1 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
AT&T CAPITAL CORPORATION LEADERSHIP SEVERANCE PLAN
The purpose of the 1996 AT&T Capital Corporation Leadership Severance Plan is to
provide severance benefits to certain of the management employees of AT&T
Capital Corporation (the "Company") and its Subsidiaries.
1. Definitions. As used in this Plan, the following terms shall have
respective meanings set forth below:
(a)"Board" means the Board of Directors of the Company.
(b)"Cause" means (i) a Participant's commission or conviction of a felony
(or guilty or nolo contendere plea in connection therewith); (ii) a
determination by the Board or the Committee that a Participant has
defrauded the Company; or (iii) a determination by the Board or the
Committee that a Participant has committed a material breach of the
duties and responsibilities of the Participant that has caused
significant adverse harm to the Company, which breach is (A)
demonstrably willful and deliberate, (B) committed in bad faith or
without reasonable belief that such breach is in the best interests of
the Company and (C) not remedied within a reasonable period of time
after receipt of written notice from the Company specifying such breach.
(c)"Closing Date" shall have the same meaning as in the Agreement and Plan
of Merger among AT&T Capital Corporation, AT&T Corp., Hercules Limited
and Antigua Acquisition Corporation, dated as of June 5, 1996, and
amended on August 20, 1996.
(d)"Committee" means the Compensation Committee of the
Board.
(e)"Company" means AT&T Capital Corporation, a Delaware
corporation.
(f)"Compensation" means a Participant's then current annual rate of base
salary as of his Date of Termination and his target annual incentive
award for the year in which his Date of Termination occurs (not taking
into account any reductions that would constitute a reason for a
Qualifying Termination) and commissions actually paid during the twelve
(12) months immediately preceding the Date of Termination.
(g)"Continuous Service" means the Participant's continuous
service with the Company (and any of its Subsidiaries),
plus any periods of continuous service with AT&T Corp. or
NCR Corporation (or AT&T Global Information Solutions,
Inc.) prior to January 1, 1994 and any periods of prior
2 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
service that have been designated as "vesting service" under the AT&T
Capital Corporation Retirement and Savings Plan. For purposes of the Plan,
Continuous Service shall be measured as of a participant's Date of
Termination, including any notice period provided for in Section 8 of the
Plan.
(h)"Date of Termination" means the date on which a Participant's employment
with the Company terminates.
(i)"Disability" means, with respect to a Participant, a determination by the
Committee that such Participant has become "disabled" within the meaning of
the Company's long-term disability plan as in effect at the time.
(j)"Final Annual Pay" means the higher of (i) the sum of a Participant's then
current rate of annual base salary as of his Date of Termination and 110%
of target annual incentive under the Company's 1995 Member Annual Incentive
Plan and the Company's 1995 Senior Executive Annual Incentive Plan, or any
successor plan, for the year in which a Date of Termination occurs (not
taking into account any reduction that would constitute a basis for a
Qualifying Termination) and commissions actually paid during the twelve
(12) months immediately preceding the Date of Termination and (ii) for
Participants who have three or more years of service with the Company prior
to the Participant's Date of Termination, the quotient equal to (A) the sum
of a Participant's (1) annual rate of base salary (not taking into account
any reduction that would constitute a basis for a Qualifying Termination),
(2) actual annual incentive payment earned under the Company's 1995 Member
Annual Incentive Plan and the Company's 1995 Senior Executive Annual
Incentive Plan, or any successor plan, and (B) commissions actually paid
during the three (3) consecutive calendar years preceding the Participant's
Date of Termination in which he had the greatest aggregate earnings,
divided by (3) three (3) ("Average Earnings").
For purposes of calculating Final Annual Pay, sign-on fees, retention fees,
waiver fees and any other fees, bonuses or similar compensation shall be
disregarded.
(k)"Other Eligible Termination" means a termination of a Participant's
employment by the Company (other than for Cause, Disability or Retirement),
that is not an RIF Termination.
(l)"Participant" means each employee of the Company or any Subsidiary who is
classified as a "strategic system" member (other than a Corporate
Leadership Team member or a Leadership Forum member) or any equivalent
classification as determined by the Corporate Leadership Team (or any
successor organization) of the Company (a "Strategic Member"), a Leadership
Forum member or a Corporate Leadership Team member (or any successor
classifications to such classifications) who 1) has waived his right to
participate in the Company's Leadership Severance Plan, which became
effective on October 5, 1995, and 2) was employed by the Company on the
Closing Date. Payments and benefits under the Plan will be determined based
upon such classification as of the Participant's Date of Termination (not
taking into account any
3 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
reduction of classification at any time following the Closing Date which,
if such reduction occurred prior to the second anniversary of the Closing
Date, would constitute a reason for a Qualifying Termination under the
Plan).
