AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 17th day of October, 1997,
and herein amended and restated, by and between AT&T Corp., a New York
corporation (together with its successors and assigns permitted under this
Agreement, the "Company"), and C. Xxxxxxx Xxxxxxxxx (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, as herein amended and restated, 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:
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) "Base Salary" shall mean the salary provided for
in Section 4 below or any increased salary granted to the Executive pursuant
to Section 4.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Cause" shall mean:
(i) the Executive is convicted of a felony
involving 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.
(e) "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 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(e);
(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 stockholders 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;
(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 Company for purposes of
determining whether clause (A) above is satisfied in connection the applicable
Corporate Transaction, of the Parent Company); or
(iv) The approval by the stockholders of the
Company of a plan of complete liquidation or dissolution of the Company.
(f) "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 opportunity as a percentage of Base Salary or
long-term performance incentive or the termination or material reduction of any
employee benefit or perquisite 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 and Chief Executive Officer of the Company;
(iv) the relocation of the Company's principal
office, or the Executive's own office location, as assigned to him by the
Company to a location more than 50 miles from Basking Ridge, New Jersey; or
(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.
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.
(g) "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.
(h) "Effective Date" shall mean the date as of which this
Agreement was entered into.
(i) "Fair Market Value" shall mean the value of a share
of Stock as traded on the New York Stock Exchange on the date in question, based
on the mean of the high and low reported prices.
(j) "Pro Rata" shall mean a fraction, the numerator of
which is the number of days that the Executive was employed in the applicable
performance period (a calendar year in the case of an annual bonus and a
performance cycle in the case of an award under the Long-Term Incentive Plan)
and the denominator of which shall be the number of days in the applicable
performance period.
(k) "Stock" shall mean the Common Stock of the Company.
(l) "Term of Employment" shall mean the period specified
in Section 2 below (including any extension as provided therein).
2. Term of Employment.
The Term of Employment shall begin on the Effective Date, and
shall extend until October 31, 2003. Notwithstanding the foregoing, the Term of
Employment may be earlier terminated by either Party in accordance with the
provisions of Section 12.
3. Position, Duties and Responsibilities.
(a) Commencing on the Effective Date and continuing for
the remainder of the Term of Employment, the Executive shall be employed as the
Chairman of the Board and Chief Executive Officer of the Company and be
responsible for the general management of the affairs of the Company. The
Executive has also been elected by the Board as a member of the Board, effective
October 20, 1997. The Executive, in carrying out his duties under this
Agreement, shall report to the Board. During the Term of this Agreement, the
Executive shall devote his full business time and attention to the business and
affairs of the Company 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), (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).
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Company, of $1,400,000.
The Base Salary shall be reviewed annually for increase in the discretion of the
Board.
5. Annual Incentive Award.
During the Term of Employment, commencing in 1998 the
Executive shall participate in the AT&T Short Term Incentive Award Plan or any
successor annual incentive award plan of the Company. Under such plan, the
Executive shall have a target bonus opportunity each year equal to 100% of his
then Base Salary, payable in that amount if the performance goals established
for the relevant year are met. 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. For 1998 the Executive shall be paid a guaranteed
annual incentive award of no less than 100% of his target bonus (whether or not
performance goals have been met in such year). The Executive shall be paid his
annual incentive awards no later than other senior executives of the Company are
paid their annual incentive awards.
6. Cash Award.
In order to address certain forfeitures experienced when the
Executive left his previous employer, the Company shall pay a premium of
$2,050,000 to purchase a split-dollar survivorship insurance policy under an
Estate Enhancement Program insuring the Executive and his spouse. Such policy
shall, upon the death of the last surviving insured, provide insurance proceeds
equal to the sum of the face amount of the policy and the policy's cash value.
An amount equal to the policy face amount shall be payable to the Executive's
beneficiaries or to a trust which may be established to own the Executive's
interest in such policy. The balance of the proceeds shall be paid to the
Company, and from its share of the death benefit, the Company will pay a
Company-paid death benefit to the Executive's beneficiaries equal to the death
benefit received by the Company, minus the Company-paid premium. It is agreed
and understood that the face amount of such split-dollar survivorship insurance
policy will be determined in accordance with the underwriting requirements of
the insurance company providing such coverage, based on the Company's premium
payment of $2,050,000, pursuant to this Section 6 and any additional premium
payments, if any, that the Executive may become eligible for under any similar
program adopted by the Company for its senior executives and in which the
Executive elects to participate.
Prior to the Company purchasing insurance under this paragraph,
Executive will make a reasonable effort (but not including litigation) to obtain
all or a portion of his 1997 annual bonus and his long-term incentive bonus for
the 1995-1997 performance cycle from his current employer, and he will notify
the Company, in writing, of the outcome of such efforts.
7. Stock Awards.
(a) General. On the Effective Date, the Company shall
grant the Executive restricted stock, restricted stock units and stock option
awards described in this Section 7. The Executive also shall be eligible to
participate in the Company's 1997 Long-Term Incentive Plan ("LTIP") as provided
in Section 8 below.
(b) Restricted Stock Award. As of the Effective Date, the
Company shall grant the Executive an award of 105,330 shares of restricted Stock
("Restricted Stock") substantially in the form attached to this Agreement as
Exhibit C, vesting as follows:
(i) 19,072 shares shall vest on January 1, 1999;
(ii) 18,294 shares shall vest on January 1, 2000;
(iii) 8,022 shares shall vest at the rate of 25%,
2006 shares on each of May 1, 1998 and May 1, 1999 and 2005 shares on each of
May 1, 2000 and May 1, 2001;
(iv) 26,815 shares shall vest as follows: 8,939
shares on May 1, 1998, and 8,938 shares on each of May 1, 1999 and May 1, 2000;
and
(v) 33,127 shares shall vest at the rate of 25%,
8282 shares on each of the first three anniversaries of the Effective Date
and 8281 shares on the fourth anniversary of the Effective Date.
(c) Restricted Stock Unit Award. As of the Effective Date,
the Company shall grant the Executive an award of 224,561 shares of restricted
stock units (the "Restricted Stock Units") substantially in the form attached to
this Agreement as Exhibit D, vesting as provided in and subject to the
provisions of Exhibit D.
(d) Stock Option Award. As of the Effective Date, the
Company shall grant the Executive a ten-year stock option award, substantially
in the form attached to this Agreement as Exhibit E, to purchase 750,000 shares
of Stock. The exercise price shall be the Fair Market Value on the Effective
Date which the Board has fixed as the date of grant, which is $44.53125 per
share. The award shall vest as provided in Exhibit E.
(e) Anything herein to the contrary notwithstanding, the
numbers of shares of restricted stock and restricted stock units referred to in
Section 7(b) and (c) above shall be reduced to the extent the Executive's
similarly related awards from his prior employer (to which such awards under
Section 7(b) and (c) relate) are not in fact forfeited.
8. Long-Term Incentive Awards.
(a) Performance Awards. The Executive shall be eligible
to participate in the LTIP, commencing with the 1998-2000 cycle. The Executive
shall not be eligible to participate in any prior LTIP performance cycles
including the 1996-1998 and the 1997-1999 LTIP performance cycles. The Executive
shall receive a target award under each of the 1998-2000 and 1999-2001
performance cycles that shall be no less than 100% of his then Base Salary
(target amount).
(b) Stock Option Awards. The Executive shall be eligible
for stock option awards commencing with awards in 1998 in accordance with
Company practices applicable to an executive in his position.
9. Supplemental Pension.
(a) The Executive shall be entitled to a pension benefit
in the form of a single life annuity commencing upon retirement at or after age
65 (subject to earlier commencement as provided in Section 9(e) below) equal to
50% of his Final Average Compensation offset by certain amounts as provided in
Section 9(b) below. For purposes of this Section 9, Final Average Compensation
shall mean the sum of the base salary and annual incentive award payments paid
in respect of the three calendar years of the Executive's employment by the
Company during the last five calendar years of such employment during which he
received the highest level of such payments, divided by three. If the
Executive's employment with the Company terminates prior to his completion of
three calendar years of employment, his Final Average Compensation shall be
based on the average of his complete calendar years of employment with the
Company. If the Executive does not complete one calendar year of employment, his
Final Average Compensation shall be calculated by deeming his Base Salary for
the year to be his Base Salary at the annualized rate in effect immediately
prior to his termination of employment and by deeming his Annual Incentive Award
for that year to be the original target Annual Incentive Award for that year.
(b) The annual annuity payment determined under Section
9(a) for any year shall be offset by (i) the greater of (A) $655,642 and (B) the
actual pension benefits to be paid to the Executive with respect to that year by
the Executive's prior employers under their respective tax-qualified and
non-tax-qualified defined benefit pension plans, (ii) any other pension benefits
provided to the Executive under any other pension plan or pension arrangement
except the AT&T Long-Term Savings Plan for Management Employees and the AT&T
Senior Management Incentive Award Deferral Plan of the Company and (iii) any
government-sponsored pension including Social Security retirement benefits. The
supplemental pension benefits payable under this Section 9 shall be afforded the
same post-employment "ad hoc" inflation adjustments, if any, as may from time to
time be given to comparable former senior executives of the Company receiving
benefits under the Company's Management Pension Plan. Payment of the pension
benefit provided under this Section 9 shall be conditioned upon the Executive
furnishing the Company promptly following retirement with written information
regarding offsetting payments from prior employers and any government-sponsored
pension and shall continue to be conditioned upon his promptly furnishing the
Company with written information as to any changes in such offsetting payments.
(c) In determining the amount of any offset under Section
9(b), such amount shall be calculated on an actuarially equivalent basis
assuming the same frequency of payment and the same form of annuity as the
pension benefit to be paid under this Section 9.
(d) Except as otherwise provided in Section 12, the
Executive's entitlement to the pension benefit under this Section 9 shall vest
at the rate of 20% on each of the first five anniversaries of the Effective
Date, with the entitlement fully vested on the fifth anniversary.
(e) Except as otherwise provided in this Section 9, the
Executive's entitlements to the pension benefit under this Section 9, including
without limitation methods of payment, rights to elect lump sum payment or joint
and survivor benefits, rights of survivors, claims procedures, actuarial
assumptions, etc., shall be determined in accordance with the provisions and
practices of the Company's Management Pension Plan as then in effect; provided,
however, that the Executive shall be deemed to have satisfied any service-period
requirement for eligibility for pre-retirement survivor annuity benefits and all
other Plan purposes except for vesting and the determination of the amount of
any early retirement benefit. In the event the Executive terminates employment
so as to be entitled to a pension benefit under this Section 9(a) prior to age
65, the actual pension benefit payable to him under this Section 9 shall be
adjusted for early commencement in accordance with the actuarial assumptions
then in effect under the Company's Management Pension Plan.
10. 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.
11. Reimbursement of Business and Other Expenses;
Perquisites; Vacations.
(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 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
arrangements with the Company.
(b) During the Term of Employment, the Executive shall
be entitled to participate in each of the Company's perquisites 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 without
limitation security protection, automobile, club dues, tax preparation and
financial counseling, use of corporate aircraft and limousine services.
(c) The Executive shall be entitled to reimbursement of
his relocation expenses in accordance with the Company's Management Relocation
Plan. In connection with establishing a new principal residence in the
Morristown, New Jersey area, the Executive shall in all events be entitled to
reimbursement of expenses incurred in moving his family and personal belongings
to that area. The Executive shall be entitled to reimbursement for reasonable
expenses in the form of real estate listings, commissions, legal costs and
similar expenses in disposing of his residence in the Manhattan Beach,
California area as well as any similar expenses incurred in acquiring a
residence in the Morristown, New Jersey area. The Executive shall also be
entitled to protection against any loss on the Manhattan Beach residence, which
will be based on his cost (acquisition cost plus costs of improvement) less (i)
market appraisal (as described below) or, if greater, (ii) the actual sale
price. The Company's obligation to protect the Executive against loss as
described above is subject to the following condition: The Executive shall have
15 calendar days following receipt of an appraisal as described in the following
sentence to sell the Manhattan Beach residence to the Company. The appraisal
shall be based on an appraisal by a nationally recognized appraiser agreed upon
by the Parties, the cost of the appraisal to be paid by the Company. If the
Parties do not agree upon an appraiser, each shall designate an appraiser and
the two appraisers shall select from among nationally recognized appraisers a
third appraiser who shall make the appraisal. If the Executive does not agree to
sell the residence to the Company based on the appraisal, the Company shall have
no further obligation except to pay the Executive the difference between the
cost of the residence as described above and the appraisal, assuming that this
results in a loss to the Executive. The Company also shall pay the Executive's
temporary living expenses in New Jersey and provide assistance in connection
with financing the purchase of a new home there in accordance with its regular
practices. To the extent the Company's reimbursement of the Executive's
relocation expenses results in taxable income to the Executive, the Company
shall gross up such expenses so that the Executive is not out of pocket for any
Federal, state or local income, employment, excise or other taxes on such
reimbursement including the gross-up amounts.
