FORM OF
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
AT&T CORP.
AND
NCR CORPORATION
DATED AS OF
NOVEMBER 20, 1996
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
................................................ 1
1.1 Agreement
...................................................... 1
1.2 Assigned Split Dollar Policies
................................. 1
1.3 AT&T Controlled Person
......................................... 2
1.4 AT&T Executive Benefit Plans
................................... 2
1.5 AT&T Individual
................................................ 2
1.6 AT&T Individual Agreement
...................................... 2
1.7 AT&T Plan
...................................................... 2
1.8 AT&T Short Term Incentive Plans
................................ 2
1.9 AT&T Stock Value
............................................... 2
1.10 ATTIMCO
........................................................ 3
1.11 Award
.......................................................... 3
1.12 Close of the NCR Distribution Date
............................. 3
1.13 Code
........................................................... 3
1.14 Distribution Agreement
......................................... 3
1.15 ERISA
.......................................................... 3
1.16 First Transfer
................................................. 3
1.17 Immediately after the NCR Distribution
Date..................... 3
1.18 Individual Agreement
........................................... 3
1.19 Long Term Incentive Plan
....................................... 3
1.20 LTIT
........................................................... 3
1.21 LTIT Agreement
................................................. 3
1.22 LTIT Redemption
................................................ 4
1.23 Lucent EBA
..................................................... 4
1.24 MPT
............................................................ 4
1.25 MPT Agreement
.................................................. 4
1.26 MPT Withdrawal
................................................. 4
1.27 NCR Allocable Share
............................................ 4
1.28 NCR Controlled Person
.......................................... 4
1.29 NCR Employee
................................................... 4
1.30 NCR Executive Benefit Plans
.................................... 4
1.31 NCR Individual
................................................. 4
1.32 NCR Individual Agreement
....................................... 5
1.33 NCR Pension Plans
.............................................. 5
1.34 NCR Plan
....................................................... 5
1.35 NCR Savings Plan
............................................... 5
1.36 NCR SERPs
...................................................... 5
1.37 NCR Short Term Incentive Plans
................................. 5
1.38 NCR Stock Value
................................................ 5
1.39 Option
......................................................... 5
1.40 Plan
........................................................... 5
1.41 Prior MPT
...................................................... 5
1.42 QDRO
........................................................... 5
1.43 QMCSO
.......................................................... 6
1.44 Ratio
...................................................... 6
1.45 Second Transfer
............................................ 6
1.46 Segregated Assets
.......................................... 6
1.47 Separation and Distribution Agreement
...................... 6
1.48 Split Dollar Life Insurance
................................ 6
1.49 Spread
..................................................... 6
1.50 Supplemental Pension Plan for Transfers
.................... 6
1.51 U.S.
....................................................... 6
1.52 Value
...................................................... 6
ARTICLE II GENERAL PRINCIPLES
......................................... 6
2.1 Allocation of Liabilities
.................................. 6
2.2 Transferred Executives
..................................... 7
ARTICLE III QUALIFIED PLANS
............................................ 7
3.1 NCR Pension Plans
.......................................... 7
3.2 NCR Savings Plan
........................................... 10
ARTICLE IV EXECUTIVE BENEFITS
......................................... 10
4.1 General
.................................................... 10
4.2 Nonqualified Plans
......................................... 10
4.3 AT&T Long Term Incentive Plans
............................. 11
4.4 AT&T Split Dollar Life Insurance
........................... 13
4.5 Individual Agreements
...................................... 13
ARTICLE V MISCELLANEOUS BENEFITS
..................................... 14
5.1 Employee Stock Purchase Plan
............................... 14
5.2 Short Term Incentive Plans
................................. 14
ARTICLE VI FOREIGN PLANS; INTERCHANGE
................................. 14
6.1 Foreign Plans
.............................................. 14
6.2 Interchange Agreement
...................................... 14
ARTICLE VII MISCELLANEOUS
.............................................. 14
7.1 Sharing of Participant Information
......................... 14
7.2 No Change of Control; No Rights Created; No
.................
Restrictions
.............................................. 14
7.3 Effect If NCR Distribution Does Not Occur
.................. 15
7.4 Relationship of Parties
.................................... 15
7.5 Affiliates
................................................. 15
7.6 Incorporation of Distribution Agreement
Provisions
............................................... 15
7.7 Incorporation of Separation and Distribution
Agreement Provisions
...................................... 15
7.8 Governing Law
.............................................. 15
7.9 Tax Deductions
............................................. 16
7.10 Agreements with Third Parties
.............................. 16
7.11 NCR to Honor Agreements
.................................... 17
Signatures
............................................................. 18
Schedule I AT&T Executive Benefit Plans
Schedule II Individual Agreements
Schedule III NCR Executive Benefit Plans
Schedule IV Individuals to be Transferred to NCR
Schedule V Assets Referred to in Section 3.1(b)
Schedule VI Selection of Assets to be
Transferred to
Trustee(s) of NCR Pension Plans
Schedule VII AT&T Awards Not to Be Replaced with
NCR Awards
Schedule VIII AT&T Liabilities Under Individual
Agreements
Schedule IX Reimbursement of NCR
Schedule X Reimbursement of AT&T
Schedule XI Agreements Establishing Phantom
Share Accounts
Exhibit A Form of Receipt and Release for
First Transfer
Exhibit B Form of Receipt and Release for
Second
Transfer
Exhibit C Form of Foreign Employee Benefits
Agreement
Exhibit D Form of Interchange Agreement
EMPLOYEE BENEFITS AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT, dated as of November 20, 1996, is by
and between AT&T and NCR. Capitalized terms used herein (other than the formal
names of AT&T Plans and NCR Plans (as defined below) and related trusts) and not
otherwise defined shall have the respective meanings assigned to them in Article
I hereof or as assigned to them in the Distribution Agreement (as defined
below).
WHEREAS, the Board of Directors of AT&T has determined that it is in
the best interests of AT&T and its shareholders to separate AT&T's existing
businesses into three independent businesses;
WHEREAS, in furtherance of the foregoing, AT&T, NCR and Lucent have
executed and delivered the Separation and Distribution Agreement providing for,
among other things, the initial public offering of shares of Lucent Common Stock
(which was consummated on April 10, 1996) and for the pro rata distribution by
AT&T of all of its shares of Lucent Common Stock to the shareholders of AT&T
(which was consummated on September 30, 1996);
WHEREAS, AT&T, NCR and Lucent have also executed and delivered the
Ancillary Agreements (as such term is defined in the Separation and Distribution
Agreement) governing certain additional matters relating to the Lucent
Distribution;
WHEREAS, the Board of Directors of AT&T has also determined that AT&T
will distribute to its shareholders all of the capital stock of NCR held
directly or indirectly by AT&T, subject to the terms and conditions set forth in
the Distribution Agreement;
WHEREAS, in furtherance of the foregoing, AT&T and NCR have entered
into a Distribution Agreement, dated as of November 20, 1996 (the "Distribution
Agreement"), and certain other agreements that will govern certain matters
relating to the NCR Distribution and the relationship of AT&T and NCR and their
respective Subsidiaries following the NCR Distribution; and
WHEREAS, AT&T and NCR wish to enter into this agreement allocating
assets, liabilities and responsibilities with respect to certain employee
compensation and benefit plans and programs between them.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 AGREEMENT means this Employee Benefits Agreement,
including all the
Schedules and Exhibits hereto.
