Exhibit 10.18
EXECUTION COPY
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 18th day of November, 2002
by and between AT&T Comcast Corporation, a Pennsylvania corporation (together
with its successors and assigns permitted under this Agreement, the "Company"),
and C. Michael Armstrong (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ the Executive and to enter into
an agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
SECTION 1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.
(b) "AT&T" shall mean AT&T Corp., a New York corporation.
(c) "Base Salary" shall mean the annual rate of salary provided for in
Section 4 below or any increased annual rate of salary granted to the Executive
pursuant to Section 4.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Broadband" shall mean AT&T Broadband Corp., a Delaware
corporation.
(f) "Cause" shall mean:
(i) the Executive is convicted of a felony involving the
Executive's moral turpitude; or
(ii) the Executive is guilty of willful gross neglect or willful
gross misconduct in carrying out his duties under this Agreement, resulting, in
either case, in material economic harm to the Company, unless the Executive
believed in good faith that such act or nonact was in the best interests of the
Company.
(g) "Change in Control" shall mean the occurrence of any of the
following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934 (the "Exchange Act")) (an "Entity") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Stock") or (B) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following: (1) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless
the security being so converted was itself acquired directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (4) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) of this Section 1(g);
(ii) A change in the composition of the Board such that the
individuals who, as of the effective date of this Agreement,
constitute the Board (such Board shall be hereinafter referred to as
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that for purposes of this
definition, any individual who becomes a member of the Board
subsequent to the effective date of this Agreement, whose election, or
nomination for election, by the Company's shareholders was approved by
a vote of at least a two-thirds majority of those individuals who are
members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as
though such individual were a member of the Incumbent Board; and
provided, further however, that any such individual whose initial
assumption of office occurs as a result of or in
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connection with either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of an Entity other than the Board shall not
be so considered as a member of the Incumbent Board;
(iii) A merger, reorganization or consolidation to which the
Company is a party or a sale or other disposition of all or
substantially all of the assets of the Company (each, a "Corporate
Transaction"); excluding however, such a Corporate Transaction
pursuant to which (A) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
Outstanding Company Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation or other person which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries
(a "Parent Company")) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Entity (other than the Company, any
employee benefit plan (or related trust) of the Company, such
corporation resulting from such Corporate Transaction (or, if
reference was made to equity ownership of any Parent Company for
purposes of determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, such Parent
Company) will beneficially own, directly or indirectly, 20% or more
of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction (or, if
reference was made to equity ownership of any Parent Company for
purposes of determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, such Parent
Company) or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the
election of directors unless such ownership resulted solely from
ownership of securities of the Company prior to the Corporate
Transaction, and (C) individuals who were members of the Incumbent
Board will immediately after the consummation of the Corporate
Transaction constitute at least a two-thirds majority of the members
of the board of directors of the corporation resulting from such
Corporate Transaction (or, if reference was made to equity ownership
of any Parent
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Company for purposes of determining whether clause (A) above is
satisfied in connection with the applicable Corporate Transaction, of
the Parent Company); or
(iv) The approval by the shareholders of the Company of a plan
of complete liquidation or dissolution of the Company.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Constructive Termination Without Cause" shall mean termination by
the Executive of his employment at his initiative following the
occurrence of any of the following events without his consent:
(i) a reduction in the Executive's then current Base Salary or
Target Bonus as a percentage of Base Salary or the termination or
material reduction of any employee benefit or executive service
enjoyed by him (other than as part of an across-the-board reduction
applicable to all executive officers of the Company);
(ii) the failure to elect or reelect the Executive to any of the
positions described in Section 3 or the removal of him from any such
position;
(iii) a material diminution in the Executive's duties or the
assignment to the Executive of duties which are materially
inconsistent with his duties or which materially impair the
Executive's ability to function as the Chairman of the Company;
(iv) the relocation of the Executive's own principal office from
its location in the Grace Building;
(v) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor
to all or substantially all of the assets of the Company within 15
calendar days after a merger, consolidation, sale or similar
transaction; or
(vi) any breach of this Agreement by the Company.
Following written notice from the Executive, as described
above, the Company shall have 15 calendar days in which to cure. If the
Company fails to cure, the Executive's termination shall become
effective on the 16th calendar day following the written notice.
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(j) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his duties and responsibilities
under this Agreement as determined by a medical doctor selected by the Company
and the Executive. If the Parties cannot agree on a medical doctor, each Party
shall select a medical doctor and the two doctors shall select a third who shall
be the approved medical doctor for this purpose.
(k) "EBA" shall mean the Employee Benefits Agreement by and between
AT&T and Broadband dated as of December 19, 2001.
(l) "Effective Date" shall mean the "Closing Date" as such term is
defined in the Merger Agreement.
(m) "Fair Market Value" shall mean the value of a share of Stock or a
share of AT&T stock, as the case may be, as traded on the Nasdaq Stock Market or
the New York Stock Exchange, as the case may be, on the date in question, based
on the respective closing prices.
(n) "Grace Building" shall mean the W.R. Grace Building at 1114 Avenue
of the Americas (and 41 West 42nd Street), New York, New York or any other
building of comparable stature maintained by the Company as its principal place
of business in the borough of Manhattan in New York City.
(o) "Merger Agreement" shall mean the Agreement and Plan of Merger
dated as of December 19, 2001, as amended, by and among AT&T, Broadband, Comcast
Corporation, AT&T Broadband Acquisition Corp., Comcast Acquisition Corp. and the
Company.
(p) "Stock" shall mean Class A Common Stock of the Company.
(q) "Target Bonus" shall have the definition set forth in Section 5(a)
of this Agreement.
(r) "Term of Employment" shall mean the period specified in Section 2
below.
(s) "2003 Annual Meeting" shall mean the regularly scheduled 2003
annual meeting of the shareholders of the Company.
(t) "2004 Annual Meeting" shall mean the regularly scheduled 2004
annual meeting of the shareholders of the Company.
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(u) "2005 Annual Meeting" shall mean the regularly scheduled 2005
annual meeting of the shareholders of the Company.
SECTION 2. Term of Employment.
The Term of Employment shall begin on the Effective Date and end on the
date of the 2005 Annual Meeting. Notwithstanding the foregoing, after the
Effective Date, the Term of Employment may be earlier terminated by either Party
in accordance with the provisions of Section 10 and the Articles of
Incorporation and the By-Laws of the Company.
SECTION 3. Position, Duties and Responsibilities.
(a) Commencing on the Effective Date and continuing until the date of
the 2005 Annual Meeting, the Executive shall be employed as the Chairman of the
Board and shall have the duties and responsibilities of the Chairman of the
Board as are set forth in the Articles of Incorporation and the By-Laws of the
Company. The Executive, in carrying out his duties under this Agreement, shall
report to the Board. During the Term of Employment, the Executive shall devote
such business time and attention to the business and affairs of the Company as
shall be necessary to discharge his responsibilities hereunder and shall use his
best efforts, skills and abilities to promote its interests.
(b) Nothing herein shall preclude the Executive from (i) serving on
the boards of directors of a reasonable number of other corporations subject to
the approval of the Board in each case (which approval has been given as to the
boards listed in Exhibit A attached hereto), (ii) serving on the boards of a
reasonable number of trade associations and/or charitable organizations, (iii)
engaging in charitable activities and community affairs, and (iv) managing his
personal investments and affairs, provided that such activities set forth in
this Section 3(b) do not materially interfere with the proper performance of his
duties and responsibilities under Section 3(a).
SECTION 4. Base Salary.
During the Term of Employment, the Executive shall be paid an
annualized Base Salary, payable in accordance with the regular payroll practices
of the Company, of $1,800,000. The Base Salary shall be reviewed annually for
increase in the discretion of the Board. In no event shall the Executive's Base
Salary be decreased.
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SECTION 5. Annual Incentive Award.
(a) During the Term of Employment, the Executive shall participate in
the annual incentive award plan of the Company applicable to senior executive
officers of the Company. Under such plan, the Executive shall have a target
bonus opportunity each year equal to no less than 150% of his Base Salary from
time to time during that year (the "Target Bonus"), payable in that amount if
the performance goals established for the relevant year are met; provided that
the performance goals for each year shall be no less favorable to the Executive
than the performance goals established for other senior officers of the Company,
including the Company's Chief Executive Officer. If such performance goals are
not met, the Executive shall receive a lesser amount (or nothing) as determined
in accordance with applicable plan guidelines. If such performance goals are
exceeded, the Executive may receive a greater amount as determined in accordance
with applicable plan guidelines. Except as otherwise provided herein, the
Executive shall be paid his annual incentive awards under this Section 5 no
later than other senior executives of the Company are paid their annual
incentive awards.
(b) Notwithstanding the foregoing, the Executive's annual incentive
awards for the following periods shall be as described below:
(i) For calendar year 2002, the Executive shall receive an
annual incentive award of $3,510,000 on January 3, 2003.