(m)"Plan" means the 1996 AT&T Capital Corporation Leadership Severance
Plan.
(n)"Qualifying Termination" of the employment of a Participant with the
Company and any relevant Subsidiaries means any of the following:
(i)A termination of a Participant's employment by the Company and its
Subsidiaries prior to the second anniversary of the Closing Date, other
than a termination for Cause or(ii) A termination of employment by a
Participant prior to the second anniversary of the Closing Date for one or
more of the following reasons: (a) a reduction in base salary; (b) a
significant reduction in annual cash target bonus; (c) an elimination or
reduction of the Participant's eligibility to participate in the Company's
benefit plans or programs that is inconsistent with the eligibility of
similarly situated employees of the Company and its Subsidiaries to
participate therein; (d) a significant reduction in the Participant's
duties as they exist immediately after the Closing Date; or (e) an
obligation to relocate more than 50 miles from the Participant's current
work location; Provided that, in the case of any termination of employment
by the Participant pursuant to this paragraph, such termination shall not
be deemed to be a Qualifying Termination unless notice of such termination
occurs within ninety (90) days after the Participant receives notice of the
occurrence of the events constituting the reason for such termination. For
purposes of this Plan, a termination of a Participant's employment by the
Company or the Participant on account of the Participant's death,
Disability or Retirement shall not constitute a Qualifying Termination.
(o)"Retirement" means the voluntary retirement of a Participant pursuant to a
retirement plan of the Company or any relevant Subsidiary.
(p)"RIF Termination" means the termination of a Participant's employment (i)
by the Company as a result of a reduction in force, change in operations,
facility relocation or closing, or other job elimination, or (ii) pursuant
to a Qualifying Termination.
(q)"Subsidiary" means (i) any person that is directly or indirectly controlled
by the Company or (ii) any other person in which the Company has a
significant equity interest, as determined by the Committee.
2. Payments-and Benefits Upon an RIF Termination. In the event a
Participant's employment is terminated as a result of an RIF Termination, the
Company will provide to such Participant the following payments and benefits:
(a) within five (5) days following the Participant's Date of
4 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the greater of (i) two (2) weeks' Compensation for each full year of
Continuous Service and (ii) the percentage of such Participant's Final Annual
Pay set forth below (the "Severance Payments"): (A)for Strategic Members (other
than Leadership Forum members), 100% of Final Annual Pay; (B) for Leadership
Forum members (other than Corporate Leadership Team members), 150% of Final
Annual Pay; and (C) for Corporate Leadership Team members, 200% of Final Annual
(b) (i) Within five (5) days following the Participant's Date of Termination,
the Company shall provide to the Participant a lump sum cash payment (the
"Benefits Payments") in an amount equal to 135% of the Participant's premium
(determined as of the Date of Termination) required to obtain "COBRA" continued
health and dental coverage (under Section 4980B of the Internal Revenue Code of
1986, as amended (the "Code")) for the "continuation periods" set forth below
(each continuation period shall begin on the first day of the calendar month
following the month in which such Participant's Date of Termination occurs);
provided, however, that if such continuation period exceeds the period of
continuation coverage provided pursuant to COBRA, the Participant shall receive
as part of such lump sum payment the cost of the remaining months' coverage as
it would be calculated had COBRA applied:
Strategic Members 12 months
Leadership Forum Members 18 months
Corporate Leadership Team Members 24 months
(ii) In addition, during the continuation periods indicated above, (A) the
Company shall provide life insurance coverage in the amount of one (1) times Pay
(as such term is defined in the Company's Life and Accidental Loss Insurance
Plan, or any comparable definition contained in a replacement or successor plan
(the "Life Insurance Plan")) to the Participant ("Basic Life Insurance"), and
(B) if a Participant was receiving prior to his Date of Termination supplemental
life insurance coverage under the Life Insurance Plan in addition to Basic Life
Insurance ("Supplemental Life Insurance"), such Participant may elect to
continue such Supplemental Life Insurance by paying the difference between the
cost of providing Supplemental Life Insurance and the cost of providing Basic
Life Insurance. If a Participant elects to continue Supplemental Life Insurance,
the cost will be deducted from such Participant's Benefits Payments hereunder.