(d) 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.
12. 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 death occurs;
(ii) annual incentive award for the year in which
the Executive's death occurs, based on the original target award performance 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 terms;
(iv) the restrictions on restricted stock shall
lapse;
(v) payment of Restricted Stock Units in
accordance with Section 7(c) and Exhibit D;
(vi) payout for each LTIP performance cycle in
which the Executive was participating at the time of his death, based on the
original target performance under the plan, payable in a single installment
promptly after his death; and
(vii) the supplemental pension benefit provided in
Section 9 shall fully vest.
(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, based on the original target award 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 terms;
(v) the restrictions on any restricted stock shall
lapse;
(vi) payment of Restricted Stock Units in
accordance with Section 7(c) and Exhibit D;
(vii) a payout for each LTIP performance cycle in
which the Executive was participating at the time of his termination, based on
the original target performance under the plan, payable in accordance with the
plan; and
(viii) the supplemental pension benefit provided in
Section 9 shall fully vest with offset for any Company-provided disability
benefits.
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 25 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 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) he 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 Compensation and
Employee Benefits Committee determines otherwise;
(C) all restricted stock as to which
restrictions have not lapsed shall be forfeited;
(D) Restricted Stock Units shall be
forfeited in accordance with Exhibit D;
(E) all LTIP awards with respect to
performance cycles which have not yet been completed shall be forfeited; and
(F) any unvested supplemental pension
benefit to which the Executive would otherwise be entitled under Section 9 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) Base Salary, at the annualized rate in effect
on the date of termination, for a period of 24 months following such
termination, provided that, at the Executive's option, the Company shall pay him
the present value of such salary continuation payments in a lump sum (using as
the discount rate the applicable Federal rate specified under Section 1274 of
the Internal Revenue Code of 1986, as amended (the "Code"), for short-term
Treasury obligations as published by the Internal Revenue Service for the month
in which such termination occurs);
(iii) a Pro Rata annual incentive award for the year
in which termination occurs, based on his original target award for such year,
payable when annual incentive awards are paid to other senior executives (or in
a lump sum in accordance with the proviso in Section 12(d)(ii));
(iv) an annual incentive award for a period of 24
months following the date of termination, based on his original target award for
the year in which termination occurs and payable in equal monthly installments
over the 24-month period of Base Salary continuation payments pursuant to
Section 12(d)(ii) (or in a lump sum in accordance with the proviso in Section
12(d)(ii));
(v) all outstanding options, whether or not then
exercisable, shall become exercisable and shall remain exercisable until the end
of their originally scheduled terms;
(vi) the restrictions on restricted stock shall
lapse;
(vii) payment of Restricted Stock Units in
accordance with Section 7(c) and Exhibit D;
(viii) payout for each LTIP performance cycle in
which the Executive was then participating, based on the original target
performance, payable in accordance with the plan (or in a lump sum in accordance
with the proviso in Section 12(d)(ii));
(ix) the supplemental pension benefit provided in
Section 9 shall fully vest; and
(x) the Executive shall be entitled to continued
participation in all medical, dental, vision and hospitalization insurance
coverage and in other employee benefit plans or programs in which he was
participating on the date of his termination until the earlier of:
(A) 24 months following the date of
termination and
(B) the date, or dates, he receives
equivalent coverage and benefits under the plans and programs of a subsequent
employer. The Executive shall promptly advise the Company of any such subsequent
employment and the benefits he receives in connection therewith.
(e) Voluntary Termination; Retirement.
(i) A 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
12(c)(ii) for a termination for Cause. A voluntary termination under this
Section 12(e) shall be effective 30 calendar days after prior written notice is
received by the Company.
(ii) The Executive may retire at any time following
the end of the Term of Employment and thereupon commence receiving payments of
his supplemental pension as provided in Section 9 and any other 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
restrictions on restricted stock which have not already lapsed will thereupon
lapse, payment of all Restricted Stock Units will be made in accordance with
their terms and all stock options will continue to be exercisable for the
remainder of their respective terms.
(f) Consequences of a Change in Control.
(i) If, following a Change in Control, the
Executive's employment is terminated by the Company without Cause, other than
due to Disability or death, or there is a Constructive Termination without
Cause, the Executive shall be entitled to the benefits provided in Section 12(d)
above, except that the period for which salary, annual incentive and benefits
are provided in Sections 12(d)(ii), 12(d)(iv) and 12(d)(x) (except that the
Executive may in his discretion, to the extent the plans permit, elect to
continue his benefits under Section 12(d)(x) in lieu of the lump sum payment
therefor) shall be 48 months, and all payments to be made pursuant to those
Sections and the payments to be made pursuant to Sections 12(d)(iii) and
12(d)(viii) shall be paid to the Executive in a lump sum promptly following the
date of termination.
(ii) Immediately following a Change in Control, all
amounts and benefits to which the Executive is entitled but not yet vested,
whether under this Agreement or otherwise, and except as provided in Exhibit D
with respect to Restricted Stock Units, shall become fully vested.
(iii) If, following a Change in Control, the
aggregate of all payments or benefits made or provided to the Executive under
Section 12(f)(i) 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 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 12(f)(iii) 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.
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 this Section
12(f)(iii) (the "Overpayment") or that the Gross-Up Payment made will have been
an amount less than the Company should have paid pursuant to this Section
12(f)(iii) (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.
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 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 12(f)(iii), 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, 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) the entire amount of all amounts owing under
Section 6, including all deferrals pursuant to Section 6 (if any such amounts
have been deferred);
(iii) any expense reimbursements due the Executive;
and
(iv) other benefits, if any, in accordance with
applicable plans and programs of the Company.
(h) No Mitigation; No Offset. In the event of any
termination of employment under this Section 12, 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
12 are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
13. Confidentiality.
(a) The Executive agrees that he will not, at any time
during the Term of Employment or thereafter, disclose or use any trade secret,
proprietary or confidential information of the Company or any subsidiary or
affiliate of the Company, obtained during the course of his employment, except
as required in the course of such employment or with the written permission of
the Company or, as applicable, any subsidiary or affiliate of the Company or as
may be required by law, provided that, if the Executive receives legal process
with regard to disclosure of such information, he shall promptly notify the
Company and cooperate with the Company in seeking a protective order.
(b) The Executive agrees that at the time of the
termination of his employment with the Company, whether at the instance of the
Executive or the Company, and regardless of the reasons therefor, he will
deliver to the Company, and not keep or deliver to anyone else, any and all
notes, files, memoranda, papers and, in general, any and all physical matter
containing information, including any and all documents significant to the
conduct of the business of the Company or any subsidiary or Affiliate of the
Company which are in his possession, except for any documents for which the
Company or any subsidiary or Affiliate of the Company has given written consent
to removal at the time of the termination of the Executive's employment and his
personal rolodex, phone book and similar items.
(c) The Executive agrees that the Company's remedies at
law would be inadequate in the event of a breach or threatened breach of this
Section 13; accordingly, the Company shall be entitled, in addition to its
rights at law, to an injunction and other equitable relief without the need to
post a bond.
14. Noncompetition.
(a) Subject to the provisions of Section 14(b) below
and notwithstanding any other provisions of this Agreement, any and all payments
(except those made from Company-sponsored tax-qualified pension or welfare
plans), benefits or other entitlements to which the Executive may be eligible in
accordance with the terms hereof, may be forfeited, whether or not in pay
status, at the discretion of the Company, if the Executive at any time without
the consent of the Company "establishes a relationship with a competitor" or
"engages in an activity" which is in conflict with or adverse to the interest of
the Company, all within the meaning of the Non-Competition Guideline referred to
below (a "Competitive Activity"). The payments, benefits and other entitlements
hereunder are being made in part in consideration of the obligations of this
Section 14 and in particular the post-employment payments, benefits and other
entitlements are being made in consideration of, and dependent upon, compliance
with this Section 14(a) and, to the extent set forth in Section 14(e), the
Release and Agreement referred to in Section 14(e). Exhibit F is a copy of the
Non-Competition Guideline.
(b) Anything in Section 14(a) to the contrary
notwithstanding, no forfeiture or cancellation shall take place with respect to
any payments, benefits or entitlements hereunder or under any other award
agreement, plan or practice unless the Company shall have first given the
Executive written notice of its intent to so forfeit, or cancel or pay out and
Executive has not, within 30 calendar days of giving such notice, ceased such
unpermitted Competitive Activity, provided that the foregoing prior notice
procedure shall not be required with respect to (x) a Competitive Activity which
the Executive initiated after the Company had informed the Executive in writing
that it believed such Competitive Activity violated Section 14(a) or the AT&T
Non-Competition Guideline, (y) any Competitive Activity regarding local,
regional or long distance telephone services or other products or services which
are part of a line of business which represents more than 5% percent of the
Company's consolidated gross revenues for its most recent completed fiscal year
at the time the Competitive Activity commences.
(c) Nothing in this Section 14 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 business of such firm, corporation or enterprise.
(d) If the restrictions stated herein are found by a court
to be unreasonable, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.
(e) Any payments or benefits made pursuant to Section 12
are: (1) subject to the provisions, restrictions and limitations of Section 14
above, but not otherwise subject to offset or mitigation, (2) subject to the
Executive's signing a Release and Agreement not to xxx the company in the form
of Exhibit G hereto with such changes therein or additions thereto as needed
under then applicable law to give effect to the intent of the Release and
Agreement and (3) receipt of Executive's resignation from all offices,
directorships and fiduciary positions with the Company, its Affiliates and their
respective benefit plans. Notwithstanding the due date of any post-employment
payment, any amounts due under Section 12 shall not be due until after the end
of any applicable revocation period with regard to the Release and Agreement.
(f) In no event shall the Executive be required to repay
to the Company any amount previously received by the Executive from the Company,
except to the extent required by the AT&T Non-Competition Guideline.
15. Resolution of Disputes.
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 New Jersey, 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.
16. 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 or resolutions of the Company's
Board of Directors or, if greater, by the laws of the State of New Jersey,
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 stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under Section 16(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 stockholders) 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 to
the extent the Company provides such coverage for its other executive officers.
17. 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 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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 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.
23. 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.
24. Governing Law/Jurisdiction.
This Agreement shall be governed in accordance with the laws
of New Jersey without reference to principles of conflict of laws.
25. 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
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Executive Vice President
Human Resources
If to the Executive: Mr. C. Xxxxxxx Xxxxxxxxx
c/o AT&T
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
26. 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.
27. Counterparts.
This Agreement may be executed in two or more counterparts.
28. Conditions.
The effectiveness of this Agreement is conditioned upon the
following:
(i) there being no agreement between the Executive
and any prior employer that interferes or could interfere with his employment
with the Company unless such agreement is to the satisfaction of the Company
waived by such prior employer; and
(ii) the Executive passes a physical examination to
the satisfaction of the Company in accordance with its policy on pre-employment
physical examinations.
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Agreement on March __, 1998 as of the date first written above.
AT&T Corp.
