Severance Agreement - AOL Time Warner Inc. and Robert W. Pittman
July 18, 2002
Robert W. Pittman
75 Rockefeller Plaza
New York, NY 10019
Dear Bob:
Reference is made to the Agreement, titled "Employment Agreement"
between you and America Online, Inc. ("AOL") dated as of October 29, 1996 (the
"Agreement"). AOL assigned and AOL Time Warner Inc. ("AOLTW") assumed all rights
and obligations under the Agreement on January 11, 2001, and AOLTW thereby
became the "Company" for all purposes of the Agreement, except as described
below with respect to the Confidentiality Agreement attached thereto as Exhibit
A. Capitalized terms used but not defined in this letter agreement shall have
the meanings given such terms in the Agreement. You and the Company wish to
modify the provisions of the Agreement as follows:
1. Effective July 18, 2002, you shall resign as the Chief Operating
Officer and as a director of AOLTW, as Chief Executive Officer of AOL and as an
officer or director of any other subsidiaries or affiliates of AOLTW, but you
shall continue to serve as an employee of the Company through September 30, 2002
(the "Termination Date"). Prior to the Termination Date, you will actively
assist the Company in the manner reasonably requested by the Chief Executive
Officer to effect an orderly transition of your responsibilities. You will
continue to receive your base salary and employee benefits through the
Termination Date, together with any amounts for expense reimbursement that have
been incurred prior to the Termination Date and not yet paid. You acknowledge
that you do not currently have a target bonus and that no amount is owed to you
as "Annual Bonus" for the period through the Termination Date or thereafter.
2. Commencing on the Termination Date, you will become a consultant to
the Company for a term of two years ending on September 30, 2004 (the
"Consulting Term"), subject to and in accordance with the terms and conditions
of the Consulting Agreement and the Confidentiality Agreement, including the
provisions regarding non-competition, except as such terms are modified by this
letter agreement. Notwithstanding any provisions
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Robert W. Pittman
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to the contrary in the Agreement, Consulting Agreement or the Confidentiality
Agreement, you agree that you will not receive any cash consideration from the
Company during the Consulting Term, and you waive any rights under the terms of
the Agreement, the Consulting Agreement or the Confidentiality Agreement to
receive any payments during the Consulting Term in the form of cash
consideration. As consideration for the services rendered under the Consulting
Agreement and the Confidentiality Agreement during the Consulting Term, you will
receive the following:
a. Consistent with the provisions of the Agreement and the Consulting
Agreement, during the Consulting Term, you will continue to receive
benefits under the Company's health and welfare benefit plans and
other benefits (including financial planning services) that you had
received as an executive of the Company, to the extent such
benefits are maintained in effect by the Company for its
executives, provided that you will not be eligible to receive any
additional awards or grants under any stock option or other stock
incentive plan, and you shall not accrue vacation time or severance
benefits. If you accept full-time employment during the Consulting
Term, these benefits will cease upon your commencement of such
employment.
b. Consistent with the terms of the Agreement, the Consulting
Agreement and the applicable stock option agreement, all stock
options granted to you by AOL on or before September 1, 1998
(including any such stock options that you previously have
transferred by gift) shall remain exercisable during the Consulting
Term and for a period of 90 days after the end of the Consulting
Term (but not beyond their expiration date). In addition, all stock
options granted to you by AOL or AOLTW after September 1, 1998 (i)
shall vest effective the Termination Date to the extent such stock
options have not vested already and (ii) shall remain exercisable
through September 30, 2007 (but not beyond their expiration date).
3. The Company shall, without charge to you, make available to you
office facilities and services in either New York City or Dulles, Virginia, at
your election, together with secretarial services for six months following the
Termination Date. The Company also acknowledges and agrees that you shall have
access to your personnel information and records during and after the end of the
Consulting Term.
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Robert W. Pittman
Page 3
4. The termination of your employment shall be deemed for all purposes
of the Agreement to be a termination without Cause by the Company under Section
9 of the Agreement. You acknowledge and agree that you shall not be entitled to
notice and severance under the Company's general employee policies, the payments
provided for in the Agreement, as modified by this letter agreement, being in
lieu thereof.
5. Subsequent to the Termination Date, you shall remain entitled to the
benefit of the indemnification provisions contained on the date hereof in the
Certificate of Incorporation and By-laws of the Company, as well as any other
indemnification rights or provisions that are applicable to executives of the
Company, with respect to your service as an officer and director of the Company
and its subsidiaries prior to the Termination Date.
6. For purposes of the Confidentiality Agreement, the references in
Sections 14 and 24 to "America Online" shall continue to refer to America Online
and the business of America Online rather than referring to AOL Time Warner Inc.
and the business of AOL Time Warner Inc., and the limitations imposed upon you
during the Consulting Term by Sections 14 and 24 shall continue to apply with
respect to and be limited to America Online and the business of America Online
rather than applying with respect to AOL Time Warner Inc. and the business of
AOL Time Warner Inc. In addition, the provisions regarding non-solicitation of
employees of AOL Time Warner Inc. contained in the Confidentiality Agreement
will not apply to the three individuals who currently serve as administrative or
executive assistants for you.
7. The obligations of the Company contained in this letter agreement
are subject to and contingent on your execution of the Release attached hereto
as Annex A, and if you do not execute and return the Release to the Company or
if you revoke the Release within the time period provided for revocation, then
this letter agreement shall terminate and be of no further force and effect.
Except as amended by this letter agreement, the Agreement, the
Consulting Agreement and the Confidentiality Agreement shall remain in full
force and effect.
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Robert W. Pittman
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Please confirm your agreement with and acceptance of the foregoing by
signing the enclosed copy of this letter and returning it to the Company.
Very truly yours,
AOL Time Warner Inc.
By
----------------------------
Richard D. Parsons
Agreed and Accepted:
----------------------------
Robert W. Pittman
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ANNEX A
RELEASE
Pursuant to the terms of the Employment Agreement dated as of
October 29, 1996, as amended by that certain letter dated the date hereof,
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, Robert W. Pittman, being of lawful
age, do hereby release and forever discharge the Company and its officers,
directors, shareholders, subsidiaries, agents, and employees, from any and all
actions, causes of action, claims, or demands for general, special or punitive
damages, attorney's fees, expenses, or other compensation, 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, under the Age Discrimination in Employment Act, 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. 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
VALUABLE 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 __________, 2002.
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Robert W. Pittman