All benefits granted, payable or otherwise available to Leadership Forum members
and Corporate Leadership Team members under the Company's Financial Counseling
Plan and Executive Car Plan shall continue for a period of one (1) year from the
Participant's Date of Termination. (c)Within five (5) days following the
Participant's Date of Termination, the Company will pay to such Participant a
lump sum cash payment equal to the sum of (i) the Participant's base salary to
the extent earned but not theretofore paid, (ii) any earned, but unpaid, bonus,
(iii) the value of such Participant's accrued, but unused, vacation, personal
days and floating holidays (including days permitted to be carried forward from
the prior year) and (iv) any other amounts due and owing to the Participant by
the Company.
5 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
3. Payments and Benefits Upon an Other Eligible Termination. In the event a
Participant's employment is terminated as a result of an Other Eligible
Termination, the Company will provide to such Participant the following payments
and benefits: (a) Within five (5) days following the Participant's Date of
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the greater of (i) one (1) week's Compensation for each full year of
Continuous Service and (ii) the percentage of such Participant's Final Annual
Pay set forth below (the "Severance Payments"): (A) for Strategic Members (other
than Leadership Forum members), 50% of Final Annual Pay; (B) for Leadership
Forum members (other than Corporate Leadership Team members), 100% of Final
Annual Pay; and (C) for Corporate Leadership Team members, 150% of Final Annual
Pay. (b) (i) Within five (5) days following the Participant's Date of
Termination, the Company shall provide to the Participant a lump sum cash
payment (the "Benefits Payments") in an amount equal to 135% of the
Participant's premium (determined as of the Date of Termination) required to
obtain "COBRA" continued health and dental coverage (under Section 4980B of the
Code) for the following "continuation periods" (each continuation period shall
begin on the first day of the calendar month following the month in which such
Participant's Date of Termination occurs):
Strategic Members 6 months
Leadership Forum Members 12 months
Corporate Leadership Team Members 18 months
(ii) In addition, during the continuation periods indicated above, (A) the
Company shall provide Basic Life Insurance to the Participant and (B) if a
Participant was receiving Supplemental Life Insurance coverage prior to his Date
of Termination, such Participant may elect to continue such Supplemental Life
Insurance by paying the difference between the cost of providing Basic Life
Insurance and the cost of providing Supplemental Life Insurance. If a
Participant elects to continue Supplemental Life Insurance, the cost will be
deducted from such Participant's Benefits Payments hereunder. (c) Within five
(5) days following the Participant's Date of Termination, the Company will pay
to such Participant a lump sum cash payment equal to the sum of (i) the
Participant's base salary to the extent earned but not theretofore paid, (ii)
any earned, but unpaid, bonus, (iii) the value of such Participant's accrued,
but unused, vacation, personal days and floating holidays (including days
permitted to be carried forward from the prior year) and (iv) any other amounts
due and owing to the Participant by the Company.
4. Sale of Division or Unit. Notwithstanding anything contained herein to
the contrary, in the event of a sale of a division or unit of the Company, such
sale shall not result in an RIF Termination or an Other Eligible Termination
with respect to any affected Participant, and no such Participant shall be
eligible to receive the Severance Payments or benefits provided under Section 2
or 3 of the Plan if, in the reasonable judgment of the Plan Administrator, such
Participant is offered a comparable position with comparable compensation with
the acquiring or resulting company in the
6 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
same general geographic area as such Participant's then current position
("Comparable Employment").
5. Certain Additional Payments by the Company and Payment Limitations.
(a) Anything in this Plan to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company or any of
its affiliates to or for the benefit of a Participant who is a Corporate
Leadership Team member or Leadership Forum member (whether paid or payable or
distributed or distributable pursuant to the terms of this Plan, any of the
Company's other compensation, severance, share ownership or benefit plans or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or imposed by any other taxing authority, or any
interest or penalties are incurred by the Participant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Participant
shall be entitled to receive an additional payment (a "Gross-Up Payment"), no
later than twenty (20) days following such Payment in an amount such that after
payment by the Participant of all taxes (and any interest and penalties imposed
with respect thereto) including, without limitation, any income and employment
taxes and Excise Tax, imposed upon the Gross-Up Payment, the Participant retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. All federal, state and local income and employment tax calculations
shall be based upon the maximum marginal rates then in effect.
