[LOGO EASYLINK SERVICES]
EXHIBIT 10.3
SEVERANCE AND CHANGE IN CONTROL AGREEMENT
SEVERANCE AND CHANGE IN CONTROL AGREEMENT (hereinafter the "Agreement")
dated as of June 22, 2006 between EasyLink Services Corporation (hereinafter
"Company") and _____________________ (hereinafter "Employee").
X. XXXXXXXXX PAYMENTS: If Company terminates the employment of Employee without
Cause (as defined below) at any time on or after the date of this Agreement
(whether before or after a Change of Control, as defined below), or Employee
terminates his or her employment for Good Reason (as defined below) within six
months after a Change of Control, Company shall pay to Employee as severance pay
an amount equal to six (6) months of Employee's base salary as in effect
immediately prior to Employee's termination of employment. Such severance pay
shall be paid in equal installments over the 6-month period immediately
following Employee's termination of employment in accordance with Company's
regular payroll practices. Notwithstanding the foregoing, in order to comply
with the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the "Code"), or an applicable exemption therefrom, Company shall have
the right either (i) to cause all severance payments to Employee to be paid by
March 15 of the calendar year following the calendar year in which the earlier
of Employee's termination date or the Change of Control date occurs (with any
installments that are scheduled to be paid after such March 15 date being paid
in a lump sum prior to such date), or (ii) if it is not practicable to make all
of such payments prior to such March 15 date, to provide that none of such
payments shall commence prior to such March 15 date and the total severance
amount shall be paid in one lump sum on the date that is one day after six
months after Employee's termination date.
A. GENERAL RELEASE: Payments under this Agreement shall be conditioned
on Employee's execution and delivery of Company's standard Separation
Agreement and Release in effect at the time of termination and
Employee's not revoking such agreement within any period of revocation
under applicable law. Employee shall be entitled to no payments under
this Agreement unless and until Employee executes and delivers such
Separation Agreement and Release and Employee fails to exercise any
right of revocation thereof under applicable law before the expiration
of any period for exercise of such revocation right.
B. EMPLOYEE'S COMPLIANCE WITH OTHER OBLIGATIONS: Payments under this
Agreement shall be conditioned on Employee's continued compliance with
any applicable obligations regarding confidentiality, intellectual
property and non-competition contained in Employee's employment
agreement or in other agreements between Company and Employee. Company
shall have the right to terminate payments under this Agreement, and to
recoup payments previously made under this Agreement, in the event of
Employee's failure to comply with such obligations.
C. WITHHOLDING TAXES: Company shall withhold from the payments
otherwise required under this Agreement any and all amounts necessary
to satisfy applicable federal, state and local withholding tax
requirements.
D. DEFINITION OF CAUSE: For purposes of this Agreement, "Cause" shall
mean termination based upon any of the following:
(i) the willful failure by Employee to follow lawful
directions communicated to Employee by one or more of
Employee's supervisors or by Company's Board of Directors;
(ii) the willful engaging by Employee in conduct which is
materially injurious to Company, monetarily or otherwise;
(iii) a conviction of, a plea of nolo contendere, a guilty
plea or confession by Employee to an act of fraud,
misappropriation or embezzlement or to a felony;
(iv) Employee's habitual drunkenness or use of illegal
substances;
(v) a material breach by Employee of Employee's employment
agreement with Company; or
(vi) an act of gross neglect or gross misconduct which Company
deems to be good and sufficient cause;
provided, however, that Company shall not be deemed to have Cause
pursuant to clauses (i), (ii), (iv), (v) or (vi) unless Company gives
Employee written notice that the specified conduct or event has
occurred and Employee fails to cure the conduct or event within thirty
(30) days after receipt of such notice.
E. DEFINITION OF GOOD REASON: For purposes of this Agreement,
"Good Reason" shall mean the occurrence of one or more of the following
circumstances:
(i) the dissolution or complete liquidation of Company;
(ii) the filing of a voluntary petition by Company, or an
involuntary petition against Company, under Chapter 7 of the Bankruptcy
Code;
(iii) Company's assignment to Employee of duties inconsistent
with Employee's duties or any material reduction in Employee's duties
or responsibilities, except as may have occurred in connection with the
termination of Employee's employment for Cause, disability or as a
result of Employee's death or by Employee other than for Good Reason;
(iv) Employee's involuntary relocation to a new principal work
location not within reasonable commuting distance of his former
location;
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(v) the failure of Company to obtain the specific assumption
of this Agreement by any transferee of all or substantially all of
Company's assets; or
(vi) any material breach by Company of this Agreement.
