-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/KeXkNNlff8mmOD6CQIaHKgZZK1ilUQdzJgSQzwk8lhAe8dK4lQyi4pSQEjzaok lJl8kvJk+nzC9qf4HRgR7w== 0000732718-00-000022.txt : 20000501 0000732718-00-000022.hdr.sgml : 20000501 ACCESSION NUMBER: 0000732718-00-000022 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIAONE GROUP INC CENTRAL INDEX KEY: 0000732718 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 840926774 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-08611 FILM NUMBER: 613509 BUSINESS ADDRESS: STREET 1: 188 INVERNESS DRIVE WEST CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3037936500 MAIL ADDRESS: STREET 1: 188 INVERNESS DRIVE WEST STREET 2: 6TH FLOOR CITY: ENGLEWOOD STATE: CO ZIP: 80112 FORMER COMPANY: FORMER CONFORMED NAME: MEDIA ONE GROUP INC DATE OF NAME CHANGE: 19980616 FORMER COMPANY: FORMER CONFORMED NAME: US WEST INC DATE OF NAME CHANGE: 19920703 10-K/A 1 FORM 10-K/A =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1999 OR |_| TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to Commission File No. 1-8611 MediaOne Group, Inc.
A Delaware I.R.S. Employer Identification Corporation No. 84-0926774
188 Inverness Drive West, Colorado 80112 Telephone Number (303) 858-3000 _________________________ Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on Title of each class which registered MediaOne Group, Inc. Common Stock New York Stock Exchange ($0.01 per share, par value) Pacific Stock Exchange 7.96% Trust Originated Preferred Securities New York Stock Exchange (Liquidation Amount $25 per Preferred Security) 8.25% Trust Originated Preferred Securities New York Stock Exchange (Liquidation Amount $25 per Preferred Security) 9.30% Trust Originated Preferred Securities New York Stock Exchange (Liquidation Amount $25 per Preferred Security) 9.50% Trust Originated Preferred Securities New York Stock Exchange (Liquidation Amount $25 per Preferred Security) 9.04% Trust Originated Preferred Securities New York Stock Exchange (Liquidation Amount $25 per Preferred Security) 6-1/4% Exchangeable Notes due August 15, 2001 New York Stock Exchange 7.00% Exchangeable Notes due November 15, 2002 New York Stock Exchange
_________________________ Securities registered pursuant to Section 12(g) of the Act:: None At February 29, 2000 642,901,248 shares of MediaOne Group, Inc. common stock were outstanding. At February 29, 2000 the aggregate market value of MediaOne Group, Inc. voting stock held by non-affiliates was approximately $50,467,747,960. Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __. DOCUMENTS INCORPORATED BY REFERENCE. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in any amendment to this Form 10-K/A [X]. TABLE OF CONTENTS PART III
Item Page 10. Directors and Executive Officers of the Registrant..................................... 11. Executive Compensation................................................................. 12. Security Ownership of Certain Beneficial Owners and Management......................... 13. Certain Relationships and Related Transactions......................................... PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................
-2- PART III ITEM 10. Directors and Executive Officers of the Registrant. The information required by this item with respect to executive officers is set forth in Part I, page 5 of the Company's annual report on Form 10-K filed on March 17, 2000, under the caption "Executive Officers of MediaOne Group, Inc." The following is a brief description of the principal occupations, business experiences and directorships of the directors of the Company.