By:______________________________
X. X. Xxxxxxxxxx
------------------------------
C. Xxxxxxx Xxxxxxxxx
EXHIBITS
[To be supplied]
A. DIRECTORSHIPS
B. DEFERRED ACCOUNT AGREEMENT
C. RESTRICTED STOCK AWARD
D. RESTRICTED STOCK UNIT AWARD
E. STOCK OPTION AGREEMENT
F. A CO. NON-COMPETITION GUIDELINES
G. RELEASE AND AGREEMENT
EXHIBIT A
DIRECTORSHIPS
The Times Mirror Company
Travelers Group Inc.
TBG (private company, Supervisory Board)
EXHIBIT B
AT&T SENIOR MANAGEMENT INCENTIVE AWARD DEFERRAL PLAN
DEFERRAL ELECTION
Pursuant to the terms of the AT&T Senior Management Incentive Award Deferral
Plan (the "Plan"), I hereby elect to defer receipt of the amounts and/or shares
which would otherwise be payable to me during the calendar year ____ and each
calendar year thereafter, to the extent indicated on LINE 1 below. This election
shall continue until I terminate or modify such election by written notice. Any
such termination or modification shall become effective as of the end of the
calendar year in which such notice is given with respect to all awards which
would otherwise be payable to me in subsequent calendar years.
I also hereby elect:
(A) that all amounts and/or shares deferred pursuant to this election
together with accumulated interest and/or additional shares shall be
distributed to me in the number of annual installment(s) indicated on
LINE 2 below, or the number of annual installments which do not extend
beyond my life expectancy at the time the installments begin, if less.
The first installment (or single payment if I have so elected) shall be
paid as soon as practicable:
I. after the first day of the calendar quarter following the end
of the month in which I retire or otherwise terminate
employment with a Company participating in the Plan (other
than a transfer to another such Company).
II. after the first day of the calendar quarter following the end
of the month in which I attain the age indicated on LINE 3
below.
Indicate Option I or II on LINE 3 below: (Retirees may only elect Option II)
(B) in the event I should die before full payment of the amounts deferred
plus accumulated interest, the balance shall be distributed to my
beneficiary or beneficiaries in the number of annual installments
indicated on LINE 4 below of which the first installment (or single
payment if I have so elected) shall be paid as soon as practicable
after the first day of the calendar quarter following the month of
death.
LONG TERM LONG TERM DIVIDEND SHORT TERM
LINE ELECTION SHARE CASH EQUIVALENTS AWARD
1 % Deferred See % from See % from
Summary Summary __________% _________%
Request Request
2 # Payments to
Self (not to
exceed 20) __________ __________ __________ __________
3 Indicate Option
I or II __________ __________ __________ __________
If Option II,
indicate age
(not less than
55 nor greater
than 70.5
years) __________ __________ __________ __________
4 # Payments to
(not to exceed
10) __________ __________ __________ __________
The elections made herein, as they relate to amounts and/or shares otherwise
payable in any calendar year, shall become IRREVOCABLE on the last day prior to
the beginning of such calendar year. The only exception is that the number of
installments elected for your beneficiary (LINE 4) may be changed at any time.
___________________________________ ___________________________________
Print Name Social Security Number
___________________________________ ___________________________________
Signature Date
EXHIBIT C
AT&T 1997 Long Term Incentive Program
Restricted Stock Award Agreement
--------------------------------------------------------------------------------
Name of Participant Social Security Number Date of Grant
--------------------------------------------------------------------------------
Capitalized terms not otherwise defined herein shall have the same meanings as
in the Plan.
--------------------------------------------------------------------------------
Pursuant to the AT&T 1997 Long Term Incentive Program of AT&T Corp. (the
"Plan"), a copy of which has been delivered to you, and in accordance with the
terms and conditions of the Plan and your agreement to the further terms,
conditions and restrictions set forth below, you have been granted as of the
date hereof 00,000 common shares of the Company (the "Restricted Shares").
1. The Restricted Shares shall vest and become nonforfeitable in accordance
with paragraphs 2 and 3 hereof. the period beginning on the date hereof and
ending on the day prior to the date on which any Restricted Share becomes
nonforfeitable in accordance with paragraphs 2 and 3 (the "Vesting Date") is
herein referred to as the "Restriction Period" with respect to any such
Restricted Share.
2. (a) A number of the Restricted Shares shall vest and become
nonforfeitable on the following schedule:
Number of Shares Vesting Date
---------------- ------------
00,000 00-00-0000
(b) Unless the Committee shall otherwise determine, any
Restricted Shares that are not vested upon termination of employment for any
reason shall be forfeited, except as set forth in paragraph 3.
3. (a) If your employment with the Company terminates during the
Restriction Period by reason of your death, Disability (as defined in Section
1(g) of the Employment Agreement between AT&T and you dated as of October 17,
1997 (the "Employment Agreement")), a Termination without Cause (as provided in
Section 12(d) of the Employment Agreement) or a Constructive Termination without
Cause (as defined in Section 1(f) of the Employment Agreement), all Restricted
Shares shall vest upon such termination.
(b) Upon termination of your employment for any reason other than as
described in Paragraph 3(a) above, any Restricted Shares which have not then
vested shall be forfeited.
4. Certificates evidencing the Restricted Shares shall be issued by the
Company and registered in your name on the stock transfer books of the Company
promptly after the date hereof, but shall remain in the physical custody of the
Company or its designee at all times during the respective Restriction Period.
As a condition to the receipt of this Restricted Stock Award, you shall deliver
to the Company a stock power, duly endorsed in blank, relating to the Restricted
Shares.
5. You shall be the record owner of the Restricted Shares until or unless
such Shares are forfeited pursuant to paragraphs 2 and 3 hereof, and as the
record owner you shall be entitled to all rights of a common shareholder of the
Company, including, without limitation, voting rights and rights to cash and
in-kind dividends, if any, on the Restricted Shares. As soon as practicable
after termination of the respective Restriction Period, certificates for the
Restricted Shares then vesting shall be delivered to you or to your legal
representative along with the stock powers relating thereto.
6. At all times during the respective Restriction Period, the Restricted
Shares shall be nontransferable, and may not be pledged, assigned or alienated
in any way.
7. Notwithstanding any other provision of this Agreement, in the event of
a Change in Control, as defined in the Employment Agreement, the respective
Restriction Periods shall terminate and all Restricted Shares shall vest and
become 100% nonforfeitable, and such termination and vesting shall be deemed to
occur immediately prior to such Change in Control.
8. Neither the Plan nor this Restricted Share Award shall be construed as
giving you the right to be retained in the employ of the Company or any
Affiliate.
9. The Company shall have the right to deduct or cause to be deducted from
or collect or cause to be collected with respect to, any distribution hereunder
any federal, state, or local taxes required by law to be withheld or paid with
respect to such distribution, and you or your legal representative or
beneficiary shall be required to pay any such amounts. The Company shall have
the right to take such action as may be necessary, in the Company's opinion, to
satisfy such obligations.
10. You may, in accordance with procedures established by the Committee,
designate one or more beneficiaries to receive all or part of any Restricted
Shares to be distributed to you hereunder in case of your death, and you may
change or revoke such designation at any time. In the event of your death, any
Restricted Shares distributable to you hereunder that are subject to such a
designation (to the extent such designation is valid and enforceable under
applicable law) shall be distributed to such beneficiary or beneficiaries in
accordance with this Agreement. Any other Restricted Shares distributable to you
hereunder shall be distributable to your estate. If there shall be any question
as to the legal right of any beneficiary to receive a distribution hereunder,
the amount in question may be paid to your estate, in which event neither the
Company nor any Affiliate shall have any further liability to anyone with
respect to such amount.
11. Notwithstanding any provision of this Agreement to the contrary, this
Award may be canceled, and the Restricted Shares forfeited, if you, without the
Company's consent, become associated with, employed by or render services to, or
own a interest in (other than as a shareholder with a nonsubstantial interest in
such business), any business that is in competition with the Company or in
competition with any business in which the Company has a substantial interest.
The provisions of this paragraph 12 will be interpreted by the AT&T Management
Committee in accordance with the AT&T Non-Competition Guideline (the
"Guideline"), a summary of which has been given to you, and shall be effective
to the extent not prohibited by applicable law.
12. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of New York and applicable
Federal Law.
Please indicate your acceptance of the terms hereof, and acknowledge that you
have received copies of the Plan and the Guideline summary, in each case as
currently in effect, by signing at the place provided and returning the original
of this Agreement.
Accepted and Agreed: AT&T Corp.
By:
----------------------------------- -----------------------------------
EXHIBIT D
AT&T 1997 Long Term Incentive Program
Restricted Stock Unit Award Agreement
--------------------------------------------------------------------------------
Name of Participant Social Security No. Date of Grant
--------------------------------------------------------------------------------
Capitalized terms not otherwise defined herein shall have the same meanings as
in the Plan.
--------------------------------------------------------------------------------
Pursuant to the Employment Agreement, dated October 17, 1997, between AT&T Corp.
("AT&T") and yourself (the "Employment Agreement") and to the AT&T 1997 Long
Term Incentive Program (the "Plan"), a copy of which has been delivered to you,
and in accordance with the terms and conditions of the Plan and the Employment
Agreement and your agreement to the further terms, conditions and restrictions
set forth below, you have been granted as of the date hereof 224,561 restricted
stock units ("Restricted Stock Units" or "Units").
1. The Restricted Stock Units shall vest and become payable in accordance
with sections 2 and 3 hereof. The period beginning on the date hereof and ending
on the day prior to the date on which any Unit becomes vested and payable in
accordance with sections 2 and 3 (the "Vesting Date") is herein referred to as
the "Restriction Period" with respect to any such Restricted Stock Unit.
2. The Restricted Stock Units shall vest and become nonforfeitable (subject
to section 12) on October 1, 2003, provided that you are employed with AT&T on
that date, and AT&T shall distribute to you (or your legal representative) a
certificate representing 224,561 common shares of AT&T ("Shares") as soon as
practicable thereafter. In the event that, on October 1, 2003, the Fair Market
Value of such Shares is less than $10,000,000, you shall be entitled to a cash
payment equal to the shortfall.
3. (a) In the event that, on or before April 1, 2002, a Change in
Control occurs that is followed within three years thereafter by a "Second
Trigger Event" (as defined below), then you shall be entitled (subject to
section 12 and in lieu of any other benefit under this grant) to a cash payment
as follows:
(i) If such Second Trigger Event occurs on or after April 1,
1998 but before April 1, 1999, a cash payment equal to the greater of (a) the
Fair Market Value, on the date of such Second Trigger Event, of 25% of the
224,561 Shares that underlie this grant and (b) $2,500,000.
(ii) If such Second Trigger Event occurs on or after April 1,
1999 but before April 1, 2000, a cash payment equal to the greater of (a) the
Fair Market Value, on the date of such Second Trigger Event, of 50% of the
224,561 Shares that underlie this grant and (b) $5,000,000.
(iii) If such Second Trigger Event occurs on or after April 1,
2000 but before April 1, 2001, a cash payment equal to the greater of (a) the
Fair Market Value, on the date of such Second Trigger Event, of 75% of the
224,561 Shares that underlie this grant and (b) $7,500,000.
(iv) If such Second Trigger Event occurs on or after April 1,
2001, but before April 1, 2002, a cash payment equal to the greater of (a) the
Fair Market Value, on the date of such Second Trigger Event, of 100% of the
224,561 Shares that underlie this grant and (b) $10,000,000.
(b) In the event that you die while employed by the Company, unless a
Second Trigger Event under section 3(a) has occurred, your beneficiaries or
estate shall be entitled (subject to section 12 and in lieu of any other benefit
under this grant) to a cash payment as follows:
(i) If such death occurs before October 1, 1998, a cash
payment equal to the greater of (a) the Fair Market Value, on the date of your
death, of 20% of the 224,561 Shares that underlie this grant and (b) $2,000,000.
(ii) If such death occurs on or after October 1, 1998 but
before October 1, 1999, a cash payment equal to the greater of (a) the Fair
Market Value, on the date of your death, of 40% of the 224,561 Shares that
underlie this grant and (b) $4,000,000.
(iii) If such death occurs on or after October 1, 1999 but
before October 1, 2000, a cash payment equal to the greater of (a) the Fair
Market Value, on the date of your death, of 60% of the 224,561 Shares that
underlie this grant and (b) $6,000,000.
