Executive Employment Agreement - Orbital Sciences Corp. and Garrett E. Pierce
EXECUTIVE EMPLOYMENT AGREEMENT
August 9, 2000
Mr. Garrett E. Pierce
Orbital Sciences Corporation
21700 Atlantic Blvd.
Dulles, Virginia 20166
Dear Garrett:
This letter agreement (the "Agreement") sets forth the severance
benefits that Orbital Sciences Corporation and its subsidiaries (together, the
"Company") agrees will be provided to you in the event your employment with
the Company terminates under the circumstances described below. This Agreement
is not an employment contract nor does it alter your status as an at-will
employee of the Company.
1. Term. This Agreement commences as of August 9, 2000, and
shall remain in effect so long as you are employed as an executive officer of
the Company.
2. Relationship to Executive Employment Change of Control
Agreement. This Agreement shall govern the severance benefits you shall
receive from the Company in the event your employment is terminated, except in
the event your employment is terminated in anticipation of or within two years
following a "Change in Control" as that term is defined in your Executive
Employment Change of Control Agreement, in which case your Executive
Employment Change of Control Agreement shall govern.
3. Termination. You shall be entitled to the benefits provided
in Section 4 of this Agreement if your employment is terminated by the Company
for Disability or Cause, as described below, or by the Company for any reasons
other than Cause or Disability, or by you for Good Reason, as described below.
(i) Disability. If, as a result of your incapacity due
to physical or mental illness, you shall have been absent from your duties
with the Company on a full-time basis for nine consecutive months, and within
30 days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, the Company may
terminate your employment for "Disability."
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 2
(ii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination on (A) the willful gross neglect
of your duties with the Company as such duties are determined by the Board or
the executive officers to whom you report (other than any such failure
resulting from your incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you by the Board which
specifically identifies the manner in which the Board believes that you have
substantially neglected your duties, or (B) the willful engaging by you in
gross misconduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the Company.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
clause (A) or (B) of the first sentence of this Subsection and specifying the
particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean:
(A) without your written consent, the assignment to you
of any position (including status, offices, titles and reporting
requirements), authorities, duties and responsibilities, that are not
at least commensurate in all material respects with the most
significant of those held, exercised and assigned by you at any time
during the previous 180-day period, or any other action by the
Company that results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that
is remedied by the Company promptly after receipt of notice thereof
given by you;
(B) a failure to nominate, or renominate you to a
position on the Board of Directors of the Company;
(C) a reduction by the Company in your annual base
salary ("Annual Base Salary"), which for the purposes of this
Agreement shall mean an amount at least equal to 12 times the highest
monthly base salary paid or payable, including any base salary that
has been earned but deferred, to you by the Company in respect of the
previous 12-month period;
(D) the Company's requiring you to be based anywhere
other than the office of the Company in which you are based in the
previous 180-day period or any office or location within a 50 mile
radius of such office, except for required travel on the
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 3
Company's business to an extent substantially consistent with your
business travel obligations within the previous 180-day period;
(E) the failure by the Company to continue in effect
any compensation plan in which you participate, or to provide you
with plans substantially similar, including but not limited to any
stock purchase plan, stock option plan, incentive compensation,
bonus, and other plan in which you were participating in the previous
180-day period, or the failure by the Company to continue your
participation therein;
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by you under
any of the Company's retirement, pension, 401(k), deferred
compensation, life insurance, medical, health, accident, disability
or other benefit plans in which you were participating in the
previous 180-day period, the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits enjoyed by you in the previous 180-day period, or the
failure by the Company to provide you with the number of paid
vacation days to which you are entitled in accordance with the
Company's normal vacation policy in effect in the previous 180-day
period;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(H) any termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(iv) hereof (and, if applicable, Section
3(ii) hereof); and for purposes of this Agreement, no such purported
termination shall be effective.
(iv) Notice of Termination. Any termination by the
Company or by you shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 6 hereof, and if by the
Company for Cause, shall not be effective unless such notice includes the
information set forth in Section 3(ii) hereof.
(v) Date of Termination, etc. "Date of Termination"
shall mean (A) if your employment is terminated by reason of death or
Disability, the date of your death or 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30 day period), as the case may be,
(B) if your employment is terminated by the Company for Cause or for any other
reason, the date specified in the Notice of Termination which shall not be
less than 30 days from the date such Notice of Termination is given, and (C)
if you terminate your employment for "Good Reason," the date such Notice of
Termination is given or any later date specified therein.