(b) All determinations required to be made under this Section 5 shall be
made by the Company's public accounting firm that is performing such services
immediately prior to the change in ownership or control giving rise to the
Excise Tax pursuant to Section 4999 of the Code. Such determination shall be
made no later than fifteen (15) days following any Payment. Such accounting firm
shall provide its determination to the Participant and the Company. If the
accounting firm determines that no Excise Tax is payable by the Participant, it
shall furnish the Participant with a written opinion to such effect.
(c) Notwithstanding the foregoing, in the event that the amount of the
Participant's Excise Tax liability is subsequently determined to be greater than
the Excise Tax liability with respect to which the Gross-Up Payment under
Section 5(a) was made, the Company shall pay to the Participant an additional
Gross-Up Payment with respect to such additional Excise Tax (and any interest
and penalties thereon) at the time that the amount of the actual Excise Tax
liability is finally determined.
(d) The Participant and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax and the expenses
of any such proceedings shall be borne solely by the Company.
(e) While the foregoing provisions of Section 5(a) - (d) do not apply to
Strategic Members, all payments made under this Plan to Strategic
7 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
Members shall be subject to the provisions of the AT&T Capital Corporation
Employee Compensation Adjustment Plan, as in effect from time to time.
6. Enhanced Payments. Any Participant who signs a Separation Agreement and
General Release prepared by the Company (substantially in the form attached
hereto as Annex A) in connection with a termination of employment under this
Plan shall receive an additional lump sum payment, within thirty (30) days
following such Participant's execution of a Separation Agreement and General
Release, equal to 20% of the Severance Payment to which such Participant is
entitled.
7. Outplacement Services. The Company will provide Participants with
reasonable outplacement services commensurate with such Participant's position
in the event of an RIF Termination or an Other Eligible Termination.
8. Notice of Termination.
(a) RIF Termination. Each Participant who is entitled to a Severance
Payment in connection with an RIF Termination, other than a Qualifying
Termination pursuant to Section l(n)(ii), shall receive written notice of
termination from the Company at least ninety (90) days prior to the
Participant's Date of Termination.
(b) Other-Eligible Termination. Each Participant who is entitled to a
Severance Payment pursuant to an Other Eligible Termination shall receive
written notice of termination from the Company at least four (4) weeks prior to
the Date of Termination.
(c) Certain Terminations by Participants. A Participant who is terminating
employment pursuant to one of the reasons set forth in Section l(n)(ii) shall
provide the Company with written notice of termination of at least fifteen (15),
but no more than ninety (90), days. Such notice shall be provided at any time
during the 90-day period set forth in Section l(n)(ii).
(d) Payment in Lieu of Notice. Notwithstanding the foregoing, the Company
may, in its sole discretion, remove the Participant from the Company's payroll
(and such date of removal shall be the Participant's Date of Termination) and
provide the following payments in lieu of providing notice hereunder or
receiving the Participant's notice: (i) an amount equal to the sum of (A) the
Participant's base salary as of his Date of Termination (not taking into account
any reductions that would constitute a reason for a Qualifying Termination) for
the remaining applicable notice period and (B) (1) commissions actually earned
by the Participant for the twelve (12) months immediately preceding the
Participant's Date of Termination, divided by (2) 52.2, and (3) multiplied by
the applicable number of weeks of notice, and (ii) in addition to any Benefits
Payments owed hereunder, 100% of such Participant's COBRA premiums (determined
as of the Date of Termination) for the applicable period of notice.
(e) General. Each notice of termination under the Plan shall specify the
category of such termination (i.e., an RIF Termination or an Other Eligible
Termination) and shall be provided (by mail, hand delivery or
8 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
facsimile) to the Participant at his last known address in the Company's records
or at his place of employment or to the Company at its corporate headquarters
(attention Head of Human Resources), as the case may be. Each Participant on a
leave of absence or on disability leave during the applicable notice period will
remain on the Company's payroll for a minimum of thirty (30) days following such
Participant's return from such leave. In the event that, following the delivery
of a notice of termination by a Participant or the Company, the Participant's
employment terminates for a reason other than that specified in the applicable
notice of termination, the Participant's right to receive any applicable
Severance Payment or Benefits Payment described in Section 2 or 3 of the Plan
shall be based upon that other reason rather than the reason specified in the
original notice of termination of employment, and the Company shall have no
obligation to continue the Participant on its payroll after such Participant's
Date of Termination.
