Employment Agreement - AOL Time Warner Inc. and Kenneth J. Novack
EMPLOYMENT AGREEMENT made as of January 4, 2002, effective as of March
1, 2001 (the "Effective Date"), between AOL TIME WARNER INC., a Delaware
corporation (the "Company"), and KENNETH J. NOVACK.
You and the Company desire to set forth the terms and conditions of
your employment by the Company and agree as follows:
1. Term of Employment. Your "term of employment" as this phrase is used
throughout this Agreement, shall be for the period beginning on the Effective
Date and ending on December 31, 2003 (the "Term Date"), subject, however, to
earlier termination as set forth in this Agreement.
2. Employment. During the term of employment, you shall serve
as Vice Chairman of the Company and you shall have the authority, functions,
duties, powers and responsibilities normally associated with such position.
During the term of employment, (i) your services shall be rendered on a
substantially full-time, exclusive basis and you will apply on a full-time basis
all of your skill and experience to the performance of your duties, (ii) you
shall report to the Chairman of the Company, and (iii) you shall have no other
employment and, without the prior written consent of the Chief Executive Officer
of the Company, no outside business activities which require the devotion of
substantial amounts of your time. The foregoing shall be subject to the
Company's written policies, as in effect from time to time, regarding vacations,
holidays, illness and the like.
3. Compensation.
3.1 Base Salary. The Company shall pay you a base salary at the rate
of not less than $1,000,000 per annum during the term of employment ("Base
Salary"). The Company may not decrease your Base Salary during the term of
employment. Base Salary shall be paid in accordance with the Company's customary
payroll practices.
3.2 Stock Options. So long as the term of employment has not
terminated, commencing in 2003 you will be eligible to receive annual grants of
stock options, although the Company does not commit to do so. Each such stock
option grant shall be at an exercise price equal to the fair market value of the
Common Stock on the date of grant and shall be reflected in a separate Stock
Option Agreement in accordance with the Company's customary practices.
3.3 Indemnification. You shall be entitled throughout the term of
employment (and after the end of the term of employment, to the extent relating
to service during the term of employment) to the benefit of the indemnification
provisions contained on the date hereof in the Certificate of Incorporation and
By-laws of the Company (not including any amendments or additions after the date
hereof that limit or
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narrow, but including any that add to or broaden, the protection afforded to you
by those provisions).
4. Termination.
4.1 Termination for Cause. The Company may terminate the term of
employment and all of the Company's obligations under this Agreement, other than
its obligations set forth below in this Section 4.1, for "cause". Termination by
the Company for "cause" shall mean termination by action of the Chairman of the
Board or the Company's Board of Directors in accordance with Article V of the
By-laws of the Company, because of (a) your conviction (treating a nolo
contendere plea as a conviction) of a felony (whether or not any right to appeal
has been or may be exercised), (b) willful refusal without proper cause to
perform your obligations under this Agreement, (c) fraud, embezzlement or
misappropriation or (d) because of your breach of any of the covenants provided
for in Section 9. Such termination shall be effected by written notice thereof
delivered by the Company to you and shall be effective as of the date of such
notice; provided, however, that if (i) such termination is because of your
willful refusal without proper cause to perform any one or more of your
obligations under this Agreement, (ii) such notice is the first such notice of
termination for any reason delivered by the Company to you under this Section
4.1, and (iii) within 15 days following the date of such notice you shall cease
your refusal and shall use your best efforts to perform such obligations, the
termination shall not be effective.
In the event of termination of your employment for cause, without
prejudice to any other rights or remedies that the Company may have at law or in
equity, the Company shall have no further obligation to you other than (i) to
pay Base Salary through the effective date of termination, and (ii) with respect
to any rights you have pursuant to any insurance or other benefit plans or
arrangements of the Company.