1.2 ASSIGNED SPLIT DOLLAR POLICIES is defined in Section
4.4.
1.3 AT&T CONTROLLED PERSON as of a specified time means any Person that
is, at such time, a Subsidiary of AT&T or is otherwise controlled, directly or
indirectly, by AT&T, other than NCR or any Person that is, at such time, an NCR
Controlled Person.
1.4 AT&T EXECUTIVE BENEFIT PLANS means the executive benefit and
nonqualified plans, programs, and arrangements established, maintained, agreed
upon, or assumed, in each case before the Close of the NCR Distribution Date, by
AT&T or a Person that is, Immediately after the NCR Distribution Date, an AT&T
Controlled Person, for the benefit of AT&T Individuals and/or NCR Individuals
who participated therein, including the plans listed in Schedule I.
1.5 AT&T INDIVIDUAL means any individual who is not an NCR Individual
and is, as of the Close of the NCR Distribution Date: (a) actively employed by,
or on a leave of absence from, either AT&T or a Person that is, as of the Close
of the NCR Distribution Date, an AT&T Controlled Person; or (b) neither actively
employed by, nor on a leave of absence from, AT&T or a Person that is, as of the
Close of the NCR Distribution Date, an AT&T Controlled Person, but whose most
recent active employment with AT&T or a past or present Affiliate of AT&T
(including NCR and its Affiliates) was with either AT&T or a Person that was, at
the time such active employment ended, an AT&T Controlled Person; provided, that
an individual who is a Transferred Individual as defined in the Lucent EBA shall
not be considered an AT&T Individual under this sentence. An alternate payee
under a QDRO or alternate recipient under a QMCSO with respect to, or a
beneficiary or covered dependent of, an employee or former employee described in
the preceding sentence shall also be an AT&T Individual with respect to that
employee's or former employee's benefit under the applicable Plans. Such an
alternate payee, alternate recipient, beneficiary, or covered dependent shall
not otherwise be considered an AT&T Individual with respect to his or her own
benefits under any applicable Plans unless he or she is an AT&T Individual by
virtue of the first sentence of this definition. In addition, AT&T and NCR may
designate, by mutual agreement, any other individuals, or group of individuals,
as AT&T Individuals. An individual may be an AT&T Individual pursuant to this
definition regardless of whether such individual is, as of the NCR Distribution
Date, alive, actively employed, on a temporary leave of absence from active
employment, on layoff, terminated from employment, retired or on any other type
of employment or post-employment status relative to any Plan, and regardless of
whether, as of the Close of the NCR Distribution Date, such individual is then
receiving any benefits from any AT&T Plan or NCR Plan.
1.6 AT&T INDIVIDUAL AGREEMENT means an Individual
Agreement with an AT&T Individual.
1.7 AT&T PLAN means any Plan that is, Immediately after the NCR
Distribution Date, sponsored by AT&T or a Person that is then an AT&T Controlled
Person or, if such Plan is no longer in existence Immediately after the NCR
Distribution Date, was, at the time it ceased to exist, sponsored by AT&T or a
Person that is, Immediately after the NCR Distribution Date, an AT&T Controlled
Person or a direct or indirect predecessor to such a Person.
1.8 AT&T SHORT TERM INCENTIVE PLANS means the AT&T Short Term Incentive
Plan and the AT&T Management Incentive Compensation Program.
1.9 AT&T STOCK VALUE means the average of the daily high and low
per-share prices of the AT&T Common Stock as traded regular way on the NYSE
during each of the five trading days immediately preceding the NCR Distribution
Date.
1.10 ATTIMCO means AT&T Investment Management
Corporation, a Delaware
corporation.
1.11 AWARD means an award under a Long Term Incentive
Plan or a Short
Term Incentive Plan.
1.12 CLOSE OF THE NCR DISTRIBUTION DATE means 11:59:59 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the NCR Distribution
Date.
1.13 CODE means the Internal Revenue Code of 1986, as amended, or any
successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that
provision.
1.14 DISTRIBUTION AGREEMENT is defined in the sixth
paragraph of the preamble of this Agreement.
1.15 ERISA means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
1.16 FIRST TRANSFER is defined in Section 3.1(c)(iii).
1.17 IMMEDIATELY AFTER THE NCR DISTRIBUTION DATE means 12:00 A.M.,
Eastern Standard Time or Eastern Daylight Time (whichever shall then be in
effect), on the day after the NCR Distribution Date.
1.18 INDIVIDUAL AGREEMENT means an individual contract or agreement
(including the agreements listed on Schedule II) entered into before the Close
of the NCR Distribution Date between AT&T, or any of its past or present
Affiliates (including NCR and its past or present Affiliates) and an NCR
Individual or an AT&T Individual that establishes the right of such individual
to special executive compensation or benefits, including a supplemental pension
benefit, hiring bonus, loan, guaranteed payment, special allowance, tax
equalization or disability benefit, or share units granted (and payable in the
form of cash or otherwise) under an individual phantom share agreement, or that
provides benefits similar to those identified in Schedule I.
1.19 LONG TERM INCENTIVE PLAN, when immediately preceded by "AT&T,"
means any of the AT&T 1984 Stock Option Plan, the AT&T 1987 Long Term Incentive
Program, and such other stock-based incentive plans assumed by AT&T by reason of
merger, acquisition, or otherwise, including incentive plans of NCR, Teradata
Corporation, AT&T Wireless Services, Inc. (formerly McCaw Cellular
Communications, Inc.), and LIN Broadcasting Corporation, and when immediately
preceded by "NCR," means the long term incentive plan to be established by NCR
pursuant to Section 4.3(a).
1.20 LTIT means the Long-Term Investment Trust
established pursuant to
the LTIT Agreement.
1.21 LTIT AGREEMENT means the Agreement of Trust Establishing the
Long-Term Investment Trust and Constituting the Amendment and Restatement of the
AT&T Master Pension Trust Agreement and Conversion Thereof, effective as of
October 1, 1996, as amended from time to time.
1.22 LTIT REDEMPTION is defined in Section 3.1(c)(ii).
1.23 LUCENT EBA means the Employee Benefits Agreement between AT&T and
Lucent dated as of February 1, 1996 and amended and restated as of March 29,
1996.
1.24 MPT means the AT&T Master Pension Trust established pursuant to
the MPT Agreement.
1.25 MPT AGREEMENT means the AT&T Master Pension Trust Agreement dated
as of October 1, 1996 between AT&T, Citibank, N.A., and certain other banks,
trust companies or individuals identified therein, as amended from
time to time.
1.26 MPT WITHDRAWAL is defined in Section 3.1(c)(iii).
1.27 NCR ALLOCABLE SHARE is defined in Section 3.1(c)(ii).
1.28 NCR CONTROLLED PERSON as of a specified time means any Person that
is, at such time, a Subsidiary of NCR or is otherwise controlled, directly or
indirectly, by NCR.