KATHLEEN A. COTE DIRECTOR SINCE: 1998 PRINCIPAL OCCUPATION AND BUSINESS President of Seagrass Partners since 1999; President and EXPERIENCE: Chief Executive Officer of Computervision Corporation from 1996 to 1998; President and Chief Operating Officer from 1995 to 1996; President and General Manager of PrimeService from 1989 to 1995. OTHER DIRECTORSHIPS: Walden University COMMITTEES: Audit, Finance ROBERT L. CRANDALL DIRECTOR SINCE: 1997 PRINCIPAL OCCUPATION AND BUSINESS Retired. Chairman of the Board, President and Chief EXPERIENCE: Executive Officer of AMR Corp., the parent company of American Airlines, from 1985 to 1998. OTHER DIRECTORSHIPS: Celestica, Inc.; Halliburton Company. COMMITTEES: Finance, Human Resources and Executive Development. GRANT A. DOVE DIRECTOR SINCE: 1988 PRINCIPAL OCCUPATION AND BUSINESS Managing Partner of Technology Strategies and Alliances EXPERIENCE: since 1992. Executive Vice President of Texas Instruments from 1982 to 1987. OTHER DIRECTORSHIPS: Control Systems International, Inc.; Cooper Cameron Corporation; InterVoice, Inc.; Microelectronics and Computer Technology Corporation; Object Space, Inc.; Optek Technology, Inc.; Vocal Data, Inc. COMMITTEES: Board Affairs, Human Resources and Executive Development (Chair). ALLAN D. GILMOUR DIRECTOR SINCE: 1992 PRINCIPAL OCCUPATION AND BUSINES Retired. Vice Chairman of Ford Motor Company from 1993 EXPERIENCE: to 1995; Executive Vice President of Ford Motor Company and President, Ford Automotive Group from 1990 to 1993; Executive Vice President, Corporate Staffs from 1989 to 1990; Executive Vice President, International Automotive Operations from 1987 to 1989. OTHER DIRECTORSHIPS: AP Automotive Systems, Inc.; The Dow Chemical Company; DTE Energy Company; The Prudential Insurance Company of America; Whirlpool Corporation. COMMITTEES: Finance (Chair); Human Resources and Executive Development; Executive Committee. -3- PIERSON M. GRIEVE DIRECTOR SINCE: 1990 PRINCIPAL OCCUPATION AND BUSINESS Retired. Chairman of the Board and Chief Executive EXPERIENCE: Officer of Ecolab, Inc. from 1983 to 1995. OTHER DIRECTORSHIPS: Guide Corporation; Palladium Equity Partners LLC; Reliant Energy Minnegasco; St. Paul Companies. COMMITTEES: Audit; Board Affairs (Chair); Executive Committee. CHARLES P. RUSS, III DIRECTOR SINCE: 1998 PRINCIPAL OCCUPATION AND BUSINESS Retired. Executive Vice President, General Counsel and EXPERIENCE: Secretary of U S WEST, Inc. from 1992 to 1998; Executive Vice President for Human Resources form 1995 to 1998; Executive Vice President for Public Policy from 1997 to 1998. OTHER DIRECTORSHIPS: None COMMITTEES: Audit (Chair); Board Affairs; Executive Committee. LOUIS A. SIMPSON DIRECTOR SINCE: 1998 PRINCIPAL OCCUPATION AND BUSINESS President and Chief Executive Officer of GEICO Capital EXPERIENCE: Operations since 1993. OTHER DIRECTORSHIPS: COHR, Inc.; Pacific American Income Shares, Inc.; Potomac Electric Power Company; Western Asset Trust, Inc. COMMITTEES: Finance; Human Resources and Executive Development. JOHN "JACK" SLEVIN DIRECTOR SINCE: 1998 PRINCIPAL OCCUPATION AND BUSINESS Retired. Chairman of the Board of Comdisco, Inc. from EXPERIENCE: 1996 to 1999; President and Chief Executive Officer from 1994 to 1999; Executive Vice President and Chief Operating Officer from 1993 to 1994. OTHER DIRECTORSHIPS: None COMMITTEES: Board Affairs; Human Resources and Executive Development. DANIEL W. YOHANNES DIRECTOR SINCE: 1998 PRINCIPAL OCCUPATION AND BUSINESS Vice Chairman of US Bancorp since January 2000; Chief EXPERIENCE: Executive Officer, U S Bank (Colorado) since 1996; President - Retail Market Manager from 1992 to 1996. OTHER DIRECTORSHIPS: National Board of the Smithsonian Institution; National Jewish Hospital Board; Denver Art Museum; Executive Board of the Denver Area Council of the Boy Scouts of America. COMMITTEES: Audit; Finance.