(iv) If such death occurs on or after October 1, 2000 but
before October 1, 2001, a cash payment equal to the greater of (a) the Fair
Market Value, on the date of your death, of 80% of the 224,561 Shares that
underlie this grant and (b) $8,000,000.
(v) If such death occurs on or after October 1, 2001 but
before October 1, 2003, a cash payment equal to the greater of (a) the Fair
Market Value, on the date of your death, of 100% of the 224,561 Shares that
underlie this grant and (b) $10,000,000.
(c) For purposes of this section 3, "Second Trigger Event" shall mean
any termination of your employment with AT&T without "Cause" (other than due to
"Disability" or death), and any "Constructive Termination Without Cause," with
the quoted terms having the meaning ascribed to them in the Employment
Agreement. For purposes of this Award, termination of your employment with AT&T
due to Disability shall be treated the same as for death under section 3(b) and
any other provision of this Award.
(d) Notwithstanding anything to the contrary in the Employment
Agreement or the Plan, the Restricted Stock Units that are the subject of this
grant shall vest and become nonforfeitable in connection with a Change in
Control only to the extent provided in section 3(a).
(e) If you retire on or after attaining age 62 at the request of
AT&T, or voluntarily at any time with the consent of AT&T, you shall be treated
as employed by AT&T on October 1, 2003, for purposes of section 2.
(f) Upon termination of your employment for any reason other than as
described above in this section 3 (including, without limitation, termination as
a result of your employer ceasing to be either AT&T or an Affiliate), any
Restricted Stock Units that are not vested shall be forfeited, unless the
Committee shall otherwise determine in its sole discretion.
4. A cash payment in an amount equal to the dividend payable on one Share
will be made to you for each Restricted Stock Unit held by you on the record
date for such dividend that has not been forfeited, canceled or converted to a
Share and distributed.
5. You may elect, in accordance with policies adopted by the Committee,
to receive any payment to which you are entitled under this Agreement in the
form of Shares rather than cash, such Shares to have a Fair Market Value on the
date of distribution equivalent to the cash payment forgone.
6. You may irrevocably elect, in accordance with policies adopted by
the Committee, to defer the distribution of all or any portion of any cash
payment or Shares that you otherwise would have become entitled to receive
pursuant to the terms of this Agreement.
7. At all times during the Restriction Period and any elected deferral
period, the Units awarded hereunder shall be nontransferable, and may not be
pledged, assigned or alienated in any way.
8. Transfer to or from AT&T and any Affiliate shall not be considered
a termination of employment for purposes of this Agreement. Nor shall it be
considered a termination of employment for purposes of this Agreement if you are
placed on a military leave or other approved leave of absence, unless the
Committee shall otherwise determine.
9. Neither the Plan nor this Restricted Stock Unit Award shall be construed
as giving you the right to be retained in the employ of AT&T or any Affiliate.
10. AT&T shall have the right to deduct, to cause to be deducted from, or to
collect with respect to, any distribution hereunder any federal, state, or local
taxes required by law to be withheld or paid with respect to such distribution,
and as may be necessary, in AT&T's opinion, to satisfy such obligations.
11. You may, in accordance with procedures established by the Committee,
designate one or more beneficiaries to receive all or part of any distribution
to be made hereunder in case of your death, and you may change or revoke such
designation at any time. In the event of your death, any distribution hereunder
that is subject to such a designation (to the extent such designation is valid
and enforceable under applicable law) shall be made to such beneficiary or
beneficiaries in accordance with this Agreement. Any other distribution
hereunder shall be made to your estate. If there shall be any question as to the
legal right of any beneficiary to receive a distribution hereunder, the amount
in question may be paid to your estate, in which event neither AT&T nor any
Affiliate shall have any further liability to anyone with respect to such
amount.
12. (a) You recognize and acknowledge that you have had access to highly
confidential and proprietary Company information and trade secrets; that the
use, misappropriation or disclosure of such confidential information would
constitute a breach of trust and could cause irreparable injury to AT&T; and
that it is essential to the protection of AT&T's good will and to the
maintenance of AT&T's competitive position that such confidential information be
kept secret and that you not disclose such confidential information to others or
use such confidential information to your own advantage or the advantage of
others. You further recognize and acknowledge that it is essential for the
proper protection of the business of AT&T that you be restrained (i) from
soliciting or inducing any employee of AT&T to leave the employ of AT&T, (ii)
from hiring or attempting to hire any employee of AT&T, (iii) from soliciting
the trade of or trading with the customers and suppliers of AT&T for any
business purpose, and (iv) from competing against AT&T following the termination
of your employment with AT&T. You therefore agree that this grant will be
forfeited and canceled immediately in its entirety (and that any benefit already
paid out within 18 months prior to AT&T's notice of violation shall, at the
discretion of AT&T, be repaid by you to AT&T within 10 business days of AT&T's
written request) if you, during your employment or thereafter, engage in
activity, which, in the sole discretion of AT&T, is deemed to be in conflict
with or adverse to the interests of AT&T. Such adverse activity by you shall
include, but is not limited to, the following: (i) becoming associated with,
becoming employed by, rendering services to, or owning an interest in (other
than as a shareholder with a nonsubstantial interest in such business) any
business or enterprise that is engaged in competition with AT&T; (ii)
recruiting, soliciting or inducing, any employee or employees of AT&T or of any
affiliate of AT&T to terminate their employment with, or otherwise cease their
relationship with, AT&T or any affiliate of AT&T; (iii) soliciting, diverting or
taking away, or attempting to divert or to take away, the business or patronage
of any of the clients, customers or accounts, or prospective clients, customers
or accounts, which were contacted, solicited or served by those segments of AT&T
that fell within, or related to, the scope of your responsibilities in Company
positions you held during your employment with AT&T; (iv) using or disclosing
the confidential information of AT&T; (v) initiating litigation against AT&T;
(vi) criticizing, denigrating or otherwise speaking adversely against AT&T; and
(vii) violating AT&T's Code of Conduct.
(b) If any restriction set forth in this section 12 is found by any
arbitrator or court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic areas as to which it
may be enforceable.
(c) The restrictions contained in this section 12 are necessary for
the protection of the business and goodwill of AT&T and are considered by you to
be reasonable for such purpose. Further, the restrictions set forth in this
section 12 are of the essence of this grant, and shall be construed as
independent of any other provision in this grant; and the existence of any claim
or cause of action by you against AT&T, whether predicated on this grant or not,
shall not constitute a defense to the enforcement by AT&T of these restrictions.
(d) The terms and provisions in this section 12 shall be administered
in accordance with the AT&T Non-Competition Guideline (the "Guideline").
13. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of New York and applicable
Federal law.
--------------------------------------------------------------------------------
Please indicate your acceptance of the terms in sections 1-13, and in particular
the restrictions contained in section 12, hereof, and acknowledge that you have
received copies of the Plan and the Guideline summary, in each case as currently
in effect, by signing at the place provided and returning the original of this
Agreement.
ACCEPTED AND AGREED:
--------------------------------------------------------------------------------
SIGNATURE BY (AT&T Corp.)
--------------------------------------------------------------------------------
EXHIBIT E
AT&T 1997 LONG TERM INCENTIVE PROGRAM
NONSTATUTORY STOCK OPTION
--------------------------------------------------------------------------------
Name of Optionee Social Security No. Date of Grant
--------------------------------------------------------------------------------
Capitalized terms not otherwise defined herein shall have the same meanings as
in the Plan.
--------------------------------------------------------------------------------
Pursuant to the AT&T 1997 LONG TERM INCENTIVE PROGRAM (the "Plan") of AT&T Corp.
("AT&T"), a copy of which has been delivered to you, you have been granted as of
the date hereof an option (the "Option") to purchase from AT&T 750,000 common
shares of AT&T ("Shares") at the price of $44.53125 per Share, subject to the
terms and conditions of the Plan and to your agreement to the additional terms
and conditions set forth herein.
1. (a) Your right to exercise this Option shall expire ten (10) years
from the date hereof, unless sooner terminated upon certain terminations of your
employment as provided in (b) or (c) below or canceled as provided in (e) or
section 2 below.
(b) Upon your termination of employment by reason of death,
Disability (as defined in section 1(g) of the Employment Agreement between you
and AT&T dated as of October 17, 1997, (the "Employment Agreement")),
Termination without Cause (as defined in section 12(d) of the Employment
Agreement, a Constructive Termination without Cause (as defined in section 1(f)
of the Employment Agreement) or on or after your retirement after reaching age
65, then you or your legal representative shall have the right to exercise any
portion of this Option that is then outstanding, and any unvested portion of
this Option shall immediately become exercisable, and remain exercisable, until
the earlier of five years after the date of such termination of employment or
the expiration of this Option.
(c) Upon your termination of employment for any reason other than as
described in (b) above (including your employer ceasing to be either an
Affiliate or AT&T), any portion of this Option then outstanding which is
unexercisable shall be cancelled and any portion which is then exercisable shall
remain exercisable until the earlier of the ninetieth day after the date of
termination or the originally scheduled expiration date of this Option unless
the Committee determines otherwise.
2. (a) You recognize and acknowledge that you have had access to
highly confidential and proprietary Company information and trade secrets and
the use, misappropriation or disclosure of the confidential information would
constitute a breach of trust and could cause irreparable injury to AT&T; and it
is essential to the protection of AT&T's good will and to the maintenance of
AT&T's competitive position that the confidential information be kept secret and
that you not disclose the confidential information to others or use the
confidential information to your own advantage or the advantage of others. You
further recognize and acknowledge that it is essential for the proper protection
of the business of AT&T that you be restrained (i) from soliciting or inducing
any employee of AT&T to leave the employ of AT&T, (ii) from hiring or attempting
to hire any employee of AT&T, (iii) from soliciting the trade of or trading with
the customers and suppliers of AT&T for any business purpose, and (iv) from
competing against AT&T following the termination of your employment with AT&T
and therefore you agree that this Option will be forfeited and canceled
immediately in its entirety (and any benefit already paid out within 18 months
prior to AT&T's notice of violation shall, at the discretion of AT&T be required
to be repaid to AT&T by you within 10 business days of AT&T's request in
writing) if you, during your employment or thereafter, engage in activity,
which, in the sole discretion of AT&T, is deemed to be in conflict with or
adverse to the interests of AT&T. Such adverse activity by you shall include,
but is not limited to, or own an interest in (other than as a shareholder with a
nonsubstantial interest in such business) any business or enterprise that is
engaged in competition with AT&T; or (ii) recruit, solicit or induce, or attempt
to induce, any employee or employees of AT&T or any affiliate of AT&T to
terminate their employment with, or otherwise cease their relationship with,
AT&T or any affiliate of AT&T; or (iii) solicit, divert or take away, or attempt
to divert or to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, which were
contacted, solicited or served by those segments of AT&T that fall within or
relate to your scope of responsibilities in Company positions you held during
your employment with AT&T; or (iv) use or disclose the confidential information;
or (v) initiate litigation against AT&T; or (vi) criticize, denigrate or
otherwise speak adversely against AT&T; or (vii) violate AT&T's Code of Conduct.
(b) If any restriction set forth in this section 2 is found by any
arbitrator or court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic areas as to which it
may be enforceable.
(c) The restrictions contained in this section 2 are necessary for
the protection of the business and goodwill of AT&T and are considered by you to
be reasonable for such purpose. Further, the restrictions set forth in this
section 2 are of the essence of this Option, they shall be construed as
independent of any other provision in this Option; and the existence of any
claim or cause of action by you against AT&T, whether predicated on this Option
or not, shall not constitute a defense to the enforcement by AT&T of these
restrictions.
(d) The terms and provisions in this section 2 shall be administered
in accordance with the AT&T Non-Competition Guideline (the "Guideline").
3. Except as provided in section 1 hereof, this Option may be exercised at
any time prior to its expiration or cancellation as follows: one-third of the
Shares may be purchased under the Option on the third anniversary of the date of
grant; one-third of such Shares on or after the fourth anniversary of the date
of grant; and the remaining one-third of such Shares on after the fifth
anniversary of the date of grant.
