THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS DOCUMENT IS
DATED NOVEMBER 22, 1991
AT&T 1987 LONG TERM INCENTIVE PROGRAM
(as amended December 17, 1997)
SECTION 1. PURPOSE. The purposes of the AT&T 1987 Long Term Incentive
Program (the "Plan") are to encourage selected key employees of American
Telephone and Telegraph Company (the "Company") and its Affiliates to acquire a
proprietary and vested interest in the growth and performance of the Company, to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of share
owners, and to enhance the ability of the Company and its Affiliates to attract
and retain individuals of exceptional managerial talent upon whom, in large
measure, the sustained progress, growth and profitability of the Company
depends.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:
(a) "Affiliate" shall mean (i) any Person that directly, or through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Company or (ii) any entity in which the Company has a significant
equity interest, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share, Performance Unit, Dividend Equivalent, Other
Stock Unit Award, or any other right, interest, or option relating to Shares or
other securities of the Company granted pursuant to the provisions of the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted by the Committee hereunder
and signed by both the Company and the Participant.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Compensation Committee of the Board, composed
of not less than three directors each of whom is a Disinterested Person.
(g) "Company" shall mean American Telephone and Telegraph Company.
(h) "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as amended, or any successor definition adopted
by the Commission.
(i) "Dividend Equivalent" shall mean any right granted pursuant to Section
13(h) hereof.
(j) "Employee" shall mean any salaried employee of the Company or of any
Affiliate.
(k) "Fair Market Value" shall mean, with respect to any property, the market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(l) "Incentive Stock Option" shall mean an Option granted under Section 6
hereof that is intended to meet the requirements of Section 422A of the Code or
any successor provision thereto.
(m) "Nonstatutory Stock Option" shall mean an Option granted under Section 6
hereof that is not intended to be an Incentive Stock Option.
(n) "Option" shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.
(o) "Other Stock Unit Award" shall mean any right granted to a Participant
by the Committee pursuant to Section 10 hereof.
(p) "Participant" shall mean an Employee who is selected by the Committee to
receive an award under the Plan.
(q) "Performance Award" shall mean any Award of Performance Shares or
Performance Units pursuant to Section 9 hereof.
(r) "Performance Period" shall mean that period established by the Committee
at the time any Performance Award is granted or at any time thereafter during
which any performance goals specified by the Committee with respect to such
Award are to be measured.
(s) "Performance Share" shall mean any grant pursuant to Section 9 hereof of
a unit valued by reference to a designated number of Shares, which value may be
paid to the Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Shares, or any combination
thereof, upon achievement of such performance goals during the Performance
Period as the Committee shall establish at the time of such grant or thereafter.
(t) "Performance Unit" shall mean any grant pursuant to Section 9 hereof of
a unit valued by reference to a designated amount of property other than Shares,
which value may be paid to the Participant by delivery of such property as the
Committee shall determine, including, without limitation, cash, Shares, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant or
thereafter.
(u) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(v) "Restricted Stock" shall mean any Share issued with the restriction that
the holder may not sell, transfer, pledge, or assign such Share and with such
other restrictions as the Committee, in its sole discretion, may impose
(including, without limitation, any restriction on the right to vote such Share,
and the right to receive any cash dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
(w) "Restricted Stock Award" shall mean an award of Restricted Stock under
Section 8 hereof.
(x) "Senior Manager" shall mean any manager of the Company or any Affiliate
holding a position above salary grade 14 or any future salary grade that is the
equivalent thereof.
(y) "Shares" shall mean the common shares of the Company, $1.00 par value,
and such other securities of the company as the Committee may from time to time
determine.
(z) "Stock Appreciation Right" shall mean any right granted to a Participant
pursuant to Section 7 hereof to receive, upon exercise by the Participant, the
excess of (i) the Fair Market Value of one Share on the date of exercise or, if
the Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise over (ii) the grant price of the right on the date
of grant, or if granted in connection with an outstanding Option on the date of
grant of the related Option, as specified by the Committee in its sole
discretion, which shall not be less than the Fair Market Value of one Share on
such date of grant of the right or the related Option, as the case may be. Any
payment by the Company in respect of such right may be made in cash, Shares,
other property, or any combination thereof, as the Committee, in its sole
discretion, shall determine.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee.
The Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company and
its Affiliates to whom Awards may from time to time be granted hereunder; (ii)
determine the type or types of Award to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property or cancelled or suspended; (vi) determine
whether, to what extent and under what circumstances cash, Shares and other
property and other amounts payable with respect to an Award under this Plan
shall be deferred either automatically or at the election of the Participant;
(vii) interpret and administer the Plan and any instrument or agreement entered
into under the Plan; (viii) establish such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan. Decisions
of the Committee shall be final, conclusive and binding upon all persons,
including the Company, any Participant, any shareholder, and any employee of the
Company or of any Affiliate. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.
SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 4(b), the total number of
Shares available for grant under the Plan in each calendar year shall be
three-fifths of one percent (0.6%) of the total outstanding Shares as of the
first day of such year for which the Plan is in effect; PROVIDED that such
number shall be increased in any year by the number of Shares available for
grant hereunder in previous years but not covered by Awards granted hereunder in
such years; and PROVIDED, FURTHER that no more than twenty million (20,000,000)
Shares shall be cumulatively available for the grant of Incentive Stock Options
under the Plan. In addition, any Shares issued by the Company through the
assumption or substitution of outstanding grants from an acquired company shall
not reduce the shares available for grants under the Plan. Any Shares issued
hereunder may consist, in whole or in part, of authorized and unissued shares or
treasury shares. If any Shares subject to any Award granted hereunder are
forfeited or such Award otherwise terminates without the issuance of such Shares
or of other consideration in lieu of such Shares, the Shares subject to such
Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan.
(b) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Shares, such adjustment shall be made in the aggregate number and
class of Shares which may be delivered under the Plan, in the number, class and
option price of Shares subject to outstanding Options granted under the Plan,
and in the value of, or number or class of Shares subject to, Awards granted
under the Plan as may be determined to be appropriate by the Committee, in its
sole discretion, PROVIDED that the number of Shares subject to any Award shall
always be a whole number.
SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the Committee)
shall be eligible to be selected as a Participant.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve. Any such Option shall be subject to
the following terms and conditions and to such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:
(a) OPTION PRICE. The purchase price per Share purchasable under an Option
shall be determined by the Committee in its sole discretion; PROVIDED that such
purchase price shall not be less than the Fair Market Value of the Share on the
date of the grant of the Option.
(b) OPTION PERIOD. The term of each Option shall be fixed by the Committee
in its sole discretion; PROVIDED that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the date the Option is
granted.
(c) EXERCISABILITY. Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant. Unless otherwise
determined by the Committee at or subsequent to grant, no Incentive Stock Option
shall be exercisable during the year ending on the day before the first
anniversary date of the granting of the Incentive Stock Option.
(d) METHOD OF EXERCISE. Subject to the other provisions of the Plan and any
applicable Award Agreement, any Option may be exercised by the Participant in
whole or in part at such time or times, and the Participant may make payment of
the option price in such form or forms, including, without limitation, payment
by delivery of cash, Shares or other consideration (including, where permitted
by law and the Committee, Awards) having a Fair Market Value on the exercise
date equal to the total option price, or by any combination of cash, Shares and
other consideration as the Committee may specify in the applicable Award
Agreement.
(e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options
held by any Participant which are granted after December 31, 1986, and
exercisable for the first time by such Participant during any calendar year
under the Plan (and under any other benefit plans of the Company or of any
parent or subsidiary corporation of the Company) shall not exceed $100,000 or,
if different, the maximum limitation in effect at the time of grant under
Section 422A of the Code, or any successor provision, and any regulations
promulgated thereunder. The terms of any Incentive Stock Option granted
hereunder shall comply in all respects with the provisions of Section 422A of
the Code, or any successor provision, and any regulations promulgated
thereunder.
