telecopier No.: (000) 000-0000
With a copy (not constituting notice) to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Telecopier No.: (000) 000-0000
14. Miscellaneous. This Agreement constitutes the entire agreement, and
-------------
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The validity, interpretation,
performance and enforcement of the Agreement shall be governed by the laws of
the State of Maryland without giving effect to conflicts of laws principles
thereof. The headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
The waiver by any party of a breach of any term or condition of this Agreement
by the other party shall not operate as nor be construed as a waiver of any
subsequent breach thereof or a waiver of a breach of any other term or condition
of this Agreement. This Agreement may be signed in two (2) or more
counterparts, each of which shall constitute an original but all of which
together shall form only a single instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
July 18, 1997.
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx, Executive
COMSAT Corporation
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx, Chairman
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