9. Transfers. If a Participant accepts a transfer to a position within the
Company or any Subsidiary within the notification period of Section 8, such
Participant will not be treated as being terminated pursuant to an RIF
Termination or Other Eligible Termination.
10. Withholding Taxes. The Company may withhold from all payments due to a
Participant (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
11. Reimbursement of Expenses. If any contest or dispute shall arise under
this Plan involving termination of a Participant's employment with the Company,
and it is finally determined by a court of competent jurisdiction that the
Company failed or refused to perform fully in accordance with the terms hereof,
the Company shall reimburse the Participant for all reasonable legal fees and
expenses incurred by the Participant in connection with such contest or dispute,
together with interest in an amount equal to the prime rate of Citibank, N.A.
from time to time in effect, but in no event higher than the maximum legal rate
permissible under applicable law. Such interest shall accrue from the date the
Company receives the Participant's statement for such fees and expenses through
the date of payment therefor.
12. Termination or Amendment of Plan.
(a) This Plan shall be in effect as of the Closing Date and shall continue
until terminated on the fifth anniversary of the Closing Date.
(b) The Company shall have the right, in its sole discretion, pursuant to
action by the Board or the Committee, to approve any amendment of this Plan;
provided, however, that in no event shall this Plan be amended in any manner
which would adversely affect the rights or potential rights of Participants.
13. Scope of Plan. Nothing in this Plan shall be deemed to entitle any
Participant to continued employment with the Company or its Subsidiaries.
9 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
14. Successors; Binding Obligation.
(a)This Plan shall not be terminated by any merger or consolidation of the
Company whereby the Company is or is not the surviving or resulting corporation
or as a result of any transfer of all or substantially all of the assets of the
Company or a purchase of the securities of the Company. In the event of any such
merger, consolidation, transfer of assets or purchase, the provisions of this
Plan shall be binding upon the surviving or resulting corporation or the person
or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any merger, consolidation,
transfer of assets or purchase of the securities of the Company referred to in
paragraph (a) of this Section 14, it will cause any successor or transferee
unconditionally to assume all of the obligations of the Company hereunder.
(c) This Plan shall inure to the benefit of and be enforceable by each
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If a Participant shall
die while any amounts would be payable to the Participant hereunder had the
Participant continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to such person
or persons appointed in writing by the Participant to receive such amounts or,
if no person is so appointed, to the Participant's estate.
15. Full Settlement. The Company's obligation to make any payments provided
for by this Plan to a Participant and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Participant or others. In no event shall a Participant be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to the Participant under any of the provisions of this Plan and such
amounts shall not be reduced whether or not the Participant obtains other
employment.
16. Employment with Subsidiaries. Employment with the Company for purposes
of this Plan shall include employment with any of its Subsidiaries.
17. Other Severance Payments. All Severance payments due under the Plan
(whether related to an RIF Termination or an Other Eligible Termination) shall
be in addition to any other amounts payable under any other plan of the Company,
but shall be reduced by the present value of any severance payments required to
be paid to a member whose work location is outside the United States pursuant to
any non-U.S. statute, regulation, law or plan.
18. Governing Law; Validity. The interpretation, construction and
performance of this Plan shall be governed by and construed and enforced in
accordance with the internal laws of the State of New Jersey without regard to
the principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or
10 EXHIBIT 10(e)
FORM 10-Q for the Quarter
Ended September 30, 1996
enforceability of any other provision of this Plan, which other provisions shall
remain in full force and effect.
19. Administration. The Company shall be the "Plan Administrator" of the
Plan, but the Plan shall be administered on the Company's behalf by the
Company's Head of Human Resources and General Counsel. The Plan Administrator
shall make the rules and regulations necessary to administer the Plan and shall
have the responsibility and discretionary authority to interpret the terms of
the Plan, determine eligibility for benefits and to determine the amounts of
such benefits. Appeals of decisions and interpretations by the Plan
Administrator may be made by Participants to the Company' s Corporate Leadership
Team (the "Committee") or any designated subcommittee thereof. In the event a
decision must be made with respect to a specific claim or benefit of either the
Head of Human Resources or the General Counsel, such person shall not be
involved in any such decision. No member of the Committee shall participate in
any appeal with respect to his benefits hereunder. To the extent permitted by
law, all agents and representatives of the Plan Administrator shall be
indemnified by the Company against any claims, and the expenses of defending
against such claims, resulting from any action or conduct (not taken in bad
faith) relating to the administration of the Plan.