(f) FORM OF SETTLEMENT. In its sole discretion, the Committee may provide,
at the time of grant, that the shares to be issued upon an Option's exercise
shall be in the form of Restricted Stock or other similar securities, or may
reserve the right so to provide after the time of grant.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock Appreciation Rights need not be
the same with respect to each recipient. Any Stock Appreciation Right related to
a Nonstatutory Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such Option.
Any Stock Appreciation Right related to an Incentive Stock Option must be
granted at the same time such Option is granted. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 8. RESTRICTED STOCK.
(a) ISSUANCE. Restricted Stock Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient.
(b) REGISTRATION. Any Restricted Stock issued hereunder may be evidenced in
such manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.
(c) FORFEITURE. Except as otherwise determined by the Committee at the time
of grant, upon termination of employment for any reason during the restriction
period, all shares of Restricted Stock still subject to restriction shall be
forfeited by the Participant and reacquired by the Company; PROVIDED that in the
event of a Participant's retirement, permanent disability, other termination of
employment or death, or in cases of special circumstances, the Committee may, in
its sole discretion, when it finds that a waiver would be in the best interests
of the Company, waive in whole or in part any or all remaining restrictions with
respect to such Participant's shares of Restricted Stock. Unrestricted Shares,
evidenced in such manner as the Committee shall deem appropriate, shall be
issued to the grantee promptly after the period of forfeiture, as determined or
modified by the Committee, and shall expire without forfeiture in respect of
such shares of Restricted Stock.
SECTION 9. PERFORMANCE AWARDS. Performance Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. Except as provided in
Section 11, Performance Awards will be distributed only after the end of the
relevant Performance Period. Performance Awards may be paid in cash, Shares,
other property or any combination thereof, in the sole discretion of the
Committee at the time of payment. The performance levels to be achieved for each
Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or, in
accordance with procedures established by the Committee, on a deferred basis.
SECTION 10. OTHER STOCK UNIT AWARDS.
(a) STOCK AND ADMINISTRATION. Other Awards of Shares and other Awards that
are valued in whole or in part by reference to, or are otherwise based on,
Shares or other property ("Other Stock Unit Awards") may be granted hereunder to
Participants, either alone or in addition to other Awards granted under the
Plan. Other Stock Unit Awards may be paid in Shares, other securities of the
Company, cash or any other form of property as the Committee shall determine.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees of the Company and its Affiliates
to whom and the time or times at which such Awards shall be made, the number of
shares of Stock to be granted pursuant to such Awards, and all other conditions
of the Awards. The provisions of Other Stock Unit Awards need not be the same
with respect to each recipient.
(b) TERMS AND CONDITIONS. Subject to the provisions of this Plan and any
applicable Award Agreement, Shares subject to Awards made under this Section 10,
may not be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the Shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses. Shares (including
securities convertible into Shares) granted under this Section 10 may be issued
for no cash consideration or for such minimum consideration as may be required
by applicable law; Shares (including securities convertible into Shares)
purchased pursuant to a purchase right awarded under this Section 10 shall be
purchased for such consideration as the Committee shall in its sole discretion
determine, which shall not be less than the Fair Market Value of such Shares or
other securities as of the date such purchase right is awarded.
SECTION 11. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any Change
in Control of the Company, as hereinafter defined, the Committee, as constituted
before such Change in Control, may, in its sole discretion, as to any Award,
either at the time an Award is made hereunder or any time thereafter, take any
one or more of the following actions: (i) provide for the acceleration of any
time periods relating to the exercise or realization of any such Award so that
such Award may be exercised or realized in full on or before a date fixed by the
Committee; (ii) provide for the purchase of any such Award, upon the
Participant's request, for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization of the
Participant's rights had such Award been currently exercisable or payable; (iii)
make such adjustment to any such Award then outstanding as the Committee deems
appropriate to reflect such Change in Control; or (iv) cause any such Award then
outstanding to be assumed, or new rights substituted therefor, by the acquiring
or surviving corporation after such Change in Control. The Committee may, in its
discretion, include such further provisions and limitations in any agreement
documenting such Awards as it may deem equitable and in the best interests of
the Company.