(ii) For calendar year 2005, the Executive shall be entitled to
an annual incentive award, equal to the Executive's Target Bonus for
such year, multiplied by a fraction, the numerator of which is the
number of days that the Executive was employed during the applicable
year and the denominator of which is 365. Such award shall be paid to
the Executive as soon as practicable after the 2005 Annual Meeting.
SECTION 6. Long-term Incentive Awards.
(a) Existing Performance Awards. Subject to the provisions of Section
10, Exhibit B sets forth the treatment of the outstanding AT&T performance
shares, restricted stock units ("RSUs") and stock options, respectively, held by
the Executive as of the Effective Date.
(b) Ongoing Performance Awards. As soon as practicable after the
Effective Date, the Company shall grant to the Executive an option (the
"Option") to purchase 2,400,000 shares of Stock at the Fair Market Value of the
Stock on the day immediately preceding the date of grant. This grant shall be
made on the
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same terms and conditions as options granted to other senior officers of the
Company (i.e., ten-year term, ten-year vesting with respect to half of the
Option, five-year vesting with respect to the other half (the details of such
vesting having been disclosed to the Executive), and the Executive shall have 90
days after retirement to exercise the vested portion of the Option, if any). The
Company shall be under no obligation to grant any additional equity awards to
the Executive.
SECTION 7. Supplemental Pension. As of the Effective Time, the Company
shall have paid to AT&T the amount necessary to discharge any obligation with
respect to the supplemental retirement benefit provided to the Executive under
Section 9 of his prior employment agreement with AT&T. Executive acknowledges
that the obligation to administer and pay such supplemental retirement benefit
has accordingly been assumed by AT&T and the Executive further acknowledges that
the Company shall have no obligation or liability to the Executive with respect
to payment of such supplemental retirement benefit.
SECTION 8. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled to
participate in all employee pension and welfare benefit plans and programs made
available to the Company's senior level executives or to its employees
generally, as such plans or programs may be in effect from time to time,
including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, 401(k), medical, dental, hospitalization,
short-term and long-term disability and life insurance plans, accidental death
and dismemberment protection, travel accident insurance, and any other pension
or retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including any
plans that supplement the above-listed types of plans or programs, whether
funded or unfunded. The Executive's participation shall be based on, and the
calculation of all benefits shall be based on, the assumptions that the
Executive has met all service-period or other requirements for such
participation provided that no such assumptions shall be made as to a
tax-qualified plan if such assumption would jeopardize the tax- qualified status
of such plan.
SECTION 9. Reimbursement of Business and Other Expenses; Executive
Services; Vacation.
(a) The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance
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with the Company's policy. The Company shall pay all reasonable financial
consultant and legal fees and expenses incurred by the Executive in connection
with the negotiation of the Executive's employment and consulting arrangements
with the Company.
(b) During the Term of Employment, the Executive's principal office
shall be located in the Grace Building. The Company shall provide full-time
secretarial support for the Executive's principal office, as selected by the
Executive in his sole discretion. The Company shall make available for the
Executive's use appropriate office space (which shall be on the executive floor)
and secretarial support when he performs services at the Company's principal
offices in Philadelphia, Pennsylvania.
(c) During the Term of Employment, the Executive shall be entitled to
participate in each of the Company's executive services in accordance with the
terms and conditions of such arrangements as they are in effect from time to
time for the Company's Chief Executive Officer, including primary personal use
of an airplane on the same economic terms as the Company's Chief Executive
Officer. Without duplication of the foregoing, until the date of the 2004 Annual
Meeting, the Company shall pay the dues for the Executive's membership in the
Business Roundtable, the G-100 and the Business Council.
(d) With respect to calendar year 2003, the Company shall pay when due
the premiums for the Executive's Senior Management Universal Life Insurance
Policy (as in effect immediately prior to the Effective Date), estimates of
which have been provided to the Company by the Executive, and a gross-up for all
federal taxes payable by the Executive in connection with the payment of such
premiums. The Company shall only pay such premiums for calendar year 2004 if the
Executive elects to become Non-Executive Chairman of the Board prior to or at
the 2003 Annual Meeting.
(e) With respect to calendar year 2003, if the Executive elects to
become Non-Executive Chairman of the Board prior to or at the 2003 Annual
Meeting he shall be entitled to tax preparation and financial counseling
services for such year. If the Company provides any executive officer with a
gross-up for applicable taxes payable in connection with the provision of such
tax preparation and counseling services, the Executive shall also be entitled to
such tax gross-up.
(f) The Executive shall be entitled to five weeks paid vacation per
year of employment, which shall accrue and otherwise be subject to the Company's
vacation policy for senior executives.
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SECTION 10. Termination of Employment.
(a) Termination Due to Death. In the event that the Executive's
employment is terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to the following benefits:
(i) Base Salary through the end of the month in which his death
occurs;
(ii) annual incentive award for the year in which the
Executive's death occurs, equal to the Target Bonus for such year,
payable in a single installment promptly after his death;
(iii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms; and
(iv) (A) any restrictions on restricted stock shall lapse and
(B) all outstanding RSUs (as well as the $10,000,000 guarantee set
forth in Exhibit B), performance shares and other equity-based awards
shall vest and be paid out (at target, with respect to the performance
shares) in a single installment promptly after his death.
(b) Termination Due to Disability. In the event that the Executive's
employment is terminated due to his Disability, he shall be entitled to
the following benefits:
(i) disability benefits in accordance with the long-term
disability program then in effect for senior executives of the
Company;
(ii) Base Salary through the end of the month in which
disability benefits commence;
(iii) annual incentive award for the year in which the
Executive's termination occurs, equal to the Target Bonus for such
year, payable in a single installment promptly after his termination;
(iv) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms; and
(v) (A) any restrictions on restricted stock shall lapse and (B)
all outstanding RSUs (as well as the $10,000,000 guarantee set forth
in Exhibit B), performance shares and other equity-based awards shall
vest
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and be paid out (at target, with respect to the performance shares) in
a single installment promptly after his termination.
In no event shall a termination of the Executive's employment
for Disability occur until the Party terminating his employment gives
written notice to the other Party in accordance with Section 24 below.
(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect unless the
provisions of this paragraph (i) are complied with. The Executive
shall be given written notice by the Board, authorized by a vote of no
less than 75% of the entire Board, of the intention to terminate him
for Cause, such notice (A) to state in detail the particular act or
acts or failure or failures to act that constitute the grounds on
which the proposed termination for Cause is based and (B) to be given
within six months of the Board learning of such act or acts or failure
or failures to act. The Executive shall have ten calendar days after
the date that such written notice has been given to the Executive in
which to cure such conduct, to the extent such cure is possible. If he
fails to cure such conduct, the Executive shall then be entitled to a
hearing before the Board. Such hearing shall be held within 15
calendar days of such notice to the Executive, provided he requests
such hearing within ten calendar days of the written notice from the
Board of the intention to terminate him for Cause. If, within five
calendar days following such hearing, the Executive is furnished
written notice by the Board confirming that, in its judgment, grounds
for Cause on the basis of the original notice exist, he shall
thereupon be terminated for Cause.
(ii) In the event the Company terminates the Executive's
employment for Cause:
(A) the Executive shall be entitled to Base Salary
through the date of the termination;
(B) all outstanding options which are not exercisable
shall be forfeited; exercisable options shall remain
exercisable until the earlier of the ninetieth day after the
date of termination or the originally scheduled expiration
date of the options unless the Board determines otherwise;
(C) all restricted stock as to which restrictions have
not lapsed shall be forfeited;
(D) all unvested RSUS shall be forfeited; and
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(E) all long-term incentive plan awards with respect to
performance cycles which have not yet been completed shall be
forfeited.
(d) Termination without Cause or Constructive Termination without
Cause. In the event the Executive's employment is terminated by the Company
without Cause, other than due to Disability or death, or in the event there is a
Constructive Termination without Cause, the Executive shall be entitled to the
following benefits:
(i) Base Salary through the date of termination;
(ii) an annual incentive award for the year in which termination
occurs, equal to the Target Bonus for such year multiplied by a
fraction, the numerator of which is the number of days that the
Executive was employed during the applicable year and the denominator
of which is 365, payable in a single installment promptly after his
termination;
(iii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms;
(iv) (A) any restrictions on any restricted stock shall lapse
and (B) all outstanding RSUs (as well as the $10,000,000 guarantee set
forth in Exhibit B), performance shares and other equity-based awards
shall vest and be paid out (at target, with respect to the performance
shares) in a single installment promptly after his termination; and
(v) if such termination occurs on or prior to the second
anniversary of the Effective Date, the Executive shall be entitled to
receive a lump sum cash amount equal to the greater of (A) (X) the
product of three multiplied by the sum of (I) the Base Salary, (II)
the annual incentive award, equal to the target bonus established by
AT&T for 2002, which was 150% of his then base salary, and (III) the
long-term performance share award, equal to the performance share
target set by AT&T for 2002 and (B) the product of four multiplied by
the sum of Base Salary, at the annualized rate in effect on the date
of termination, and the Target Bonus for the year in which the
termination occurs (with respect to the Target Bonus, $2.7 million if
such termination occurs in 2002 or 2005). If such termination occurs
after the second anniversary of the Effective Date, the Executive
shall be entitled to receive the payment set forth in clause (B) of
this Section 10(d)(v).
