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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 21st day of November, 2005, by and
between Space Systems/Loral, Inc., a
Delaware corporation (the "Company"), and
C. Patrick DeWitt, a resident of Fremont,
CA (the "Executive").
WHEREAS, the Company desires to engage the services of the
Executive and the Executive desires to be
employed by the Company on the terms
and conditions hereinafter set forth;
and
WHEREAS, the Company desires to be assured that all proprietary
and confidential information of the Company
will be preserved for the exclusive
benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the
mutual covenants herein contained, and for
other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged, the
Company and the Executive agree as
follows:
Section 1.
Employment and Position. The Company hereby employs the
Executive as its President, and the
Executive hereby accepts such employment
under and subject to the terms and
conditions hereinafter set forth.
Section 2.
Term. The term of employment under this Agreement shall begin
on the Effective Date, as such term is
defined in the Debtors' Fourth Amended
Joint Plan of Reorganization Under Chapter
11 of the Bankruptcy Code, dated June
3, 2005, as modified (the "Plan of
Reorganization"), and, unless sooner
terminated as provided in Section 6, shall
conclude on the second (2nd)
anniversary of the Effective Date (the
"Term"). At the Executive's request
within the last six months preceding the
expiration of the Term, the Company
shall, to the extent practicable within two
weeks after any such request but
without any obligation, provide the
Executive with notice regarding whether the
Company intends to renew or extend the Term
under this Agreement, terminate the
employment relationship between the parties
on or shortly after the expiration
of the Term or continue the Executive's
employment on an "at will" basis with no
guaranteed term. Unless the Executive's
employment with the Company is
terminated upon the expiration of the Term
or the Term under this Agreement is
renewed or extended, the Executive shall be
employed by the Company after the
Term on an "at will" basis.
Section 3.
Duties. The Executive shall perform services in a managerial
capacity in a manner consistent with the
Executive's position as President,
subject to the general supervision of the
Chief Executive Officer of Loral Space
& Communications Inc. or his designee.
The Executive hereby agrees to devote his
full business time to the faithful
performance of such duties and to the
promotion and forwarding of the business
and affairs of the Company for the
Term, provided, however, that Executive
shall be permitted to engage in (i)
other activities of a civic, religious,
political or charitable nature, (ii)
managing investments of the Executive and
the Executive's family in
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securities, mutual funds or other
collective investment funds, limited partner
interests or similar passive investments,
(iii) corporate directorships and
other business activities described in
Schedule I attached hereto, or (iv) such
other activities as may hereafter be
specifically approved in writing, which in
each case and in the aggregate do not
materially interfere with the performance
of his obligations hereunder, provided,
further, however, that Executive may not
engage in any such activities that would
result in the Executive being in
Competition (as defined in Section 8(d)
below).
Section 4.
Compensation.
(a)
Salary. In consideration of the services rendered by the
Executive
under this Agreement, the Company shall pay
the Executive a base salary (the
"Base Salary") at the rate of $485,000 per
calendar year. The Base Salary shall
be paid in such installments and at such
times as the Company pays its salaried
executives and shall be subject to all
necessary withholding taxes, FICA
contributions and similar deductions. The
Board of Directors (the "Board") of
Loral Space & Communications Inc.
("Parent") may review from time to time the
Base Salary payable to Executive hereunder
and may, in its sole discretion,
increase but not decrease, the Executive's
salary rate. Any such increased
salary shall be and become the "Base
Salary" for purposes of this Agreement.
(b) Annual
Bonus. The Company shall maintain an annual bonus program ("MIB
Program") for certain executives, and
Executive shall be a participant in the
MIB Program and shall be entitled to an
annual bonus to the extent payable under
such program ("Annual Bonus"). The
Executive's target annual bonus opportunity
under the MIB Program shall be fifty
percent (50.0%) of the Executive's Base
Salary (the "Target Annual Bonus"). The
Annual Bonus for the 2005 fiscal year
under the MIB Program shall be earned and
determined in accordance with the
terms and conditions heretofore established
by Loral Space & Communications Ltd.
With respect to the Annual Bonus for the
2006 fiscal year or any subsequent
fiscal year, the Board shall, in its
discretion, establish the terms and
conditions of the MIB Program and may amend
the MIB Program (other than by
reducing the Target Annual Bonus percentage
set forth above) accordingly. The
Annual Bonus shall be paid on or before
March 15 of the year following the year
to which the Annual Bonus relates.