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 4
4. Benefits Upon Termination or During Disability.
(i) During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or mental illness,
and in the event your employment is terminated pursuant to Section 3(i)
hereof, your benefits shall be determined in accordance with the Company's
insurance and benefit programs then in effect. Your stock options shall
continue to vest as scheduled for a 24-month period following your termination
and remain exercisable for the rest of the originally scheduled term.
(ii) If your employment shall be terminated for Cause or
by you without Good Reason, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, as well as any accrued, but unpaid amounts. You shall
have 60 days to exercise your vested options and your unvested options shall
be forfeited. The Company shall have no further obligations to you under this
Agreement.
(iii) If your employment shall be terminated (a) by the
Company for any reason other than for Cause or Disability or (b) by you for
Good Reason, then you shall be entitled to all the benefits provided below:
(A) The Company shall pay you on the Date of
Termination your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given.
(B) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall pay
to you, not later than 15 days following the Date of Termination, a
lump sum payment equal to two times the sum of (i) your Annual Base
Salary and (ii) the higher of (x) the sum of any incentive, annual
and other cash bonuses, paid or payable to you for the 12-month
period immediately preceding the month of your termination or (y) the
target bonus for the year of termination, based on 60% of your Annual
Base Salary (provided that for the first year of your employment,
such amount shall be construed to be your minimum guaranteed bonus of
$200,000).
(C) The Company shall also pay to you all reasonable
legal fees and expenses incurred by you as a result of such
termination (including all such fees and expenses, if any, incurred
in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement)
upon presentation to the Company of a reasonably detailed invoice for
such expenses, whether or not you have already made payment for such
expenses.
(D) For a 24-month period after such termination, the
Company shall arrange to provide you with life, disability, accident
and health insurance benefits substantially similar to those you were
receiving immediately prior to the Notice of Termination,
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 5
provided, however, that should the Company be unable to provide for
any such benefits under the terms of the benefit plans, or by law,
the Company shall pay you an amount equal to the premiums the Company
would have paid for such benefits under such plans, grossed-up for
taxes.
(E) Your stock options shall continue to vest as
scheduled for a 24-month period following your termination and all
vested stock options shall remain exercisable for the rest of their
originally scheduled terms.
(F) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or by
retirement benefits after the Date of Termination, or otherwise.
(G) In addition to all other amounts payable to you
under this Section 4, you shall be entitled to receive all benefits
payable to you under any of the Company's plans or agreements
relating to retirement benefits.
(iv) All payments required to be made by the Company
hereunder to you shall be subject to the withholding of such amounts relating
to Federal, state, local or foreign taxes as the Company reasonably may
determine it should withhold pursuant to any applicable law or regulation.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all its business and/or assets to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement no later than
ten days prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle you to compensation from the Company in
the same amount and on the same terms as you would be entitled under section
4(iii), except that for purposes of implementing the foregoing, a date ten
days prior to the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "the Company" shall
mean the Company, as hereinbefore defined and any successor to its business
and/or assets that assumes and agrees to perform this Agreement by executing
and delivering the agreement provided for in this paragraph 5, by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees,
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 6
devisees, and legatees. If you should die while any amount would still be
payable to you hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or if there is no such designee, to your estate.
6. Notice. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by registered
mail, return receipt requested, postage prepaid, addressed (i) if to the
Company, to Orbital Sciences Corporation, 21700 Atlantic Boulevard, Dulles,
Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the
address set forth on the first page of this Agreement, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement, and this Agreement supersedes all prior agreements between the
Company and you with respect to the subject matter herein. The validity,
interpretation construction and performance of this Agreement shall be
governed by the local laws of the Commonwealth of Virginia (regardless of the
laws that might otherwise govern under principles of conflicts of law).
8. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Washington, D.C. in accordance with the domestic rules of the American
Arbitration Association then in effect. Pending the resolution of such dispute
or controversy, the Company will continue to pay you your full base salary in
effect when the notice giving rise to the dispute was given and you will
continue as a participant in all incentive compensation, stock option,
retirement, deferred compensation, pension, life, disability, health and
accident plans in which you were participating when the notice giving rise to
dispute
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Mr. Garrett E. Pierce
Orbital Sciences Corporation
August 9, 2000
Page 7
was given, unless you have already received all benefits payable under Section
4(iii) of this Agreement. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
If this Agreement correctly sets forth our agreement on the subject
matter hereof, kindly sign both of the enclosed copies, keeping one for your
files and returning the other to the Company.
Sincerely,
ORBITAL SCIENCES CORPORATION
/s/ David W. Thompson
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By: David W. Thompson
Chairman and Chief Executive Officer
Agreed to:
/s/ Garrett E. Pierce
-------------------------------------------
Name: Garrett E. Pierce
Date: August 9, 2000