(b) A "Change in Control" shall be deemed to have occurred if (a) there
shall have been a change in the composition of the Board such that at any time a
majority of the Board shall have been members of the Board for less than
twenty-four months, unless the election of each new director who was not a
director at the beginning of the period was approved by at least two-thirds of
the directors then still in office who were directors at the beginning of such
period (but in no event by fewer than three such directors); or (b) any Person
acquires 30% or more of the outstanding common shares of the Company.
SECTION 12. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of an optionee or Participant under an Award
theretofore granted, without the optionee's or Participant's consent, or that
without the approval of the Stockholders would:
(a) except as is provided in Section 4(b) of the Plan, increase the total
number of shares reserved for the purpose of the Plan; or
(b) change the employees or class of employees eligible to participate in
the Plan.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his consent. The Committee may also substitute new
Awards for previously granted Awards, including without limitation previously
granted Options having higher option prices.
SECTION 13. GENERAL PROVISIONS.
(a) Unless the Committee determines otherwise at the time the Award is
granted or thereafter: (i) no Award, and no Shares subject to Awards described
in Section 10 which have not been issued or as to which any applicable
restriction, performance or deferral period has not lapsed, may be sold,
assigned, transferred, pledged or otherwise encumbered, except by will or by the
laws of descent and distribution; provided that, if so determined by the
Committee, a Participant may, in the manner established by the Committee,
designate a beneficiary to exercise the rights of the Participant with respect
to any Award upon the death of the Participant; and (ii) each Award shall be
exercisable, during the Participant's lifetime, only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative.
(b) The term of each Award shall be for such period of months or years from
the date of its grant as may be determined by the Committee; PROVIDED that in no
event shall the term of any Incentive Stock Option or any Stock Appreciation
Right related to any Incentive Stock Option exceed a period of ten (10) years
from the date of its grant.
(c) No Employee or Participant shall have any claim to be granted any Award
under the Plan and there is no obligation for uniformity of treatment of
Employees or Participants under the Plan.
(d) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an agreement or other instrument evidencing the Award and delivered a
fully executed copy thereof to the Company, and otherwise complied with the then
applicable terms and conditions.
(e) The Committee shall be authorized to make adjustments in performance
award criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial statements
or changes in applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry it into effect. In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
(f) The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances any Award shall be canceled or
suspended. In addition, all outstanding Awards to any Participant shall be
canceled if the Participant, without the consent of the Company, while employed
by the Company or after termination of such employment, establishes a
relationship with a competitor of the Company or engages in activity which is in
conflict with or adverse to the interest of the Company, as determined under the
AT&T Non-Competition Guideline.
(g) All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(h) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award (including, without limitation, any deferred Award) may,
if so determined by the Committee, be entitled to receive, currently or on a
deferred basis, interest or dividends, or interest or dividend equivalents, with
respect to the number of shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested.
(i) Except as otherwise required in any applicable Award Agreement or by the
terms of the Plan, recipients of Awards under the Plan shall not be required to
make any payment or provide consideration other than the rendering of services.
(j) The Committee may delegate to one or more Senior Managers or a committee
of Senior Managers the right to grant Awards to Employees who are not officers
or directors of the Company and to cancel or suspend Awards to Employees who are
not officers or directors of the Company.
(k) The Company shall be authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due in respect of an
Award or payment hereunder and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes.
(l) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(m) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of New York and applicable Federal law.
(n) If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
SECTION 14. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of July
15, 1987.
SECTION 15. TERM OF PLAN. No Award shall be granted pursuant to the Plan
after 10 years from the date of shareowner approval, but any Award theretofore
granted may extend beyond that date.