(c) Stock
Options. The Parent has agreed to grant to the Executive an
option to purchase 75,000 shares of common
stock of the Parent (the "Option")
pursuant to the terms of the Parent's 2005
Stock Incentive Plan (the "Stock
Option Plan"). Except as set forth in the
Option Agreement (defined below), the
Option shall have a per share exercise
price equal to $19.00. Such Option shall
be granted on or about the thirtieth (30th)
day following the Effective Date.
The Option shall have such other terms and
conditions as set forth in the Option
Agreement attached hereto as Exhibit A (the
"Option Agreement").
Section 5.
Benefits. In addition to the compensation detailed in Section 4
of this Agreement, the Executive shall be
entitled to the following additional
benefits:
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(a) Paid
Vacation. The Executive shall be entitled to twenty-five (25)
days paid vacation per calendar year in
accordance with the Company's vacation
policy in effect from time to time, such
vacation shall extend for such periods
and shall be taken at such intervals as
shall be appropriate and consistent with
the proper performance of the Executive's
duties hereunder.
(b)
Welfare Plans. During the Term, the Executive and/or the
Executive's
family, as the case may be, shall be
eligible for participation in and shall
receive all benefits under welfare benefit
plans, programs, practices and
policies provided generally by the Company
to similarly situated executives of
the Company (including, without limitation,
any medical, prescription, dental,
disability, salary continuance, employee
life, group life, accidental death and
travel accident insurance plans and
programs that may be provided by the Company
from time to time). Such plans, programs,
practices and policies are subject to
change from time to time by the
Company.
(c) Other
Benefit Plans. During the Term, the Executive shall be entitled
to participate in all savings, retirement
and pension plans (including the
Company's Supplemental Executive Retirement
Plan ("SERP")), programs, practices
and policies applicable generally to
similarly situated executives of the
Company as determined by the Board from
time to time. Such plans, programs,
practices and policies are subject to
change from time to time by the Company.
(d)
Perquisites and Other Benefits. During the Term, the Executive
shall
be entitled to such additional perquisites
and fringe benefits appertaining to
his position in accordance with any
practice established by the Board. During
the Term, Executive shall be entitled to
receive all benefits under any
individual welfare benefit arrangements
(including life insurance coverage) or
other benefit arrangements currently in
effect for such Executive in a manner
consistent with past practice, and such
arrangements are listed on Schedule I
attached hereto.
(e)
Reimbursement of Expenses. The Company shall reimburse the
Executive
for all reasonable and necessary expenses
actually incurred by the Executive
directly in connection with the business
affairs of the Company and the
performance of his duties hereunder, upon
presentation of proper receipts or
other proof of expenditure and subject to
such reasonable guidelines or
limitations provided by the Company from
time to time. The Executive shall
comply with such reasonable limitations and
reporting requirements with respect
to such expenses as the Board may establish
from time to time.
(f)
Indemnification. In addition to indemnification obligations
pursuant
to Section 8.7 of the Plan of
Reorganization and the terms of any officers'
liability insurance carried by the Parent,
the Executive (and his heirs,
executors and administrators) shall be
indemnified by the Company and its
successors and assigns pursuant to a
separate Indemnification Agreement in the
form attached hereto as Exhibit B. The
Executive shall be an insured person
under or otherwise covered by directors and
officers liability insurance in an
amount consistent with past practice. The
obligations of
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the Company pursuant to this Section shall
survive the expiration of the Term or
Executive's voluntary or involuntary
termination or resignation for Good Reason.
Section 6.
Termination. This Agreement shall terminate at the end of the
Term. The Executive's employment may end
earlier as follows:
(a) Death.
The employment of the Executive shall automatically terminate
upon the death of the Executive.
(b)
Disability. In the event of any physical or mental disability of
the
Executive rendering the Executive
substantially unable to perform his duties
hereunder for a period of at least 120 days
out of any twelve-month period and
the further determination that the
disability is permanent with regard to the
Executive's ability to return to work in
his full capacity, the Executive's
employment shall be terminated on account
of the Executive's disability. Any
determination of permanent disability shall
be made by the Board in consultation
with a qualified physician or physicians
selected by the Board and reasonably
acceptable to the Executive. The failure of
the Executive to submit to a
reasonable examination by such physician or
physicians shall act as an estoppel
to any objection by the Executive to the
determination of disability by the
Board.