1.29 NCR EMPLOYEE means an NCR Individual who is described in clause
(a) of the definition of NCR Individual, or, to the extent relevant, an
alternate payee under a QDRO or alternate recipient under a QMCSO with respect
to, or a beneficiary or covered dependent of, such an NCR Individual.
1.30 NCR EXECUTIVE BENEFIT PLANS means the executive benefit and
nonqualified plans, programs, and arrangements established, maintained, agreed
upon, or assumed, before the Close of the NCR Distribution Date, by NCR or any
Person that is, Immediately after the NCR Distribution Date, an NCR Controlled
Person, for the benefit of AT&T Individuals and/or NCR Individuals who
participated therein, including the plans listed in Schedule III.
1.31 NCR INDIVIDUAL means any individual who, as of the Close of the
NCR Distribution Date: (a) is actively employed by, or on a leave of absence
from, NCR or a Person that is, as of the Close of the NCR Distribution Date, an
NCR Controlled Person; or (b) is neither actively employed by, nor on a leave of
absence from, NCR or a Person that is, as of the Close of the NCR Distribution
Date, an NCR Controlled Person, but whose most recent active employment with
AT&T or a past or present Affiliate of AT&T (including NCR and its Affiliates)
was with either NCR or a Person that was, at the time such active employment
ended, or is, as of the Close of the Distribution Date, an NCR Controlled
Person. An alternate payee under a QDRO or alternate recipient under a QMCSO
with respect to, or a beneficiary or covered dependent of, an employee or former
employee described in the preceding sentence shall also be an NCR Individual
with respect to that employee's or former employee's benefit under the
applicable Plans. Such an alternate payee, alternate recipient, beneficiary, or
covered dependent shall not otherwise be considered an NCR Individual with
respect to his or her own benefits under any applicable Plans unless he or she
is an NCR Individual by virtue of the first sentence of this definition. In
addition, AT&T and NCR may designate, by mutual agreement, any other
individuals, or group of individuals, as NCR Individuals. An individual may be
an NCR Individual pursuant to this definition regardless of whether such
individual is, as of the NCR Distribution Date, alive, actively employed, on a
temporary leave of absence from active employment, on layoff, terminated from
employment, retired or on any other type of employment or post-employment status
relative to any Plan, and regardless of whether, as of the Close of
the NCR Distribution Date, such individual is then receiving any benefits from
any AT&T Plan or NCR Plan.
1.32 NCR INDIVIDUAL AGREEMENT means an Individual Agreement with an NCR
Individual.
1.33 NCR PENSION PLANS means The NCR Pension Plan, The Retirement Plan
for Employees of NCR Corporation at Dayton, Ohio Represented by the Independent
Union of NCR Corporation Guards, and all predecessors to either of such Plans,
including Plans that have been merged into either of such Plans.
1.34 NCR PLAN means any Plan that is, Immediately after the
Distribution Date, sponsored by NCR or a Person that is then an NCR Controlled
Person or, if such Plan is no longer in existence Immediately after the NCR
Distribution Date, was, at the time it ceased to exist, sponsored by NCR or a
Person that is, Immediately after the NCR Distribution Date, an NCR Controlled
Person or a direct or indirect predecessor to such a Person.
1.35 NCR SAVINGS PLAN means the NCR Savings Plan.
1.36 NCR SERPS means all NCR Plans that are or were "employee pension
benefit plans" within the meaning of Section 3(2) of ERISA that are not
qualified under Section 401(a) of the Code, including the NCR Corporation
Nonqualified Excess Plan, the NCR Corporation Executive Retirement, Death and
Disability Plan, the NCR Mid-Career Hire Supplemental Pension Plan, the
Supplemental Plan for Transfers Between AT&T and NCR, and the Retirement Plan
for Officers of NCR.
1.37 NCR SHORT TERM INCENTIVE PLANS means the NCR Management Incentive
Plan and the NCR Customer Delight Performance Award Program.
1.38 NCR STOCK VALUE means the average of the daily high and low
per-share prices of the NCR Common Stock as traded on the NYSE, on a when-issued
basis, during each of the five trading days immediately preceding the NCR
Distribution Date.
1.39 OPTION, when immediately preceded by "AT&T," means an option to
purchase AT&T Common Stock and when immediately preceded by "NCR," Option means
an option to purchase NCR Common Stock, in each case pursuant to a Long Term
Incentive Plan.
1.40 PLAN means any plan, policy, program, payroll practice, on-going
arrangement, contract, trust, insurance policy or other agreement or funding
vehicle providing benefits to employees or former employees of AT&T and its past
or present Affiliates (including NCR and its Affiliates).
1.41 PRIOR MPT means the AT&T Master Pension Trust which was the
predecessor to, and was converted into, the LTIT.
1.42 QDRO means a domestic relations order which qualifies under Code
Section 414(p) and ERISA Section 206(d) and which creates or recognizes an
alternate payee's right to, or assigns to an alternate payee, all or a portion
of the benefits payable to a participant under any AT&T Plan or NCR Plan.
1.43 QMCSO means a medical child support order which qualifies under
ERISA Section 609(a) and which creates or recognizes the existence of an
alternate recipient's right to, or assigns to an alternate recipient the right
to, receive benefits for which a participant or beneficiary is eligible under an
AT&T Plan or NCR Plan.
1.44 RATIO means the amount obtained by dividing the
AT&T Stock Value by the NCR Stock Value.
1.45 SECOND TRANSFER is defined in Section 3.1(c)(iii).
1.46 SEGREGATED ASSETS is defined in Section 3.1(c)(iii).
1.47 SEPARATION AND DISTRIBUTION AGREEMENT is defined in the third
paragraph of the preamble of this Agreement.
1.48 SPLIT DOLLAR LIFE INSURANCE means the life insurance policies
purchased by AT&T on behalf of certain individuals under the AT&T Senior
Management Individual Life Insurance Program and the AT&T Senior Management
Basic Life Insurance Program, with respect to which such individuals (or their
assignees or delegates) have executed collateral assignments for the benefit of
AT&T.
1.49 SPREAD is defined in Section 4.3(b)(iv).
1.50 SUPPLEMENTAL PENSION PLAN FOR TRANSFERS means the NCR Supplemental
Pension Plan for Transfers between AT&T and NCR.
1.51 U.S. means the 50 United States and the District of
Columbia.