-4- ITEM 11. Executive Compensation. Executive Agreements Change of Control and Termination Arrangements. MediaOne Group has entered into change of control agreements with certain of its executive officers, including the executive officers listed in the Summary Compensation Table below. These agreements encourage the continued service and dedication of these executive officers to the performance of their duties even after the announcement of a change of control. The following discussion is a summary of such agreements. The actual forms of such agreements have been filed as exhibits to MediaOne Group's filings with the Securities and Exchange Commission. Under their agreements, executive officers are entitled to receive certain specified benefits in the event of a change of control, which is defined to include any of the following: (i) a change of control that would have to be reported under Item 6(e) of Schedule 14A of the Securities Exchange Act of 1934, even if the company is not subject to that reporting requirement; (ii) a party or certain related parties directly or indirectly acquire securities representing twenty percent or more of the total voting power of the company's outstanding voting securities; (iii)the occurrence of two consecutive calendar years during which a majority of the Board of Directors ceases to be composed of individuals who either (a) were a Director at the beginning of the two-year period or (b) are a new Director whose election by the Board or nomination for election by the company's shareholders was approved by at least two-thirds of the Directors who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved (and excluding for this purpose any individual whose initial assumption of office resulted from an actual or threatened proxy contest); (iv) shareholders of the company approve a merger, consolidation, sale or other disposition of all or substantially all of the assets of the company, unless immediately afterwards the holders of the company's voting securities prior to this change of control hold securities representing more than seventy percent of the voting power of the surviving entity and, also immediately afterwards, no party or certain related parties (other than trustees of employee benefit plans) hold twenty percent or more of the total voting power of the company's outstanding voting securities, and members of the Board of Directors prior to such transaction constitute more than half of the surviving entity's Board of Directors; (v) the shareholders of the company approve a plan of complete liquidation or dissolution; or (vi) any other event that a majority of the Board of Directors deems to be a change of control. Termination benefits, when payable under these agreements, include accrued but unpaid salary, and payments due under short- and long-term incentive plans in which the executive officer participates. In the case of Mr. Lillis, termination benefits also include his annual bonus amount under any short-term incentive plan in which he participates, and the annual grant value payable under any long-term incentive plan in which he participates. For each executive officer, termination benefits also consist of an amount equal to three times the sum of: o Annual base salary prior to termination; o Annual bonus amount under any short-term incentive program in which the executive officer participates (calculated at 100% of target unless the percentage actually achieved is greater than 100%, in which case the higher percentage applies); and o The annual long-term incentive grant value under any long-term incen- tive program in which the executive officer participates (calculated at 100% of target). The Company will gross-up income sufficient to cover any excise taxes incurred in connection with the benefits paid under these agreements. Upon termination under the change of control severance agreements, the executive officer's pension benefits vest immediately if they are not already vested, and three years are added to both the executive officer's age and years of service. Modification of Change of Control and Termination Arrangements. In connection with the anticipated merger with AT&T, the Board of Directors approved certain modifications to MediaOne Group's change of control agreements with its executive officers. The purpose of the modifications was to provide additional incentives to individuals who are critical to completing the merger and who are likely targets for competitive offers from other companies. Chief among these modifications -5- were: (i) the acceleration of the payment of certain benefits to the fourth quarter of 1999 (subject to a repayment obligation in the event that the merger with AT&T fails to close); (ii) the provision of lifetime health, vision and dental benefits to executive officers, on terms substantially similar to those the company would provide if the executive officer were eligible for retiree health care benefits immediately prior to the merger with AT&T; and (iii) the imposition of non-competition provisions, which for one year following the AT&T merger precludes executive officers from working for certain local exchange and multi-channel video programming companies. Benefits paid to executive officers in connection with these modifications are described in the summary compensation table below. Executive Severance Agreements. The company has entered into executive severance agreements with certain of its officers, including the executive officers listed in the summary compensation