4. This Option shall be exercised by delivering to AT&T written notice on a
form to be provided for this purpose. The notice shall specify the number of
Shares as to which the Option is being exercised (which number shall be at least
fifty or the number of Shares that may then be exercised under this Option,
whichever is less). The Option or any portion thereof may be exercised only upon
payment of the exercise price thereof in full, and in accordance with procedures
established by AT&T Board of Directors or the Committee. Payment shall be made
in cash or in AT&T common shares or a combination of cash and AT&T common shares
such that the total of the cash plus the Fair Market Value, as determined in
accordance with procedures established by the Committee, of the AT&T common
shares on the date of exercise at least equals the aggregate exercise price of
the Shares as to which the Option is being exercised; provided, however, that
any AT&T common shares surrendered as payment must have been owned by you at
least six months prior to the date of exercise. Exercise of the Option shall
take effect on the date the notice of exercise, in good order, is actually
received at the address specified thereon, such date to be acknowledged to you
in writing.
5. Within a reasonable period after the Option is exercised, AT&T will
deliver to you or your legal representative a statement reflecting ownership of
Shares in the form of book entry or certificates for the number of Shares with
respect to which you exercised the Option. Neither you nor your legal
representative shall be, or have any of the rights and privileges of, a
shareowner of AT&T in respect of any shares purchasable upon the exercise of
this Option, in whole or in part, unless and until certificates for such Shares
shall have been issued.
6. (a) This Option is not transferable by you otherwise than by will or
the laws of descent and distribution, and during your lifetime the Option may be
exercised only by you or your guardian or legal representative if permitted by
Section 422 and related sections of the Internal Revenue Code and any
regulations promulgated thereunder.
(b) You may, in accordance with procedures established by the
Committee, designate one or more beneficiaries to receive all or part of the
Option in case of your death, and you may change or revoke such designation at
any time. In the event of your death, any portion of this Option that is subject
to such a designation (to the extent such designation is valid and enforceable
under applicable law) shall be distributed to such beneficiary or beneficiaries
in accordance with this Agreement. Any other portion of this Option shall be
distributable to your estate. If there shall be any question as to the legal
right of any beneficiary to receive a distribution hereunder, the Shares in
question may be purchased by and distributed to your estate, in which event
neither AT&T nor any Affiliate shall have any further liability to anyone with
respect to such Shares.
7. Notwithstanding any other provision of this Agreement, in the event of
Change in Control, as defined in the Employment Agreement, any unvested portion
of the Option shall immediately become exercisable.
8. Neither the Plan nor this Agreement shall be construed as giving you the
right to be retained in the employ of AT&T nor any Affiliate.
9. If the Company shall determine, on advise of counsel, that the listing,
registration or qualification of the Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
or regulatory agency or authority, is necessary or desirable as a condition of,
or in connection with , the exercise of the Option, no portion of the Option may
be exercised until or unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.
10. Any determinations or decisions made or actions taken arising out of or
in connection with the interpretation and administration of this Agreement and
the Plan by the AT&T Board of Directors of the Committee shall be final and
conclusive.
11. This Agreement may be amended by the AT&T Board of Directors or the
Committee provided that no such amendment shall impair your rights hereunder
without your consent.
12. AT&T may withhold or require you to pay any applicable withholding or
other employment taxes due upon the exercise of this Option. You may elect to
satisfy such withholding tax obligations by requesting that AT&T withhold Shares
with a value equal to such tax obligations from the Shares otherwise deliverable
upon the exercise of this Option.
13. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of New York and applicable
Federal Law.
--------------------------------------------------------------------------------
Please indicate your acceptance of terms 1-13, and in particular the
restrictions contained in section 2, hereof, and acknowledge that you have
received copies of the Plan and the Guideline summary, in each case as currently
in effect, by signing at the place provided and returning the original of this
Agreement.
ACCEPTED AND AGREED:
--------------------------------------------------------------------------------
SIGNATURE BY (AT&T Corp.)
--------------------------------------------------------------------------------
EXHIBIT F
AT&T NON-COMPETITION GUIDELINE
As approved effective
August 1, 1986
AT&T NON-COMPETITION GUIDELINE
TABLE OF CONTENTS
SECTION 1. STATEMENT OF PURPOSE 1
SECTION 2. DEFINITIONS 1
SECTION 3. MANAGEMENT COMMITTEE 3
1. Membership 3
2. Responsibility and Authority 4
3. Conflict of Interest 5
SECTION 4. COMPETITIVE ACTIVITY 5
1. Limitation 5
2. Definition 6
SECTION 5. EVALUATION AND DETERMINATION OF COMPETITIVE ACTIVITY 7
1. Request for a Determination 7
2. Company's Right to Initiate an Evaluation 8
3. Evaluation 9
4. Conflict of Interest 10
5. Determination 10
6. Notice of Forfeiture 11
7. Opportunity to Withdraw 12
8. Reevaluation and Determination 13
9. Subsequent Competitive Activity 13
10. Consent to Compete 15
SECTION 6. GENERAL PROVISIONS 16
1. Guideline Modifications 16
2. Severability 16
3. No Intent to Prejudice Employees' Rights 16
SECTION 1. STATEMENT OF PURPOSE
The purpose of this AT&T Non-Competition Guideline is to set
uniform standards and establish administrative responsibilities and procedures
for evaluating activity in possible violation of the non-competition clauses
contained in various AT&T incentive and benefit plans.
SECTION 2. DEFINITIONS
1. The word "Guideline" shall mean this AT&T Non-Competition
Guideline.
2. The words "AT&T" or "Company" shall mean collectively the American
Telephone and Telegraph Company, a New York corporation, all of its
subsidiaries, related entities, lines of business and corporate successors and
all business enterprises, including joint ventures, in which it is a partner or
has a substantial ownership interest.
3. The term "Board of Directors" or "Board" shall mean the Board of
Directors of the American Telephone and Telegraph Company.
4. The word "Committee" shall mean the AT&T Management Committee
established and authorized by the Board to interpret and implement the standards
and procedures of the Guideline.
5. The word "Plans" shall mean the AT&T Senior Management Long Term
Incentive Plan, AT&T Senior Management Short Term Incentive Plan, AT&T 1984
Stock Option Plan, AT&T Non-Qualified Pension Plan, AT&T Senior Management Life
Insurance Program, AT&T Senior Management Long Term Disability and Survivor
Protection Plan, the AT&T Mid-Career Pension Plan, and any such other plans that
my from time to time contain non-competition clauses or that the Board shall
deem appropriate to make subject to the standards of this Guideline.
6. The word "benefit" shall mean any payment or entitlement to payment
conferred pursuant to the terms of any or all of the Plans, regardless of how,
when or in what form it is made or intended to be made.
7. The term "affected employee" shall mean an individual who, as a
former or present employee, has received, is receiving or would be eligible to
receive benefits under any of the Plans by virtue of his currently holding or,
if a former employee, by virtue of his having held at the time of his
termination of employment with the Company (i) a level higher than Division
Level or equivalent fourth level or (ii) a position that the Board of Directors
designates to be within the Senior Management Group.
8. The term "Senior Officer" shall mean an employee who has attained a
level higher than Corporate Vice President or equivalent.
9. The phrase "non-competition clauses" shall mean those provisions,
paragraphs, divisions or portions of the Plans which state in words or substance
that an affected employee will forfeit and relinquish all entitlement to
benefits if he engages in activity deemed to be in competition with the Company.
10. The use in this Guideline of personal pronouns of the masculine
gender is intended to include both the masculine and feminine genders.
11. The use in this Guideline of singular or plural nouns is intended
to have individual or collective meaning as applicable to the context as used
therein and is in no way to be construed narrowly or such as to limit the scope
of this Guideline or any of its provisions.
SECTION 3. MANAGEMENT COMMITTEE
1. Membership. The Management Committee shall consist of the Senior
Vice President-Personnel (or the corporate successor to that officer's
responsibilities) and up to four other, but at no time less than two other,
Senior Officers of the Company, such other Senior Officers to serve on a
rotating basis terms of not less than one year. The Senior Vice
President-Personnel shall serve as Chairman and Secretary of the Committee and
shall have full authority to select and designate other Senior Officers to serve
on the Committee, including the authority to select and designate Senior
Officers to serve on an interim basis when regular Committee members are
unavailable or are recused as described in Paragraph 3 of this Section 3.
2. Responsibility and Authority. Responsibility for interpreting and
implementing the standards and provisions of this Guideline is vested solely and
exclusively in the Committee, which is empowered to perform or to delegate,
through and by its Chairman acting on its behalf, performance of all function
necessary to fulfill its responsibilities in connection with the forfeiture of
benefits, such functions explicitly to include, but which are not limited to,
the following: seeking the advice and counsel and directing the participation of
the heads of the Company's lines of business and any such other individuals as
it deems necessary, at whatever intervals and for whatever function it deems
appropriate ; making final determination that certain activity is or is not
competitive activity and that the benefits of the affected employee who engages
in such activity are or are not forfeited by such activity, respectively;
directing or delegating the directing of whatever such Payroll, Benefit and
other organizations of the Company as are affected to suspend or terminate
payment of benefits or to refrain from initiating payments of benefits under any
or all of the Plans to an affected employee who is found to be engaging in
competitive activity or whose activity, in the case of the suspension of
payment, is under evaluation; taking or delegating the taking of such legal
steps as are necessary to recover benefits paid to an affected employee since
the date on which he commenced engaging in activity deemed to be competitive
activity; making such minor changes to this Guideline as may be required by law,
by administrative efficiency or by changes in the Company structure; and acting
on the Company's behalf and in its best interests in all matters relating to the
issues covered by this Guideline.
3. Conflict of Interest. When a Senior Officer serving on the
Committee is unable, for personal or professional reasons, to make a fair and
objective determination of an affected employee's activity, then he shall recuse
himself and shall not participate in the discussions concerning or in the final
determination of appropriate action, in which case the Chairman of the Committee
shall nominate and appoint another Senior Officer to substitute for the Senior
Officer who has been recused, which substitute shall serve as a full member of
the Committee and shall have all authority and responsibility thereto until full
resolution off the matter has been accomplished.
SECTION 4. COMPETITIVE ACTIVITY
1. Limitation. Notwithstanding the definitions and procedures
contained in this Guideline, in all questions relating to whether certain
activity of any affected employee or any business or any product or service of
any business is or would be competitive with AT&T or whether such affected
employee's activity is grounds for the Company's invoking any non-competition
clause in any of the Plans and for terminating or preventing payment of benefits
or recovering benefits already paid to such affected employee, the Committee, in
its discretion and judgment, has sole authority to interpret the spirit and
intent of the Guideline and of the non-competition clauses, and each and every
decision of the Committee shall, with respect to all questions and matters
relative to the subjects of forfeiture and competition, be final.
2. Definition. For purposes of the non-competition clauses as
contained in the Company's Plans and subject to the limitation contained in
Paragraph 1 of this Section 4, an affected employee's activity is competitive
activity and any or all of his benefits under the Plans are subject to
forfeiture to the fullest extent allowable by law if such affected employee
either (A), as more fully described below, establishes a relationship with a
competitor of the Company or (B) engages in activity which, in the Committee's
discretion or judgment, is in conflict with or adverse to the interests of the
Company.
a. As used above in Paragraph 2 of this Section 4, the phrase
"establishes a relationship with" shall mean, but shall not be limited to,
founding, organizing, establishing, becoming associated with, becoming employed
by, rendering services to, consulting or acting as consultant to, serving as
director for, being a partner in or owning a substantial interest in, as
shareholder or otherwise, such an interest to include, but not be limited to,
for example, an interest subject to the reporting requirements of Section 13(d)
of the Securities Exchange Act of 1934.
b. As used above in Paragraph 2 of this Section 4, a "competitor
of the Company" is a business, entity or enterprise which either (A) designs,
develops, manufactures, produces, offers for sale or sells a product or service
which can be used as a substitute for, performs substantially the same function
as, is a practical alternative for or is generally intended to satisfy the same
customer or client needs for any product or service designed, developed,
manufactured, produced, offered for sale or sold by the Company, or (B) is a
business or activity which the Committee, based upon review of the individual
facts and circumstances and in its discretion and judgment, determines, in order
to protect the best interests of the Company, to be a competitor within the
spirit and intent of the Guideline and the non-competition clauses.
