EXECUTIVE EMPLOYMENT
AGREEMENT
between
TeleCommunication
Systems, Inc.
and
Richard A. Young
(Executive Name)
THIS EMPLOYMENT AGREEMENT (“Agreement”), effective
as of December 1, 2008 (the “Effective
Date”), between the individual signing as
“Executive” at the end of this Agreement (hereinafter
referred to as “Executive”), and TeleCommunication
Systems, Inc. (hereinafter referred to as
“Company”);
WHEREAS, Company desires to employ Executive, or to continue
Executive’s employment, and Executive desires to be employed
by Company on the terms and conditions hereinafter set forth;
WHEREAS, Company and Executive wish to replace all previous
employment agreements between them with this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Company agrees to employ
Executive for the position of Executive Vice President &
Chief Operating Officer . Executive shall perform such duties
as the management of the Company may from time to time assign to
him hereunder, including (without limitation) responsibility for
the day-to-day activities in the Company including goal setting,
performance monitoring, program management, personnel and fiscal
management, strategic planning and quality control of all
functions .
2. Duties and Responsibilities . Executive agrees to
devote his or her full time and attention and his or her best
efforts to performing his or her duties hereunder. While employed
by the Company, Executive will not, without the Company’s
prior written consent, engage in any other business activity, other
than investment of Executive’s personal funds on a passive
basis and is prohibited from lending assistance directly or
indirectly to any competitor. Attachment A hereto is a complete
list of Executive’s current other business activities to
which the Company consents. In the event the Executive wishes to
change the approved activities, then the Executive shall submit the
requested change in writing to the Company. Any changes consented
to by the Company shall be documented as a revised Attachment A and
will become incorporated into the Agreement by reference. In no
event shall Executive pursue outside business or personal interests
that the Company determines would interfere with his or her
full-time responsibilities or entail any use of the Company’s
resources.
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3.
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Compensation and Benefits.
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3.1
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Base Salary. During Executive’s
employment under this Agreement, Company shall pay or cause to be
paid to Executive a base salary at an annual rate of not less than
$345,099 , payable in cash in equal periodic installments
not less frequent than the periodic installments in effect for
salaries of Company Executives of the same level as Executive (the
“ Base Salary ”). The Base Salary shall be
subject to increases pursuant to reviews by the Board of Directors,
where applicable, or a committee appointed by the Board of
Directors, at such times as salary reviews are conducted generally
for Company Executives of the same level as Executive, but in no
event less frequent than annually.
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3.2
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Incentive Compensation. During
Executive’s employment under this Agreement, Company shall
cause Executive to be eligible to participate in each bonus or
incentive compensation plan, program or policy maintained by
Company from time to time, in whole or in part, for Executives of
his level (“ Bonus Plan ”). Executive’s
target and maximum compensation under, and his performance goals
and other terms of participation in, each Bonus Plan shall be
determined by Company or by such person or administrative body as
provided in the Bonus Plan. Said incentive compensation is not
guaranteed and is contingent upon Executive and Company achieving
deliverables or goals agreed upon. Said incentive compensation
shall not be considered “earned” by Executive until
Company has allocated payment to be made to Executive for any
performance period. Payment under any Bonus Plan shall be made, if
at all, no later than March 15 th of the year after
the year in which the incentive compensation is earned.
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3.3
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Incentive Stock Compensation. During
Executive’s employment under this Agreement, Company shall
cause Executive to be eligible to participate in an incentive stock
plan as may be maintained by Company from time to time, in whole or
in part, for Executives of his level. Executive’s awards
under such plan shall be determined by the administrator of the
plan, the vesting for which shall be accelerated in the event of a
Change in Control as defined herein. The specific terms and
conditions of these options shall be set out in a stock option
agreement between Executive and Company.
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The grant of stock options shall not
be construed to constitute or to be evidence of a commitment or
guarantee to renew this Agreement or to employ or retain Executive
for any period of time inconsistent with Sections 4 and 5 of
this Agreement.
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3.4
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Benefits. During his employment under
this Agreement, Executive shall be entitled to:
(i) participation in such Executive retirement and welfare
benefit plans, programs, policies and arrangements as maintained by
Company from time to time, in whole or in part, for Executives of
his level, including but not limited to Company’s Executive
stock ownership plan, and its health, disability, life insurance
and sickness and accident insurance plans; and (ii) paid
vacation, holidays, leave of absence, leave for illness, funeral
leave and temporary disability leave in accordance with the
policies of Company; and (iii) perquisites as from time to
time provided by Company to Executives of his level.