1.52 VALUE is defined in Section 4.3(b)(iv).
ARTICLE II
GENERAL PRINCIPLES
2.1 ALLOCATION OF LIABILITIES. (a) NCR hereby assumes or retains, as
applicable, and agrees to pay, perform, fulfill and discharge, in accordance
with their respective terms, and to indemnify the AT&T Indemnitees from and
against, pursuant to Section 4.2 of the Distribution Agreement, all of the
following (regardless of when or where such Liabilities arose or arise or were
or are incurred), except to the extent otherwise specified in Section 2.1(b)
below and in the agreement entered into pursuant to Section 6.1 with respect to
Foreign Plans: (i) all Liabilities to or relating to NCR Individuals relating
to, arising out of or resulting from employment by AT&T or any Person that was,
at the time of such employment, an AT&T Controlled Person, which employment
occurred before the Close of the NCR Distribution Date; (ii) all Liabilities to
or relating to NCR Individuals and other employees or former employees of NCR or
any Person that was, at the time of such employment, an NCR Controlled Person,
and their dependents and beneficiaries, relating to, arising out of or resulting
from employment with NCR or an NCR Controlled Person before, at or after the
Close of the NCR Distribution Date (including Liabilities under NCR Plans);
(iii) all Liabilities relating to, arising out of or resulting from any other
actual or alleged employment relationship with NCR or any Person that was, at
the time of such actual or alleged employment, an NCR Controlled Person; (iv)
all other Liabilities relating to, arising out of or resulting from obligations,
liabilities and responsibilities expressly
assumed or retained by NCR, or an NCR Plan pursuant to this Agreement; and (v)
all Liabilities relating to, arising out of or resulting from NCR Plans.
(b) AT&T hereby assumes or retains, as applicable, and agrees to
pay, perform, fulfill and discharge, in accordance with their respective terms,
and to indemnify the NCR Indemnitees from and against, pursuant to Section 4.3
of the Distribution Agreement, all of the following (regardless of when or where
such Liabilities arose or arise or were or are incurred) except to the extent
otherwise specified in the agreement entered into pursuant to Section 6.1 with
respect to Foreign Plans: (i) all Liabilities to or relating to AT&T Individuals
relating to, arising out of or resulting from employment by AT&T, any Person
that was, at the time of such employment, an AT&T Controlled Person, NCR or any
Person that was, at the time of such employment, an NCR Controlled Person, which
employment occurred before the Close of the NCR Distribution Date, other than
Liabilities relating to, arising out of or resulting from NCR Plans; (ii) all
Liabilities relating to, arising out of or resulting from written AT&T Plans in
accordance with their terms, to the extent neither of NCR nor any NCR Plan is
expressly made responsible for such Liabilities pursuant to this Agreement; and
(iii) any other Liabilities relating to, arising out of or resulting from
obligations, liabilities and responsibilities expressly assumed or retained by
AT&T or an AT&T Plan pursuant to this Agreement.
2.2 TRANSFERRED EXECUTIVES. The individuals listed on Schedule IV shall
become employees of, and shall be transferred to the payroll of, NCR or a Person
that is, at the time of such transfer, an NCR Controlled Person, as soon as
practicable after the date hereof, but in any event no later than the Close of
the NCR Distribution Date, and shall therefore be considered "NCR Individuals"
as of the Close of the NCR Distribution Date.
ARTICLE III
QUALIFIED PLANS
3.1 NCR PENSION PLANS.
(a) NAMED FIDUCIARY FOR NCR PENSION PLANS. NCR hereby represents
and warrants to AT&T that (i) the NCR Pension Plans as defined herein
constitute, as of the date hereof, all of the defined benefit pension plans
sponsored by NCR and the Persons that are, as of the date hereof, NCR Controlled
Persons, all other such plans having been merged into the NCR Pension Plan on or
before November 15, 1996, (ii) each NCR Pension Plan has been amended to provide
that NCR is the named fiduciary of such NCR Pension Plan, and that AT&T is not
the named fiduciary of such NCR Pension Plan, in each case for purposes of
negotiating the terms and conditions of this Section 3.1 and entering into this
Agreement, and (iii) that it has delivered to AT&T true, correct and complete
copies of such amendments and the resolutions of its Board of Directors
authorizing such amendments and providing for the delegation of the authority to
act in such fiduciary capacity by NCR to individual employees of NCR. As soon as
practicable after the Close of the NCR Distribution Date, and in any event
before the Second Transfer, NCR shall seek to have its Board of Directors ratify
such amendments and resolutions.
(b) PRE-DISTRIBUTION ACTIONS BY NCR. NCR shall
take all actions
necessary or appropriate so that before the Close of the NCR
Distribution Date:
(i) one or more individuals or entities are appointed in place of AT&T as named
fiduciary under the NCR Pension Plans; (ii) appropriate trustees, custodians,
investment managers and other fiduciaries with respect to the NCR Pension Plans
have been appointed, so as to permit the LTIT
Redemption and the MPT Withdrawal to occur promptly in accordance with this
Section 3.1; (iii) NCR shall have entered into an Investment Advisory Agreement
with ATTIMCO providing for the management of the assets of the NCR Pension Plans
by ATTIMCO during the period from Immediately after the NCR Distribution Date
until the completion of the LTIT Redemption and the MPT Withdrawal in accordance
with this Section 3.1; and (iv) NCR shall have taken all such actions with
respect to the assets identified on Schedule V hereto as ATTIMCO shall
reasonably require.
(c) TRANSFER OF ASSETS OF NCR PENSION PLANS FROM LTIT
AND MPT.
(i) LTIT REDEMPTION AND MPT WITHDRAWAL. AT&T shall take all
actions necessary or appropriate to accomplish the LTIT Redemption, and AT&T and
NCR shall take all steps necessary or appropriate to accomplish the MPT
Withdrawal, in each case in accordance with this Section 3.1(c) as promptly as
practicable after the later of (A) the Close of the NCR Distribution Date and
(B) the completion of the ratification referred to in the last sentence of
Section 3.1(a) and all actions required to be taken pursuant to Section 3.1(b).
(ii) VALUATION OF LTIT ASSETS; LTIT REDEMPTION. Under the terms
of the LTIT Agreement, the Total Asset Value and Net Asset Value (as those terms
are defined in the LTIT Agreement) of the assets of the LTIT will be determined
by ATTIMCO, in its capacity as named fiduciary of the LTIT, as of December 31,
1996. As part of such determination process, ATTIMCO shall also determine the
portion of such Net Asset Value that represents the share allocable to the NCR
Pension Plans in the LTIT through their interests in the MPT (the "NCR Allocable
Share") in accordance with the terms of the LTIT Agreement. Such determinations
shall be audited by Coopers & Lybrand in accordance with the normal valuation
procedures for the LTIT. AT&T, in its capacity as Authorized Fiduciary (within
the meaning of the LTIT Agreement) for the MPT, shall then direct ATTIMCO, in
its capacity as named fiduciary of the LTIT, to redeem, pursuant to Section 7.2
of the LTIT Agreement, a portion of the MPT's allocable share of the assets of
the LTIT having a value, as of December 31, 1996, at least equal to the NCR
Allocable Share (the "LTIT Redemption"). Such assets shall consist of a mix of
assets satisfying the requirements of Schedule VI hereto (as such Schedule may
be amended hereafter by written agreement between AT&T and NCR). AT&T and NCR
acknowledge that the LTIT Redemption may be subject, in whole or in part, to the
consent of Lucent, in its capacity as Authorized Fiduciary (within the meaning
of the LTIT) of certain plans participating in the LTIT, and agree to use
reasonable best efforts to obtain any such required consent, but failure to
obtain such consent shall not be considered a violation hereof.