SECTION 5. EVALUATION AND DETERMINATION OF COMPETITIVE ACTIVITY
1. Request for a Determination. An affected employee who is
considering engaging in an activity which an individual would reasonably believe
to be competitive activity as that term is used and defined in this Guideline
and which thus may be grounds for the Company's invoking the non-competition
clauses of the Plans should request, prior to engaging in such activity, that it
be evaluated as described in this Section 5 of the Guideline and that a
determination be made and an opinion rendered as to whether such activity is
deemed to violate such non-competition clauses. Such affected employee's request
may be made to the Director, Executive Personnel Matters, who, as the
Committee's delegate in correspondence and administrative functions, will
coordinate evaluation of the activity. To insure that the valuation and
determination are based on all relevant facts and circumstances and thus are
consistent with the spirit and intent of this Guideline, such affected employee
should accompany his request with a full explanation in writing of whatever
information he deems pertinent as well as of a description of the contemplated
activity, such explanation to include, but not to be limited to, (A) his
contemplated relationship, including, as applicable, his proposed position,
title, responsibilities and the nature and extent of his ownership interest, (B)
the nature of the business, including, for example, all products and/or services
currently being or expected to be designed, developed, manufacturing, produced,
offered for sale and sold by the business and (C) the most recently available
financial information on the business.
2. Company's Right to Initiate an Evaluation. The Company reserves
the right to initiate an evaluation of any activity of an affected employee
which may be competitive activity as that phrase is used and defined in this
Guideline. Upon receipt of a request from or on behalf of the head of any of the
Company's lines of business, from the Board, from the Committee or from any
Senior Officer, the Director, Executive Personnel Matters, shall notify the
affected employee in writing that such an evaluation has been initiated and that
he has the opportunity to submit in writing for consideration by the Committee
whatever information he deems pertinent to its determination, including, but not
limited to, a full explanation of the activity as described above in Divisions
(A) through (C), inclusive, of Paragraph 1 of this Section 5.
3. Evaluation. Whether an affected employee's contemplated or
actual activity is or is not competitive activity within the scope and intent of
the non-competition clauses shall be separately evaluated by the head and by an
attorney serving as counsel to the head of each of the Company's lines of
business responsible for the design, development, manufacture, production, offer
for sale or sale of the product or service with which such activity is suspected
to be in competition, by the head of each entity responsible for paying benefits
under any of the affected Plans or his delegate, by a Corporate Vice
President-Law of the Company and, in addition, by such other individuals as the
Committee may designate as appropriate. Such evaluations are to be based upon
information submitted by the affected employee (including his position and
responsibilities), the financial state of the line of business, the competitive
marketplace, the extent to which the activity is adverse to the Company, the
impact on the affected employee's line of business and any other facts and
circumstances deemed relevant under the standards of this Guideline. After such
evaluations, each head and his counsel of each such line of business, each head
of each such entity or his delegate, the Corporate Vice President-Law and each
of any such other specially-designated individuals as described above shall
provide to the Committee in writing his independent recommendation as to its
determination, which recommendation shall identify, if applicable, any fact or
circumstance not readily apparent from the affected employee's submittal or not
generally known but upon which fact or circumstance the recommendation was
based.
4. Conflict of Interest. When an individual who, under the standards
of this Guideline, is to evaluate an affected employee's activity but is unable,
for personal or professional reasons, to make in that instance a fair and
objective evaluation, then he shall recuse himself and shall not evaluate the
activity nor make a recommendation to the Committee nor participate in any way
in the resolution of the matter; provided, however, that at the express
direction of the Chairman he can participate, in which case, the conflict of
interest shall be duly noted and taken into consideration when weighing his
involvement. An individual who recuses himself from evaluating activity shall
designate the individual in his line of business, entity or another Corporate
Vice President-Law, as appropriate, who shall evaluate the activity and make a
recommendation as his delegate.
5. Determination. Final determination of whether an affected
employee's activity is or is not competitive activity and thus whether his
benefits are or are not, respectively, subject to forfeiture shall be made by
the Committee and the Committee alone, and such final determination shall be
based on the recommendations as described above in Paragraphs 3 and 4 of this
Section 5 as well as on such other facts and circumstances as the Committee
deems pertinent. No single recommendation nor any or all of the recommendations
in the aggregate shall be binding or conclusive on the Committee in making its
determination. After the Committee's determination, the Director, Executive
Personnel Matters, shall notify the affected employee in writing of the decision
of the Committee. If the Committee's determination is that an affected
employee's activity is not or would not be competitive activity, the Committee
reserves the right to seek, at whatever intervals it deems appropriate, written
assurance from the affected employee that the facts and circumstances upon which
the activity was evaluated and the determination based have not changed.
6. Notice of Forfeiture. If, after activity has been evaluated and
recommendations submitted as described above in Paragraph 3 of this Section 5,
the Committee determines that contemplated activity would be competitive
activity, the Director, Executive Personnel Matters, will notify the affected
employee in writing of the Committee's determination and advise such affected
employee that his benefits are at risk of forfeiture. An affected employee who
receives such notice and advice shall, within thirty business days of the date
of such notice and advice, provide the Company with written assurance that he
has not engaged and will not engage in such contemplated activity. If, after the
expiration of the thirty business day period, the Director, Executive Personnel
Matters, has not received such assurance, he shall so advise the Committee and
shall notify the appropriate Payroll and Benefit organizations to terminate
immediately or not to initiate payments of benefits to the affected employee. If
the Committee's determination is that an affected employee is currently engaging
in competitive activity, the Director, Executive Personnel Matters, upon receipt
of notice of such determination from the Chairman of the Committee shall so
advise the affected employee, shall also if so authorized by the Chairman direct
the appropriate Payroll, Benefit and other affected organizations of the Company
to terminate immediately payments of benefits to the affected employee and, in
addition, may at the Committee's express direction take such legal steps as are
necessary to recover from the affected employee all benefits paid by the Company
or on its behalf since the date when such competitive activity is deemed to have
commenced.
7. Opportunity to Withdraw. If, after activity has been evaluated and
recommendations submitted as described above in Paragraphs 3 and 4 of this
Section 5, the Committee determines that there are unusual or special
circumstances which mitigate against withdrawal of benefits from or denial of
benefits to an affected employee who is and has been engaging in activity which
is competitive activity within the spirit and intent of the non-competition
clauses, the Committee may, in its discretion and judgment, withhold termination
of benefits and offer the affected employee in writing the opportunity to
withdraw from the competitive activity; provided, however, that any affected
employee who is the recipient of and accepts such an offer shall provide the
Committee, within a reasonable time of the date of such offer as prescribed by
the Committee, written assurance that such withdrawal has been accomplished, or
such offer shall lapse and a final determination and termination of benefits be
ordered.
8. Reevaluation and Determination. Notwithstanding prior evaluations
and regardless of a previous determination by the Committee as described in this
Guideline, the Company reserves the right, without prior notice to the affected
employee, to institute a reevaluation of his activity if, in the Committee's
discretion and judgment, it believes that under the facts and circumstances such
reevaluation is warranted. In case of such reevaluation, the affected employee
shall be notified by the Director, Executive Personnel Matters, that such
reevaluation has been instituted and shall have the opportunity to submit in
writing for consideration by the Committee a full explanation of whatever
information he deems pertinent to the Committee's redetermination, such
explanation to include, but not to be limited to, a full explanation of the
activity as described above in Divisions (A) through (C), inclusive, of
Paragraph 1 of this Section 5. After such reevaluation, there shall be a
determination substantively and procedurally consistent with that described
above in Paragraph 5 of this Section 5.
9. Subsequent Competitive Activity. If an affected employee commences
engaging in activity which is not at the time of commencement considered
competitive activity as that phrase is used and defined in this Guideline but
within a reasonable period of time thereafter )such period, under ordinary
circumstances and unless the Committee determines otherwise, to be three years)
the activity becomes competitive activity as that phrase is used and defined in
this Guideline, then the affected employee so engaging in such competitive
activity should advise the Director, Executive Personnel Matters. Upon receipt
of such advice, the Director, Executive Personnel Matters, shall then offer such
affected employee the opportunity to withdraw without forfeiture of benefits
under the term of and consistent with the provisions of such an opportunity as
described in Paragraph 7 of this Section 5. If an affected employee engages in
subsequent competitive activity in a situation such as that described in the
first sentence of this Paragraph 9 of this Section 5 but such affected employee
fails to come forward and so advise the Company, then, notwithstanding anything
herein to the contrary, after evaluation or reevaluation and determination as
described above in Paragraphs 2, 3, 5 and 8 of this Section 5, benefits to such
affected employee shall be immediately terminated and the Company may take such
steps as are necessary to recover any benefits paid since the date on which such
activity became competitive. If an affected employee commences engaging in
activity which is not at the time of commencement competitive with AT&T as that
phrase is used and defined in this Guideline but, subsequent thereto, AT&T
designs, develops, manufactures, produces, offers for sale or sells a product or
service such as to render the activity competitive, no question of forfeiture
arises; provided, however, that, if the affected employee, knew or had reason to
know at the time he commenced the activity that AT&T intended to design,
develop, manufacture, produce, offer for sale or sell such product or service,
then the Company may invoke the non-competition clauses.
10. Consent to Compete. In extraordinary circumstances and
notwithstanding that an affected employee's competitive activity would, under
the provisions of the Guideline, be grounds for invoking the non-competition
clauses and terminating payment of benefits to such affected employee, the
Committee may consent to an affected employee's engaging in such activity if, in
its discretion and judgment, the Committee determines that, despite such
activity's technical isolation, the facts are overwhelmingly compelling or it is
otherwise in the Company's best interest that relief from application of the
non-competition clauses is warranted. In such a case the Director, Executive
Personnel Matters, shall notify the affected employee of such consent; provided,
however, that, despite such consent, the Company reserve the right to withdraw
such consent and to invoke the non-competition clauses within a reasonable
period of time thereafter (such period, under ordinary circumstances and unless
the Committee determines otherwise, to be three years) and without prior notice
if and when, in the Committee's discretion and judgment, the facts and
circumstances warrant it.
SECTION 6. GENERAL PROVISIONS
1. Guideline Modifications. The Committee, in its discretion and
judgment and without notice, may from time to time make such minor changes in
the Guideline as it deems required by law, by administrative efficiency or by
change in the Company structure.
2. Severability. To the extent that one or more of the provisions of
this Guideline may be found to be unenforceable in any federal or state
jurisdiction, such provisions are intended and are declared to be severable from
the whole, and such a judgment shall not jeopardize the enforceability of the
balance of the Guideline.
3. No Intent to Prejudice Employees' Rights. No act of the Company,
the Board, the Committee or any Senior Officer or employee of the Company acting
in connection with the design, approval, interpretation or implementation of
this Guideline or any of its standards, provisions or procedures is in any way
intended to interfere with or prejudice any individual's right to consider,
accept, continue or terminate employment, to engage in any activity or to
establish any kind of business relationship or ownership interest with any
enterprise.
EXHIBIT G
AGREEMENT AND RELEASE
This AGREEMENT is made this _____ day of September 1997 by and between
AT&T Corp., (hereinafter "Company" or "AT&T") and ________________ (hereinafter
"Employee").
WHEREAS, Employee has been employed by AT&T since _____________; and
WHEREAS, Employee and the Company have decided to settle fully and
finally all obligations related to Employee's employment and resignation from
the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
1. Employee will resign his active employment with the Company on or
before ____________________, this date or such later resignation date under
Paragraph 8, hereinafter "Resignation Date".
2. Should Employee die after executing this Agreement but before the
intended Resignation Date, this Agreement shall be null and void in its
entirety.
3. As special consideration for this Agreement, the Company will pay
the Employee a Severance Benefit in the amount of ________________________
(______________). Such Severance Benefit will be paid to the Employee in _______
monthly installments beginning the month after the month which includes
Employee's Resignation Date and will be less legally required deductions for
applicable taxes.
4. Except as provided in Paragraphs 3 and 4 of this Agreement,
Employee hereby waives any and all claims to salary, incentives, payments, or
benefits of any kind, including, but not limited to, any entitlements Employee
may have under his Employment Agreement with the Company signed and dated by
Employee on ________________ and any amendments thereto, other than:
a. Employee and/or his survivors, will receive payout of
previously deferred incentive plan awards made under the AT&T
Senior Management Incentive Award Deferral Plan in accordance
with Employee's elected payout schedules and with the terms
and conditions of such plan, and
b. Those payments and other benefits shown in Appendix A.
5. Except as required by law or valid legal process, Employee shall
not disclose or discuss, other than with legal counsel, personal tax or
financial advisors, or members of Employee's immediate family, any facts
concerning the negotiation, execution or implementation of this Agreement.
Moreover, Employee specifically agrees that he will not criticize, denigrate or
otherwise speak adversely or originate, disclose or otherwise be the source of
any negative information about the operations, management or performance of the
Company, affiliates of the Company, or about any director, officer, employee or
agent of any of the foregoing; or the circumstances related to his resignation,
other than to state that Employee was __________________________ and that he
resigned voluntarily to pursue other opportunities.
6. Employee specifically covenants that:
a. he will not for 18 months from the Resignation Date,
recruit, solicit or induce, attempt to induce or cause to induce, any employee
or employees of the Company to terminate their employment with, or otherwise
cease their relationship with the Company.
b. The Severance Benefit in Paragraph 3 is conditioned upon
Employee adhering to and not violating the AT&T Non- Competition Guideline (a
summary is attached as Appendix B). Such Guideline, in addition to
Non-Competition constraints includes a provision which calls for forfeiture of
benefits in the event Employee engages in activities in conflict with or adverse
to the interest of the Company.
c. The Employee recognizes and acknowledges that the Company
considers its confidential and proprietary information and trade secrets to be
among its most valuable assets, including, but not limited to, its customer and
vendor lists, databases, computer programs, frameworks, models, its marketing
programs, its sales, financial, marketing, training and technical information,
and any other information, whether communicated orally, electronically, in
writing or in other tangible forms concerning how AT&T creates, develops or
maintains its products, services and its marketing plans, targets its potential
customers and operates its business. The parties to this Agreement recognize
that AT&T has invested, and continues to invest, considerable amounts of time
and money in obtaining and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and all the proprietary
and other information described above (hereinafter collectively referred to as
"AT&T Confidential Information"), that it is essential to the protection of
AT&T's goodwill and to the maintenance of AT&T's competitive position and that
AT&T Confidential Information be kept secret and that Employee not disclose AT&T
Confidential Information to others or use AT&T Confidential Information to
Employee's own advantage or the advantage of others, and agrees that any
misappropriation or unauthorized disclosure of AT&T Confidential Information
(including trade secrets) in any form would irreparably harm AT&T. (Such AT&T
Confidential Information does not include any publicly available material.)
Employee affirms his obligation to keep secret all AT&T Confidential Information
and that he will not disclose it to any third party in the future.
d. Employee acknowledges that the restrictions set forth in this
Paragraph 6 are necessary and reasonable to prevent the use and disclosure of
AT&T Confidential Information and to otherwise protect the legitimate business
interests of the Company. Employee further acknowledges that when Employee's
employment with AT&T terminates, he will be able to earn a livelihood without
violating any of the foregoing restrictions.
7. Employee acknowledges that remedies at law, and those remedies
contained in Paragraph 11, for any breach by Employee of the provisions of
Paragraphs 5 and 6 will be inadequate and that the Company shall be entitled to
injunctive relief against Employee in the event of any such breach. This Release
is in addition to any other remedy and damages available. Employee acknowledges
that the restrictions contained therein are reasonable, but agrees that if any
court of competent jurisdiction shall hold such restrictions unreasonable as to
time, geographic area, activities, or otherwise, such restrictions shall be
deemed to be reduced to the extent necessary in the opinion of such court to
make them reasonable. The Company's waiver, or failure to seek enforcement or
remedy for a breach or suspected breach of any provision of this Agreement in a
particular instance shall not be deemed a waiver of such provision in the
future. In addition, such waiver or failure to act with respect to one
provision, shall not be deemed to be a waiver of any other provision of this
Agreement.
8. If Employee becomes disabled after executing this Agreement, but
before ___________________, and if he is receiving or entitled to receive
sickness or accident disability benefit payments from the Company as of
____________________, then:
a. Should Employee die while disabled and receiving sickness or
accident benefit payments, this Agreement shall be null and void in its
entirety; OR
b. Should Employee's period of disability be determined by the
Company to terminate prior to the expiration of the period during which in
accordance with the terms of the Sickness and Accident Disability Benefit Plan,
he could become entitled to receive sickness and accident disability benefit
payments, Employee will resign his active employment with the Company effective
on the day following the last day of disability for which he receives such
payments (hereinafter his "actual resignation date"); further, Employee
understands and agrees that, in such event, the total amount of the payment
specified in Paragraph 3 above shall be reduced by the total amount of sickness
or accident disability benefit payments which he has received from the Company
for the period of disability after his intended resignation date, i.e.,
___________________ to his actual resignation date inclusive and shall be paid
out in accordance with Paragraph 3 above OR
c. Should Employee be determined by the Company to continue to be
disabled at the expiration of the period during which he is entitled to receive
sickness or accident disability benefit payments, Employee understands and
agrees that he will thereupon be retired by action of the Company's Benefit
Committee, effective on the day following the last day of eligibility for such
sickness or accident disability payments (hereafter his "actual resignation
date") and that, under such circumstances, the total amount of the payment
specified in Paragraph 3 above shall be reduced by the total amount of sickness
or accident disability benefit payments which he has received from the Company
for the period of disability after his intended resignation date, i.e., from
____________________ to his actual resignation date inclusive and shall be paid
out in accordance with Paragraph 3 above.
9. The Employee agrees that he will submit all vouchers for reasonable
business expenses prior to his Resignation Date or as soon thereafter as is
practicable. The Employee understands and agrees that after his Resignation Date
he will no longer be authorized to incur any expenses, obligations or
liabilities on behalf of the Company.
10. In accordance with his existing and continuing obligations to the
Company, Employee agrees to return to the Company, on or before his Resignation
Date, all Company property or copies thereof, including, but not limited to,
files, records, computer access codes, computer programs, instruction manuals,
documents, business plans and other property which he received or prepared or
helped to prepare in connection with his employment with the Company, and to
assign to the Company all right, title and interest in such property, and any
other inventions, discoveries or works of authorship created by Employee during
the course of his employment.
11. Employee understands and agrees that a violation of any portion of
Paragraphs 5, 6, or 10, relating to the negotiation of the Agreement, disclosure
of adverse information about the Company, recruiting employees of the Company,
violation of the AT&T Non-Competition Guideline, the return of Company property,
(except the Company car if Employee elects to purchase such vehicle), and the
use or disclosure of AT&T Confidential Information, will be considered a
material breach of this Agreement, for which Employee will forfeit all benefits
(other than tax qualified welfare and retirement plan benefits) as well as any
monies not already paid under this Agreement and/or be obligated to return
immediately all monies which have already been paid under this Agreement -
except $1,000.00. The provisions of this Paragraph 11 in no way limit the
Company's right to also commence an action for damages and/or pursue other legal
or equitable remedies in the event Employee breaches any provision of this
Agreement. In the event that the Company takes such action, all of Employee's
other obligations under this Agreement shall remain in full force and effect.
12. Employee acknowledges that there are various state local and
federal laws that prohibit employment discrimination on the basis of age, sex,
race, color, national origin, religion, disability, sexual orientation or
veteran status and that these laws are enforced through the Equal Employment
Opportunity Commission, Department of Labor and State or Local Human Rights
agencies. Such laws include, without limitation, Title VII of the Civil Rights
Act of 1964 as amended 42 U.S.C. Sec. 2000 et. seq.; the Age Discrimination in
Employment Act, 29 U.S.C. Sec. 621 et. seq.; the Americans with Xxxxxxxxxxxx
Xxx, 00 X.X.X. Xxx. 00000; the Employee Retirement Income Security Act, as
amended 29 U.S.C. Sec. 1001 et. seq.; and 42 U.S.C. Section 1981, the New Jersey
Conscientious Employee Protection Act, the New Jersey Law Against Discrimination
and other state and local human or civil rights laws as well as other statutes
which regulate employment; and the common law of contracts and torts. In
consideration of this Agreement, Employee hereby waives and releases any rights
he may have under these laws as to events which have occurred prior to the date
of this Agreement or Resignation Date, whichever is later. Employee acknowledges
that the Company has not (a) discriminated against him, (b) breached any
contract with him (c) committed any cruel wrong (tort) against him or (d)
otherwise acted unlawfully toward him. Employee, also waives any right to
become, and promises not to consent to become, a member of any class in a case
in which claims are asserted against any Releasee that is related in any way to
his employment or the termination of his employment with AT&T, and that involve
events which have occurred as of the date of this Agreement or Resignation Date.
If Employee, without his prior knowledge and consent is made a member of a class
in any proceeding, he shall opt out of the class at the first opportunity
afforded to him after learning of his inclusion. In this regard Employee agrees
that he will execute, without objection or delay, an "opt-out" form presented to
him either by the court in which such proceeding is pending or by counsel for
any Releasee who is made a defendant in any such proceeding.
13. Employee, on behalf of himself, his heirs, executors,
administrators, successors and assigns, releases and discharges the Company and
its successors, assigns, subsidiaries, affiliates, directors, officers,
representatives, agents and employees ("Releasees") from any and all claims,
including claims for attorney's fees and costs, charges, actions and causes of
action, including but not limited to those with respect to his employment or
termination of employment with the Company, as well as from all claims for
personal injury, actual or potential, to the date of this Agreement or
Employee's Resignation Date, whichever is later. This includes, but is not
limited to, claims arising under federal, state, or local laws prohibiting age,
sex, race or any other forms of discrimination such as the Age Discrimination in
Employment Act, claims arising under the New Jersey Conscientious Employee
Protection Act and the New Jersey Law Against Discrimination, and claims growing
out of any legal restrictions on the Company's right to terminate its employees.
This also includes claims based on theories of contract or tort, whether arising
out of common law or otherwise. Employee represents that he has not filed any
charge or lawsuit against the Company with any governmental agency or Court and
that he will not institute any actions against the Company or any Releasee for
any reason. With respect to any administrative charges that have been or may be
filed concerning events or actions relating to his employment or the termination
of his employment that occurred on or before Resignation Date, Employee waives
and releases any right he may have to recover in any lawsuit or proceeding
brought by him or by an Administrative Agency on his behalf. If Employee
breaches this Paragraph, Employee understands that he will be liable for all
expenses, including costs and reasonable attorney's fees, incurred by any
Releasee in defending the lawsuit or charge of discrimination. Employee agrees
to pay such expenses within thirty (30) calendar days of written demand. This
Paragraph is not intended to limit Employee from instituting legal action for
the sole purpose of enforcing this Agreement.
14. Except to the extent expressly provided herein, nothing in this
Agreement shall be deemed to alter, amend, modify or otherwise affect any
employee benefit, compensation or other plan, program or policy maintained by
the Company or any provision thereof.
15. If any provision, or portion thereof, of this Agreement is
determined to be invalid under applicable statute or rule of law, only such
provision, and only to the extent determined to be invalid, shall be deemed
omitted from this Agreement, the remainder of which shall remain fully in force
and effect.
16. The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to its
Conflict of Laws principles.
17. Employee understands that, pursuant to the Older Workers Benefit
Protection Act of 1990, he has the right to consult with an attorney before
signing this Agreement, he has 21 days to consider the Agreement before signing
it and he may revoke the Agreement within seven (7) calendar days after signing
it. Employee further understands that the Agreement will not become effective or
enforceable until the seven day revocation period has expired.