(c) By the
Company For Cause. The employment of the Executive may be
terminated by the Company for Cause (as
defined below) at any time effective
upon written notice to the Executive;
provided, however, that if such
termination is based upon any event set
forth in clauses (iii), (iv), (v), (vi)
or (vii) below, Executive shall be given
not less than ten (10) days prior
written notice by the Board of the
intention to terminate him for Cause, such
notice to state in detail the particular
act or acts or failure or failures to
act that constitute the grounds on which
the proposed termination for Cause is
based, and Executive shall have ten (10)
days after the date that such written
notice has been given to Executive in which
to address the Board regarding any
such alleged act or failure to act. If the
Board makes a determination that
Cause exists, the termination shall be
effective on the date immediately
following the expiration of the ten (10)
day notice period. For purposes hereof,
the term "Cause" shall mean that the Board
has determined reasonably, in good
faith and based on credible evidence that
one or more of the following has
occurred:
(i) the Executive shall have been after the Effective Date
convicted
of, or
shall have pleaded guilty or nolo contendere to, any felony or
any
other
crime that would have constituted a felony under the laws of
the
State of
New York;
(ii) the Executive shall have been indicted for any felony or
any
other
crime that would have constituted a felony under the laws of
the
State of
New York in connection with or arising from the Executive's
employment
with the Company;
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(iii) the Executive shall have breached any material provision
of
Section 8
hereof;
(iv) the Executive shall have committed any fraud,
embezzlement,
misappropriation of funds, or breach of fiduciary duty against
the
Company,
in each case of a material nature;
(v) the Executive
shall have engaged in any willful misconduct
resulting
in or reasonably likely to result in a material loss to the
Company or
substantial damage to its reputation;
(vi) the Executive shall have willfully breached in any
material
respect
any material provision of the Company's Code of Conduct and, to
the extent
any such breach is curable, the Executive shall have failed to
cure such
breach within ten (10) days after written notice of the alleged
breach is
provided to the Executive; or
(vii) the Executive shall have willfully breached in any
material
respect
any material provision of Section 3 hereof.
(d) By the
Company without Cause. The Company may terminate the
Executive's employment at any time without
Cause effective upon written notice
to the Executive.
(e) By the
Executive Voluntarily. The Executive may terminate his
employment at any time effective upon at
least thirty (30) days prior written
notice to the Company.
(f) By the
Executive for Good Reason. The Executive may terminate his
employment for Good Reason by providing the
Company thirty (30) days' written
notice setting forth in reasonable
specificity the event that constitutes Good
Reason, within sixty (60) days of the
occurrence of such event. During such
thirty (30) day notice period, the Company
shall have a cure right (if curable),
and, if not cured within such period,
Executive's termination will be effective
upon the expiration of such cure period.
For this purpose, the term "Good
Reason" shall mean:
(i)
the assignment
to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority or
responsibilities or any duties which are illegal or unethical or
any
material diminution of any of the Executive's significant
duties;
(ii)
any reduction in Base
Salary, the Target Annual Bonus or any of the
benefits described in Section 5 of this Agreement to the extent
not
permitted under Section 5;
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(iii) the
relocation by the Company of the Executive's primary place of
employment with the Company to a location not within a thirty
(30)
mile radius of such place of employment as of the Effective
Date;
provided, however, that such relocation shall not be considered
Good
Reason if such location is closer to the Executive's home than
the
Executive's primary place of employment as of the Effective
Date;
(iv)
other material breach
of this Agreement by the Company; or
(v)
the failure of
the Company to obtain the assumption in writing of
its obligation to perform this Agreement by any successor to all
or
substantially all of the assets of the Company.
Notwithstanding anything in this Agreement to the contrary, any
determination by the non-employee directors
of the Board regarding the action
the Company shall take with respect to (a)
any personal claims of any of the
Company's or its affiliates' officers
(including Executive) or directors against
the Company or any of its affiliates for
indemnification arising from or in
connection with alleged acts or omissions
that occurred on or prior to the date
of the commencement of the chapter 11 cases
of Loral Space & Communications Ltd.
and certain of its affiliates on July 15,
2003; and (b) the Shared Services
Agreement or the Management Agreement, each
of even date herewith, by and among
the Parent, Loral Skynet Corporation and
the Company, shall not constitute Good
Reason.
Section 7.
Termination Payments and Benefits.
(a)
Voluntary Termination, Termination For Cause. Upon any termination
of
employment during the Term either (i) by
the Executive without Good Reason