(iii) WITHDRAWAL FROM MPT. AT&T (in its capacity as named
fiduciary of the MPT) shall cause the assets received by the MPT pursuant to the
LTIT Redemption to be segregated upon such receipt in anticipation of the MPT
Withdrawal. Such assets, together with the proceeds of any sale of such assets,
any other assets in which such proceeds may be reinvested, and any dividends,
interest, distributions and other income realized from such assets, proceeds and
other assets, in each case during the period from their receipt by the MPT until
they are transferred to the trustee(s) of the NCR Pension Plans as hereinafter
provided, are referred to collectively as the "Segregated Assets." AT&T and NCR
shall then direct the withdrawal of the NCR Pension Plans from the MPT pursuant
to Section 5(c) of MPT Agreement (the "MPT Withdrawal") in exchange for all or a
portion of the Segregated Assets, as set forth below. The transfer of Segregated
Assets from the trustee of the MPT to the trustee(s) of the NCR Pension Plans
pursuant to the MPT Withdrawal shall occur in two steps. The first step (the
"First Transfer") shall be a
transfer of a portion of the Segregated Assets selected by ATTIMCO (in its
capacity as a fiduciary of the MPT) that it determines to have a value, as of
December 31, 1996, equal to approximately 90 percent of the NCR Allocable Share.
The second step (the "Second Transfer") shall be a transfer of additional
Segregated Assets selected by ATTIMCO (in its capacity as a fiduciary of the
MPT), such that the Segregated Assets transferred to the trustee(s) of the NCR
Pension Plans in the First Transfer and the Second Transfer (I) have a value, as
of December 31, 1996, equal to the NCR Allocable Share, and (II) constitute a
mix of assets satisfying the requirements of Schedule VI hereto. No adjustment
shall be made to the assets so transferred as a result of any diminishment in
the value of the Segregated Assets after December 31, 1996.
(iv) ACCEPTANCE OF ASSET TRANSFER. The completion of the First
Transfer and the Second Transfer shall be subject in each case to the receipt by
ATTIMCO, from NCR and each of the recipient trustee(s) of the NCR Pension Plans,
of a Receipt and Release substantially in the forms attached hereto as Exhibits
A and B, respectively (with such modifications as may be agreed to by ATTIMCO).
NCR hereby agrees to give Receipts and Releases substantially in such forms
unless it determines in good faith that either (I) AT&T or ATTIMCO has failed to
comply with the requirements of this Section 3.1(c) or (II) it is required by
ERISA to withhold such Receipts and Releases.
(d) RELEASE AND ASSUMPTION OF LIABILITIES.
(i) RELEASES. Effective Immediately after the NCR Distribution
Date, NCR does hereby, for itself and each other member of the NCR Group, their
respective Affiliates (other than any member of the AT&T Services Group (as
defined in the Separation and Distribution Agreement) or the Lucent Group),
successors and assigns, and all Persons who at any time prior to the NCR
Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the NCR Group (in each case, in their respective
capacities as such), remise, release and forever discharge AT&T, the members of
the AT&T Services Group, their respective Affiliates (other than any member of
the NCR Group), successors and assigns, and all Persons who at any time prior to
the NCR Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the AT&T Services Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever
relating to or arising out of the participation by any of the NCR Pension Plans
in the MPT or the Prior MPT or the participation by the MPT in the LTIT;
provided that the foregoing shall not release AT&T from the obligation to carry
out the First Transfer and the Second Transfer in accordance with Section 3.1(c)
above.
(ii) ASSUMPTION OF LIABILITIES. Without limiting the generality
of Section 2.1 above, NCR hereby assumes or retains, as applicable, and agrees
to pay, perform, fulfill and discharge, in accordance with their respective
terms: (A) all Liabilities relating to, arising out of or resulting from the
administration, or investment of the assets of, any of the NCR Pension Plans;
(B) all other Liabilities relating to, arising out of or resulting from any of
the NCR Pension Plans; and (C) NCR's allocable share of any amounts which AT&T
or any Affiliate of AT&T pays to any fiduciary of the MPT, the Prior MPT or the
LTIT pursuant to any obligation to indemnify such fiduciary with respect to
actions or omissions occurring while assets of any of the NCR Pension Plans were
held in the MPT, the Prior MPT or the LTIT, as applicable; such allocable share
to equal a percentage of such amounts paid by AT&T or such Affiliate equal to
the average percentage of the total value of the assets of the MPT, the Prior
MPT or the LTIT, as applicable,
during the period of time when such actions or omissions occurred, that was
allocable to the NCR Pension Plans.
3.2 NCR SAVINGS PLAN. (a) REPLACEMENT FIDUCIARIES. NCR
shall take all
steps necessary and appropriate, including the amendment of the
plan document
and related trust agreement, so that effective no later than
Immediately after
the NCR Distribution Date, one or more individuals or entities
appointed by NCR
shall (i) replace AT&T in all of its capacities under the NCR
Savings Plan,
including as named fiduciary with respect to investment,
reinvestment and
administration of assets and with respect to the power to remove
and replace
trustees and investment managers, and (ii) replace or be
reappointed as the
trustee, investment managers, custodians and other fiduciaries
with respect to
the NCR Savings Plan.
(b) RELEASE. Effective Immediately after the NCR Distribution Date,
NCR does hereby, for itself and each other member of the NCR Group, their
respective Affiliates (other than any member of the AT&T Services Group (as
defined in the Separation and Distribution Agreement)), successors and assigns,
and all Persons who at any time prior to the NCR Distribution Date have been
shareholders, directors, officers, agents or employees of any member of the NCR
Group (in each case, in their respective capacities as such), remise, release
and forever discharge AT&T, the members of the AT&T Services Group, their
respective Affiliates (other than any member of the NCR Group), successors and
assigns, and all Persons who at any time prior to the NCR Distribution Date have
been shareholders, directors, officers, agents or employees of any member of the
AT&T Services Group (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever relating to or arising out of the NCR Savings
Plan.
ARTICLE IV
EXECUTIVE BENEFITS
4.1 GENERAL. Effective Immediately after the NCR Distribution Date,
except as otherwise specified in this Article IV and in Section 5.2 hereof: (a)
NCR shall be solely responsible for all Liabilities to or with respect to NCR
Individuals under all AT&T Executive Benefit Plans; (b) AT&T shall be solely
responsible for all Liabilities to or with respect to AT&T Individuals under all
NCR Executive Benefit Plans; (c) no NCR Individuals shall continue to
participate in or to accrue benefits under any AT&T Executive Benefit Plans; and
(d) no AT&T Individuals shall continue to participate in or to accrue benefits
under any NCR Executive Benefit Plans.
4.2 NONQUALIFIED PLANS.
(a) NCR SERPS. NCR shall cause the Supplemental
Pension Plan for
Transfers to be amended, effective Immediately after the NCR Distribution Date,
to provide that no individual will be eligible to participate therein as a
result of or with respect to transfers of employment from AT&T or a Person that
is, at the time of such transfer, an AT&T Controlled Person to NCR or a Person
that is, at the time of such transfer, an NCR Controlled Person, or vice versa,
occurring after the Close of the NCR Distribution Date. NCR shall remain solely
responsible for all Liabilities to or relating to NCR Individuals under the
Supplemental Pension Plan for Transfers, and for all Liabilities for benefits
accrued by AT&T Individuals through the Close of the Distribution Date under the
NCR SERPs.