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3.4
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Expenses. During Executive’s
employment under this Agreement, Company shall reimburse Executive
for ordinary and reasonable out-of-pocket expenses incurred by him
in the performance of his duties hereunder, provided that Executive
shall account to Company for such expenses in accordance with the
Executive business expense policies and practices of Company.
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3.5
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Effect of Termination. Upon termination
of employment for any reason, Executive shall no longer be entitled
to participation in any Benefits programs, including the period
when severance is payable under the Agreement.
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4. Term of Employment. The term of Executive’s
employment (the “Term”) shall commence on the effective
date of this Agreement and continue through January 31, 2009
for the initial term, unless sooner terminated as provided herein.
Upon expiration of the initial term, the term of Executive’s
employment shall automatically renew on February 1 st
for successive 12-month renewal periods, unless and until
terminated as provided herein.
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5.
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Termination of Employment.
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5.1
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Dismissal without Good Cause and
Resignation for Good Reason.
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5.1.1
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Dismissal without Good Cause. Company
may terminate Executive’s employment under this Agreement
without Good Cause (as defined in Section 5.1.4) at any time
by giving notice thereof to Executive at least 30 days before
the effective date of such termination. Upon such termination,
Executive shall be entitled to such compensation as provided in
Section 5.1.3.
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5.1.2
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Resignation for Good Reason. Executive
may terminate his employment under this Agreement for Good Reason
(as defined in Section 5.1.5) at any time by written notice
thereof to Company at least 30 days before the effective date
of such termination. Such notice shall specify in reasonable detail
the Good Reason based upon which Executive intends to terminate his
employment. Upon such termination, Executive shall be entitled to
such compensation as provided in Section 5.1.3.
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5.1.3
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Severance Pay upon Dismissal without Good
Cause or Resignation for Good Reason. If Executive’s
employment under this Agreement is terminated by Company without
Good Cause or by Executive for Good Reason, Executive shall be
entitled to the sum of the following, payable in equal periodic
installments the same as Base Salary was received during the term
of Executive’s employment as provided in Section 3.1 herein,
which installments shall commence within 60 days after the
last day of employment:
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(i)
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Base Salary, at the rate in effect immediately
before the date of termination, for the greater of (A) the
period from the day after his last day of employment hereunder
through the last day of the Term of this Agreement, or (B) six
months; and
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(ii)
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The amount “earned” by Executive
under the annual Bonus Plan if at the time of termination Company
has allocated payment to be made to Executive under the terms of
the Bonus Plan for any performance period. Executive will not be
eligible to receive payment under the Bonus Plan for any
performance period if he is terminated prior to a decision by
Company as to the payment due to Executive, if any, under the terms
of the Bonus Plan. If no such decision by Company is made or
necessary, Executive will not be eligible to receive any payments
under the Bonus Plan if he is not employed at the time bonus
payments are made to Executives;
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so long as Executive
(1) executes and delivers to the Company, before such sum
becomes payable, a general release in form and substance acceptable
to the Company, by which Executive releases the Company from all
claims arising from Executive’s employment by the Company or
termination of employment therefrom, in consideration for such
payment and (2) Executive shall not be in breach of any of the
provisions o f Section 7 of this Agreement at any time during
the effectiveness thereof. In no event will any payment be made
before the release becomes effective upon expiration of any
applicable withdrawal period.
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5.1.4
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Definition of “Good Cause.”