table, that set forth the severance benefits that would be payable in certain circumstances other than a change of control, such as a termination not for cause, termination in connection with a downsizing, or resignation of an officer who elects not to accept reassignment to a comparable position. The severance benefits payable in such circumstances, following delivery of a waiver and release of claims by the executive officer, include: (i) an amount equal to two times base salary; (ii) the amounts that would otherwise be due under the Executive Short-Term Incentive Plan and any long-term incentive plan, in each case pro-rated to the date of termination and calculated on the basis of full achievement of targeted performance levels; and (iii) financial counseling services, or the cash value of such services, through the year following the year of termination. The agreements also provide for the lapse of restrictions on grants of common stock issued to the executive officer, and the accelerated vesting of a pro-rated portion of the stock options issued to the executive officer. Finally, the agreements include provisions for medical, dental and vision benefits for eighteen months following termination, and provisions to protect the confidentiality of MediaOne Group information and to arbitrate employment disputes. In the event of a change of control, the terms of the executive severance agreements will be superseded by applicable change of control severance agreements. Executive Summary Compensation Table
Annual Compensation Long-Term Compensation -------------------------------- ----------------------------------------------------------
Other Restricted Securities Annual Stock Underlying LTIP All Other Name and Salary Bonus Compensation Award (s) (4) Options/SARs Payouts Compensation Principal Position (1) Year ($) ($) ($) ($) (#) ($) (6) ($) (7) - ---------------------------------------------------------------------------------------------------------------------------- Charles M. Lillis 1999 $900,000 $1,400,000 $68,533 (2) 300,000 $19,807,683 $24,019,568 (8) President, CEO and 620,000 Chairman of the Board 1998 $793,538 $900,000 $79,034 (2) $10,308,996 325,628 $ 171,174 $ 103,556 1997 $618,115 $630,000 $ 3,083 168,150 $ 90,583 $ 97,237 30,000 (5) A. Gary Ames 1999 $515,000 $690,000 $3,504,542 (3) 107,000 $ 5,100,000 $ 9,650,166 (8) President and CEO 220,000 MediaOne International 1998 $510,192 $600,000 $3,722,821 (3) 163,018 $ 92,141 Janice C. Peters 1999 $500,000 $540,000 157,000 $ 7,562,500 $13,027,139 (8) President and 323,000 Chief Executive 1998 $455,385 $260,000 191,026 $ 52,938 Officer, MediaOne Richard A. Post 1999 $440,385 $390,000 $ 85,855 107,000 $ 5,100,000 $10,140,451 (8) Executive Vice President 220,000 and Chief Financial 1998 $350,000 $270,000 $ 57,118 101,452 $ 37,345 Officer Frank M. Eichler 1999 $350,000 $300,000 $ 180,000 94,000 $ 4,650,765 $ 8,967,563 (8) Executive Vice 194,000 President -- Law and 1998 $335,577 $317,698 $ 60,000 $ 219,341 101,660 $ 35,861 $ 43,173 Public Policy, General Counsel and Secretary
___________________ (1) Mr. Ames, Ms. Peters, Mr. Post and Mr. Eichler became executive officers of the Company on June 12, 1998, the date of the Separation. (2) This amount includes $76,086 for 1998 and $57,812 for 1999 of imputed income related to the use of the Company's aircraft. -6- (3) This amount includes $291,571 in 1998 and $500,760 in 1999 for housing costs and $3,431,250 in 1998 and $3,003,782 in 1999 for gross-ups of income that are related to Mr. Ames' overseas assignment. (4) Upon shareowner approval on October 21, 1999 of the merger between MediaOne Group and AT&T , all restrictions immediately lapsed on stock issued to Messrs. Lillis, Ames, Post, and Eichler and Ms. Peters. (5) In October 1995, the Company's shareholders approved a plan pursuant to which the Company issued tracking stocks that were intended to reflect separately the performance of its two business groups, U S WEST Media Group and U S WEST Communications Group. At the time of the Separation, the Company aligned the domestic directories business of U S WEST Dex with U S WEST Communications Group, and the two business groups became separate public companies. Stock options issued prior to the Separation were based on one or the other of the Company's tracking stocks. At the Separation, the Company's U S WEST Communications Group tracking stock was replaced by the common stock of the newly independent U S WEST, Inc., and the options based on the U S WEST Communications Group tracking stock were likewise replaced with substitute options issued by U S WEST, Inc. The tracking stock that formerly reflected the performance of U S WEST Media Group remained outstanding as the common stock, par value $.01 per share of MediaOne Group, Inc. These 30,000 stock options relate to the stock of U S WEST Communications Group. (6) The 1999 LTIP payouts to Mr. Lillis, Mr. Ames, Ms. Peters, Mr. Post and Mr. Eichler include incremental payments that were made in connection with their change of control agreements. (7) Except as otherwise noted, the amounts in this column are attributable to (1) the MediaOne Group matching contribution under the Deferred Compensation Plan, (2) the MediaOne Group matching contribution under the Savings Plan/ESOP, (3) the current dollar value of the remainder of the premium paid under a split-dollar insurance arrangement, and (4) the amount paid for the term insurance portion of the foregoing split-dollar insurance arrangement. The separate components of these amounts for 1999 are set forth below. Mr. Ames also received an overseas service premium of $46,404 for 1999. Year Ended December 31, 1999
Deferred Compensation Savings Plan Split-Dollar Term Portion Name Company Match Company Match Premium Value Premium ------------------------------------------------------------------------ Lillis $82,000 $8,000 $48,268 $1,820 Ames $47,750 $8,000 $29,986 $1,045 Peters $30,857 $7,143 $30,455 $590 Post $27,519 $8,000 $19,246 $196 Eichler $30,500 $8,000 $19,810 $262
