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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
AGREEMENT,
dated as of the 28th day of March, 2006 (the "Effective Date"),
by and between Loral Space & Communications Inc., a Delaware
corporation (the
"Company"), Michael B. Targoff (the "Executive") and those
subsidiaries of the
Company signatory hereto solely for purposes of Section 13(n)
hereof.
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 Chief Executive Officer and Vice Chairman of the
Board of
Directors (the "Board"), 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
as of March 1, 2006, and, unless sooner terminated as provided in
Section 6,
shall conclude on December 31, 2010 (the "Term").
Section 3.
Duties. The Executive shall perform services in a managerial
capacity in a manner consistent with the Executive's position as
Chief Executive
Officer and Vice Chairman of the Board, subject to the general
supervision of
the Board. The Executive shall have all of the duties,
responsibilities and
authority commensurate with his position. The Executive hereby
agrees to devote
substantially all his business time to 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, or
continue participation, in (a) charitable, civic, educational,
professional,
community or industry affairs, (b) managing the Executive's and his
family's
personal investments, (c) corporate directorships and other
business activities
described in Schedule I attached hereto with regard to public
companies, and as
heretofore disclosed to the Board with regard to private companies,
including
any replacements for any such private companies heretofore
disclosed to the
Board that does not materially change the time commitment or
violate Section 10
hereof and (d) such other activities as may hereafter be
specifically approved
in writing, which in each case
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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 10(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 $950,000 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 shall review
annually 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 Management
Incentive 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 not
less than
125% of the Executive's Base Salary (the "Target Annual Bonus").
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) Equity
Grants. In connection with Executive's service as Vice Chairman
of the Board commencing on November 21, 2005, the Company, pursuant
to an Option
Agreement dated December 21, 2005 (the "Initial Option Agreement"),
on December
21, 2005, granted to Executive (the "Initial Option Grant") an
option to
purchase 106,952 shares of its common stock at an exercise prices
of $28.441 per
share under the Company's 2005 Stock Incentive Plan (the "Stock
Option Plan").
The Board has amended and restated the Stock Option Plan to
increase the number
of shares of the Company's common stock, par value per share $0.01
(the "Common
Stock"), available for grant thereunder to a number adequate to
cover the Option
(as defined below) and will, prior to the submission of the amended
and restated
Stock Option Plan to stockholders for approval, further amend and
restate the
Plan to provide for an additional number or shares adequate to
cover the 2008
Equity Award (as defined below), based on the Company's best
estimate at the
time of amendment and restatement of the number of shares necessary
for the 2008
Equity Award, and shall reserve adequate shares, subject to such
best estimate,
under the Stock Option Plan for such awards and the Company agrees
to submit the
Stock Option Plan as amended to the Company's stockholders at the
next annual
meeting of stockholders and seek stockholder approval (the
"Approvals"). In
addition to the Initial Option Grant, in connection with the
execution of this
Agreement,
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the Company grants to the Executive an option to purchase 825,000
shares of
common stock of the Company, with a per-share exercise price equal
to the fair
market value of one share of the Company's common stock at the date
of grant
(the "Option"), such grant to be subject to obtaining the
Approvals. To the
extent the Approvals are not obtained, the Option shall be void.
The Option
shall have such other terms and conditions as set forth in the
Option Agreement
attached hereto as EXHIBIT A (the "Second Option Agreement" and,
together with
the Initial Option Agreement, the "Option Agreements"). The Option
is intended
to count as an option award for both 2006 and 2007, in lieu of any
regular
annual option award that the Executive would otherwise be entitled
to in 2006
and 2007, and has been structured as such with one-half of the
Option vesting
over three years commencing on the date of Grant and one-half of
the Option
vesting over three years commencing on the first anniversary of the
date of
grant. In addition, if the Executive has earned a Target Annual
Bonus for both
2006 and 2007, the Company shall grant to the Executive in 2008 an
additional
option to purchase shares of common stock of the Company, or other
equity award
under the Stock Option Plan, in either case having a comparable
economic value
equal to one-half (1/2) of the value of the Option (based on a
Black-Scholes
valuation of such Option) (the "2008 Equity Award") and, to the
extent the 2008
Equity Award is a stock option, with terms similar to the Second
Option
Agreement; provided, however, that the 2008 Equity Award shall,
whether an
Option or other equity award, vest in four annual installments with
twenty-five
percent (25%) of the award vesting on the date of grant, an
additional
twenty-five percent (25%) of the award vesting on the first
anniversary of the
date of grant, an additional twenty-five percent (25%) of the award
vesting on
the second anniversary of the date of grant and the remaining
twenty-five
percent (25%) of the award vesting on the third anniversary of the
date of grant
(consistent with the provisions of the Second Option Agreement (and
Section 7(h)
hereof) relating to termination of employment and accelerated
vesting and
exercise periods); and further provided, however, that the 2008
Equity Award
shall not be made subject to stockholder approval. The grant of the
2008 Equity
Award shall also be subject to obtaining the Approvals. The
Executive shall be
eligible for participation in the Stock Option Plan during the Term
to the same
extent as other senior executives of the Company, taking into
account that the
Option is intended to count as the regular option award for both
2006 and 2007
and the 2008 Equity Award is intended to count as an the regular
equity award
for 2008. The Company may make such other discretionary equity
awards to the
Executive as it deems appropriate. Notwithstanding anything herein
to the
contrary, (i) the Option shall not become exercisable prior to the
date the
Company obtains the Approvals and the 2008 Equity Award shall not
become
exercisable prior to the Approvals.
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:
(a) Paid
Vacation. The Executive shall be entitled to 20 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
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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 equity, 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 other senior
executives of
the Company 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 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 the terms of any officers'
liability
insurance carried by the Company, 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 attached
hereto as
EXHIBIT B, which has heretofore been executed. 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 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.
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Section 6.
Termination of Employment. The Executive's employment may end
earlier than the end of the Term 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 one hundred eighty (180) days
out of any
three hundred sixty-five (365)-day 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 upon written notice from the Company.
In the event
of any dispute as to the Executive's disability, the determination
binding on
both parties shall be made by a physician or physicians mutually
agreed upon in
good faith by the Board and the Executive or his
representative.
(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 full
Board and
present arguments on his own behalf, with or without legal
representation at the
Executive's election, regarding any such alleged act or failure to
act. If a
majority of the members of the full Board make a determination that
Cause
exists, the termination shall be effective on the date immediately
following the
expiration of the ten (10) day notice period. Otherwise, Cause
shall not be
determined to exist. For purposes hereof, the term "Cause" shall
mean 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;
(ii) the Executive shall have materially breached any provision
of
Section 10
hereof;
(iii) 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;
(iv) the Executive shall have engaged in any willful misconduct
with
regard to
the Company resulting in or reasonably likely to result in a
material
loss to the Company or substantial damage to its reputation; or
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(v) the Executive shall have willfully breached in any material
respect
any material provision of the Company's Code of Conduct, which
breach
would generally result in the termination of a senior executive
of
the
Company 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.
(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, unless
agreed to by
the Executive, 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;
(ii) any reduction or diminution in the Executive's then titles
or
positions
(including removal or failure to be re-elected to the Board or
as Vice
Chairman), or a material reduction or diminution in the
Executive's then authorities, duties or responsibilities or
reporting
requirements with the Company; provided, however, that the sale of
all or
substantially all of the assets or stock of Loral Skynet
Corporation or
Space
Systems/Loral, Inc. (each, a "Subsidiary") shall not, by
itself,
constitute
Good Reason;
(iii) 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;
(iv) the relocation by the Company of the Executive's primary
place
of
employment with the Company to a location outside of New York
County,
New
York;
(v) other material breach of this Agreement by the Company;
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(vi) the failure of the Company to obtain the assumption in
writing
delivered
to the Executive of its obligation to perform this Agreement by
any successor to
all or substantially all of the assets of the Company;
(vii) the occurrence of a Change in Control, as defined in the
Stock
Option
Plan, if the stockholders of the Company have not granted the
Approvals
under Section 4(c) prior to the earlier of June 30, 2007 or a
Change in
Control; provided, however, that for purposes of this Section
6(f)(vii)
the Executive shall not have Good Reason following the date
that
is six
months following the earlier of June 30, 2007 or a Change in
Control;
and further provided, however, that for purposes of this
Section
6(f)(vii)
the Executive shall not have Good Reason following the date
that
the
Approvals are obtained.
(viii)the failure of the stockholders of the Company to grant
the
Approvals
by June 30, 2007; provided, however, that for purposes of this
Section
6(f)(viii) the Executive shall not have Good Reason following
December
31, 2007; or
(ix) the failure of the Company to grant the 2008 Equity Award,
unless
such failure is due to the failure to obtain the Approvals.
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 under
Section 6(e), or (ii) by the Company for Cause as provided in
Section 6(c), all
payments, Base Salary and other benefits hereunder shall cease at
the effective
date of termination. Notwithstanding the foregoing, the Executive
shall be
entitled to receive from the Company (i) Base Salary earned or
accrued through
the date the Executive's employment is terminated, (ii)
reimbursement for any
and all monies advanced in connection with the Executive's
employment for
reasonable business expenses incurred by the Executive through the
date the
Executive's employment is terminated, (iii) all other payments and
benefits to
which the Executive may be entitled under the terms of any
applicable
compensation arrangement or benefit plan or program of the Company,
including
any earned and accrued, but unused vacation pay and benefits under
and in
accordance with the terms and provisions of the SERP, but excluding
any
entitlement to severance under any Company severance policy
generally applicable
to the Company's salaried employees, and (iv) excluding any accrued
and unpaid
Annual Bonus for the immediately preceding year (collectively, the
"Accrued
Benefits"). Payment of the Accrued Benefits pursuant to this
Section 7(a) shall
be made as soon as reasonably practicable following the Executive's
termination
of employment subject to such limitations and adjustments necessary
to comply
with Section 409A of the Internal Revenue Code of 1986, as amended
(the "Code").
(b) Death.
In the event of a termination due to the Executive's death
during the Term, the Company shall have no further obligations to
the Executive
or his
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beneficiaries other than to pay to the Executive's designated
beneficiary or, if
no beneficiary has been designated by the Executive, to his estate
(i) all
Accrued Benefits, plus (ii) any Base Salary through the end of the
calendar
month in which the Executive's death occurred, plus (iii) any
accrued and unpaid
Annual Bonus for the immediately preceding year, and (iv) at the
times the
Company pays its executives bonuses in accordance with its general
payroll
policies, an amount equal to that portion of the Annual Bonus,
which but for the
Executive's death would have been earned by the Executive during
the year of his
death, pro-rated based on a formula, the denominator of which shall
be 365 and
the numerator of which shall be the number of days during the year
of his death
during which the Executive was employed by the Company on an active
status (the
Accrued Benefits and the payment of the amounts set forth in
clauses (iii) and
(iv) of this Section 7(b) are collectively referred to as the
"Enhanced Accrued
Benefits"). In addition, any unvested stock options under the Stock
Option Plan
and any deferred compensation under the Initial Option Agreement
that would have
become vested on the next date of vesting applicable thereto shall
become vested
and shall remain exercisable or be paid as provided under the terms
of the
applicable plan or agreement as to a portion thereof based on a
formula, the
denominator of which shall be 365 and the numerator of which shall
be the number
of days during the year of his death during which the Executive was
employed by
the Company on an active status. The Executive's medical,
prescription and
dental coverage shall continue for the benefit of the Executive's
family through
the end of the Term.
(c)
Termination without Cause or for Good Reason. In the event that
the
Executive's employment is terminated during the Term by the Company
without
Cause or by the Executive for Good Reason, the Executive shall be
entitled to
receive as his exclusive right and remedy in respect of such
termination, (i)
all Enhanced Accrued Benefits, and (ii) a lump sum severance
payment equal to
two (2) times the sum of (A) the Executive's Base Salary in effect
on the date
of termination and (B) the Annual Bonus for the immediately
preceding year (or
Target Annual Bonus if termination occurs during the first year of
the Term or
before the Annual Bonus for the prior fiscal year is declared);
provided,
however, that if the Good Reason is the event under Section
6(f)(vii), the sum
of subsections (A) and (B) above shall be paid in the amount that
would be due
for the remainder of the original Term rather than two (2) time
such sum
("Severance Payments"). In addition, all unvested stock options,
other equity
grants and all deferred compensation under the Initial Option
Agreement shall
become fully vested and shall remain exercisable or be paid as
provided under
the terms of the applicable plan or agreement. Following the
termination of the
Executive's employment by the Company without Cause or by the
Executive for Good
Reason, the Company shall provide medical, dental and life
insurance coverage,
upon the same terms and conditions applicable generally to
similarly situated
executives who remain employed with the Company, for a period of
eighteen (18)
months; provided, however, that for each of the eighteen (18)
months following
such termination the Executive shall be responsible for payment of
the regular
employee portion of the monthly insurance premiums for such
insurance,
applicable to similarly situated executives who remain employed
with the
Company, and the Company shall be responsible for payment of the
regular Company
portion of the
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monthly insurance premiums for such insurance, applicable to
similarly situated
executives who remain employed with the Company (the "Welfare
Severance
Benefits"); and further provided, however, that such obligation
shall expire if
the Executive commences new employment prior to the expiration of
such eighteen
(18)-month period and becomes covered by substantially similar
benefits. The
Severance Payments, all other payments and the provision of any
continued
benefits pursuant to this Section 7(c) shall be made as soon as
reasonably
practicable following the Executive's termination of employment
subject to such
limitations and adjustments