“ Good Cause ” means:
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(A)
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Executive’s willful gross misconduct,
willful gross neglect, willful malfeasance or gross negligence in
carrying out his duties hereunder, or willful breach of this
Agreement (other than an inadvertent and nonrecurring breach cured
and corrected by Executive within 30 days after notice thereof
by Company). Under this provision, “willful breach”
shall include, but not be limited to, insubordination, serious
dereliction of fiduciary obligation, chronic abuse by Executive of
alcohol, narcotics or any other drug, a violation of any material
Company rule, regulation or policy, or a serious violation of any
law governing the workplace. It is provided further that, no act or
failure to act shall be considered “willful” if
Executive reasonably believed in good faith that such act or
failure to act was in, or not opposed to, the best interest of
Company and its affiliates;
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(B)
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Any act or conduct of dishonesty to Company by
Executive involving fraud and/or embezzlement;
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(C)
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Executive’s conviction, including a plea
of guilty or nolo contendere , of a felony involving theft
or moral turpitude, other than a felony predicated on
Executive’s vicarious liability (for purposes of this
Agreement, “vicarious liability” means
Executive’s liability based on acts of Company for which
Executive is charged solely as a result of his offices with Company
and in which he was not directly involved or did not have prior
knowledge of such acts); or
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5.1.5
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Definition of “Good
Reason.” “ Good Reason ” means,
without Executive’s consent, any of the following
conditions:
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(A)
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Any change in Executive’s title or
position that constitutes a material diminution in authority as
compared to the authority of his title or position as of the
Effective Date, or any substantial diminution in Executive’s
duties and responsibilities (other than a change due to
Executive’s Disability), provided that no diminution of
title, position, duties or responsibilities shall be deemed to
occur solely because Company becomes a subsidiary of another
corporation or because there has been a change in the reporting
hierarchy incident thereto involving Executive;
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(B)
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Any requirement by Company that Executive
involuntarily physically relocate from Executive’s current
work location to another work location more than 75 miles away;
or
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(C)
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Any material breach by Company of its
obligations under this Agreement.
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So long as Executive notifies
Company within 90 days after the existence of any such
condition and Company fails to cure and correct such condition
within 30 days after receipt of such notice. Notwithstanding
the foregoing, Good Reason shall not exist unless the termination
of employment occurs no later than two years following the initial
existence of any condition provided in this Section 5.1.5.
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5.2
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Dismissal for Good Cause, Resignation
without Good Reason and Termination upon Death or
Disability.
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5.2.1
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Dismissal for Good Cause. Company may
terminate Executive’s employment under this Agreement for
Good Cause by (i) giving notice thereof to Employee specifying
in reasonable detail the Good Cause based upon which Company
intends to terminate his employment; (ii) if Good Cause exists
under 5.1.4(A) only, after at least 30 days after such notice,
providing Employee an opportunity to be heard at a meeting with the
CEO and the Board of Directors; and (iii) thereafter,
effectuating such termination by a majority vote of the Board of
Directors. For Good Cause terminations under Sections 5.1.4(B)
& (C), Company may terminate Employee’s employment
immediately under this Agreement upon notice thereof to Employee.
The effect of such termination is provided in
Section 5.2.4.
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5.2.2
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Resignation without Good Reason.
Executive may terminate his employment hereunder at any time
without Good Reason by notice thereof to Company at least 30 days
before the effective date of such termination. The effect of such
termination is provided in Section 5.2.4.
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5.2.3
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Termination upon Death or Disability.
This Agreement shall terminate automatically upon Executive’s
death. If Company determines in good faith that Executive has a
Disability as defined in this Section, Company may terminate his
employment under this Agreement by notifying Executive thereof at
least 30 days before the effective date of termination. For
purposes of this Agreement, “ Disability ” means
any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than six
months and which renders Executive unable to perform his material
duties under this Agreement. If there is any dispute between the
parties as to Executive’s Disability, Company shall select or
approve a physician whose determination as to Executive’s
Disability shall bind the parties hereto. The effect of a
termination due to Executive’s death or Disability is
provided in Section 5.2.4.
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5.2.4
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Effect of Dismissal for Good Cause,
Resignation without Good Reason, or Termination upon Death or
Disability. If Executive’s employment under this
Agreement is terminated by Company for Good Cause, by Executive
without Good Reason, or due to Executive’s death or
Disability as provided in this Agreement, all obligations of
Company under this Agreement shall terminate, except as provided in
Section 5.6.
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5.3
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Termination by Mutual Consent. Company
and Executive may terminate Executive’s employment under this
Agreement at any time and for any reason upon the mutual consent of
both parties, effective as of such date as agreed upon by the
parties. Upon such termination, except as provided in
Section 5.6 or as agreed to by the parties in connection with
their mutual consent to terminate Executive’s employment, all
obligations of Company hereunder shall terminate.
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5.4
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Termination after a Change in
Control.
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5.4.1
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Termination Events Triggering
Compensation. Company shall pay or cause to be paid to
Executive such compensation as provided in Section 5.4.2, if
his employment under this Agreement is terminated by Company
without Good Cause or by Executive for Good Reason within
12 months after a Change in Control (as defined in
Section 5.4.3).
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5.4.2
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Compensation upon Termination. If
Executiv
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