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Exhibit 10.11
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 21st day of November, 2005, by and
between
Loral Space & Communications Inc., a Delaware corporation (the
"Company"), Eric
J. Zahler, a resident of New York, NY (the "Executive") and those
subsidiaries
of the Company signatory hereto solely for purposes of Section
11(m) 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 President & Chief Operating Officer, 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 &
Chief Operating Officer, subject to the general supervision of the
Chief
Executive Officer of the Company 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
securities,
mutual funds or other collective investment funds, limited partner
interests
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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 $1,248,000 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 the Company 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 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 forty
percent (40%) 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
the
Compensation Committee of the Board of Directors of 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 Company agrees to grant to the Executive an
option
to purchase 120,000 shares of common stock of the Company (the
"Option")
pursuant to the terms of the Company'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:
(a)
Paid Vacation. The Executive shall be entitled to twenty (20) days
paid
vacation per calendar year in accordance with the Company's
vacation policy in
effect
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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 of the
Company pursuant to Section 8.7 of the Plan of Reorganization and
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 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 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. 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;
(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;
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(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;
(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
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(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 Company, Loral Skynet Corporation and Space Systems/Loral,
Inc., 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 under
Section 6(e), or (ii) by the Company for Cause as provided in
Section 6(c), all
payments, 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) all 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 and
necessary 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 exc