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(e) Voluntary Termination; Retirement.
(i) Except as otherwise provided herein, termination of
employment by the Executive on his own initiative, other than a
termination due to death or Disability or a Constructive Termination
without Cause or retirement following the end of the Term of
Employment, shall have the same consequences as provided in Section
10(c)(ii) for a termination for Cause. A voluntary termination under
this Section 10(e) shall be effective 30 calendar days after prior
written notice is received by the Company.
(ii) Notwithstanding the foregoing, if the Executive elects to
both (A) become Non-Executive Chairman of the Board prior to or at the
2003 Annual Meeting and (B) retire from his position as Non-Executive
Chairman of the Board prior to or at the 2004 Annual Meeting, but not
earlier than January 1, 2004, the Company shall offer to enter into a
consulting agreement with the Executive in the form attached hereto as
Exhibit C under which he would serve as a consultant and senior
advisor to the Company until the one year anniversary of the 2005
Annual Meeting. All benefits owing to the Executive as a result of a
retirement event described in the immediately preceding sentence shall
be as set forth in the consulting agreement. The Company's failure to
offer to enter into such consulting agreement shall constitute a
termination of the Executive's employment without Cause covered by
Section 10(d).
(iii) The Executive may retire at any time following the end of
the Term of Employment and thereupon commence receiving any benefits
to which he is entitled as a retired senior executive in accordance
with the Company's then existing plans and practices. Upon such
retirement, all stock options, other than the Option, shall continue
to be exercisable for the remainder of their originally scheduled
ten-year terms.
(f) Gross-up Payment.
(i) If the aggregate of all payments or benefits made or
provided to the Executive under this Agreement and under all other
plans and programs of the Company (the "Aggregate Payment") is
determined to constitute a Parachute Payment within the meaning of
Section 280G(b)(2) of the Code, the Company shall pay to the
Executive, prior to the time any excise tax imposed by Section 4999 of
the Code ("Excise Tax") is payable with respect to such Aggregate
Payment, an additional amount (the "Gross-Up Payment") which, after
the imposition of all income, employment, excise and other taxes
thereon, is equal to the Excise Tax on the Aggregate Payment. The
determination of whether the Aggregate
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Payment constitutes a Parachute Payment and, if so, the amount to be
paid to the Executive and the time of payment pursuant to this Section
10(f)(i) shall be made by an independent auditor (the "Auditor")
selected by the Parties and paid by the Company. The Auditor shall be
a nationally recognized United States public accounting firm which has
not, during the two years preceding the date of its selection, acted
in any way on behalf of the Company or any Affiliate thereof. If the
Executive and the Company cannot agree on the firm to serve as the
Auditor, then the Executive and the Company shall each designate one
accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor. All fees and expenses of the
Auditor shall be borne solely by the Company. Any Gross- Up Payment
shall be paid by the Company to the Executive within five calendar
days of the receipt of the Auditor's determination. Any determination
by the Auditor shall be binding upon the Company and the Executive.
(ii) As a result of uncertainty in the application of Sections
280G and 4999 of the Code at the time of the initial determination by
the Auditor hereunder, it is possible that the Gross-Up Payment made
will have been an amount more than the Company should have paid
pursuant to Section 10(f)(i) (the "Overpayment") or that the Gross-Up
Payment made will have been an amount less than the Company should
have paid pursuant to Section 10(f)(i) (the "Underpayment"). In the
event that there is a final determination by the Internal Revenue
Service, or a final determination by a court of competent
jurisdiction, that an Overpayment has been made, any such Overpayment
shall be treated for all purposes as a loan to the Executive which the
Executive shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the
Code. In the event that there is a final determination by the Internal
Revenue Service, a final determination by a court of competent
jurisdiction or a change in the provisions of the Code or regulations
pursuant to which an Underpayment arises under this Agreement, any
such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
(iii) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
result in an Underpayment and would require the payment by the Company
of an additional Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the
Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the
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30 calendar day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive
shall:
(A) give the Company any information reasonably requested
by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceeding
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income or employment tax (including
interest and penalties with respect thereto) imposed as a result of such
proceeding and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 10(f), the Company shall control all
proceedings taken in connection with such contest, provided that the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) Other Termination Benefits. In the case of any of the foregoing
terminations (other than retirement as Non-Executive Chairman of the
Board pursuant to Section 10(e)(ii)) the Executive or his estate shall
also be entitled to:
(i) the balance of any incentive awards due for performance
periods which have been completed, but which have not yet been paid;
(ii) any expense reimbursements due the Executive;
15
(iii) other benefits, if any, in accordance with applicable
plans and programs of the Company; and
(iv) with respect to the Executive only, if such termination
occurs on or prior to the second anniversary of the Effective Date,
financial counseling services for a period of two years following the
Executive's termination.
(h) No Mitigation; No Offset. In the event of any termination of
employment under this Section 10, the Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.
(i) Nature of Payments. Any amounts due under this Section 10
are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty.
SECTION 11. Confidential Information; Prohibited Public Statements;
Publicity.
(a) The Company (as hereinafter specially defined for purposes of
Sections 11 through 13 hereof), pursuant to the Executive's employment
hereunder, provides him access to and confides in him business methods and
systems, techniques and methods of operation developed at great expense by the
Company ("Trade Secrets") and which the Executive recognizes to be unique assets
of the Company's business. The Executive shall not, during or at any time after
the Term of Employment, directly or indirectly, in any manner utilize or
disclose to any person, firm, corporation, association or other entity, except
(i) where required by law, (ii) to directors, consultants or employees of the
Company in the ordinary course of his duties or (iii) during his employment and
in the ordinary course of his services as Chairman of the Board for such use and
disclosure as he shall reasonably determine to be in the best interest of the
Company: (A) any such Trade Secrets, (B) any sales prospects, customer lists,
products, research or data of any kind, or (C) any information relating to
strategic plans, sales, costs, profits or the financial condition of the Company
or any of its customers or prospective customers, which are not generally known
to the public or recognized as standard practice in the industry in which the
Company shall be engaged. The Executive further covenants and agrees that he
will promptly deliver to the Company all tangible evidence of the knowledge and
information described in (A), (B) and (C), above, prior to or at the termination
of the Executive's employment. For purposes of Sections 11, 12 and 13 hereof the
term "Company" shall mean AT&T Comcast Corporation ("AT&T Comcast") as well as
(I) each of its more than fifty percent (50%) owned subsidiaries and (II) each
other entity in
16
which AT&T Comcast directly or indirectly has a greater than ten percent (10%)
equity interest, the fair market value of which interest is in excess of
$50,000,000. In determining AT&T Comcast's equity interest for purposes of this
definition, any equity interest which AT&T Comcast has an option to purchase
shall be considered as owned by AT&T Comcast.
(b) Neither the Executive nor the Company, its officers or directors
(collectively, the "Company Affiliated Entities") shall, either during or at any
time after the Term of Employment, directly or indirectly make any public
statement (including a private statement reasonably likely to be repeated
publicly) reflecting adversely on the Company Affiliated Entities or the
Executive, as the case may be, or the business prospects of the Company except
for (i) such statements which the Executive may be required to make in the
ordinary course of his service as a member of, including Chairman of, the Board
or (ii) with respect to each of the Executive and the Company Affiliated
Entities, as otherwise required by applicable law.
(c) Neither the Executive nor the Company Affiliated Entities shall
publicly comment (including private statements reasonably likely to be repeated
publicly) on, or discuss the circumstances surrounding, this Agreement or the
consulting agreement attached hereto as Exhibit C, except as mutually agreed or
as required by applicable law.
SECTION 12. Noncompetition, Noninterference and Nonsolicitation.
(a) Subject to the geographic limitation of Section 12(b) hereof, the
Executive during the Term of Employment and for a period of two (2) years
following termination of employment in accordance with this Agreement shall not,
directly or indirectly, on his behalf or on behalf of any other person, firm,
corporation, association or other entity, as an employee or otherwise, engage
in, or in any way be concerned with or negotiate for, or acquire or maintain any
ownership interest in any business or activity which is the same as or
competitive with that conducted by the Company at the termination of his
employment, or which was engaged in or developed by the Company at any time
during the Term of Employment for specific implementation in the immediate
future by the Company.
(b) The Executive acknowledges that the Company is engaged in business
throughout the United States and in various foreign countries and that the
Company intends to expand the geographic scope of its activities. Accordingly
and in view of the nature of his position and responsibilities, the Executive
agrees that the provisions of this Section shall be applicable to each state and
each foreign country, possession or territory in which the Company may be
engaged in business during the Term of Employment, or, with respect to the
Executive's
17
obligations following termination of his employment, at the termination of his
employment or at any time within the twelve-month period following the effective
date of his termination of employment.
(c) The Executive agrees that for a period of two (2) years following
termination of employment in accordance with this Agreement, the Executive will
not, directly or indirectly, for himself or on behalf of any third party at any
time in any manner, request or cause any of the Company's customers to cancel or
terminate any existing or continuing business relationship with the Company;
solicit, entice, persuade, induce, request or otherwise cause any employee,
officer or agent of the Company (other than clerical employees of the Company)
to refrain from rendering services to the Company or to terminate his or her
relationship, contractual or otherwise, with the Company; induce or attempt to
influence any supplier to cease or refrain from doing business or to decline to
do business with the Company; divert or attempt to divert any supplier from the
Company; or induce or attempt to influence any supplier to decline to do
business with any businesses of the Company as such businesses are constituted
immediately prior to the termination of employment.
(d) The Executive agrees that for a period of two (2) years following
his termination of employment in accordance with this Agreement, the Executive
will not directly or indirectly, for himself or on behalf of any third party,
solicit for business in competition with the business of the Company, accept any
business in competition with the business of the Company from or otherwise do,
or contract to do, business in competition with the business of the Company with
any person or entity who, at the time of, or any time during the twelve (12)
months preceding such termination, was an active customer or was actively
solicited by the Company according to the books and records of the Company and
within the knowledge, actual or constructive of the Executive.
(e) Notwithstanding anything to the contrary in this Section 12, the
prohibitions and agreements contained in subsections 12(a), 12(c), and 12(d)
shall terminate immediately upon any termination of Executive's employment
hereunder following a Change in Control.
(f) Nothing in this Section 12 shall prohibit the Executive from being
a passive owner of not more than one percent of the outstanding common stock,
capital stock and equity of any firm, corporation, or enterprise so long as the
Executive has no active participation in the management of the business of such
firm, corporation or enterprise.
18
SECTION 13. Equitable Remedies.
The Executive acknowledges that his compliance with the covenants in
Sections 11 and 12 of this Agreement is necessary to protect the good will and
other proprietary interests of the Company and that, in the event of any
violation by the Executive of the provisions of Section 11 or 12 of this
Agreement, the Company will sustain serious, irreparable and substantial harm to
its business, the extent of which will be difficult to determine and impossible
to remedy by an action at law for money damages. Accordingly, the Executive
agrees that, in the event of such violation or threatened violation by the
Executive, the Company shall be entitled to any injunction before trial from any
court of competent jurisdiction as a matter of course and upon the posting of
not more than a nominal bond in addition to all such other legal and equitable
remedies as may be available to the Company. The Executive further agrees that,
in the event any of the provisions of Sections 11 and 12 of this Agreement are
determined by a court of competent jurisdiction to be contrary to any applicable
statute, law or rule, or for any reason to be unenforceable as written, such
court may modify any of such provisions so as to permit enforcement thereof as
thus modified.
SECTION 14. Resolution of Disputes.
Except as provided in Section 13, any disputes arising under or in
connection with this Agreement shall be resolved by third party mediation of the
dispute and, failing that, by binding arbitration, to be held in a location
mutually agreed to by the Parties, in accordance with 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. Each
Party shall bear his or its own costs of the mediation, arbitration or
litigation, except that the Company shall bear all such costs if the Executive
prevails in such mediation, arbitration or litigation on any material issue.
SECTION 15. Indemnification.
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged action in
an official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held harmless by the Company to
the fullest extent legally permitted or authorized by the Company's certificate
of incorporation or bylaws
19
or resolutions of the Company's Board of Directors or, if greater, by the laws
of the Commonwealth of Pennsylvania, against all cost, expense, liability and
loss (including, without limitation, attorney's fees, judgments, fines, ERISA
excise taxes or other liabilities or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of the Company or
other entity and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
calendar days after receipt by the Company of a written request for such
advance. Such request shall include an undertaking by the Executive to repay the
amount of such advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Executive under Section 15(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or shareholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive which is no less
favorable than the policy covering other senior officers of the Company.
SECTION 16. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. Rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company pursuant to a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. The Company further agrees that, in the
event of a sale of assets or liquidation as described in the preceding sentence,
it shall take whatever action it reasonably can in order to cause such assignee
or transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No rights or
20
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will or operation of law.
SECTION 17. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents that the
performance of his obligations under this Agreement will not violate any
agreement between him and any other person, firm or organization that would be
violated by the performance of his obligations under this Agreement.
SECTION 18. Entire Agreement.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
SECTION 19. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
SECTION 20. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law so as to
achieve the purposes of this Agreement.
SECTION 21. Survivorship.
Except as otherwise expressly set forth in this Agreement, the
respective rights and obligations of the Parties hereunder, including the
covenants and the
21
agreements of Executive set forth in Sections 11, 12 and 13, shall survive any
termination of the Executive's employment. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by either
Party without the written consent of the other Party.
SECTION 22. References.
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
SECTION 23. Governing Law/Jurisdiction.
This Agreement shall be governed in accordance with the laws of the
State of New York without reference to principles of conflict of laws.
SECTION 24. Notices.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (a) delivered personally, (b)
sent by certified or registered mail, postage prepaid, return receipt requested
or (c) delivered by overnight courier (provided that a written acknowledgment of
receipt is obtained by the 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 Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
Attention: General Counsel
If to the Executive: Mr. C. Michael Armstrong
c/o AT&T Comcast Corporation
1114 Avenue of the Americas
New York, New York 10036
SECTION 25. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
22
SECTION 26. Counterparts.
This Agreement may be executed in two or more counterparts.
23
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
November 18, 2002 as of the date first written above.
AT&T Comcast Corporation
By: --------------------------------
Name:
Title:
By: --------------------------------
C. Michael Armstrong
24
EXHIBIT A
----------
DIRECTORSHIPS
Citigroup
TBG (private company, Supervisory Board)
A-1
EXHIBIT B
----------
EXISTING PERFORMANCE AWARDS
1. Performance Shares:
(a) The Executive shall receive (i) an award under the Broadband
Adjustment Plan (as defined in the EBA) for a certain number of
Broadband performance shares and (ii) an award under the Broadband
Adjustment Plan for a certain number of stock units (valued with
respect to AT&T common stock), as described in the EBA. Such Broadband
performance shares shall be converted automatically into equivalent
awards based upon shares of Stock ("Company Performance Shares").
(b) 2000 and 2001 Grants: Pursuant to the terms of the Broadband
Adjustment Plan, the outstanding performance shares for the 2000 and
2001 performance cycles shall vest in full as of the Effective Date
and shall be considered to be earned and payable in full as of the
Effective Date. In accordance with the resolution of the Board of
Directors of AT&T dated October 22, 2000, the payout with respect to
these performance shares shall be as follows:
(i) the Fair Market Value of a share of AT&T common stock
on the date of grant of the performance share award (adjusted
to reflect stock splits, etc.) or on November 15, 2002 (the
day prior to the Effective Date), whichever is greater; times
(ii) the current target number of performance shares or
the number of performance shares based on the performance
factor to date.
The payout shall be at least 50% in cash, and the remainder
shall be in the form of Stock, valued on the Effective Date.
(c) 2002 Grant: The performance shares for the 2002-2004
performance cycle shall not vest upon the Effective Date. Company
Performance Shares and AT&T stock units will vest on December 31,
2004. Company Performance Shares will be paid out at target in January
2005. The form of payout will be at least 50% in cash, based on the
Fair Market Value of Stock on the first trading day in 2005, and the
remaining portion of the payment will be in Stock. AT&T stock units
will be paid out in cash based on the Fair Market Value of AT&T common
stock on the first trading day in 2005.
B-1
2. Restricted Stock Units ("RSUs")
(a) The Executive shall receive (i) an award under the Broadband
Adjustment Plan for a certain number of Broadband RSUs (valued with
respect to Broadband common stock) and (ii) an award under the
Broadband Adjustment Plan for a certain number of stock units (valued
with respect to AT&T common stock), as described in the EBA. Such
Broadband RSUs shall be converted automatically into equivalent awards
based upon shares of Stock ("Company RSUs"), as described in the
Merger Agreement.
(b) 1997 Grant:
(i) The Company RSUs and AT&T stock units shall vest and
be paid out on the earlier of (1) the date that the Executive
becomes Non-Executive Chairman of the Board or (2) October 1,
2003 (as applicable, the "Payment Date").
(ii) The form of payout will be Stock in respect of the
Company RSUs and cash in respect of the AT&T stock units,
based, in the latter case, on the Fair Market Value of AT&T
common stock on the day immediately prior to the Payment Date.
(iii) If the dollar value of the payment (determined by
adding the cash payment in respect of the AT&T stock units to
the Fair Market Value, on the day immediately prior to the
Payment Date, of the Stock paid with respect to the Company
RSUs) is less than $10,000,000, then the Executive will
receive in cash the excess of $10,000,000 over such dollar
value; provided that the calculation of Fair Market Value
shall not include any amounts attributable to dividends paid
with respect to such stock.
(c) 2001 Grant: Pursuant to the terms of the Broadband
Adjustment Plan, the 2001 grant shall vest in full and become payable
as of the Effective Date. The form of payout will be Stock in respect
of the Company RSUs, and cash in respect of the AT&T stock units,
based, in the latter case, on the Fair Market Value of AT&T common
stock on November 15, 2002.
3. Stock Options
(a) The Executive shall receive an award under the Broadband
Adjustment Plan for a certain number of options to purchase Broadband
common stock, which shall be converted automatically into options to
B-2
purchase shares of Stock, as described in the EBA and the Merger
Agreement.
(b) Pursuant to the terms of the Merger Agreement, options
granted prior to December 19, 2001 shall vest in full as of the
Effective Date and shall remain exercisable for the remainder of their
original terms.
(c) Pursuant to the terms of the Merger Agreement, options
granted on or after December 19, 2001 shall not vest as of the
Effective Date and shall remain subject to their original vesting
terms.
4. Change in Control
If an award described in Exhibit B of this Agreement is to be
determined by reference to AT&T shares, then such award shall vest and become
exercisable and be paid out, as the case may be, upon a Change in Control of
AT&T (substituting "AT&T" for the "Company" in the definition of Change in
Control). If an award described in Exhibit B of this Agreement is to be
determined by reference to Company shares, then such award shall vest and be
paid out upon a change in control of the Company, as such term is defined in
this Agreement.
B-3
EXHIBIT C
----------
[FORM OF CONSULTING AGREEMENT]
C-1
Exhibit C
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement"), made as of [ ], 2004, by and
between Comcast Corporation, a Pennsylvania corporation (together with its
successors and assigns permitted under this Agreement, the "Company"), and C.
Michael Armstrong (the "Consultant").
WITNESSETH:
WHEREAS, the Consultant is employed by the Company pursuant to the
Employment Agreement (as defined herein); and
WHEREAS, the Consultant has elected to retire from his position as Non-
Executive Chairman of the Board and to retire from employment with the Company,
effective [ ], 2004; and
WHEREAS, the Company desires to retain the benefit of the Consultant's
knowledge and experience by retaining the Consultant, and the Consultant desires
to accept such position, for the term and upon the other conditions hereinafter
set forth; and
WHEREAS, in connection with Consultant's retirement from his position
as Non-Executive Chairman of the Board and retirement from employment with the
Company, the parties desire to supersede and replace the Employment Agreement
with this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Consultant (individually a
"Party" and together the "Parties") agree as follows:
SECTION 1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.
(b) "AT&T" shall mean AT&T Corp., a New York corporation.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Broadband" shall mean AT&T Broadband Corp., a Delaware
corporation.
(e) "Cause" shall mean:
(i) the Consultant is convicted of a felony involving the
Consultant's moral turpitude; or
(ii) the Consultant is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material economic harm to the
Company, unless the Consultant believed in good faith that such act or
nonact was in the best interests of the Company.
(f) "Change in Control" shall mean the occurrence of any of the
following events:
(i) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act")) (an "Entity") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares
of common stock of the Company (the "Outstanding Company Stock") or
(B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); excluding,
however, the following: (1) any acquisition directly from the Company,
other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired
directly from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company, or (4) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1(f);
(ii) A change in the composition of the Board such that the
individuals who, as of the effective date of this Agreement,
constitute the Board (such Board shall be hereinafter referred to as
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that for purposes of this
definition, any individual who becomes a member of the Board
subsequent to the effective date of this Agreement, whose election, or
nomination for election, by the Company's
2
shareholders was approved by a vote of at least a two-thirds majority
of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member
of the Incumbent Board; and provided, further however, that any such
individual whose initial assumption of office occurs as a result of or
in connection with either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of an Entity other than the Board
shall not be so considered as a member of the Incumbent Board;
(c) A merger, reorganization or consolidation to which the
Company is a party or a sale or other disposition of all or
substantially all of the assets of the Company (each, a "Corporate
Transaction"); excluding however, such a Corporate Transaction
pursuant to which (A) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
Outstanding Company Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation or other person which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries
(a "Parent Company")) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Entity (other than the Company, any
employee benefit plan (or related trust) of the Company, such
corporation resulting from such Corporate Transaction (or, if
reference was made to equity ownership of any Parent Company for
purposes of determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, such Parent
Company) will beneficially own, directly or indirectly, 20% or more
of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction (or, if
reference was made to equity ownership of any Parent Company for
purposes of determining whether clause (A) above is satisfied in
connection with the applicable Corporate Transaction, such Parent
Company) or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the
election of directors unless such ownership resulted
3
solely from ownership of securities of the Company prior to the
Corporate Transaction, and (C) individuals who were members of the
Incumbent Board will immediately after the consummation of the
Corporate Transaction constitute at least a two-thirds majority of the
members of the board of directors of the corporation resulting from
such Corporate Transaction (or, if reference was made to equity
ownership of any Parent Company for purposes of determining whether
clause (A) above is satisfied in connection with the applicable
Corporate Transaction, of the Parent Company); or
(iv) The approval by the shareholders of the Company of a plan
of complete liquidation or dissolution of the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Constructive Termination Without Cause" shall mean termination
by the Consultant of his service at his initiative following the occurrence of
any of the following events without his consent:
(i) a reduction in the Consultancy Fee or the termination or
material reduction of any benefits provided under this Agreement
(other than as part of an across-the-board reduction applicable to all
executive officers of the Company);
(ii) prior to the 2005 Annual Meeting, the failure to elect or
reelect the Consultant to the Board or the removal of him from the
Board;
(iii) the relocation of the Consultant's own principal office
from its location in the Grace Building;
(iv) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor
to all or substantially all of the assets of the Company within 15
calendar days after a merger, consolidation, sale or similar
transaction; or
(v) any breach of this Agreement by the Company.
Following written notice from the Consultant, as described
above, the Company shall have 15 calendar days in which to cure. If the
Company fails to cure, the Consultant's termination shall become
effective on the 16th calendar day following the written notice.
4
(i) "Disability" shall mean the Consultant's inability, due to
physical or mental incapacity, to substantially perform his duties and
responsibilities under this Agreement as determined by a medical doctor selected
by the Company and the Consultant. If the Parties cannot agree on a medical
doctor, each Party shall select a medical doctor and the two doctors shall
select a third who shall be the approved medical doctor for this purpose.
(j) "EBA" shall mean the Employee Benefits Agreement by and between
AT&T and Broadband dated as of December 19, 2001.
(k) "Employment Agreement" shall mean the Employment Agreement
entered into as of November 18, 2002 by and between the Company and the
Consultant.
(l) "Fair Market Value" shall mean the value of a share of Stock or a
share of AT&T stock, as the case may be, as traded on the Nasdaq Stock Market or
the New York Stock Exchange, as the case may be, on the date in question, based
on the respective closing prices.
(m) "Grace Building" shall mean the W.R. Grace Building at 1114
Avenue of the Americas (and 41 West 42nd Street), New York, New York or any
other building of comparable stature maintained by the Company as its principal
place of business in the borough of Manhattan in New York City.
(n) "Merger Agreement" shall mean the Agreement and Plan of Merger
dated as of December 19, 2001, as amended, by and among AT&T, Broadband, Comcast
Corporation, AT&T Broadband Acquisition Corp., Comcast Acquisition Corp. and the
Company.
(o) "Stock" shall mean Class A Common Stock of the Company.
(p) "Term" shall mean the period specified in Section 3 below.
(q) "Termination Date" shall mean the date that is one year after the
2005 Annual Meeting.
(r) "2004 Annual Meeting" shall mean the regularly scheduled 2004
annual meeting of the shareholders of the Company.
(s) "2005 Annual Meeting" shall mean the regularly scheduled 2005
annual meeting of the shareholders of the Company.
5
SECTION 2. Retirement as Chairman.
Consultant hereby retires from employment with the Company and from his
position as Non-Executive Chairman of the Board effective as of the close of
business on [ ], 2004 (the "Effective Date").
SECTION 3. Term.
The Term shall begin on the Effective Date and end on the Termination
Date. Notwithstanding the foregoing, after the Effective Date, the Term may be
earlier terminated by either Party in accordance with the provisions of Section
8.
SECTION 4. Positions, Duties and Responsibilities.
(a) During the Term, Consultant shall be a senior advisor and
consultant to the Company and, upon reasonable request of the Chief Executive
Officer, or an Executive Vice President of the Company mutually designated by
the Chief Executive Officer and the Consultant, make himself available to
perform consulting and advisory services with respect to strategic issues
concerning the Company. Such consulting and advisory services shall be related
to such matters as the Chief Executive Officer of the Company, or an Executive
Vice President of the Company so mutually designated, and Consultant may
mutually agree. During the Term, the Consultant shall accommodate reasonable
requests for the Consultant's consulting and advisory services, by making
himself reasonably available, by phone or otherwise, to perform such services,
but in no event shall Consultant be required to devote more than eighty hours
per month to his services hereunder. Notwithstanding the foregoing, during the
time that the Consultant serves as a director of the Company, he shall devote
such time as is necessary to satisfy his fiduciary duties as a director. In
addition, the Company shall use its reasonable best efforts to ensure that the
Consultant shall serve as a director of the Company through the 2005 Annual
Meeting.
(b) Nothing herein shall preclude the Consultant from (i) serving on
the boards of directors of a reasonable number of other corporations subject to
the approval of the Board in each case (which approval has been given as to the
boards listed in Exhibit A attached hereto), which approval shall not be
unreasonably withheld, (ii) serving on the boards of a reasonable number of
trade associations and/or charitable organizations, (iii) engaging in any
charitable or business activities and community affairs, and (iv) managing his
personal investments and affairs, provided that such activities set forth in
this Section 4(b) do not materially interfere with the proper performance of his
duties and responsibilities under Sections 4(a).
6
SECTION 5. Compensation.
(a) As soon as practicable after the Effective Date, in recognition
of the Consultant's retirement from employment with the Company and from his
position as Non-Executive Chairman of the Board, the Company shall pay to the
Consultant an amount in cash equal to the sum of (a) the base salary under the
Employment Agreement as in effect immediately prior to the Effective Date,
payable from the Effective Date through April 15, 2005, which shall not be less
than one year's base salary, (b) the Target Bonus under the Employment Agreement
for calendar year 2004, and (c) a pro-rata portion of the Target Bonus under the
Employment Agreement for calendar year 2005, equal to such Target Bonus,
multiplied by a fraction, the numerator of which is the number of days from
January 1, 2005 until April 15, 2005 and the denominator of which is 365.
(b) During the Term, the Consultant shall be paid consultancy fees
at the rate of $900,000 per year (the "Consultancy Fee"). The Consultancy Fee
shall be paid in equal monthly installments on the last day of each month. In no
event shall the Consultancy Fee be decreased.
SECTION 6. Outstanding Long-term Incentive Awards.
(a) Existing Performance Awards. Subject to the provisions of
Section 8, Exhibit B attached hereto sets forth the treatment of outstanding
equity-based awards held by the Consultant as of the Effective Date.
(b) Options. Except as otherwise provided in Exhibit B, all options
held by the Consultant as of the Effective Time shall continue to vest during
the Term as if he had remained employed by the Company. On the Termination Date,
all options held by the Consultant shall become fully vested and shall remain
exercisable for the remainder of their original ten-year terms.
SECTION 7. Benefit Programs; Reimbursement of Business and Other
Expenses.
(a) The Consultant shall not be entitled to participate in any
employee benefit plans or other benefits or conditions of employment available
to the employees of the Company, except as provided in Section 6 , Section 7 or
elsewhere in this Agreement.
(b) During the Term, the Consultant's principal office shall be the
office the Consultant occupied as an executive of the Company in the Grace
Building. The Company shall provide full-time secretarial support for the
Consultant's principal office, as selected by the Consultant in his sole
discretion.
7
(c) From the Effective Date until the 2005 Annual Meeting, the
Consultant shall be entitled to participate in each of the Company's executive
services in accordance with the terms and conditions of such arrangements as
they are in effect from time to time for the Company's Chief Executive Officer
(except for the executive services as set forth below). During the Term, the
Consultant shall be entitled to (a) primary personal use of an airplane on the
same economic terms as the Chief Executive Officer of the Company and (b) tax
preparation and financial counseling services (plus a gross-up for applicable
taxes payable in connection with the provisions of such services, but only if
such gross-up is provided to a senior executive of the Company). In addition,
the Company shall pay the dues for the Consultant's membership in each of the
Business Roundtable, the G-100 and the Business Council through the 2004 Annual
Meeting.
(d) During the Term, the Company shall pay when due the premiums for
the Consultant's Senior Management Universal Life Insurance Policy (as in effect
as of the Effective Date), and a gross-up for all federal taxes payable by the
Consultant in connection with the payment of such premiums.
(e) The Consultant is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy.
SECTION 8. Termination.
(a) Termination Due to Death. In the event that the Consultant's
performance of consulting services is terminated due to his death, his estate or
his beneficiaries, as the case may be, shall be entitled to the following
benefits:
(i) the Consultancy Fee through the end of the month in which
his death occurs;
(ii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms; and
(iii) all outstanding performance shares and other equity-based
awards shall vest and be paid out (at target, with respect to the
performance shares) in a single installment promptly after his death.
8
(b) Termination Due to Disability. In the event that the
Consultant's service is terminated due to his Disability, he shall be entitled
to the following benefits:
(i) the Consultancy Fee through the end of the month in which
disability benefits commence;
(ii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms; and
(iii) all outstanding performance shares and other equity-based
awards shall vest and be paid out (at target, with respect to the
performance shares) in a single installment promptly after his
termination.
In no event shall a termination of the Consultant's service
for Disability occur until the Party terminating his service gives written
notice to the other Party in accordance with Section 23 below.
(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect unless the
provisions of this paragraph (i) are complied with. The Consultant
shall be given written notice by the Board, authorized by a vote of no
less than 75% of the Board, of the intention to terminate him for
Cause, such notice (A) to state in detail the particular act or acts
or failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to be given within six
months of the Board learning of such act or acts or failure or
failures to act. The Consultant shall have ten calendar days after the
date that such written notice has been given to the Consultant in
which to cure such conduct, to the extent such cure is possible. If he
fails to cure such conduct, the Consultant shall then be entitled to a
hearing before the Board. Such hearing shall be held within 15
calendar days of such notice to the Consultant, provided he requests
such hearing within ten calendar days of the written notice from the
Board of the intention to terminate him for Cause. If, within five
calendar days following such hearing, the Consultant is furnished
written notice by the Board confirming that, in its judgment, grounds
for Cause on the basis of the original notice exist, he shall
thereupon be terminated for Cause.
(ii) In the event the Company terminates the Consultant's
service for Cause:
9
(A) the Consultant shall be entitled to the Consultancy
Fee through the date of the termination; and
(B) all outstanding options which are not exercisable
shall be forfeited; exercisable options shall remain
exercisable until the earlier of the ninetieth day after the
date of termination or the originally scheduled expiration
date of the options unless the Board determines otherwise.
(d) Termination without Cause or Constructive Termination without
Cause. In the event the Consultant's service is terminated by the Company
without Cause, other than due to Disability or death, or in the event there is a
Constructive Termination without Cause, the Consultant shall be entitled to the
following benefits:
(i) the Consultancy Fee through the date of termination;
(ii) a cash payment of $1,800,000, payable in a single
installment promptly after his termination;
(iii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable until the end of
their originally scheduled ten-year terms;
(iv) all outstanding performance shares and other equity-based
awards shall vest and be paid out (at target, with respect to the
performance shares) in a single installment promptly after his
termination; and
(v) if such termination occurs on or prior to the second
anniversary of the effective date of the Employment Agreement, the
Consultant shall be entitled to receive a lump sum cash amount equal
to the greater of (A) (X) the product of three multiplied by the sum
of (I) the Base Salary (as defined in the Employment Agreement), (II)
the annual incentive award, equal to the target bonus established by
AT&T for 2002, which was 150% of such Base Salary, and (III) the
long-term performance share award, equal to the performance share
target set by AT&T for 2002 and (B) the product of four multiplied by
the sum of Base Salary (as defined in the Employment Agreement), at
the annualized rate in effect on the date of termination of employment
under the Employment Agreement, and the Target Bonus (as defined in
the Employment Agreement) for the year in which the termination of
employment under the Employment Agreement occurs. If such termination
occurs after the second anniversary
10
of the effective date of the Employment Agreement, the Consultant
shall be entitled to receive the payment set forth in clause (B) of
this Section 8(d)(v).
(e) Gross-up Payment.
(i) If the aggregate of all payments or benefits made or
provided to the Consultant under this Agreement and under all other
plans and programs of the Company (the "Aggregate Payment") is
determined to constitute a Parachute Payment within the meaning of
Section 280G(b)(2) of the Code, the Company shall pay to the
Consultant, prior to the time any excise tax imposed by Section 4999
of the Code ("Excise Tax") is payable with respect to such Aggregate
Payment, an additional amount (the "Gross-Up Payment") which, after
the imposition of all income, employment, excise and other taxes
thereon, is equal to the Excise Tax on the Aggregate Payment. The
determination of whether the Aggregate Payment constitutes a Parachute
Payment and, if so, the amount to be paid to the Consultant and the
time of payment pursuant to this Section 8(e)(i) shall be made by an
independent auditor (the "Auditor") selected by the Parties and paid
by the Company. The Auditor shall be a nationally recognized United
States public accounting firm which has not, during the two years
preceding the date of its selection, acted in any way on behalf of the
Company or any Affiliate thereof. If the Consultant and the Company
cannot agree on the firm to serve as the Auditor, then the Consultant
and the Company shall each designate one accounting firm and those two
firms shall jointly select the accounting firm to serve as the
Auditor. All fees and expenses of the Auditor shall be borne solely by
the Company. Any Gross- Up Payment shall be paid by the Company to the
Consultant within five calendar days of the receipt of the Auditor's
determination. Any determination by the Auditor shall be binding upon
the Company and the Consultant.
(ii) As a result of uncertainty in the application of Sections
280G and 4999 of the Code at the time of the initial determination by
the Auditor hereunder, it is possible that the Gross-Up Payment made
will have been an amount more than the Company should have paid
pursuant to Section 8(e)(i) (the "Overpayment") or that the Gross-Up
Payment made will have been an amount less than the Company should
have paid pursuant to Section 8(e)(i) (the "Underpayment"). In the
event that there is a final determination by the Internal Revenue
Service, or a final determination by a court of competent
jurisdiction, that an Overpayment has been made, any such Overpayment
shall be treated for all purposes as a loan to the Consultant which
the Consultant shall repay to the Company
11
together with interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code. In the event that there is a final
determination by the Internal Revenue Service, a final determination
by a court of competent jurisdiction or a change in the provisions of
the Code or regulations pursuant to which an Underpayment arises under
this Agreement, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Consultant together with interest
at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code.
(iii) The Consultant shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
result in an Underpayment and would require the payment by the Company
of an additional Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the
Consultant is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim
is requested to be paid. The Consultant shall not pay such claim prior
to the expiration of the 30 calendar day period following the date on
which the Consultant gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Consultant in writing
prior to the expiration of such period that it desires to contest such
claim, the Consultant shall:
(A) give the Company any information reasonably requested
by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceeding
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Consultant harmless, on an
after-tax basis, for any Excise Tax or income or employment tax (including
interest and penalties with respect thereto) imposed as a result of such
proceeding and
12
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(e), the Company shall control all proceedings taken in connection
with such contest, provided that the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Consultant shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(f) Other Termination Benefits. In the case of any of the foregoing
terminations the Consultant or his estate shall also be entitled to:
(i) the balance of any incentive awards due for performance
periods which have been completed, but which have not yet been paid;
(ii) any expense reimbursements due the Consultant;
(iii) with respect to the Consultant only, (i) tax preparation
and financial counseling services for the period beginning on the date
of termination and ending on the Termination Date (plus a gross-up for
all applicable taxes payable in connection with the provisions of such
services, but only if such gross-up is provided to a senior executive
of the Company); (ii) primary personal use of the Company airplane, on
the economic terms set forth in Section 7(c), for the period beginning
on the date of termination and ending on the Termination Date; and
(iii) continued payment by the Company when due of the premiums for
the Senior Management Universal Life Insurance Policy provided under
Section 7 of this Agreement, and a gross-up for all federal taxes
payable in connection with the payment of such premiums, for the
period beginning on the date of termination and ending on the
Termination Date;
(iv) with respect to the Consultant only, use of his office in
the Grace Building until the Termination Date and then, at the
Company's option, use of his office in the Grace Building or a
comparable office, as determined by the Company in its sole
discretion, in the borough of Manhattan in New York City for the
two-year period commencing on the Termination Date. The Company shall
provide full-time secretarial support for the Consultant's principal
office, as selected by the Consultant in his sole discretion. The
Company shall use its reasonable efforts to maintain the Grace
Building office for the Consultant's use during this latter period;
and
(v) other benefits, if any, in accordance with applicable plans
and programs of the Company and this Agreement.
13
(g) No Mitigation; No Offset. In the event of any termination of
service under this Section 8, the Consultant shall be under no obligation to
seek other employment and there shall be no offset against amounts due the
Consultant under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.
(h) Nature of Payments. Any amounts due under this Section 8 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.
SECTION 9. Confidential Information; Prohibited Public Statements;
Publicity.
(a) The Company (as hereinafter specially defined for purposes of
Sections 9 through 11 hereof), pursuant to the Consultant's performance of
consulting services hereunder, provides the Consultant access to and confides in
him business methods and systems, techniques and methods of operation developed
at great expense by the Company ("Trade Secrets") and which the Consultant
recognizes to be unique assets of the Company's business. The Consultant shall
not, during or at any time after the Term, directly or indirectly, in any manner
utilize or disclose to any person, firm, corporation, association or other
entity, except (i) where required by law, (ii) to directors, consultants or
employees of the Company in the ordinary course of his duties or (iii) during
his performance of consulting services as a consultant or serving as a member of
the Board for such use and disclosure as he shall reasonably determine to be in
the best interest of the Company: (A) any such Trade Secrets, (B) any sales
prospects, customer lists, products, research or data of any kind, or (C) any
information relating to strategic plans, sales, costs, profits or the financial
condition of the Company or any of its customers or prospective customers, which
are not generally known to the public or recognized as standard practice in the
industry in which the Company shall be engaged. The Consultant further covenants
and agrees that he will promptly deliver to the Company all tangible evidence of
the knowledge and information described in (A), (B) and (C), above, prior to or
at the termination of the Consultant's service. For purposes of Sections 9, 10
and 11 hereof the term "Company" shall mean Comcast Corporation ("Comcast") as
well as (I) each of its more than fifty percent (50%) owned subsidiaries and
(II) each other entity in which Comcast directly or indirectly has a greater
than ten percent (10%) equity interest, the fair market value of which interest
is in excess of $50,000,000. In determining Comcast's equity interest for
purposes of this definition, any equity interest which Comcast has an option to
purchase shall be considered as owned by Comcast.
14
(b) Neither the Consultant nor the Company, its officers or
directors (collectively, the "Company Affiliated Entities") shall, either during
or at any time after the Term, directly or indirectly make any public statement
(including a private statement reasonably likely to be repeated publicly)
reflecting adversely on the Company Affiliated Entities or the Consultant, as
the case may be, or the business prospects of the Company, except for (a) such
statements which the Consultant may be required to make in the ordinary course
of his position as senior consultant to the Company or (b) with respect to each
of the Consultant and the Company Affiliated Entities, as otherwise required by
applicable law.
(c) Neither the Consultant nor the Company Affiliated Entities shall
comment (including private statements reasonably likely to be repeated publicly)
on, or discuss the circumstances surrounding, this Agreement, except as mutually
agreed or as required by applicable law.
SECTION 10. Noncompetition, Noninterference and Nonsolicitation.
(a) Subject to the geographic limitation of Section 10(b) hereof,
the Consultant, for the period beginning on the Effective Date and ending on the
Termination Date, shall not, directly or indirectly, on his behalf or on behalf
of any other person, firm, corporation, association or other entity, as an
employee or otherwise, engage in, or in any way be concerned with or negotiate
for, or acquire or maintain any ownership interest in any business or activity
which is the same as or competitive with that conducted by the Company at the
termination of his employment, or which was engaged in or developed by the
Company at any time during the term of the Employment Agreement for specific
implementation in the immediate future by the Company.
(b) The Consultant acknowledges that the Company is engaged in
business throughout the United States and in various foreign countries and that
the Company intends to expand the geographic scope of its activities.
Accordingly and in view of the nature of his position and responsibilities, the
Consultant agrees that the provisions of this Section shall be applicable to
each state and each foreign country, possession or territory in which the
Company may be engaged in business during the Term or the term of the Employment
Agreement, or, with respect to the Consultant's obligations following
termination of his employment under the Employment Agreement, at the termination
of his service or at any time within the twelve-month period following the
effective date of his termination of employment under the Employment Agreement.
(c) The Consultant agrees that, for the period beginning on the
Effective Date and ending on the Termination Date, the Consultant will not,
directly or indirectly, for himself or on behalf of any third party at any time
in any manner,
15
request or cause any of the Company's customers to cancel or terminate any
existing or continuing business relationship with the Company; solicit, entice,
persuade, induce, request or otherwise cause any employee, officer or agent of
the Company (other than clerical employees of the Company) to refrain from
rendering services to the Company or to terminate his or her relationship,
contractual or otherwise, with the Company; induce or attempt to influence any
supplier to cease or refrain from doing business or to decline to do business
with the Company; divert or attempt to divert any supplier from the Company; or
induce or attempt to influence any supplier to decline to do business with any
businesses of the Company as such businesses are constituted immediately prior
to the termination of employment under the Employment Agreement.