(b) AT&T SERPS. AT&T shall remain solely responsible for all
Liabilities for benefits accrued by NCR Individuals through the close of the
Distribution Date under the AT&T Mid-Career Pension Plan and the AT&T
Non-Qualified Pension Plan.
4.3 AT&T LONG TERM INCENTIVE PLANS.
(a) GENERAL. NCR shall use its reasonable best efforts to take all
actions necessary or appropriate (including obtaining consents of affected
individuals) so that each outstanding Award granted under any AT&T Long Term
Incentive Plan held by any NCR Employee shall be replaced to the extent required
by this Section 4.3 with an Award based on NCR Common Stock. Effective
Immediately after the NCR Distribution Date, (i) NCR shall establish a Long Term
Incentive Plan providing for awards to employees of NCR and its Affiliates based
upon NCR Common Stock, (ii) NCR shall be solely responsible for all Liabilities
under the AT&T Long Term Incentive Plan to NCR Employees, and (iii) AT&T shall
remain solely responsible for all Liabilities under the AT&T Long Term Incentive
Plan to NCR Individuals who are not NCR Employees.
(b) NCR EMPLOYEES.
(i) STOCK OPTIONS. NCR shall cause each Award consisting of an
AT&T Option that is outstanding and held by an NCR Employee as the Close of the
NCR Distribution Date to be replaced, effective Immediately after the NCR
Distribution Date, with an NCR Option. Such NCR Option shall provide for the
purchase of a number of shares of NCR Common Stock equal to the number of shares
of AT&T Common Stock subject to such AT&T Option as of the Close of the NCR
Distribution Date, multiplied by the Ratio, and then rounded down to the nearest
whole share. NCR shall pay to the holder of such replacement Award, at the time
of such replacement, cash in lieu of any fractional share equal to the product
of (A) the fraction represented by such fractional share times (B)(1) the excess
of the NCR Stock Value over (2) the per-share exercise price of such AT&T Option
as the Close of the NCR Distribution Date divided by the Ratio. The per-share
exercise price of such NCR Option shall equal the per-share exercise price of
such AT&T Option as of the Close of the NCR Distribution Date divided by the
Ratio. Each such NCR Option shall otherwise have the same terms and conditions
as were applicable to the corresponding AT&T Option as of the Close of the NCR
Distribution Date, except that references to AT&T and its Affiliates shall be
amended to refer to NCR and its Affiliates.
(ii) PERFORMANCE SHARES AND STOCK UNITS. NCR shall cause each
Award consisting of AT&T performance shares or AT&T stock units that is
outstanding and held by an NCR Employee as of the Close of the NCR Distribution
Date to be replaced, effective Immediately after the NCR Distribution Date, with
a new performance share award or a new stock unit award, as the case may be,
consisting of a number of NCR performance shares or NCR stock units, as the case
may be, equal to the number of AT&T performance shares or AT&T stock units, as
the case may be, constituting such Award as of the Close of the NCR Distribution
Date, multiplied by the Ratio, and then rounded down to the nearest whole share.
NCR shall pay to the holder of such replacement Award, at the time of such
replacement, cash in lieu of any fractional share based on the NCR Stock Value.
Each such replacement Award shall otherwise have the same terms and conditions
as were applicable to the corresponding AT&T Award as of the Close of the NCR
Distribution Date, except that references to AT&T and its Affiliates shall be
amended to refer to NCR and its Affiliates and dividend equivalent payments, if
any, with respect to dividends, the record date for which is after the Close of
the NCR Distribution Date shall be paid with reference to dividends, if any, on
NCR Common Stock.
(iii) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. NCR shall
cause each Award that consists of non-vested restricted shares of AT&T Common
Stock or restricted stock units relating to shares of AT&T Common Stock that is
outstanding and held by an NCR Employee as of the Close of the NCR Distribution
Date, other than the Awards described in Schedule VII, to be replaced, effective
Immediately after the NCR Distribution Date, with either a replacement Award
described below or such other form of compensation not based on NCR Common Stock
as NCR shall determine. Any such replacement Award shall be a new Award
consisting of a number of non-vested restricted shares of NCR Common Stock
and/or restricted stock units relating to shares of NCR Common Stock equal to
the number of non-vested restricted shares or restricted stock units of AT&T
Common Stock constituting such Award as of the Close of the NCR Distribution
Date multiplied by the Ratio, and then rounded down to the nearest whole share.
NCR shall pay to the holder of any such replacement Award, at the time of such
replacement, cash in lieu of any fractional share based on the NCR Stock Value.
Each such replacement Award shall otherwise have the same terms and conditions
as were applicable to the corresponding AT&T Award as of the Close of the NCR
Distribution Date, except that references to AT&T and its Affiliates shall be
amended to refer to NCR and its Affiliates and dividend equivalent payments, if
any, with respect to dividends, the record date for which is after the NCR
Distribution Date shall be paid with reference to dividends, if any, on NCR
Common Stock.
(iv) CHARGEBACK. If, at any time after the Close of the NCR
Distribution Date, AT&T is required to deliver shares of AT&T Common Stock, or
shares of AT&T Common Stock vest, pursuant to an Award that NCR fails to replace
pursuant to this Section 4.3 or an Award listed on Schedule VII, NCR shall pay
AT&T the following amounts: (A) with respect to each such Award that is an AT&T
Option, the Spread on such Option; (B) with respect to the vesting or delivery
of shares of AT&T Common Stock pursuant to such an Award (other than an AT&T
Option), the Value of such AT&T Common Stock on the date of such vesting or
delivery and (C) with respect to each such Award, the amount of any withholding
taxes with respect thereto which are not paid or reimbursed to AT&T by the
holder of such Award. In addition, NCR shall pay AT&T the amount of any payments
made by AT&T with respect to fractional shares under any Award that NCR fails to
replace pursuant to this Section 4.3 or an Award listed on Schedule VII. AT&T
shall bill NCR for such amounts from time to time (but only after the exercise,
purchase, vesting, delivery or payment that gives rise to the obligation to make
any such payment), and NCR shall pay such amounts promptly after receipt of such
bills. The "Spread" on an Option means the excess, if any, of the Value of the
purchased shares on the date of exercise of such Option over the price paid for
such shares. The "Value" of a share of AT&T Common Stock on a given date means
the average of the high and the low per-share prices of the AT&T Common Stock as
listed on the NYSE on such date, or if there is no trading on the NYSE on such
date, on the most recent previous date on which such trading takes place.
(c) NCR INDIVIDUALS WHO ARE NOT NCR EMPLOYEES. Each Award that is
outstanding and held by an NCR Individual other than an NCR Employee as of the
Close of the NCR Distribution Date shall remain outstanding Immediately after
the NCR Distribution Date in accordance with its terms as applicable as of the
Close of the NCR Distribution Date, subject to such adjustments as may be
applicable to outstanding Awards held by AT&T Individuals.
