EXHIBIT (10)(iii)(A)20
EMPLOYMENT AGREEMENT
This Agreement, dated as of June 10th, 2002, by and between Xxxxxx
X. Xxxxxx (the "Executive") and AT&T Corp., a New York corporation (the
"Company")
WITNESSETH THAT
WHEREAS, the Company has offered the Executive, and the Executive
has accepted, employment on the terms and conditions set forth in this
Agreement; and
WHEREAS, the Company and the Executive wish to set forth such terms
and conditions in a binding written agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth
in this Agreement, it is hereby agreed as follows:
1. Term of Employment. The term of the Executive's employment under
this Agreement (the "Term") shall begin on June __, 2002 (the "Effective Date")
and end on June 15, 2006; provided, that the Term shall be extended by
successive periods of one (1) year, effective as of each Renewal Date (as
defined in the next sentence), unless, before any Renewal Date, the Company
shall have notified the Executive or the Executive shall have notified the
Company that no such extension shall take place (a "Notice of Nonrenewal"); and
provided, further, that the Term shall in any event end upon a Termination, as
set forth in Section 5 below. "Renewal Date" means each June 15 that occurs
during the Term, beginning with June 15, 2006.
2. Position, Duties and Location. (a) Position. During the Term, the
Executive shall serve as Executive Vice President and Chief Financial Officer of
the Company, with the duties and responsibilities customarily assigned to that
position and such other duties and responsibilities as the Board of Directors of
the Company (the "Board") shall from time to time assign to the Executive. The
Executive shall report directly to the Chief Executive Officer.
(a) Duties. During the Term, the Executive shall devote his full
business attention and time to the business and affairs of the Company and shall
use his reasonable best efforts to carry out such responsibilities faithfully
and efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, civic or charitable boards or committees, and
manage personal investments, so long as such activities do not materially
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement or otherwise violate
the Executive's obligations hereunder. The Executive shall be subject to the
AT&T Non-Competition Guideline, as the same may be amended from time to time,
and to any successor policy that may hereafter be adopted (such Guideline and
any successor policy thereto, the "Non-Competition Guideline"). The Executive
hereby acknowledges that he has received a copy of the Non-Competition
Guideline, and that he understands that compensation and benefits otherwise
payable to him under this Agreement may be subject to forfeiture if he violates
the Non-Competition Guideline. Notwithstanding the second sentence of this
Section 2(b), the Executive shall not serve on any corporate, civic or
chari-
table boards or committees without first disclosing such proposed service to the
Corporate Secretary of Company (the "Corporate Secretary") and obtaining the
consent of the Corporate Secretary to such service, and in any event he shall
not serve on any board or committee of an entity that is a competitor of the
Company within the meaning of the Non-Competition Guideline. The Executive
hereby represents to the Company that he has previously informed the Corporate
Secretary of the boards and committees on which he presently serves, and has
obtained the Corporate Secretary's consent to his remaining a member of such
boards and committees.
(b) Nothing in this Agreement shall prevent the Company from
reassigning the Executive's job duties on a temporary basis during any period
during which the Executive is absent under the Company's applicable sick leave
policy or short-term disability benefits plan, until such time as the Executive
returns to work full-time.
(c) The Executive's services shall be performed primarily at the
Company's current offices in Basking Ridge, N.J. or such other location within
35 miles thereof as the Company may hereafter determine.
3. Compensation.
(a) Base Salary. During the Term, the Executive shall receive a base
salary (the "Base Salary") at an annual rate of not less than six hundred
thousand dollars ($600,000), payable at such times and intervals as the Company
customarily pays the base salaries of other members of the Company's Operations
Group or any comparable successor group of senior executives (hereinafter, the
"Other Senior Executives"). During the Term, the Base Salary shall be reviewed
annually for possible increase in accordance with the Company's normal practices
for the Other Senior Executives. The Base Salary shall not be reduced after any
such increase, and the term "Base Salary" shall thereafter refer to the Base
Salary as so increased.
(b) Annual Bonus. The Executive shall be eligible to earn an annual
bonus (the "Annual Bonus") based on individual and Company performance, under
the terms and conditions applicable to the Other Senior Executives. The
Executive's target Annual Bonus shall equal one hundred percent (100%) of the
Base Salary earned by the Executive during the fiscal year in question, subject
to review by the Compensation Committee of the Board of Directors for possible
increase. The Annual Bonus for 2002 shall be pro-rated to reflect the portion of
the Term that occurs during 2002, but if the Executive remains employed by the
Company from the Effective Date through December 31, 2002, in no event shall the
Executive's Annual Bonus for fiscal year 2002 be less than three hundred
seventy-five thousand dollars ($375,000) (the "Guaranteed Bonus Amount").
(c) Long Term Incentive Compensation. (i) During the Term, the
Executive shall be eligible to receive awards under the Company's 1997 Long Term
Incentive Program or any successor thereto (collectively, the "LTIP") under the
terms and conditions applicable to the Other Senior Executives; provided, that
the Executive's annual LTIP awards for 2002 shall consist of stock options with
respect to three hundred fifteen thousand (315,000) shares of Company common
stock (the "2002 Options") and a performance share award with respect to
seventy-seven thousand five hundred (77,500) shares of Company common stock for
the performance cycle 2002-2004 (the "2002 Performance Share Award"), each to be
granted effective as of the
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Effective Date. Payment for the 2002 Performance Shares, if any, shall be made
during the first quarter of 2005.
(ii) In addition, the Executive shall be granted, effective on the
Effective Date, a special one-time grant under the LTIP of stock options with
respect to two hundred ninety thousand (290,000) shares of Company common stock
(the "Special Options").
(iii) The 2002 Options and the Special Options shall have ten-year
terms and shall each vest in four equal annual installments beginning on the
first anniversary of the date they are granted. The 2002 Options, the Special
Options and the 2002 Performance Share Award shall otherwise be subject to the
terms and conditions of the LTIP as established for the Other Senior Executives.
Notwithstanding the foregoing provisions of this Section 3(c), the number of
shares subject to the 2002 Options, the Special Options and the 2002 Performance
Share Award shall be adjusted as appropriate to reflect any event described in
Section 4(e) of the LTIP that may occur before they are granted.
(iv) Without limiting the generality of the foregoing, the 2002
Options, the Special Options and the 2002 Performance Share Award shall be
subject to the Non-Competition Guidelines and the Company's Senior Officer
Severance Plan or any successor thereto (the "Severance Plan").
(d) Special Signing and Retention Compensation. The Company shall
make the following cash payments to the Executive, provided that the Executive
is employed by the Company on the date of payment and subject to the provisions
of Section 5(e) below: (i) not later than thirty (30) days after the Effective
Date, one million fifty thousand dollars ($1,050,000) (the "Signing Bonus");
(ii) on December 31, 2003, three hundred seventy-five thousand dollars
($375,000); and (iii) on December 31, 2004, three hundred seventy-five thousand
dollars ($375,000) (the amounts described in clauses (ii) and (iii) being
referred to as the "Retention Bonuses").
(e) Certain Payments Not Benefit-Bearing. The following amounts will
not be counted in the calculation of Executive's benefits under any employee
benefit plans and perquisite programs made available by the Company to its
management and senior management employees (the "Employee Benefit Plans"): (i)
the excess, if any, of the Guaranteed Bonus Amount over the amount of the Annual
Bonus for fiscal year 2002 that would be payable to the Executive, absent the
last sentence of Section 3(b); (ii) the Signing Bonus; and (iii) the Retention
Bonuses. Notwithstanding the foregoing, in the event of a conflict between this
Agreement and a particular plan or program regarding the inclusion or exclusion
of payments under this paragraph, such plan and not this Agreement shall
control.
4. Benefits. (a) Relocation. In connection with his initial hiring,
the Executive shall be eligible for benefits under the Company's Management
Relocation Plan B, subject to the terms and conditions thereof, including
without limitation use of an approved real estate broker. The Executive hereby
acknowledges that he has received a copy of the Company's Management Relocation
Plan B. In addition, upon the Executive's purchase of a residence in New Jersey,
the Company shall pay him a lump sum equal to the difference between two million
five hundred thousand dollars ($2,500,000) and the value realized on the
disposition of his Texas
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residence in accordance with the Company's Management Relocation Plan B. This
payment will be made at such time to facilitate the closing of the purchase of
the New Jersey residence. This payment shall be grossed up to approximate
federal and state income tax imposed on the Executive.
(b) Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses that he incurs during the Term in
carrying out his duties under this Agreement, provided that he complies with the
policies, practices and procedures of the Company for submission of expense
reports, receipts, or similar documentation of such expenses as in effect from
time to time.
(c) Benefits Generally. During the Term, the Executive shall be
entitled to participate in the Employee Benefit Plans, on the same terms and
conditions as apply to the Other Senior Executives, as the same may be in effect
from time to time.
5. Consequences of Early Termination. (a) Accrued Compensation and
Benefit Entitlements. If the Executive's employment with the Company is
terminated for any reason at or before the end of the Term, including without
limitation as a result at the end of the Term pursuant to the Executive's Notice
of Nonrenewal, by action of the Company or the Executive or by reason of the
Executive's death or Disability (as defined in Section 5(d) below) (a
"Termination"), the Term shall end on the date of the Termination, and the
Company and the Executive shall have no further obligations under this
Agreement, except as provided in this Section 5. The Executive (or, in the case
of his death, the Executive's estate and/or beneficiaries) shall be entitled
following a Termination: (i) to receive the Base Salary through the date of the
Termination and any cash payment to which the Executive is entitled pursuant to
Section 3(d), to the extent not previously paid; (ii) to the benefit of the 2002
Stock Options, the Special Stock Options, the 2002 Performance Share Award and
any other LTIP award previously granted to the Executive, to the extent and on
the terms and conditions provided in the LTIP and any agreement governing such
award; and (iii) to all other compensation and benefits that may be provided
under the terms and conditions of the Employee Benefit Plans.
(b) Severance. Without limiting the generality of the foregoing,
upon a Termination of the Executive's employment by the Company without Cause or
by the Executive for Good Reason (as those terms are defined in the Severance
Plan, except that a termination upon the Company's Notice of Nonrenewal shall
also be considered without Cause), the Executive shall be entitled to such
severance pay and benefits, if any, upon such Termination as may be provided for
in, and subject to the terms and conditions (including the execution of any
required release or other documentation or agreement) of, the Severance Plan as
in effect at the time of the Termination (including, if applicable, any change
of control severance pay or benefits); provided, that such pay and benefits
shall not duplicate any pay or benefits provided for under Section 5(a) above.
(c) Termination Due to Death. In the event of a Termination as a
result of the Executive's death during the Term, his estate or his
beneficiaries, as the case may be, shall be entitled to the following benefits
in addition to those provided for in Section 5(a) above: (i) a cash payment
equal to the amount of the Executive's target Annual Bonus for the year of the
Termination, pro-rated to reflect the portion of the performance year that
occurs before the Ter-
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mination (a "Pro-Rata Target Bonus"), payable in a single installment as soon as
practicable following the Termination; and (ii) financial counseling for one
year following the Termination, including without limitation preparation of the
Executive's final individual income tax returns, together with a grossup for any
federal income tax imposed on the Executive as a result of receiving such
counseling, calculated in accordance with Company practices applicable to Other
Senior Executives.
(d) Termination Due to Disability. The Company shall have the right
to terminate Executive's employment as a result of his inability to perform his
duties under this Agreement by reason of any physical or mental impairment,
which inability is expected to continue for more than twelve (12) months
("Disability"). In the event that Executive's employment is terminated during
the Term due to his Disability, he shall be entitled to the following benefits
in addition to those provided for in Section 5(a) above: (i) disability benefits
in accordance with the disability program then in effect for Other Senior
Executives (and the terms of such disability program shall govern exclusively
the Executive's rights to benefits thereunder); (ii) a Pro-Rata Target Bonus,
payable in a single installment as soon as practicable following the
Termination; and (iii) financial counseling for one year following the
Termination, including without limitation preparation of the Executive's
individual income tax returns, together with a grossup for any federal income
tax imposed on the Executive as a result of receiving such counseling,
calculated in accordance with Company practices applicable to Other Senior
Executives. Nothing in this Agreement shall prevent the Company from reassigning
the Executive's job duties to another individual on a temporary basis during any
period during which Executive is receiving benefits under the Company's
applicable short-term disability benefits plan, until the Executive returns to
work full-time or is terminated as a result of Disability, and such a temporary
reassignment of duties shall not constitute "Good Reason" under the Severance
Plan.
(e) Repayment of Signing Bonus. If the Executive terminates his
employment with the Company without Good Reason before January 1, 2004, he shall
repay seven hundred fifty thousand dollars ($750,000) of the Signing Bonus to
the Company. If the Executive terminates his employment with the Company without
Good Reason on or after January 1, 2004 and before January 1, 2005, he shall
repay three hundred seventy-five thousand dollars ($375,000) of the Signing
Bonus to the Company. The Company shall be entitled to withhold all or any
portion of such amounts that the Executive is obligated to repay from any other
cash payment that the Executive is entitled to receive from the Company,
including without limitation under the Severance Plan.
(f) No Damages or Other Relief. In no event shall a Termination be
considered a breach of this Agreement, nor shall the Company or the Executive be
entitled to any damages, injunctive relief or other relief or compensation
beyond that set forth in this Section 5, as a result of any Termination, except
as specifically provided in Section 9.
6. Confidentiality of Trade Secrets and Business Information. The
Executive agrees that he will not, at any time during his employment with the
Company or thereafter, disclose or use any trade secret, proprietary or
confidential information of the Company or any subsidiary or affiliate of the
Company (collectively, "Confidential Information"), obtained during the course
of such employment, except for disclosures and uses required in the course of
such employment or with the written permission of the Company or, as applicable,
any subsidiary or
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affiliate of the Company or as may be required by law; provided that, if the
Executive receives notice that any party will seek to compel him by process of
law to disclose any Confidential Information, he shall promptly notify the
Company and cooperate with the Company in seeking a protective order against
such disclosure.
7. Return of Information. The Executive agrees that at the time of
any termination of his employment with the Company, whether at the instance of
the Executive or the Company, and regardless of the reasons therefore, he will
deliver to the Company, and not keep or deliver to anyone else, any and all
notes, files, memoranda, papers and, in general, any and all physical (including
electronic) matter containing Confidential Information and other information
relating to the business of the Company or any subsidiary or affiliate of the
Company which are in his possession, except as otherwise consented in writing by
the Company at the time of such termination. The foregoing shall not prevent the
Executive from retain copies of personal contact information to the extent such
copies do not contain any Confidential Information.
8. Covenants of the Executive. (a) Noncompetition. In consideration
for the compensation payable to the Executive under this Agreement, the
Executive agrees that he will not, during his employment with the Company and
for a period of one hundred eighty (180) days after any Termination, regardless
of the reason therefor, establish a relationship with a competitor (including
but not limited to an employment or consulting relationship) or engage in any
activity which is in conflict with or adverse to the interest of the Company, as
defined on the Effective Date by the AT&T Non-Competition Guideline (hereinafter
referred to as a "Competitive Activity"). Executive recognizes that this
obligation includes, and is not limited to, an agreement that he shall not work
for a competitor of AT&T Corp. as an executive, consultant, independent
contractor or in any other capacity for a period of one hundred eighty (180)
days following any Termination, regardless of whether the Termination is at the
instance of the Company or the Executive, and regardless of whether the
Executive is entitled to severance pay as a result thereof. The foregoing shall
not prohibit the Executive from being a passive owner of not more than one
percent (1%) of the outstanding common stock, capital stock and/or equity of any
publicly traded entity so long as the Executive has no active participation in
the management of business of such firm, corporation or enterprise.
(b) Noninterference. During the Executive's employment with the
Company and for a period of one hundred eighty (180) days following any
Termination, the Executive agrees not to directly or indirectly recruit, solicit
or induce, any employees, consultants or independent contractors of the Company
to terminate, alter or modify their employment or other relationship with the
Company. During the Executive's employment with the Company and for a period of
one hundred eighty (180) days following any Termination, the Executive agrees
not to directly or indirectly solicit any customer or business partner of the
Company to terminate, alter or modify its relationship with the Company or
interfere with the Company's relationships with any of its customers or business
partners on behalf of any enterprise that directly or indirectly competes with
the Company.
(c) Forfeiture. Notwithstanding any other provision of this
Agreement or of any Employee Benefit Plan or other plan, policy, arrangement or
agreement, the Company may, in its discretion, determine to cause the Executive
to forfeit any and all payments and benefits from the Company and its affiliates
(except those made from Company-sponsored tax-qualified
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pension or welfare plans) to which Executive may otherwise be entitled, whether
under this Agreement or otherwise, if Executive violates any of his obligations
under the Non-Competition Guideline; provided, that before imposing such
forfeiture, the Company shall first given the Executive written notice of the
violation and its intent to cause such forfeiture, and an opportunity to cure
such violation; and provided, further, that no such notice shall be required if
either (i) the Company had previously notified the Executive that the conduct or
proposed conduct in question violated or would violate his obligations under the
Non-Competition Guideline, or (ii) such conduct is not capable of being cured.
9. Enforcement. The Executive acknowledges and agrees that: (i) the
purpose of the covenants set forth in Sections 6 through 8 above is to protect
the goodwill, trade secrets and other confidential information of the Company;
(ii) because of the nature of the business in which the Company and the
Affiliated Companies are engaged and because of the nature of the Confidential
Information to which the Executive has access, it would be impractical and
excessively difficult to determine the actual damages of the Company and the
Affiliated Companies in the event the Executive breached any such covenants;
(iii) remedies at law (such as monetary damages) for any breach of the
Executive's obligations under Sections 6 through 8 would be inadequate; and (iv)
even the threat of any misuse of the Confidential Information of the Company
would be irreparably harmful because of the importance of that Confidential
Information. The Executive therefore agrees and consents that if he commits any
breach of a covenant under Sections 6 through 9 or threatens to commit any such
breach, the Company shall have the right (in addition to, and not in lieu of,
any other right or remedy that may be available to it) to temporary and
permanent injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of proof of actual
damage. If any portion of Sections 6 through 8 is hereafter determined to be
invalid or unenforceable in any respect, such determination not affect the
remainder thereof, which shall be given the maximum effect possible and shall be
fully enforced, without regard to the invalid portions. In particular, without
limiting the generality of the foregoing, if the covenants set forth in Section
8 are found by a court or an arbitrator to be unreasonable, the Executive and
the Company agree that the maximum period, scope or geographical area that is
found to be reasonable shall be substituted for the stated period, scope or
area, and that the court or arbitrator shall revise the restrictions contained
herein to cover the maximum period, scope and area permitted by law. If any of
the covenants of Sections 6 through 8 are determined to be wholly or partially
unenforceable in any jurisdiction, such determination shall not be a bar to or
in any way diminish the Company's right to enforce any such covenant in any
other jurisdiction.
10. Cooperation After Termination of Employment. Following the
termination of his employment for any reason, the Executive shall reasonably
cooperate with the Company with respect to the prosecution or defense by the
Company of any legal proceedings in which the Executive is or could be a
witness. The Executive's obligation to cooperate pursuant to this Section 10
shall continue until such legal proceedings are concluded or his services as a
witness or consultant are no longer required. The Company shall reimburse the
Executive for all travel and other out-of-pocket expenses required by his
obligations under this Section 10.
11. Resolution of Disputes. Any disputes arising under or in
connection with this Agreement, other than Sections 6 through 8 above, shall
first be addressed by third-party mediation and, if such mediation fails to
resolve such dispute within sixty days, by binding arbi-
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tration, to be held in New Jersey. The arbitration shall be conducted according
to the rules and procedures of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The Company shall pay the costs of the arbitrator or the
mediator but not the attorneys' fees of the Executive; provided, however, that
the Company shall reimburse the Executive for attorneys' fees if the Executive
prevails in such arbitration on any material issue.
12. Executive's Representations. The Executive hereby represents and
warrants that the Executive has the right to enter into this Agreement with the
Company and to grant the rights contained in this Agreement, and the provisions
of this Agreement do not violate any other contracts or agreements that the
Executive has entered into with any other individual or entity. The Executive
acknowledges that before signing this Agreement, he was given the opportunity to
read it, evaluate it and discuss it with his personal advisors and attorney and
with representatives of the Company. The Executive further acknowledges that the
Company has not provided him with any legal advice regarding this Agreement.
13. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when delivered
(a) personally, (b) by facsimile with evidence of completed transmission, or (c)
delivered by overnight courier; to the Party concerned at the address indicated
below or to such changed address as such Party may subsequently give such notice
of:
If to the Company:
AT&T Corp.
Room 4353K2
000 Xxxxx Xxxxx Xxx.
Basking Ridge, N.J. 07920
Attention: Executive Vice President, Human Resources
If to the Executive:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxx.
Xxxxxxx Xxxxx, X.X. 00000
14. Assignment and Successors. (a) The Executive. This Agreement is
personal to the Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company
specifically reserves the right to assign the terms of this Agreement to any
successor, whether the successor is the result of any sale, purchase, merger,
consolidation, asset sale, divestiture or spin-off or any form or combination
thereof. No sale, purchase, merger, consolidation, asset sale, divestiture or
spin-off or any form or combination thereof shall be construed as a termination
of Executive's employ-
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ment. As used in this Agreement, "Company" shall mean both the Company as
defined above and any such successor to which this Agreement is assigned or that
assumes this Agreement by operation of law or otherwise.
15. Governing Law Amendment. This Agreement shall be governed by,
and construed in accordance with, the laws of New Jersey, without reference to
principles of conflict of laws. This Agreement may not be amended or modified
except by a written agreement executed by the Executive and the Company or their
respective successors and legal representatives.
16. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
17. Tax Withholding. Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all federal, state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.
18. No Waiver. The Executive's or the Company's failure to insist
upon strict compliance with any provision of, or to assert any right under, this
Agreement shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.
19. Headings. The Section headings contained in this Agreement are
for convenience only and in no manner shall be construed as part of this
Agreement.
20. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and shall
supersede all prior agreements, whether written or oral, with respect thereto,
including without limitation any term sheet.
21. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization of its Board of Directors, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
AT&T Corp.
By: /s/ Xxxxxx X. Xxxxxxxx-Xxxx
-----------------------------
Xxxxxx X. Xxxxxxxx-Xxxx
Executive Vice-President
Human Resources
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