(d) The Consultant agrees that, for the period beginning on the
Effective Date and ending on the Termination Date, the Consultant will not
directly or indirectly, for himself or on behalf of any third party, solicit for
business in competition with the business of the Company, accept any business in
competition with the business of the Company from or otherwise do, or contract
to do, business in competition with the business of the Company with any person
or entity who, at the time of, or any time during the twelve (12) months
preceding such termination, was an active customer or was actively solicited by
the Company according to the books and records of the Company and within the
knowledge, actual or constructive, of the Consultant.
(e) Notwithstanding anything to the contrary in this Section 10, the
prohibitions and agreements contained in subsections 10(a), 10(c), and 10(d)
shall terminate immediately upon any termination of Consultant's service
hereunder following a Change in Control.
(f) Notwithstanding the foregoing, if, following the Term, the
Consultant engages in any behavior that would be prohibited under this Section,
as determined by the Company in its sole discretion, the Company shall be
relieved of its obligations under Section 8(f)(iv) of this Agreement.
(g) Nothing in this Section 10 shall prohibit the Consultant from
being a passive owner of not more than one percent of the outstanding common
stock, capital stock and equity of any firm, corporation, or enterprise so long
as the Consultant has no active participation in the management of the business
of such firm, corporation or enterprise.
SECTION 11. Equitable Remedies.
The Consultant acknowledges that his compliance with the covenants in
Sections 9 and 10 of this Agreement is necessary to protect the good will and
16
other proprietary interests of the Company and that, in the event of any
violation by the Consultant of the provisions of Section 9 or 10 of this
Agreement, the Company will sustain serious, irreparable and substantial harm to
its business, the extent of which will be difficult to determine and impossible
to remedy by an action at law for money damages. Accordingly, the Consultant
agrees that, in the event of such violation or threatened violation by the
Consultant, the Company shall be entitled to any injunction before trial from
any court of competent jurisdiction as a matter of course and upon the posting
of not more than a nominal bond in addition to all such other legal and
equitable remedies as may be available to the Company. The Consultant further
agrees that, in the event any of the provisions of Sections 9 and 10 of this
Agreement are determined by a court of competent jurisdiction to be contrary to
any applicable statute, law or rule, or for any reason to be unenforceable as
written, such court may modify any of such provisions so as to permit
enforcement thereof as thus modified.
SECTION 12. Resolution of Disputes.
Except as provided in Section 11, any disputes arising under or in
connection with this Agreement shall be resolved by third party mediation of the
dispute and, failing that, by binding arbitration, to be held in a location
mutually agreed to by the Parties, in accordance with 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. Each
Party shall bear his or its own costs of the mediation, arbitration or
litigation, except that the Company shall bear all such costs if the Consultant
prevails in such mediation, arbitration or litigation on any material issue.
SECTION 13. Indemnification.
(a) The Company agrees that if the Consultant is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Consultant's alleged action
in an official capacity while serving as a director, officer, member, employee
or agent, the Consultant shall be indemnified and held harmless by the Company
to the fullest extent legally permitted or authorized by the Company's
certificate of incorporation or bylaws or resolutions of the Board or, if
greater, by the laws of the Commonwealth of Pennsylvania, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgments, fines, ERISA excise taxes or other
17
liabilities or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Consultant in connection therewith, and
such indemnification shall continue as to the Consultant even if he has ceased
to be a director, member, employee or agent of the Company or other entity and
shall inure to the benefit of the Consultant's heirs, executors and
administrators. The Company shall advance to the Consultant all reasonable costs
and expenses incurred by him in connection with a Proceeding within 20 calendar
days after receipt by the Company of a written request for such advance. Such
request shall include an undertaking by the Consultant to repay the amount of
such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Consultant under Section 13(a) above that indemnification
of the Consultant is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or shareholders) that the Consultant has not met such
applicable standard of conduct, shall create a presumption that the Consultant
has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Consultant which is no less
favorable than the policy covering senior officers of the Company.
SECTION 14. Assignability; Binding Nature. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors, heirs (in the case of the Consultant) and assigns. Rights or
obligations of the Company under this Agreement may be assigned or transferred
by the Company pursuant to a merger or consolidation in which the Company is not
the continuing entity, or the sale or liquidation of all or substantially all of
the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it shall take whatever
action it reasonably can in order to cause such assignee or transferee to
expressly assume the liabilities, obligations and duties of the Company
hereunder. No rights or obligations of the Consultant under this Agreement may
be assigned or transferred by the Consultant other than his rights to
compensation and benefits, which may be transferred only by will or operation of
law.
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SECTION 15. The Consultant's Independence and Discretion.
(a) Nothing herein contained shall be construed to constitute the
Parties hereto as partners or as joint venturers, or either as agent of the
order, or as employer and employee. By virtue of the relationship described
herein the Consultant's relationship to the Company during the Term shall only
be that of an independent contractor and the Consultant shall perform all
services pursuant to this Agreement as an independent contractor. The Consultant
shall not provide any services under the Company's business name, except as
requested hereunder, and shall not present himself as an employee of the
Company.
(b) Subject only to such specific limitations as are contained in
this Agreement, the manner, means, details or methods by which the Consultant
performs his obligations under this Agreement shall be solely within the
discretion of the Consultant. The Company shall not have the authority to, nor
shall it, supervise, direct or control the manner, means, details or methods
utilized by the Consultant to perform his obligations under this Agreement and
nothing in this Agreement shall be construed to grant the Company any such
authority.
(c) To the extent consistent with applicable law, the Company will
not withhold any amounts as federal income tax withholding from wages or as
employee contributions under the Federal Insurance Contributions Act or any
other state or federal laws. The Consultant shall be solely responsible for
payment of any required employment taxes or contributions.
SECTION 16. Representation. The Company represents and warrants that it
is fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization. The Consultant
represents that the performance of his obligations under this Agreement will not
violate any agreement between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
SECTION 17. Entire Agreement. This Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties with
respect thereto, except, without duplication, for those provisions of the
Employment Agreement that would otherwise survive the termination of such
Employment Agreement. The Consultant acknowledges that, except as provided
herein, he shall not be entitled to any other payment, benefits or prerequisites
from the Company or any of its subsidiaries on account of his former employment
by, or his retirement from, the Company, except that the Consultant shall be
entitled
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to any benefits due to him as a retired employee under the Company's employee
benefit plans.
SECTION 18. Amendment or Waiver. No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by the
Consultant and an authorized officer of the Company. No waiver by either Party
of any breach by the other Party of any condition or provision contained in this
Agreement to be performed by such other Party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by the Consultant or
an authorized officer of the Company, as the case may be.
SECTION 19. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law so as to achieve the purposes of this Agreement.
SECTION 20. Survivorship. Except as otherwise expressly set forth in
this Agreement, the respective rights and obligations of the Parties hereunder
shall survive any termination of the Consultant's service. This Agreement itself
(as distinguished from the Consultant's service) may not be terminated by either
Party without the written consent of the other Party.
SECTION 21. References. In the event of the Consultant's death or a
judicial determination of his incompetence, reference in this Agreement to the
Consultant shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
SECTION 22. Governing Law; Jurisdiction. This Agreement shall be
governed in accordance with the laws of the State of New York without reference
to principles of conflict of laws.
SECTION 23. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (a)
delivered personally, (b) sent by certified or registered mail, postage prepaid,
return receipt requested or (c) delivered by overnight courier (provided that a
written acknowledgment of receipt is obtained by the 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:
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If to the Company: Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
Attention: General Counsel
If to the Consultant: Mr. C. Michael Armstrong
c/o Comcast Corporation
1114 Avenue of the Americas
New York, NY 10036
SECTION 24. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
SECTION 25. Counterparts. This Agreement may be executed in
counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
on [ ], 2004 as of the date first written above.
Comcast Corporation
By: ____________________
Name:
Title:
By: ____________________
C. Michael Armstrong
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EXHIBIT A
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DIRECTORSHIPS
Citigroup
TBG (private company, Supervisory Board)
23
EXHIBIT B
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1. Performance Shares: The 2002 grant of performance shares was
converted into Company performance shares and AT&T stock units, pursuant
to the terms of the EBA and the Merger Agreement. Company performance
shares and AT&T stock units will vest on the Effective Date. Company
performance shares will be paid out at target as soon as practicable after
the Effective Date. The form of payout will be at least 50% in cash, based
on the Fair Market Value of Stock on the day immediately preceding the
Effective Date, and the remaining portion of the payment will be in Stock.
The AT&T stock unit portion of the award will be paid out in cash based on
the Fair Market Value of AT&T common stock on the day immediately
preceding the Effective Date.
2. Stock Options: Unvested options granted to the Consultant
prior to November 18, 2002 shall vest in full on the Effective Date and
all options granted prior to November 18, 2002 shall remain exercisable
until the end of their originally scheduled ten-year terms.
3. Change in Control: Options granted to the Consultant on or
after November 18, 2002 shall vest upon a Change in Control.