4.4 AT&T SPLIT DOLLAR LIFE INSURANCE. AT&T and NCR shall take all
actions necessary or appropriate to assign to NCR, effective Immediately after
the NCR Distribution Date, AT&T's rights and interests in the Split Dollar Life
Insurance policies under the Senior Management Individual Life Insurance Program
and the Senior Management Basic Life Insurance Program issued by Metropolitan
Life Insurance Company, Hartford Life Insurance Company, and Confederation Life
Insurance Company (or their successors in interest, including Pacific Mutual
Life Insurance Company), and any additional split dollar life insurance program
that may be implemented by AT&T before the Close of the NCR Distribution Date,
with respect to NCR Individuals (such policies, the "Assigned Split Dollar
Policies"). Such actions shall include NCR's acceptance of any collateral
assignments, policy endorsements or such other documentation executed by or on
behalf of NCR Individuals, or any trustee of any trust to which such
individual's policy rights or incidents of ownership under the Assigned Split
Dollar Policies have been assigned, and NCR's entering into such agreements as
may be necessary to fulfill any obligations of AT&T to any insurance company or
insurance agent or broker under the Assigned Split Dollar Policies. From and
after the date of the assignment of any Assigned Split Dollar Policy to NCR, NCR
shall assume and be solely responsible for all Liabilities, and shall be
entitled to all benefits, of AT&T under such policy and under the Senior
Management Life Insurance Program, the Senior Management Basic Life Insurance
Program and any additional split dollar life insurance program that may be
implemented by AT&T before the Close of the NCR Distribution Date, as the case
may be, with respect to such policies, and any related agreements entered into
by NCR Individuals.
4.5 INDIVIDUAL AGREEMENTS.
(a) GENERAL. Except as specifically provided in the next two
sentences, NCR shall assume or retain, as the case may be, and be solely
responsible for all Liabilities relating to, arising out of or resulting from
NCR Individual Agreements, and AT&T shall assume or retain, as the case may be,
and be solely responsible for all Liabilities relating to, arising out of or
resulting from AT&T Individual Agreements. AT&T shall retain the Liabilities
under NCR Individual Agreements specified on Schedule VIII and shall reimburse
NCR for the amounts described on Schedule IX when and as such amounts are paid
by NCR. NCR shall reimburse AT&T for the amounts described on Schedule X as set
forth thereon. For purposes of this Section 4.5, Liabilities relating to,
arising out of or resulting from NCR Plans or AT&T Plans without reference to
any Individual Agreement shall not be considered to relate to, arise out of or
result from any Individual Agreement, even if such Liabilities or Plans are
described in such Individual Agreements.
(b) PHANTOM SHARE ACCOUNTS. The phantom AT&T Shares credited to
each of the phantom share accounts established pursuant to the agreements listed
on Schedule XI shall be converted, effective Immediately after the NCR
Distribution Date, to a number of phantom NCR Shares equal to the number of such
phantom AT&T Shares reflected in such account as of the Close of the NCR
Distribution Date multiplied by the Ratio. If AT&T declares any dividend (other
than the dividend that effects the NCR Distribution), the record date for which
is before the NCR Distribution Date and the payment date for which is after the
NCR Distribution Date, each such phantom share account shall be credited with
such dividend in accordance with the terms of the relevant agreement listed on
Schedule XI, except that such dividend shall be converted into NCR Common Stock
rather than AT&T Common Stock. After the Close of the NCR Distribution Date, the
dividends credited to such phantom share accounts shall be determined by
reference to dividends on NCR Common Stock rather than AT&T Common Stock.
ARTICLE V
MISCELLANEOUS BENEFITS
5.1 EMPLOYEE STOCK PURCHASE PLAN. NCR shall cause the 1994 Employee
Stock Purchase Plan for NCR, and any options that are then outstanding under
such Plan, to be terminated no later than the record date for the NCR
Distribution.
5.2 SHORT TERM INCENTIVE PLANS. AT&T shall be solely responsible for
all Liabilities to NCR Individuals under the AT&T Short Term Incentive Plans for
the 1996 performance year and (if the NCR Distribution Date occurs after
December 31, 1996) subsequent performance years, to the extent they participated
therein. NCR shall be solely responsible for all Liabilities to AT&T Individuals
under the NCR Short Term Incentive Plans for the 1996 performance year and (if
the NCR Distribution Date occurs after December 31, 1996) subsequent performance
years, to the extent they participated therein.
ARTICLE VI
FOREIGN PLANS; INTERCHANGE
6.1 FOREIGN PLANS. AT&T and NCR shall use reasonable best efforts so
that as soon as practicable after the date of this Agreement, AT&T, Lucent and
NCR shall enter into an agreement regarding the treatment of employee benefit
plans maintained for the benefit of employees outside the U.S. substantially in
the form set forth in Exhibit C hereto.
6.2 INTERCHANGE AGREEMENT. AT&T and NCR shall use
reasonable best
efforts so that as soon as practicable after the date of this
Agreement, AT&T,
Lucent and NCR shall enter into an agreement regarding the treatment, for
purposes of their respective Plans, of individuals whose employment is
transferred between them, which agreement shall be substantially in the form set
forth in Exhibit D hereto.
ARTICLE VII
MISCELLANEOUS
7.1 SHARING OF PARTICIPANT INFORMATION. AT&T and NCR shall share, and
shall cause their respective Affiliates to share, with each other and their
respective agents and vendors (without obtaining releases) all participant, plan
design and other information necessary for the efficient and accurate
administration of, compliance with laws and regulations applicable to, and
response to inquiries by governmental authorities regarding, the AT&T Plans and
the NCR Plans after the Close of the NCR Distribution Date. AT&T and NCR and
their respective authorized agents shall, subject to applicable laws on
confidentiality, be given reasonable and timely access to, and may make copies
of, all information relating to the subjects of this Agreement in the custody of
the other party, to the extent necessary for such administration. All
participant information shall be provided in a manner and medium that is
compatible with the data processing systems of AT&T as in effect as of the Close
of the NCR Distribution Date, unless otherwise agreed to by AT&T and NCR.
7.2 NO CHANGE OF CONTROL; NO RIGHTS CREATED; NO
RESTRICTIONS. The NCR
Distribution shall not be considered to result in a "change of
control" of NCR
or any Person that is, as of the Close of the NCR Distribution
Date, an NCR
Controlled Person, or any
similar event for purposes of any NCR Plan or NCR Individual Agreement, and NCR
shall take all steps necessary or appropriate, including amending any NCR Plan
or NCR Individual Agreement or obtaining any necessary approvals or consents, to
ensure the foregoing result. No provision of this Agreement or of the
Distribution Agreement shall be construed to create any right to any
compensation or benefit whatsoever on the part of any NCR Individual, AT&T
Individual or other future, present or former employee of AT&T, any of its
Affiliates, NCR or any of its Affiliates under any AT&T Plan or NCR Plan or
otherwise. Nothing in this Agreement shall preclude AT&T or NCR, at any time
after the Close of the NCR Distribution Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
AT&T Plan or NCR Plan, as applicable, any benefit under any Plan or any trust,
insurance policy or funding vehicle related to any AT&T Plan or NCR Plan, as
applicable.