18. Employee promises and agrees that in consideration of a payment of
one thousand dollars ($1,000) to be made within ten business days subsequent to
his Resignation Date, in addition to the benefits set forth in Paragraph 3 and
4, Employee will execute a release of all claims relating to his employment
during the period from the execution of this Agreement to his Resignation Date.
A copy of such release is attached as Appendix C to this Agreement.
19. This Agreement, consisting of _______ pages containing _______
paragraphs and three Appendices constitutes the entire agreement between the
Company and Employee with respect to the subject matter hereof and shall not be
amended, modified, or amplified without specific written provision to that
effect, signed by both parties. No oral statement of any person whosoever shall,
in any manner or degree, modify or otherwise affect the terms and provisions of
this Agreement. Accordingly, this Agreement supersedes and completely replaces
any prior oral or written communication on this subject.
By signing this Agreement, Employee states that;
a) He has read it and has had sufficient time to consider its
terms;
b) He understands it and knows that he is giving up important
rights;
c) He agrees with everything in it;
d) He is aware of his right to consult an attorney before signing
it;
and has been so advised
e) He has signed it knowingly and voluntarily.
Witnesses:
___________________________ ___________________________ ________________
Employee Date
___________________________ ___________________________ ________________
For the Company Date
THIS IS A LEGAL AGREEMENT, RELEASE
AND COVENANT NOT TO XXX
XXXX CAREFULLY BEFORE SIGNING
Appendix A
Item Treatment
a) Base Salary Employee receives base salary through
Resignation Date.
b) Employee Benefits and Senior Employee will be covered under general
Management Benefits (except employee benefit plans and Senior
as otherwise noted below) Management benefit and perquisite
plans/programs and practices through
Resignation Date.
c) Medical/Dental/Vision(After Company paid Medical/Dental/Vision will
Resignation Date) continue through the Resignation Date.
Under COBRA (Consolidated Omnibus Budget
Reconciliation Act of 1985), coverage
can be continued at Employee's expense
for lesser of 18 months or until Employee
becomes eligible for coverage under
another employer's plan.
d) AT&T Senior Management Coverage will cease on Resignation Date.
Individual Life Insurance Employee may assume policy if he so
Program (AT&T SMILIP) elects by paying 100% of premium.
(After Resignation Date) Company premium contributions to policy
cease on Resignation Date and Company
will withdraw all prior premium
contributions.
e) Supplemental Variable Universal Employee, via insurance carrier, will be
Life Insurance given the option to continue coverage on
an individual basis.
Appendix B
AT&T
Non-Competition
Guideline
Summary
Introduction
In order to protect the interests of the Company, its shareholders, its
employees and its customers, AT&T requires that an employee who is eligible to
receive benefits under various Senior Management incentive and compensation
plans forfeit those benefits if he or she competes with the Company after
termination of employment. The standard used to determine "competing" and an
explanation of the administrative process used to evaluate activity are
described in full in the AT&T Non-Competition Guideline, which has been approved
by the AT&T Board of Directors.
This brochure summarizes the Guideline and is intended as a reference guide
only. A copy of the complete Guideline may be obtained by requesting a copy from
the Director, Executive Human Resources, AT&T Corporate Headquarters.
General Information
Responsibility for interpreting, administering and implementing the provisions
of the Guideline rests with the AT&T Management Committee, which was established
and authorized by the Board to resolve all questions and handle all matters in
connection with competition and forfeiture of benefits. At least three, but no
more than five, Senior Officers serve on the Committee.
The Committee may make minor changes in the Guideline and to those incentive and
compensation plans which are subject to the Guideline's procedures. Changes may
be made without notice whenever the Committee considers the changes necessary to
fairly and consistently administer the Guideline and to protect the Company's
interests. The Committee's decisions about forfeiture of benefits and what is
competitive activity are final.
No act of the Company, the Committee or any employee acting in connection with
the Guideline and its provisions is in any way intended to interfere with any
individual's right to consider, accept, continue or terminate employment to
engage in any activity or to establish any kind of business or ownership
interest with any enterprise.
Forfeitable Benefits
Under the terms of the following plans, the benefits they pay are forfeitable
(or immediately payable): AT&T Senior Management Short Term Incentive Plan, AT&T
Senior Management Long Term Incentive Plan, AT&T 1984 Stock Option Plan, AT&T
Non-Qualified Pension Plan, AT&T Senior Management Life Insurance Program, AT&T
Senior Management Long Term Disability and Survivor Protection Plan, AT&T Senior
Management Individual Life Insurance Program, AT&T Incentive Award Deferral
Plan, AT&T Deferred Compensation Plan for Non-Employee Directors, A&T Senior
Management Financial Counseling Program, and the AT&T Mid-Career Pension Plan.
The Board or Committee may make other plans subject to this Guideline.
. the contemplated relationship, including (as applicable) the proposed
position, title, responsibilities and the nature and extent of the
ownership interest;
. the nature of the business, including, for example, all products and/or
services currently being or expected to be designed, developed,
manufactured, produced, offered for sale or sold by the business; and
. the most recently available financial information on the business
The Company has the right to initiate an evaluation of an individual's activity.
An evaluation will be instituted when it is requested by or on behalf of the
head of any of the Company's lines of business or a member of the Board or the
Committee. The Director, Executive Human Resources, will notify the individual
in writing that an evaluation has been initiated and of the opportunity to
submit within a stated period of time information for the evaluators' and the
Committee's consideration. An individual whose activity is being evaluated is
strongly encouraged to provide the Committee with a written submittal such as
that described above.
An individual's contemplated or actual activity will be separately evaluated by
. the head and an attorney serving as counsel to the head of each of the
Company's lines of business responsible for the design, development,
manufacture, production, offer for sale or sale of the product or service
with which the activity is suspected to be in competition;
. the head of each entity responsible for paying benefits under any of the
Plans listed above, or a delegate;
. A Corporate Vice President-Law of the Company; and
. any other individuals whose evaluations the Committee designates as
appropriate.
Individuals who, for personal or professional reasons, have a conflict of
interest which they feel would prevent their fair and objective evaluation will
not participate but will delegate their responsibility to another in their line
of business or organization. Evaluations will be based on the individual's
submittal, the financial state of the line of business, the competitive
marketplace, the impact of the individual's leaving on his or her line of
business, the extent to which activity is adverse to the Company's interests and
all other relevant facts and circumstances. After evaluating the activity, each
person doing an evaluation will make to the Committee a recommendation of
appropriate action, identifying, if there are any, those facts or circumstances
not readily apparent form the submittal or not generally known but upon which
facts or circumstances the recommendation was based.
Reevaluation
Even though activity has been previously evaluated and regardless of a prior
determination, the Company reserves the right without prior notice to reevaluate
activity if the Committee believes it is warranted. In case of a reevaluation,
the individual will be advised by the Director, Executive Human Resources, that
a reevaluation has been instituted and that he or she has the opportunity to
make a submittal such as that described above.
Subsequent
Competitive Activity
If an individual establishes a relationship with a business which is not at that
time a competitor of the Company, but AT&T later engages in a line of business
which is competitive with any such product and/or service of the business, no
question of forfeiture arises. However, the Company may require forfeiture if
the person knew (or had reason to know) at the time the relationship was
established that AT&T intended to design, develop, manufacture, produce, offer
for sale or sell a competitive product or service.
The Company may also invoke forfeiture if, within a reasonable time-normally
three years- after the individual engages in an activity, it becomes adverse to
AT&T's interests or competitive with AT&T. In such case, if the person advises
the Director, Executive Human Resources, that the activity may have become
competitive, he or she will have the opportunity to withdraw as described above,
without forfeiture. If the Company is not advised, or if the withdrawal is not
accomplished within the stated time, then all benefits paid after the point when
the activity became competitive are forfeitable.
Consent to Compete
In very extraordinary circumstances and despite the fact that an individual's
competitive activity would be grounds for requiring forfeiture of benefits, the
Company may consent to the activity if the Committee determines that the
situation is only technically competitive and the facts are overwhelmingly
compelling that relief is warranted. In such a case, the Director, Executive
Human Resources, will provide a letter advising the individual of the Company's
decision. However, the Company does not waive by such consent the right to
withdraw the consent after it is issued, without prior notice, and to invoke the
non-competition clauses if, within a reasonable time-normally three
years-thereafter, the facts and circumstances change and it becomes in the
Company's best interest to require forfeiture.
Affected Individuals
An individual whether a present or former employee, is subject to the Guideline
and to having activity evaluated if he or she has received, is receiving or is
entitled to receive benefits according to any of the Plans listed above.
What is
Competitive Activity
An individual's activity is competitive activity and his or her benefits are
forfeitable if that individual either (A) engages in activity in conflict with
or adverse to the interests of the Company or (B) establishes a relationship
with a competitor of the Company.
"Establishing a relationship" includes founding, organizing, establishing,
becoming associated with, becoming employed by, rendering services to,
consulting or acting as consultant to, being a partner in or owning a
substantial interest in as shareholder or otherwise (such as, for example, an
interest subject to the reporting requirements of Section 13(d) of the
Securities Exchange Act of 1934).
A "competitor of the Company" is a business, entity or enterprise which either
(A) designs, develops, manufactures, produces, offers for sale or sells a
product or service which can be used as a substitute for, performs substantially
the same function as, is a practical alternative for or is generally intended to
satisfy the same customer or client needs for any product or service designed,
developed, manufactured, produced, offered for sale or sold by the Company or
(B) is a business which the Committee, based upon review of the individual facts
and circumstances and in its discretion and judgment, determines, in order to
protect the best interests of the Company, to be a competitor within the spirit
and intent of the Guideline and the non-competition clauses of various Plans.
The Evaluation Process
Anyone who is considering engaging in an activity which a reasonable person
might consider competitive activity as described above should notify the
Director, Executive Human Resources, and request that the Company evaluate the
activity to determine whether it is competitive.
To insure that the Company's evaluation is fairly based on all relevant facts
and circumstances, an individual who requests a determination should provide the
Company in writing with all information he or she believes to be relevant to the
inquiry as well as a full explanation of the contemplated activity which
describes
Determination
Final determination of whether an individual's activity is or is not competitive
activity will be made by the Committee and the Committee alone. The
determination will be based on the recommendations as described above, the best
interests of the Company and on all other facts and circumstances the Committee
deems pertinent.
After the Committee's determination, the Director, Executive Human Resources,
will notify the individual of the decision in writing.
If the Committee's determination is that activity is not competitive activity ,
the individual may receive a letter advising of that determination. In such
case, the Committee reserves the right to seek, at whatever intervals it deems
appropriate, written assurance from the individual that the facts and
circumstances on which the evaluations and the determination were based have not
changed.
An individual who has not yet engaged in activity which would be considered
competitive activity will have the opportunity to provide the Company within a
reasonable period of time written assurance that he or she has not and will not
engage in such activity. If the Company receives such assurance no forfeiture
will result. If the individual fails to provide such assurance or if he or she
is already engaged in competitive activity and does not withdraw from it, then
the Director, Executive Human Resources, will coordinate termination of all
benefits with the Payroll, Benefit and all other affected organizations. The
Committee or its delegate may also take legal steps to recover any benefits
already paid.
Opportunity
to Withdraw
After activity has been evaluated and recommendations submitted as described
above, the Committee may determine that there are unusual or special
circumstances which are persuasive that withdrawal or denial of benefits is not
appropriate. In that case, the Committee may, in its discretion and judgment,
withhold termination or denial of benefits and offer the individual the
opportunity to withdraw from the competitive activity. An individual who
receives such an offer will have a reasonable period of time from the date of
the offer to accept it and to provide the Committee assurance in writing that
the withdrawal has been accomplished, or the offer will lapse and a notice to
terminate benefits will be issued.
This guideline is published by the Executive Human Resources group of AT&T
Corporate Headquarters. Questions and requests for additional copies may be
directed to Director, Executive Human Resources, AT&T Corporate Headquarters,
000 Xxxxx Xxxxx Xxxxxx, Xxxx 0000X0, Xxxxxxx Xxxxx, Xxx Xxxxxx 00000.
April 1997