4.2 Termination by You for Material Breach by the Company and
Termination by the Company Without Cause. Unless previously terminated pursuant
to any other provision of this Agreement and unless a Disability Period shall be
in effect, you shall have the right, exercisable by written notice to the
Company, to terminate the term of employment effective 15 days after the giving
of such notice, if, at the time of the giving of such notice, the Company is in
material breach of its obligations under this Agreement; provided, however,
that, with the exception of clause (i) below, this Agreement shall not so
terminate if such notice is the first such notice of termination delivered by
you pursuant to this Section 4.2 and within such 15-day period the Company shall
have cured all such material breaches. A material breach by the Company shall
include, but not be limited to, (i) the Company violating Section 2 with respect
to your title, reporting lines, or duties, or (ii) the Company failing to cause
any successor to all or substantially all of the business and assets of the
Company expressly to assume the obligations of the Company under this Agreement.
The Chairman of the Board or the Board of Directors of the Company,
in accordance with Article V of the By-laws, shall have the right, exercisable
by
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written notice to you, to terminate your employment under this Agreement without
cause, which notice shall specify the effective date of such termination.
4.2.1 After the effective date of a termination pursuant to this
Section 4.2 (a "termination without cause"), you shall receive Base Salary
through the effective date of termination and you shall be entitled to remain on
the payroll of the Company as provided in Section 4.2.2 below.
4.2.2 After the effective date of a termination without cause, you
shall remain an employee of the Company for the period ending on the Term Date
and during such period you shall be entitled to receive, whether or not you
become disabled during such period but subject to Section 6, Base Salary at an
annual rate equal to your Base Salary in effect immediately prior to the notice
of termination. Except as provided in the second succeeding sentence, if you
accept other full-time employment during such period or notify the Company in
writing of your intention to terminate your status as an employee during such
period, you shall cease to be an employee of the Company effective upon the
commencement of such other employment or the effective date of such termination
as specified by you in such notice, whichever is applicable, and you shall be
entitled to receive, as severance, a lump sum payment within 30 days after such
commencement or such effective date (provided that if you were named in the
compensation table in the Company's then most recent proxy statement, such lump
sum payment shall be made within 30 days after the end of the calendar year in
which such commencement or effective date occurred), discounted as provided in
the immediately following sentence, equal to the balance of the payments you
would have received pursuant to this Section 4.2.2 had you remained on the
Company's payroll. That lump sum shall be discounted to present value as of the
date of payment from the times at which such amounts would otherwise have become
payable absent such commencement or termination at an annual discount rate for
the relevant periods equal to 120% of the "applicable Federal rate" (within the
meaning of Section 1274(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), in effect on the date of such commencement or termination, compounded
semi-annually. Notwithstanding the foregoing, if you accept employment with any
not-for-profit entity, then you shall be entitled to remain an employee of the
Company and receive the payments as provided in the first sentence of this
Section 4.2.2; and if you accept full-time employment with any affiliate of the
Company, then the payments provided for in this Section 4.2.2 shall immediately
cease and you shall not be entitled to any lump sum payment. For purposes of
this Agreement, the term "affiliate" shall mean any entity which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company.
4.3 After the Term Date. If at the Term Date, the term of employment
shall not have been previously terminated pursuant to the provisions of this
Agreement, no Disability Period is then in effect and the parties shall not have
agreed to an extension or renewal of this Agreement or on the terms of a new
employment agreement, then the term of employment shall continue on a
month-to-month basis and you shall continue to be employed by the Company
pursuant to the terms of this Agreement, subject to termination by either party
hereto on 60 days written notice delivered to the other party
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(which notice may be delivered by either party at any time on or after the date
which is 60 days prior to the Term Date). If the Company shall terminate the
term of employment on or after the Term Date for any reason (other than for
cause as defined in Section 4.1, in which case Section 4.1 shall apply), which
the Company shall have the right to do so long as no Disability Date (as defined
in Section 5) has occurred prior to the delivery by the Company of written
notice of termination, then such termination shall be deemed for all purposes of
this Agreement to be a "termination without cause" under Section 4.2 and the
provisions of Section 4.2.2 shall apply.