F. DEFINITION OF CHANGE OF CONTROL:
For purposes of this Agreement, "Change of Control" shall
mean:
(i) any "person" or "group" of "persons" (as such terms are
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934 (the "Exchange Act"), directly or indirectly, acquires "beneficial
ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of
voting securities then entitled to vote of Company possessing more than
fifty percent (50%) of the total combined voting power of Company's
securities outstanding immediately after such acquisition;
(ii) a merger or consolidation of Company with any other
corporation or business entity, or a sale, lease or disposition by
Company of all or substantially all of Company's assets, other than a
merger, consolidation, sale, lease or disposition which would result in
the voting securities of Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or transferee entity
or a direct or indirect parent company of the surviving or transferee
entity) at least 50% of the total voting power represented by the
voting securities of Company or such surviving or transferee entity or
parent company resulting from such merger, consolidation, sale, lease
or disposition; or
(iii) any time the Continuing Directors do not constitute a
majority of the Board of Directors of Company (or, if applicable, a
successor corporation to Company). "Continuing Director" means, as of
any date of determination, any member of the Board of Directors of
Company who (i) was a member of such Board of Directors on the date of
this Agreement or (ii) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of
such nomination or election.
G. CODE SECTION 409A: Notwithstanding any other provision of
this Section I, the Company reserves the right to structure the timing
of severance payments in a manner that, in the opinion of the Company,
complies with the requirements of Code Section 409A or any exemption
therefrom.
II. CHANGE OF CONTROL VESTING: If Company terminates the employment of Employee
without Cause within three months before or six months after a Change of
Control, or Employee terminates his or her employment for Good Reason within six
months after a Change of Control, all of Employee's outstanding stock options
and other equity-based awards granted under Company's equity incentive plans or
pursuant to individual agreements with Company shall become fully vested and
exercisable.
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III. TERM; RENEWAL: This Agreement shall have an initial term of three years and
shall expire on June 30, 2009 unless renewed by the Company upon the approval of
the Compensation Committee on or before such date.
IV. GENERAL AGREEMENT TERMS:
A. LIMITED EFFECT OF WAIVER BY COMPANY. No waiver of a right by Company
constitutes a waiver of any other right of Company, and a temporary
waiver by Company does not constitute a permanent waiver or any
additional temporary waiver.
B. EFFECT OF PRIOR AGREEMENT: This Agreement supersedes any prior
agreement between Company or any predecessor of Company and Employee
regarding severance pay. This Agreement shall not affect or operate to
reduce any benefit or compensation, other than severance pay, inuring
to Employee.
C. SETTLEMENT BY ARBITRATION: Any claim or controversy that arises out
of or relates to this Agreement, or the breach thereof, will be settled
by arbitration in the office nearest Company's headquarters in
accordance with the prevailing rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any
court possessing jurisdiction of arbitration awards.
D. SEVERABILITY: If for any reason any portion of this Agreement is
declared invalid, this Agreement shall continue in effect as if the
invalid portion had never been part hereof, and the other portions of
this Agreement will remain in effect, insofar as is consistent with the
governing laws.
E. INVALIDITY: If this Agreement is held invalid or cannot be enforced,
then to the full extent permitted by the governing laws any prior
agreement regarding severance pay between Company (or any predecessor
thereof) and Employee will be deemed reinstated as if this Agreement
had not been executed.
F. ASSUMPTION OF AGREEMENT: The rights and obligations under this
Agreement will inure to the benefit of and be binding upon the parties,
their successors, heirs, assigns and personal representatives.
G. ORAL MODIFICATIONS NOT BINDING: This instrument is the entire
agreement. Oral changes will have no effect. This Agreement may be
altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or
discharge is sought.
H. GOVERNING LAW: This Agreement and the covenants herein shall be
governed and interpreted under the laws of the State of New Jersey.
K. FULL DISCLOSURE: Company and Employee know of no restrictions on
their ability to complete this Agreement
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
By: /s/ Xxxxxx Xxxxxxxx By:
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Name: Xxxxxx Xxxxxxxx Name:
Chairman, President and
Chief Executive Officer
EasyLink Services Corporation
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