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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT by and between AT&T Corp., a New York corporation (the
"Company"), and Xxxxxxx X. Xxxxx (the "Executive"), dated as of the 1st day of
April, 1999 (the "Effective Date").
WHEREAS, the Executive is employed as of the Effective Date by the
Company; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to employ the Executive and the Executive desires to serve in that capacity;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and
the Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for the Employment Period (as defined in the next sentence).
The "Employment Period" shall mean the period beginning on the Effective Date
and ending on March 31, 2000, unless extended or earlier terminated as set
forth herein. Effective on April 1, 2000, the Employment Period shall be
extended until either party provides the other party with 45 days written
notice to terminate the Employment Period.
2. Position and Duties. (a) During the Employment Period, the Executive
shall serve in the position and have the duties and responsibilities set forth
on Exhibit A hereto.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this Agreement, use the
Executive's 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 (A) serve on corporate, civic or charitable
boards or committees, (B) deliver
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lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
(c) The Executive's services shall be performed primarily at the
principal office location where the Executive performed his duties immediately
prior to the Effective Date (or otherwise within 35 miles of such office),
subject to any travel requirements necessary to perform his duties hereunder.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall be paid an annual base salary ("Annual Base Salary") at a rate
equal to $900,000, payable pursuant to the Company's normal payroll practices.
(b) Benefits. During the Employment Period, the Executive shall be
entitled to participate in savings and welfare benefit plans, practices,
policies and programs of the Company that are provided generally to similarly
situated employees of the Company.
(c) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Executive in accordance with the Company's policies, practices
and procedures.
(d) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company.
(e) TCI Equity Awards. Effective as of June 23, 1999, the Company
shall accelerate the vesting of the Executive's outstanding unvested stock
options and shares of restricted stock that are set forth on Exhibit B hereto
(the "Exhibit B Grants"). All remaining stock options and restricted stock
initially granted to the Executive with respect to Tele-Communications, Inc.
("TCI") or Liberty Media Corporation prior to the Effective Date, which do not
become vested pursuant to the immediately preceding sentence ("Remaining TCI
Awards"), shall continue to vest during the Employment Period pursuant to their
scheduled
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vesting terms and, if not previously vested, shall become immediately vested
upon the expiration of the Employment Period. In the event the Executive
exercises a stock option or sells a share of stock that had been restricted
stock (in each case, that was an Exhibit B Grant or Remaining TCI Award) within
60 days after the earlier of (i) the vesting of such stock option or share of
restricted stock pursuant to the terms of such award or (ii) the expiration of
the Employment Period (or any earlier vesting date under this Agreement), the
Company shall pay the Executive, with respect to each such stock option or
share, a cash payment (the "Equity Payment"), within 10 days following the
exercise of the stock option or sale of stock, equal to the excess, if any, of:
(A) with respect to Exhibit B Grants or Remaining TCI Awards denominated in
Company common stock, $57.81 over the average of the high and low price of
Company common stock on the New York Stock Exchange on the date of such exercise
or sale, as applicable, and (B) with respect to Exhibit B Grants or Remaining
TCI Awards denominated in "AT&T Liberty Tracking Shares", $26.67 over the
average of the high and low price of AT&T Liberty Tracking Shares on the New
York Stock Exchange on the date of such exercise or sale, as applicable. Each
Equity Payment shall be subject to equitable adjustment in the event of any
adjustment in the capitalization of the Company (eg., stock split, spin-off,
extraordinary dividend, reorganization or similar corporate transaction,
including any adjustments relating to the AT&T Liberty Tracking Shares) which
occurs following June 23, 1999 and prior to the date of any such exercise or
sale.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. The Company shall be entitled to terminate the
Executive's employment because of the Executive's Disability during the
Employment Period. "Disability" means that (i) the Executive is unable to
perform the Executive's duties under this Agreement for a period of not less
than 180 consecutive days, as a result of physical or mental illness or injury,
and (ii) a physician selected by the Company or its insurers, and acceptable to
the Executive or the Executive's legal representative, has determined that the
Executive's incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
or the Executive's legal representative by written notice,
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and shall be effective on the 10th day after receipt of such notice by the
Executive or the Executive's legal representative (the "Disability Effective
Date").
(b) By the Company. The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. "Cause"
shall mean illegal conduct or gross misconduct by the Executive, in either case
that is willful and results in material and demonstrable damage to the business
or reputation of the Company or any of its affiliates.
(c) By the Executive. (i) The Executive may terminate employment
for Good Reason or without Good Reason. "Good Reason" means (without, as to
subparagraphs, (A) through (D) below, the Executive's written consent):
A. the Company's assignment to the Executive of any duties
inconsistent in any material respect with the duties described
in Exhibit A of this Agreement;
B. any failure by the Company to comply with any material
provision of Section 3 of this Agreement;
C. any requirement by the Company that the Executive's services
be rendered primarily at a location or locations other than
that provided for in Section 2(c) of this Agreement;
D. any failure by the Company to comply with Section 9(c) of
this Agreement; or
E. any termination of employment by the Executive on or after
March 31, 2000 on 45 days written notice.
An isolated, insubstantial and inadvertent failure or action by the Company
that is not taken in bad faith and is remedied by the Company promptly after
receipt of notice thereof from the Executive shall not be a basis for Good
Reason. A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice ("Notice of
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Termination for Good Reason") of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement upon which the Executive is relying. A
termination of employment by the Executive for Good Reason shall be effective
(unless disputed by the Company) on the fifth business day (except as otherwise
provided in Section 4(c)(E)) following the date when the Notice of Termination
for Good Reason is received by the Company, unless the notice sets forth a
later date (which date shall in no event (except as otherwise provided in
Section 4(c)(E)) be later than 30 days after the notice is received by the
Company).
(d) Date of Termination. The "Date of Termination" means the date
of the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company or by the Executive
for Good Reason is effective, or the last day the Executive provides services
under this Agreement, in the case of the Executive's termination of employment
without Good Reason, as the case may be.
5. Obligations of the Company upon Termination. Following the
Executive's Date of Termination, the Company shall have the obligations to the
Executive set forth in this Section 5, and shall have no further obligations
under this Agreement, other than, if applicable, any obligations to reimburse
expenses due to the Executive under Section 3(c) or to make an Equity Payment
to the Executive under Section 3(e).
(a) Other Than for Cause; Death or Disability; Good Reason. If,
during the Employment Period, the Company terminates the Executive's
employment, other than for Cause, or the Executive's employment is terminated
because of death or Disability, or the Executive terminates employment for Good
Reason, the Company shall make the payments and provide the benefits set forth
in (i) and (ii) below. In addition, if the Executive's employment is terminated
by the Company other than for Cause or Disability, or by the Executive for Good
Reason, the Company shall provide the Executive with reasonable outplacement
services. The payments and benefits provided pursuant to this Section 5(a) are
intended as liquidated damages for a termination of the Executive's employment
by the Company other than for Cause, or for the actions of the Company leading
to a termination of the Executive's employment by the Executive for Good
Reason, or for the Executive's
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termination of employment as a result of death or Disability, and shall be the
sole and exclusive remedy therefor.
(i) The Company shall pay the Executive the amounts set forth below
in a lump sum in cash within 30 days following the Date of Termination:
The sum of (1) the Executive's Annual Base Salary through the Date
of Termination, (2) the value of the Executive's accrued, but
unused, vacation days, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1) and (2) shall
be hereinafter referred to as the "Accrued Obligations") and (3) an
amount equal to five times Executive's Annual Base Salary (the
"Supplemental Payment").
(ii) All unvested Remaining TCI Awards shall become immediately
vested. In the event of the Executive's death or Disability, the payments
under this Section 5(a) may be made to the Executive's estate or legal
representatives, if applicable.
(b) Cause; Other than for Good Reason. If, during the Employment
Period, the Executive's employment is terminated by the Company for Cause or
the Executive voluntarily terminates employment other than for Good Reason, the
Company shall pay the Executive the Accrued Obligations in a lump sum in cash
within 30 days following the Date of Termination and, notwithstanding anything
in this Agreement to the contrary, the Company shall have no obligation to make
the Supplemental Payment, and the Remaining TCI Awards that are not vested as
of the Date of Termination shall be forfeited immediately.
6. Full Settlement. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
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Executive under any of the provisions of this Agreement and such amounts shall
not be reduced, regardless of whether the Executive obtains other employment.
7. Confidential Information; Noncompetition; Nonsolicitation. (a) The
Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company
and its respective businesses that the Executive obtains during the Executive's
employment by the Company (before and after the Effective Date) and that is not
public knowledge (other than as a result of the Executive's violation of this
Section 7(a)) ("Confidential Information"). The Executive shall not
communicate, divulge or disseminate Confidential Information at any time
during or after the Executive's employment with the Company, except with the
prior written consent of the Company or as otherwise required by law or legal
process.
(b) During the Noncompetition Period (as defined below), the
Executive shall not, without the prior written consent of the Executive Vice
President-Human Resources of the Company or the Executive Vice President,
Merger and Joint-Venture Integration of the Company, directly or indirectly, as
principal or agent, or in any other capacity, own, manage, operate, participate
in or be employed by or otherwise be interested in, or connected in any manner
with, any person, firm, corporation or other enterprise which directly competes
in a material respect with the telecommunications or cable businesses
(including broadband and internet services) of the Company as it is conducted
while the Executive is employed by the Company. Nothing herein contained shall
be construed as denying the Executive the right to own securities of any such
corporation which is listed on a national securities exchange or quoted in the
NASDAQ System to the extent of an aggregate of 5% of the amount of such
securities outstanding. For purposes of this Section 7(b), the "Noncompetition
Period" means the period during which the Executive is employed by the Company
pursuant to this Agreement and 24 months after the first to occur (i) the
Executive's Date of Termination or (ii) the end of the Employment Period.
(c) During the Noncompetition Period, the Executive shall not
solicit any business of the type engaged in by the Company from any clients,
customers, former clients or customers, or prospects of the Company who were
solicited directly by the Executive when
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the Executive was an employee of the Company or with respect to which the
Executive supervised, directly or indirectly, in whole or in part, the
solicitation activities related to any such persons when the Executive was an
employee of the Company.
(d) During the Noncompetition Period, the Executive shall not
solicit any business of the type engaged in by the Company from any person
whatsoever if such solicitation involves a product of the Company which the
Board deems, in its reasonable judgment, to be proprietary to the Company and
otherwise non-public.
(e) During the Noncompetition Period, the Executive shall not
induce or solicit any employee of the Company to terminate his or her
employment.
(f) The provisions of Sections 7(b), (c), (d) and (e) shall remain
in full force and effect until the expiration of the Noncompetition Period
notwithstanding the earlier termination of the Executive's employment hereunder.
In the event of a breach of the Executive's covenants under this Section 7, it
is understood and agreed that the Company shall be entitled to injunctive
relief, as well as any other legal remedies. For purposes of Section 7, the
"Company" shall include all entities controlling, controlled by or under common
control with the Company ("affiliates").
8. Dispute Resolution. At the option of the Executive or the Company,
any dispute, controversy, or question arising under, out of or relating to this
Agreement or the breach thereof, other than that for injunctive relief to this
Agreement or the breach thereof, other than that for injunctive relief under
Section 7(f), shall be referred for decision by arbitration in the State of
Colorado by a neutral arbitrator selected by the parties hereto. The proceeding
shall be governed by the Rules of the American Arbitration Association then in
effect or such rules last in effect (in the event such Association is no longer
in existence). If the parties are unable to agree upon such a neutral
arbitrator within 30 days after either party has given the other written notice
of the desire to submit the dispute, controversy or question for decision as
aforesaid, then either party may apply to the American Arbitration Association
for an appointment of a neutral arbitrator, or if such Association is not then
in existence or does not act in the matter within 30 days of application,
either party may apply to the
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Presiding Judge of the District Court of any county in Colorado for an
appointment of a neutral arbitrator to hear the parties and settle the dispute,
controversy or question, and such Judge is hereby authorized to make such
appointment. In the event that either party exercises the right to submit a
dispute arising hereunder to arbitration, the decision of the neutral
arbitrator shall be final, conclusive and biding on all interested persons and
no action at law or equity shall be instituted or, if instituted, further
prosecuted by either party other than to enforce the award of the neutral
arbitrator. The award of the neutral arbitrator may be entered in any court
that has jurisdiction. In the event that the Executive is successful in
pursuing any material claim(s) or dispute(s) arising out of this Agreement, the
Company shall pay the Executive's attorney and expenses of any Arbitrator in
connection with such claims or disputes. In any other case, the Executive and
the Company shall each bear all their own costs and attorneys fees, except the
Company shall in all events pay the costs of any arbitrator appointed
hereunder.
9. Successors. (a) 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) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company shall require any successors (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business and/or assets expressly to assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken
place. Except as specifically provided, herein, as used in this Agreement,
"Company" shall mean both the Company as defined above and any such successor
that assumes and agrees to perform this Agreement, by operation of law or
otherwise.
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10. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: The most recent address on file
for the Executive at the Company.
If to the Company:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Executive Vice President,
Human Resources and Executive
Vice President, Merger and Joint
Venture Integration of the Company
or to such other address as either party furnishes to the other in writing in
accordance with this Section 10(b). Notices and communications shall be
effective when actually received by the addressee.
(c) 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.
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(d) 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.
(e) 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.
(f) Except as to (i) the "Special Continuees benefit program letter"
to the Executive, dated March 8, 1999, as clarified by TCI's letter to the
Executive dated June 23, 1999, and (ii) the Tax Protection Agreement between the
Executive and TCI, dated as of March 1, 1999, attached hereto as Exhibits C and
D, respectively, the Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them or between TCI and the Executive
and/or any Company or TCI plan or practice (or plan or practice of Liberty Media
Corporation) concerning the subject matter hereof, including TCI's Severance Pay
Plan or any other severance policy of TCI, the Company or any of their
affiliates (collectively, the "Severance Plans"). The Executive hereby
irrevocably waives any rights to severance benefits under the Severance Plans or
to acceleration of equity awards under the Severance Plans or any equity award
plan of TCI, Liberty Media Corporation or the Company except as may be provided
in this Agreement.
(g) The Executive shall be covered under the indemnification
policies of the Company applicable to similarly situated officers of the
Company.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and 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/ XXXXXXX X. XXXXX
----------------------------
Xxxxxxx X. Xxxxx
AT&T CORP.
By: /s/ [ILLEGIBLE]
------------------------
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EXHIBIT A
Position. The Executive shall be the Senior Executive Vice President of
Strategic Development of TCI, and the Executive shall report directly and
exclusively to the Chief Executive Officer of TCI.
Duties. The Executive shall devote his full business efforts to strategic
development, and other business and affairs, of TCI and the Company's cable,
broadband and internet services business unit.
SCHEDULE B
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The following stock options will be accelerated upon the Effective Date as
defined herein:
November 17, 1994, grant (AT&T) (formerly TCOMA)
August 4, 1995, grant (AT&T) (formerly TCOMA)
August 4, 1995, grant (Liberty Media) (formerly TCIVA)
July 23, 1997, grant (Liberty Media) (formerly TCIVA)
November 17, 1994, grant (Liberty Media) (formerly LBTYA)
August 4, 1995, grant (Liberty Media) (formerly LBTYA)
July 23, 1997, grant (Liberty Media) (formerly LBTYA)
The following restricted stock grants will be accelerated upon the Effective
Date as defined herein:
None.
GRANTS NOT ACCELERATED
XXXXXXX XXXXX
The following stock options will not be accelerated upon the Effective Date.
July 23, 1997, grant (AT&T) (formerly TCOMA)
July 23, 1997, grant (Liberty Media) (formerly LBTYA)
November 17, 1994, grant (Liberty Media) (formerly TCIVA)
The following restricted stock grants will not be accelerated upon the Effective
Date.
December 31, 1995, grant (AT&T) (formerly TCOMA)
June 23, 1998, grant (AT&T) (formerly TCOMA)
December 13, 1995, grant (Liberty Media) (formerly TCIVA)
September 3, 1998, grant (AT&T) (formerly TCOMA)
December 13, 1995, grant (Liberty Media) (formerly LBTYA)