4.4 Office Facilities. In the event of a termination without cause,
then for the period beginning on the effective date of such termination and
ending on the earlier of (a) six months thereafter or (b) the date you commence
other full-time employment, the Company shall, without charge to you, make
available to you office space at or near your principal job location immediately
prior to such termination, together with secretarial services, office
facilities, services and furnishings, in each case reasonably appropriate to an
employee of your position and responsibilities prior to such termination but
taking into account your reduced need for such office space, secretarial
services and office facilities, services and furnishings as a result of you no
longer being a full-time employee.
4.5 Release. A condition precedent to the Company's obligation to
make the payments associated with a termination without cause shall be your
execution and delivery of a release in the form attached hereto as Annex A. If
you shall fail to execute and deliver such release, or if you revoke such
release as provided therein, then in lieu of the payments provided for herein,
you shall receive a severance payment determined in accordance with the
Company's policies relating to notice and severance.
4.6 Mitigation. In the event of a termination without cause under
this Agreement, you shall not be required to seek other employment in order to
mitigate your damages hereunder unless Section 280G of the Code would apply to
any payments to you by the Company and your failure to mitigate would result in
the Company losing tax deductions to which it would otherwise have been
entitled. In such an event, you will engage in whatsoever mitigation is
necessary to preserve the Company's tax deductions. With respect to the
preceding sentences, any payments or rights to which you are entitled by reason
of the termination of employment without cause shall be considered as damages
hereunder. Any obligation to mitigate your damages pursuant to this Section 4.6
shall not be a defense or offset to the Company's obligation to pay you in full
the amounts provided in this Agreement upon the occurrence of a termination
without cause, at the time provided herein, or the timely and full performance
of any of the Company's other obligations under this Agreement.
4.7 Payments. So long as you remain on the payroll of the Company or
any subsidiary of the Company, payments of Base Salary required to be made after
a termination without cause shall be made at the same times as similar payments
are made to other senior executives of the Company.
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5. Disability.
5.1 Disability Payments. If during the term of employment and prior
to the delivery of any notice of termination without cause, you become
physically or mentally disabled, whether totally or partially, so that you are
prevented from performing your usual duties for a period of six consecutive
months, or for shorter periods aggregating six months in any twelve-month
period, the Company shall, nevertheless, continue to pay your full Base Salary
through the last day of the sixth consecutive month of disability or the date on
which the shorter periods of disability shall have equaled a total of six months
in any twelve-month period (such last day or date being referred to herein as
the "Disability Date"). If you have not resumed your usual duties on or prior to
the Disability Date, the Company shall pay you disability benefits for the
period ending on the Term Date in an annual amount equal to 75% of your Base
Salary at the time you become disabled.
5.2 Recovery from Disability. If during the Disability Period you
shall fully recover from your disability, the Company shall have the right
(exercisable within 60 days after notice from you of such recovery), but not the
obligation, to restore you to full-time service at full compensation. If the
Company elects to restore you to full-time service, then this Agreement shall
continue in full force and effect in all respects and the Term Date shall not be
extended by virtue of the occurrence of the Disability Period. If the Company
elects not to restore you to full-time service, you shall be entitled to obtain
other employment, subject, however, to the following: (i) you shall perform
advisory services during any balance of the Disability Period; and (ii) you
shall comply with the provisions of Sections 9 and 10 during the Disability
Period. The advisory services referred to in clause (i) of the immediately
preceding sentence shall consist of rendering advice concerning the business,
affairs and management of the Company as requested by the Chairman or Chief
Executive Officer of the Company but you shall not be required to devote more
than five days (up to eight hours per day) each month to such services, which
shall be performed at a time and place mutually convenient to both parties. Any
income from such other employment shall not be applied to reduce the Company's
obligations under this Agreement.
5.3 Other Disability Provisions. The Company shall be entitled to
deduct from all payments to be made to you during the Disability Period pursuant
to this Section 5 an amount equal to all disability payments received by you
during the Disability Period from Worker's Compensation, Social Security and
disability insurance policies maintained by the Company; provided, however, that
for so long as, and to the extent that, proceeds paid to you from such
disability insurance policies are not includible in your income for federal
income tax purposes, the Company's deduction with respect to such payments shall
be equal to the product of (i) such payments and (ii) a fraction, the numerator
of which is one and the denominator of which is one less the maximum marginal
rate of federal income taxes applicable to individuals at the time of receipt of
such payments. All payments made under this Section 5 after the Disability Date
are intended to be disability payments, regardless of the manner in which they
are computed. Except as otherwise provided in this Section 5, the term of
employment shall continue
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during the Disability Period and you shall be entitled to all of the rights and
benefits provided for in this Agreement, except that Sections 4.2 and 4.3 shall
not apply during the Disability Period and unless the Company has restored you
to full-time service at full compensation prior to the end of the Disability
Period, the term of employment shall end and you shall cease to be an employee
of the Company at the end of the Disability Period and shall not be entitled to
notice and severance or to receive or be paid for any accrued vacation time or
unused sabbatical.
6. Death. If you die during the term of employment, this Agreement and
all obligations of the Company to make any payments hereunder shall terminate
except that your estate (or a designated beneficiary) shall be entitled to
receive Base Salary to the last day of the month in which your death occurs.
7. Life Insurance. During your employment with the Company, the Company
shall (i) provide you with $50,000 of group life insurance and (ii) pay you
annually an amount equal to two times the premium you would have to pay to
obtain life insurance under the Group Universal Life ("GUL") insurance program
made available by the Company in an amount equal to $4 million. You shall be
under no obligation to use the payments made by the Company pursuant to the
preceding sentence to purchase GUL insurance or to purchase any other life
insurance. If the Company discontinues its GUL insurance program, the Company
shall nevertheless make the payments required by this Section 7 as if such
program were still in effect. The payments made to you hereunder shall not be
considered as "salary" or "compensation" or "bonus" in determining the amount of
any payment under any pension, retirement, profit-sharing or other benefit plan
of the Company or any subsidiary of the Company.
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8. Other Benefits.
8.1 General Availability. To the extent that (a) you are eligible
under the general provisions thereof (including without limitation, any plan
provision providing for participation to be limited to persons who were
employees of the company or certain of its subsidiaries prior to a specific
point in time) and (b) the Company maintains such plan or program for the
benefit of its executives, during the term of employment and so long as you are
an employee of the Company, you shall be eligible to participate in any savings
or similar plan or program and in any group life insurance (to the extent set
forth in Section 7), hospitalization, medical, dental, accident, disability or
similar plan or program of the Company now existing or established hereafter.
8.2 Benefits After a Termination or Disability. During the period
you remain on the payroll of the Company after a termination without cause or
during the Disability Period, you shall continue to be eligible to participate
in the benefit plans and to receive the benefits required to be provided to you
under this Agreement to the extent such benefits are maintained in effect by the
Company for its executives; provided, however, you shall not be entitled to any
additional awards or grants under any stock option, restricted stock or other
stock based incentive plan. At the time you leave the payroll of the Company,
your rights to benefits and payments under any benefit plans or any insurance or
other death benefit plans or arrangements of the Company or under any stock
option, restricted stock, stock appreciation right, bonus unit, management
incentive or other plan of the Company shall be determined in accordance with
the terms and provisions of such plans and any agreements under which such stock
options, restricted stock or other awards were granted. However, notwithstanding
the foregoing or any more restrictive provisions of any such plan or agreement,
if your employment with the Company is terminated as a result of a termination
pursuant to Section 4.2, then, except if you would otherwise qualify for
retirement under the terms of the applicable stock option agreement, (i) all
stock options granted to you by the Company or America Online, Inc. ("America
Online") on or after September 1, 2000 (which options are collectively referred
to as your "Term Options") which would have vested on or before the Term Date
(or the comparable date of any employment agreement that amends, replaces or
supersedes this Agreement) shall vest and become immediately exercisable upon
the effective date of such termination, (ii) all your vested Term Options shall
remain exercisable while you are on the payroll of the Company and for a period
of three years after the date you leave the payroll of the Company (but not
beyond the term of such options), and (iii) the Company shall not be permitted
to determine that your employment was terminated for "unsatisfactory
performance" within the meaning of any stock option agreement between the you
and the Company. All stock options granted to you by America Online prior to
September 1, 2000 shall be governed by the terms of the applicable stock option
agreement.
8.3 Payments in Lieu of Other Benefits. In the event the term of
employment and your employment with the Company is terminated pursuant to any
section of this Agreement, you shall not be entitled to notice and severance
under the
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Company's general employee policies or to be paid for any accrued vacation time
or unused sabbatical, the payments provided for in such sections being in lieu
thereof.
9. Protection of Confidential Information; Non-Compete.
9.1 Confidentiality Covenant. You acknowledge that your employment
by the Company (which, for purposes of this Section 9 shall mean AOL Time Warner
Inc. and its affiliates) will, throughout the term of employment, bring you into
close contact with many confidential affairs of the Company, including
information about costs, profits, markets, sales, products, key personnel,
pricing policies, operational methods, technical processes and other business
affairs and methods and other information not readily available to the public,
and plans for future development. You further acknowledge that the services to
be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. You further acknowledge that the
business of the Company is international in scope, that its products and
services are marketed throughout the world, that the Company competes in nearly
all of its business activities with other entities that are or could be located
in nearly any part of the world and that the nature of your services, position
and expertise are such that you are capable of competing with the Company from
nearly any location in the world. In recognition of the foregoing, you covenant
and agree:
9.1.1 You shall keep secret all confidential matters of the Company
and shall not disclose such matters to anyone outside of the Company, or to
anyone inside the Company who does not have a need to know or use such
information, and shall not use such information for personal benefit or the
benefit of a third party, either during or after the term of employment, except
with the Company's written consent, provided that (i) you shall have no such
obligation to the extent such matters are or become publicly known other than as
a result of your breach of your obligations hereunder and (ii) you may, after
giving prior notice to the Company to the extent practicable under the
circumstances, disclose such matters to the extent required by applicable laws
or governmental regulations or judicial or regulatory process;
9.1.2 You shall deliver promptly to the Company on termination of
your employment, or at any other time the Company may so request, all memoranda,
notes, records, reports and other documents (and all copies thereof) relating to
the Company's business, which you obtained while employed by, or otherwise
serving or acting on behalf of, the Company and which you may then possess or
have under your control; and
9.1.3 If the term of employment is terminated pursuant to Section 4,
for a period of one year after such termination, without the prior written
consent of the Company, you shall not employ, and shall not cause any entity of
which you are an affiliate to employ, any person who was a full-time employee of
the Company at the date of such termination or within six months prior thereto
but such prohibition shall not apply to your secretary or executive assistant or
to any other employee eligible to receive overtime pay.
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9.2 Non-Compete. During the term of employment and through the later
of (i) the Term Date, (ii) the date you leave the payroll of the Company, and
(iii) twelve months after the effective date of any termination of the term of
employment pursuant to Section 4, you shall not, directly or indirectly, without
the prior written consent of the Chairman or Chief Executive Officer of the
Company, render any services to, or act in any capacity for, any Competitive
Entity, or acquire any interest of any type in any Competitive Entity; provided,
however, that the foregoing shall not be deemed to prohibit you from acquiring,
(a) solely as an investment and through market purchases, securities of any
Competitive Entity which are registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934 and which are publicly traded, so long as you
are not part of any control group of such Competitive Entity and such
securities, including converted securities, do not constitute more than one
percent (1%) of the outstanding voting power of that entity and (b) securities
of any Competitive Entity that are not publicly traded, so long as you are not
part of any control group of such Competitive Entity and such securities,
including converted securities, do not constitute more than three percent (3%)
of the outstanding voting power of that entity. For purposes of the foregoing,
the following shall be deemed to be a Competitive Entity: (x) during the period
that you are actively employed with the Company, any person or entity that
engages in any line of business that is substantially the same as either (i) any
line of business which the Company engages in, conducts or, to your knowledge,
has definitive plans to engage in or conduct or (ii) any operating business that
is engaged in or conducted by the Company as to which, to your knowledge, the
Company covenants, in writing, not to compete with in connection with the
disposition of such business, and (y) during the period following a termination
of your term of employment pursuant to Section 4, any of the following: AT&T
Corporation, Bertelsmann A.G., The Walt Disney Company, EarthLink, Inc., General
Electric Corporation, Microsoft Corporation, The News Corporation, Sony
Corporation, Vivendi Universal, S.A., Viacom Inc. and Yahoo! Inc., and their
respective subsidiaries and affiliates and any successor to any internet service
provider, media or entertainment businesses thereof.
10. Ownership of Work Product. You acknowledge that during the term of
employment, you may conceive of, discover, invent or create inventions,
improvements, new contributions, literary property, material, ideas and
discoveries, whether patentable or copyrightable or not (all of the foregoing
being collectively referred to herein as "Work Product"), and that various
business opportunities shall be presented to you by reason of your employment by
the Company. You acknowledge that all of the foregoing shall be owned by and
belong exclusively to the Company and that you shall have no personal interest
therein, provided that they are either related in any manner to the business
(commercial or experimental) of the Company, or are, in the case of Work
Product, conceived or made on the Company's time or with the use of the
Company's facilities or materials, or, in the case of business opportunities,
are presented to you for the possible interest or participation of the Company.
You shall (i) promptly disclose any such Work Product and business opportunities
to the Company; (ii) assign to the Company, upon request and without additional
compensation, the entire rights to such Work Product and business opportunities;
(iii) sign all papers necessary to carry out the foregoing; and
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(iv) give testimony in support of your inventorship or creation in any
appropriate case. You agree that you will not assert any rights to any Work
Product or business opportunity as having been made or acquired by you prior to
the date of this Agreement except for Work Product or business opportunities, if
any, disclosed to and acknowledged by the Company in writing prior to the date
hereof.
11. Notices. All notices, requests, consents and other communications
required or permitted to be given under this Agreement shall be effective only
if given in writing and shall be deemed to have been duly given if delivered
personally or sent by a nationally recognized overnight delivery service, or
mailed first-class, postage prepaid, by registered or certified mail, as follows
(or to such other or additional address as either party shall designate by
notice in writing to the other in accordance herewith):
11.1 If to the Company:
AOL Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Vice President - Global
Compensation and Benefits
(with a copy, similarly addressed
but Attention: General Counsel)
11.2 If to you, to your residence address set forth on the records
of the Company.
12. General.
12.1 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the substantive laws of the State of
New York.
12.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12.3 Entire Agreement. This Agreement, including Annex A, sets
forth the entire agreement and understanding of the parties relating to the
subject matter of this Agreement and supersedes all prior agreements,
arrangements and understandings, written or oral, between the parties.
12.4 No Other Representations. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or be liable for any alleged representation,
promise or inducement not so set forth.
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12.5 Assignability. This Agreement and your rights and obligations
hereunder may not be assigned by you and except as specifically contemplated in
this Agreement, neither you, your legal representative nor any beneficiary
designated by you shall have any right, without the prior written consent of the
Company, to assign, transfer, pledge, hypothecate, anticipate or commute to any
person or entity any payment due in the future pursuant to any provision of this
Agreement, and any attempt to do so shall be void and shall not be recognized by
the Company. The Company shall assign its rights together with its obligations
hereunder in connection with any sale, transfer or other disposition of all or
substantially all of the Company's business and assets, whether by merger,
purchase of stock or assets or otherwise, as the case may be. Upon any such
assignment, the Company shall cause any such successor expressly to assume such
obligations, and such rights and obligations shall inure to and be binding upon
any such successor.
12.6 Amendments; Waivers. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended and the terms or covenants hereof may
be waived only by written instrument executed by both of the parties hereto, or
in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect such party's right at a later time to enforce the same. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.
12.7 Specific Remedy. In addition to such other rights and remedies
as the Company may have at equity or in law with respect to any breach of this
Agreement, if you commit a material breach of any of the provisions of Sections
9.1, 9.2, or 10, the Company shall have the right and remedy to have such
provisions specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company.
12.8 Resolution of Disputes. Except as provided in the preceding
Section 12.7, any dispute or controversy arising with respect to this Agreement
and your employment hereunder (whether based on contract or tort or upon any
federal, state or local statute, including but not limited to claims asserted
under the Age Discrimination in Employment Act, Title VII of the Civil Rights
Act of 1964, as amended, any state Fair Employment Practices Act and/or the
Americans with Disability Act) shall, at the election of either you or the
Company, be submitted to JAMS/ENDISPUTE for resolution in arbitration in
accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall
make such election by delivering written notice thereof to the other party at
any time (but not later than 45 days after such party receives notice of the
commencement of any administrative or regulatory proceeding or the filing of any
lawsuit relating to any such dispute or controversy) and thereupon any such
dispute or controversy shall be resolved only in accordance with the provisions
of this Section 12.8. Any such proceedings shall take place in New York City
before a single arbitrator (rather than a panel of arbitrators), pursuant to any
streamlined or expedited (rather than a comprehensive) arbitration process,
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before a non-judicial (rather than a judicial) arbitrator, and in accordance
with an arbitration process which, in the judgment of such arbitrator, shall
have the effect of reasonably limiting or reducing the cost of such arbitration.
The resolution of any such dispute or controversy by the arbitrator appointed in
accordance with the procedures of JAMS/ENDISPUTE shall be final and binding.
Judgment upon the award rendered by such arbitrator may be entered in any court
having jurisdiction thereof, and the parties consent to the jurisdiction of the
New York courts for this purpose. The prevailing party shall be entitled to
recover the costs of arbitration (including reasonable attorneys fees and the
fees of experts) from the losing party. If at the time any dispute or
controversy arises with respect to this Agreement, JAMS/ENDISPUTE is not in
business or is no longer providing arbitration services, then the American
Arbitration Association shall be substituted for JAMS/ENDISPUTE for the purposes
of the foregoing provisions of this Section 12.8. If you shall be the prevailing
party in such arbitration, the Company shall promptly pay, upon your demand, all
legal fees, court costs and other costs and expenses incurred by you in any
legal action seeking to enforce the award in any court.
12.9 Beneficiaries. Whenever this Agreement provides for any
payment to your estate, such payment may be made instead to such beneficiary or
beneficiaries as you may designate by written notice to the Company. You shall
have the right to revoke any such designation and to redesignate a beneficiary
or beneficiaries by written notice to the Company (and to any applicable
insurance company) to such effect.
12.10 No Conflict. You represent and warrant to the Company that
this Agreement is legal, valid and binding upon you and the execution of this
Agreement and the performance of your obligations hereunder does not and will
not constitute a breach of, or conflict with the terms or provisions of, any
agreement or understanding to which you are a party (including, without
limitation, any other employment agreement). The Company represents and warrants
to you that this Agreement is legal, valid and binding upon the Company and the
execution of this Agreement and the performance of the Company's obligations
hereunder does not and will not constitute a breach of, or conflict with the
terms or provisions of, any agreement or understanding to which the Company is a
party.
12.11 Withholding Taxes. Payments made to you pursuant to this
Agreement shall be subject to withholding and social security taxes and other
ordinary and customary payroll deductions.
12.12 No Offset. Neither you nor the Company shall have any right
to offset any amounts owed by one party hereunder against amounts owed or
claimed to be owed to such party, whether pursuant to this Agreement or
otherwise, and you and the Company shall make all the payments provided for in
this Agreement in a timely manner.
12.13 Severability. If any provision of this Agreement shall be
held invalid, the remainder of this Agreement shall not be affected thereby;
provided, however, that the parties shall negotiate in good faith with respect
to equitable
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<PAGE>
modification of the provision or application thereof held to be invalid. To the
extent that it may effectively do so under applicable law, each party hereby
waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
12.14 Survival. Sections 3.3, 8.3 and 9 through 12 shall survive
any termination of the term of employment by the Company for cause pursuant to
Section 4.1. Sections 3.3, 4.4, 4.5, 4.6 and 8 through 12 shall survive any
termination of the term of employment pursuant to Sections 4.2, 5 or 6.
12.15 Definitions. The following terms are defined in this
Agreement in the places indicated:
affiliate - Section 4.2.2
Base Salary - Section 3.1
cause - Section 4.1
Code - Section 4.2.2
Company - the first paragraph on page 1 and Section 9.1
Competitive Entity - Section 9.2 Disability Date - Section 5
Disability Period - Section 5
Effective Date - the first paragraph on page 1
Term Date - Section 1
Term Options - Section 8.2
term of employment - Section 1
termination without cause - Section 4.2.1
Work Product - Section 10
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
AOL TIME WARNER INC.
By /s/ Patricia Fili-Krushel
------------------------------
/s/ Kenneth J. Novack
------------------------------
Kenneth J. Novack
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<PAGE>
ANNEX A
RELEASE
Pursuant to the terms of the Employment Agreement made as of
_____________, between AOL TIME WARNER INC., a Delaware corporation (the
"Company"), 75 Rockefeller Plaza, New York, New York 10019 and the undersigned
(the "Agreement"), and in consideration of the payments made to me and other
benefits to be received by me pursuant thereto, I, [Name], being of lawful age,
do hereby release and forever discharge the Company and any successors,
subsidiaries, affiliates, related entities, predecessors, merged entities and
parent entities and their respective officers, directors, shareholders,
employees, benefit plan administrators and trustees, agents, attorneys,
insurers, representatives, affiliates, successors and assigns from any and all
actions, causes of action, claims, or demands for general, special or punitive
damages, attorney's fees, expenses, or other compensation or damages
(collectively, "Claims"), which in any way relate to or arise out of my
employment with the Company or any of its subsidiaries or the termination of
such employment, which I may now or hereafter have under any federal, state or
local law, regulation or order, including without limitation, Claims related to
any stock options held by me or granted to me by the Company that are scheduled
to vest subsequent to the Term Date, as defined in the Agreement, and Claims
under the Age Discrimination in Employment Act, Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act, the Fair Labor Standards Act,
the Family and Medical Leave Act and the Employee Retirement Income Security
Act, each as amended through and including the date of this Release; provided,
--------
however, that the execution of this Release shall not prevent the undersigned
-------
from bringing a lawsuit against the Company to enforce its obligations under the
Agreement.
I acknowledge that I have been given at least 21 days from the
day I received a copy of this Release to sign it and that I have been advised to
consult an attorney. I understand that I have the right to revoke my consent to
this Release for seven days following my signing. This Release shall not become
effective or enforceable until the expiration of the seven-day period following
the date it is signed by me.
I ALSO ACKNOWLEDGE THAT BY SIGNING THIS RELEASE I MAY BE
GIVING UP VALAUBLE LEGAL RIGHTS AND THAT I HAVE BEEN ADVISED TO CONSULT A LAWYER
BEFORE SIGNING. I further state that I have read this document and the Agreement
referred to herein, that I know the contents of both and that I have executed
the same as my own free act.
WITNESS my hand this ____ day of ___________, ____.
--------------------------
[Name]
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