7.3 EFFECT IF NCR DISTRIBUTION DOES NOT OCCUR. If the
NCR Distribution
does not occur, then all actions and events that are, under this
Agreement, to
be taken or occur effective as of the Close of the NCR
Distribution Date,
Immediately after the NCR Distribution Date, or otherwise in connection with the
NCR Distribution, shall not be taken or occur except to the extent specifically
agreed by NCR and AT&T.
7.4 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
7.5 AFFILIATES. Each of AT&T and NCR shall cause to be performed, and
hereby guarantees the performance of, all actions, agreements and obligations
set forth in this Agreement to be performed by a Person that is, at the time of
such performance, an AT&T Controlled Person or an NCR Controlled Person,
respectively.
7.6 INCORPORATION OF DISTRIBUTION AGREEMENT PROVISIONS. The following
provisions of the Distribution Agreement are hereby incorporated herein by
reference, and unless otherwise expressly specified herein, such provisions
shall apply as if fully set forth herein (references in this Section 7.6 to an
"Article" or "Section" shall mean Articles or Sections of the Distribution
Agreement, and, except as expressly set forth below, references in the material
incorporated herein by reference shall be references to the Distribution
Agreement): Article IV (relating to Mutual Releases and Indemnification);
Section 5.2 (relating to Exchange of Information and Archives); Article VI
(relating to Further Assurances and Additional Covenants); Article VII (relating
to Termination); and Article VIII (relating to Miscellaneous) other than Section
8.2 (relating to Governing Law).
7.7 INCORPORATION OF SEPARATION AND DISTRIBUTION AGREEMENT PROVISIONS.
Article IX of the Separation and Distribution Agreement (relating to Arbitration
and Dispute Resolution) is hereby incorporated herein by reference, and unless
otherwise expressly specified herein, such provision shall apply as if fully set
forth herein (references in the material incorporated herein by reference shall
be references to the Separation and Distribution Agreement).
7.8 GOVERNING LAW. To the extent not preempted by
applicable federal
law, this Agreement shall be governed by, construed and
interpreted in
accordance with the laws of the State of New York, irrespective of
the choice of
laws principles of the State of New
York, as to all matters, including matters of validity, construction, effect,
performance and remedies.
7.9 TAX DEDUCTIONS. It is the intention of AT&T and NCR that the party
that actually bears the cost (whether directly or indirectly) of making a
payment with respect to, or (except as provided below) whose stock is used to
satisfy, a Liability governed by this Agreement shall be entitled to any and all
tax benefits associated therewith, including the benefit of taking a deduction
with respect to such payment or satisfaction for income tax purposes, and shall
be obligated to satisfy all tax withholding obligations with respect thereto,
and AT&T and NCR agree to take no action inconsistent with such intention.
Notwithstanding the foregoing, AT&T and NCR recognize that it is possible that
the Internal Revenue Service or another taxing authority will take a different
position. Therefore, AT&T and NCR agree that: (a) if either of them is notified
by the Internal Revenue Service or another taxing authority that it is taking or
proposes to take a different position, the party receiving such notice shall so
notify the other; (b) if, when and to the extent that AT&T or a Person that is
then an AT&T Controlled Person receives a tax benefit as a result of a payment
made by NCR or a Person that is then an NCR Controlled Person with respect to,
or the use of NCR Common Stock to satisfy, a Liability governed by this
Agreement, AT&T shall pay to NCR, or shall cause such AT&T Controlled Person to
pay to NCR, an amount equal to the net tax benefit realized by AT&T or such AT&T
Controlled Person, as and when realized; and (c) if and to the extent that NCR
or a Person that is then an NCR Controlled Person receives a tax benefit as a
result of a payment made by AT&T or a Person that is then an AT&T Controlled
Person with respect to, or (except as provided below) the use of AT&T stock to
satisfy, a Liability governed by this Agreement, NCR shall pay to AT&T, or shall
cause such NCR Controlled Person to pay to AT&T, an amount equal to the net tax
benefit realized by NCR or such NCR Controlled Person, as and when realized. For
purposes of this Section 7.9, NCR shall be entitled to any and all tax benefits
with respect to Awards as to which NCR makes a payment to AT&T required by
Section 4.3(b)(iv) hereof, and AT&T shall not be entitled to any such tax
benefits, notwithstanding the fact that its stock is used to satisfy, or it pays
cash to satisfy, the Liabilities with respect to such Awards; provided, that
AT&T shall be obligated in the first instance to satisfy all tax withholding
obligations with respect thereto, subject to reimbursement by NCR pursuant to
Section 4.3(b)(iv) hereof. The net tax benefit to either party resulting from
payment or satisfaction of a Liability shall be deemed to equal the excess of
(i) the taxes that would have been paid by such party if such party had not paid
or satisfied such Liability over (ii) the taxes that are actually paid by such
party.
7.10 AGREEMENTS WITH THIRD PARTIES. The provisions of this Agreement
regarding the allocation of Liabilities are intended only to provide for such
allocation as between AT&T and NCR, and shall have no effect on any agreements
with respect thereto among AT&T, any of its Affiliates and/or one or more third
parties, or among NCR and any of its Affiliates and/or one or more third
parties, including the Lucent EBA. To the extent that (i) any Liability assumed
or retained by NCR hereunder, (ii) any other Liability accrued under any NCR
Plan not specifically assumed by AT&T hereunder, or (iii) any other
employee-related Liability primarily related to, arising out of or resulting
from the operation of the NCR Business (as conducted at any time prior to, on or
after the NCR Distribution Date) not specifically assumed by AT&T hereunder, is
subject to the sharing arrangement for Contingent Liabilities under Section
6.3(b)(ii) of the Separation and Distribution Agreement, NCR shall be solely
responsible for AT&T's share thereof (as determined pursuant to said Section
6.3(b)(ii)), but no provision of this Agreement shall be deemed to relieve or
release Lucent from responsibility for its share thereof (as determined pursuant
to said Section 6.3(b)(ii)).
7.11 NCR TO HONOR AGREEMENTS. NCR shall honor, and shall cause Persons
who are, at any time hereafter, NCR Controlled Persons to honor, all obligations
to their respective employees and former employees, except to the extent such
obligations are expressly assumed by AT&T pursuant to this Agreement. To the
extent the obligations referred to in the preceding sentence are obligations
pursuant to agreements referred to in Schedule 6.12 to the Agreement and Plan of
Merger, dated May 6, 1991, as amended as of July 17, 1991, among AT&T,
Subsidiary Corporation and NCR, the individuals who are entitled to third-party
beneficiary rights with respect thereto under said Schedule 6.12 shall be
entitled to third-party beneficiary rights with respect to the preceding
sentence.
IN WITNESS WHEREOF, the parties have caused this Employee
Benefits Agreement to be duly executed as of the day and year first above
written.
AT&T CORP.
By:_______________________________
Name:
Title:
NCR CORPORATION
By:_______________________________
Name:
Title: