EMPLOYMENT AGREEMENT
Exhibit 10-u
THIS
AGREEMENT ("Agreement") by and between SBC COMMUNICATIONS INC., a Delaware
corporation ("SBC"), SBC MANAGEMENT SERVICES, L.P. (the "Company") and XXXXXX X.
XXXXXXXX, XX. ("Employee") is effective the 16th day of November,
2001.
WITNESSETH THAT:
WHEREAS,
Employee presently is Chairman of the Board and Chief Executive Officer of SBC
and possesses executive skills and experience which SBC acknowledges are of
substantial value and importance to the success of SBC’s present and future
business operations; and
WHEREAS,
SBC, the Company and Employee desire to provide for the terms and conditions
upon which Employee will continue in the employ and service of SBC and the
Company,
NOW,
THEREFORE, in consideration of the mutual promises, covenants and agreements
herein set forth, the parties hereto agree as follows:
1. Employment and
Duties. The Company hereby employs Employee, and Employee agrees to
continue in the employ of the Company, for the term herein specified (the
“Employment Term”). During the Employment Term, Employee shall serve SBC and the
Company as Chairman of the Board and Chief Executive Officer and shall devote
his full time, attention and effort to the business and affairs of SBC and its
affiliates.
2. Term. Subject to
Section 4 below, the Employment Term shall be a five (5) year period commencing
November 16, 2001 and ending November 15, 2006; provided, however, upon
notice provided by either party to the other within 60 days prior to the
second anniversary of this Agreement, the Employment Term shall end on the third
anniversary of this Agreement.
3. Consideration, Benefits and
Compensation.
a. Consideration. In
consideration of Employee’s agreement to enter into this Agreement and to make
the non-compete, non-solicitation and confidentiality covenants provided in
Section 7, SBC agrees to make a one-time grant to Employee of 2,500,000 SBC
options with an exercise price equal to the closing price of SBC Communications
Inc. stock on the New York Stock Exchange on the effective date hereof. The
options shall be granted under the 2001 Incentive Plan or another plan of SBC or
as a special grant having terms substantially similar to the 2001 Incentive
Plan. The terms of this agreement shall supercede any conflicting terms
contained in any such grant. The options shall only vest upon completion of the
earliest to occur of: (A) the end of the fifth (5th) year of the Employment
Term; however, three-fifths (3/5) of the options shall vest after the first
three (3) years of the Employment Term; (B) termination of the Employee’s
employment due to death or Disability, as that term is used in the 2001
Incentive Plan; (C) a change in control, as that term is used in the 2001
Incentive Plan; or (D) in the event the Company terminates the employment
of Employee without Cause. In the event the Employee voluntarily terminates his
employment prior to the end of the first 3 years of the Employment Term, he
shall forfeit all options under this grant. In the event the Employee
voluntarily terminates his employment prior to the end of the Employment Term
but after the first three years of the Employment Term, he shall forfeit
unvested options under this grant.
b. Benefits. In
consideration of Employee’s provision of services to SBC and the Company
throughout his career with SBC and its affiliates, SBC agrees to continue to
provide to Employee, for the duration of Employee’s life, (i) health and welfare
benefits on terms and conditions that are at least equivalent to the health and
welfare benefits provided to Employee and his eligible dependents as of the date
of this Agreement, (the employee’s spouse shall also be eligible to receive
company provided health and welfare benefits on terms no less favorable than
exist as of the date of employee’s retirement in the event employee shall
pre-decease her) and (ii) access to and U.S. domestic use of SBC’s aircraft for
a maximum of ten (10) hours per month, office facilities and support staff, and
an automobile or automobile benefits at least equivalent to those provided to
Employee as of the date of this Agreement; provided, however, Employee shall be
responsible for the payment of all taxes incurred by him because of personal use
of such aircraft.
c. Compensation. In
order that SBC and the Company may continue to benefit from Employee’s
experience, knowledge, reputation and contacts and in consideration of his
services, Employee shall earn and the Company shall pay, during each calendar
year of the Employment Term, base salary to be set by the SBC Board of
Directors, which shall not be less than the rate of base salary earned by
Employee during calendar year 2001, and, during the Employment Term, Employee’s
short-term and long-term targets shall not be less than his short-term and
long-term targets for calendar year 2001. In addition, Employee shall
participate in SBC’s health and welfare, pension and other benefit plans and
programs applicable generally to employees of SBC and its affiliates, and in any
fringe benefit programs presently existing or hereafter adopted for the benefit
of executive employees of SBC and its affiliates that are commensurate with
Employee’s position. In the event that any of such programs require future
action by the Board of Directors of SBC or a Committee of such Board (for
example, as in the case of future stock grants, stock option grants, or long
term incentive programs), Employee shall be a candidate for participation in
such programs commensurate with Employee’s position on the basis applicable to
other eligible executive employees of SBC and its affiliates. SBC and the
Company may, from time to time, also consider the award of other forms of
compensation to Employee.
4. Effect of Termination of
Employment. The Employment Term and, except as provided in this Section
4, Employee’s right to salary and compensation (including benefits) as provided
for in Section 3(c) shall terminate only (a) upon the expiration of the
Employment Term pursuant to Section 2, (b) if Employee shall die during the
Employment Term, (c) if Employee shall voluntarily terminate his employment, or
(d) if Employee’s employment is terminated for Cause during the Employment Term.
The Company reserves the right to terminate the employment of Employee for any
other reason not specified in the preceding sentence, but in such case, the
Company shall be obligated to continue to provide Employee with the salary and
compensation through the end of the then current Employment Term and to pay fees
and benefits during the consulting period described below.
For
purposes of this Agreement, the term Cause shall mean (i) a willful failure or
refusal of Employee to perform his employment or consulting duties and
obligations hereunder; (ii) any fraud, embezzlement or other dishonesty of
Employee, or (iii) the conviction of Employee of a felony committed in the
performance by him of services on behalf of SBC or its affiliates.
Employee’s
right to salary and compensation (including benefits) shall not be limited or
affected by any illness or disability of Employee, or on account of any accident
or other event (except as provided herein) which either temporarily or
permanently, or wholly or partially, shall prevent Employee from performing his
employment duties hereunder.
Employee
shall continue to participate, so long as he continues in the employ of the
Company or any affiliate of SBC, in employee benefit plans and other fringe
benefit programs available to employees generally and to any group or class of
employees to which he belongs on the same terms and conditions applicable to
employees generally or to such group or class of employees, as the case may
be.
5. Consulting. Employee
agrees that commencing upon Retirement, provided he has completed as least three
(3) years of the Employment Term, he will provide consulting services and advice
to SBC when and as reasonably requested by the Chief Executive Officer or by the
Board of Directors of SBC until the earliest of the third anniversary of
Employee’s Retirement or the Employee’s death (the “Consulting Term”). In
consideration of such services, SBC or its affiliates shall, pay Employee an
annual consulting fee equal to 50% of his annual rate of base salary in effect
at his Retirement (the “Consulting Fee”), payable in monthly installments. In
addition to the benefits specified in Section 3(b), SBC shall provide Employee
continued access during the Consulting Term to SBC’s facilities and services
comparable to those provided to him prior to his Retirement, including club
memberships, financial planning, automobile or allowance therefore, and an
office and support staff (collectively referred to as “Consulting Benefits”), on
the same basis as such facilities and services were provided to Employee prior
to his Retirement. During the Consulting Term, SBC shall also reimburse
Employee, upon the receipt of appropriate documentation, for reasonable
expenses, which he incurs in providing such consulting services at the request
of the Chief Executive Officer or the Board of Directors of SBC. During the
Consulting Term, Employee and SBC agree and acknowledge that Employee shall be
an independent contractor. Notwithstanding the foregoing, in the event his
employment is terminated for Cause during the Employment Term, the obligation to
perform consulting services and advice shall not begin and the Company shall not
be obligated to pay Employee any fees, benefits, or expenses.
The
Consulting Term and Employee’s right to the Consulting Fee and Consulting
Benefits as provided for in this Section 5 shall terminate only (a) upon the
expiration of the Consulting Term pursuant to this Section 5, (b) if Employee
shall die during the Consulting Term, or (c) if Employee’s consulting
arrangement is terminated by SBC for Cause during the Consulting Term.
Employee’s right to the Consulting Fee and Consulting Benefits shall not be
limited or affected by any illness or disability of Employee, or on account of
any accident or other event (except as provided herein) which either temporarily
or permanently, or wholly or partially, shall prevent Employee from performing
his consulting duties hereunder.
6. Change of Control.
Notwithstanding anything to the contrary herein, in the event that Employee
receives a payment pursuant to that certain change in control/severance
agreement between Employee and SBC dated March 1, 1989, as amended in an
agreement dated March 25, 1998, as a result of a “change in control of the
Corporation” (as that term is defined in such change in control/severance
agreement, as amended), the Employment Term shall expire on the date such
payment is made; provided, however, the number of days in the Employment Term
that expire pursuant to this Section 6 shall be added to the Consulting Term,
whereupon the Employee shall be entitled to receive the Consulting Fees and
Consulting Benefits as described in Section 5 during the Consulting Term as
extended by this Section 6.
7. Non-Disclosure,
Non-Solicitation and Non-Compete Agreements. Employee agrees that he will
not disclose to any other firm or person any of SBC’s or its affiliates’ trade
secrets or any confidential information relating to its or their business.
Employee further agrees that, for the three year period commencing upon the
expiration of the Employment Term (but excepting any period following a
termination by SBC with Cause), or if longer, at any time during the Consulting
Term, he will not without the prior consent of SBC, (a) enter the employ of, or
have any material interest in, directly or indirectly, any business in this
country in competition with SBC or any of its affiliates, (b) contact, solicit
or attempt to solicit, directly or indirectly any customer of SBC or any of its
affiliates, or (c) induce, directly or indirectly, any personnel of SBC or any
of its affiliates to leave SBC or any of its affiliates nor interfere with the
faithful discharge by such personnel of their duties to serve SBC or its
affiliates.
8 Miscellaneous.
Neither this Agreement nor any rights hereunder shall be assignable by either
party hereto.
This Agreement shall be construed and
interpreted under the laws of the State of Texas. If any payments or benefits
provided by SBC, the Company or any of their respective affiliates to Employee
are subject to golden parachute excise tax, then SBC shall make Employee whole
for such excise taxes on an after-tax basis. Any dispute arising out of or
relating to this Agreement, except any dispute by SBC arising out of or relating
to matters addressed in Section 7, shall be settled by final and binding
arbitration, which shall be the exclusive means of resolving any such dispute,
and the parties specifically waive all rights to pursue any other remedy,
recourse or relief. Any such arbitration shall be expedited and conducted in San
Antonio, Texas and shall be governed by the United States Arbitration Act, 9
U.S.C. Section 1-16, and judgment upon the award rendered by the arbitration may
be entered by any court having jurisdiction.
IN WITNESS WHEREOF, the parties have
executed this Agreement, as amended, this 16th day of November,
2001.
SBC COMMUNICATIONS
INC.
SBC MANAGEMENT SERVICES,
L.P.
By: /s/ Xxxx X.
Xxx
Printed
Name: Xxxx X. Xxx
Its:
Chairman, Human Resources
Committee
of the Board of Directors
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx,
Xx.
Xxxxxx X.
Xxxxxxxx, Xx.