(8) These amounts include payments, other than incremental bonus and LTIP payments, that were made to Mr. Lillis, Mr. Ames, Ms. Peters, Mr. Post and Mr. Eichler in connection with the change of control and non-compete agreements, in the respective amounts of $23,879,480, $9,516,981, $12,958,094, $10,085,490 and $8,908,991. Individual Option/SAR Grants in Last Fiscal Year The following table provides information on stock options granted to the executive officers listed in the Summary Compensation Table during 1999. The Company employed the Black-Scholes option pricing model to develop the theoretical values set forth under the "Grant Date Present Value" column. -7-
--------------------------------------------------------------------------- Number of Percent of Securities Total Underlying Options/SARs Exercise Options/ Granted to or Base Grant Date SARs Employees in Price Expiration Present Granted # Fiscal Year ($/sh) Date Value ($) ----------------------------------------------------------------------------
Name Charles M. Lillis 300,000 (1) 2.30% $46.688 1/4/2009 $ 4,350,000 (3) 620,000 (2) 4.75% $70.031 1/4/2009 $ 4,600,000 (3) A Gary Ames 107,000 (1) 0.82% $46.688 1/4/2009 $ 1,551,500 (3) 220,000 (2) 1.68% $70.031 1/4/2009 $ 1,632,400 (3) 23,950 (1) 0.18% $55.063 2/4/2009 $ 412,419 (4) Janice C. Peters 157,000 (1) 1.20% $46.688 1/4/2009 $ 2,276,500 (3) 323,000 (2) 2.47% $70.031 1/4/2009 $ 2,396,660 (3) Richard A. Post 107,000 (1) 0.82% $46.688 1/4/2009 $ 1,551,500 (4) 220,000 (2) 1.68% $70.031 1/4/2009 $ 1,632,400 (4) 1,062 (1) 0.01% $55.000 12/2/2004 $ 23,630 (5) 3,981 (1) 0.03% $55.000 12/2/2004 $ 85,577 (5) Frank M. Eichler Jr. 94,000 (1) 0.72% $46.688 1/4/2009 $ 1,363,000 (4) 194,000 (2) 1.49% $70.031 1/4/2009 $ 1,439,480 (4)
_____________________ (1) These stock options, to the extent they were not already exercisable, became exercisable upon approval by shareowners on October 21, 1999 of the merger between MediaOne Group and AT&T. (2) These stock options became exercisable when the Company's common stock first traded on the New York Stock Exchange at or above the grant price of $70.03. These stock options also include a limited stock appreciation right that ensures that, in the event of a change of control, full value may be obtained for the difference between the market value of the common stock on the date of exercise and the market value of the common stock on the date of grant ($46.69). (3) This value reflects the standard application of the Black-Scholes option pricing model to options issued on common stock of MediaOne Group, Inc., using the following assumptions: volatility 30%, dividend yield 0.0%, and a risk-free rate of return of 4.70% based on the options being outstanding for an average term of 4.0 years. (4) This value reflects the standard application of the Black-Scholes option pricing model to options issued on common stock of MediaOne Group, Inc., using the following assumptions: volatility 30%, dividend yield 0.0%, and a risk-free rate of return of 4.83% based on the options being outstanding for an average term of 4.0 years. (5) These stock options become fully exercisable one year from the date of grant and do not include a reload feature. This value reflects the standard application of the Black-Scholes option pricing model to options issued on common stock of MediaOne Group, using the following assumptions: volatility 30%, dividend yield of 0%, and a risk-free rate of return of 5.75% based on the options being outstanding for a term 5.76 years. Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR Values
Shares Number of Unexercised Value of Unexercised Acquired Value Options/SARs In-the-Money on Exercise Realized at FY-End (#) Options/SARs -------------------------------
Name (#) ($) Exercisable * Unexercisable * Exercisable Unexercisable ------------------------------------------------------------------------------------------ Charles M. Lillis - $ - 1,805,493 $ - $ 61,950,460 $ - A. Gary Ames 18,327 $ 1,015,598 884,313 $ - $ 35,209,753 $ - Janice C. Peters - $ - 976,013 $ - $ 31,563,097 $ - Richard A. Post 9,884 $ 406,228 528,850 $ - $ 14,403,740 $ - Frank M. Eichler - $ - 440,117 $ - $ 11,375,359 $ -
-8- _________________ *Owing to the shareowner approval on October 21, 1999 of the merger between MediaOne Group and AT&T Broadband, all unvested stock options held by Mr. Lillis, Mr. Ames, Ms. Peters, Mr. Post and Mr. Eichler immediately became vested and fully exercisable. MediaOne Group Pension Plans The following tables illustrate the maximum estimated annual benefits payable to the officers listed in the summary compensation table upon retirement under MediaOne Group's pension plans, based upon applicable pension plan formulas for specified final average annual compensation and specified years of service. The second table is based on the "defined lump sum" pension plan formula that applied to Messrs. Post and Eichler. The other executive officers are eligible to receive the greater of the pension amount that is calculated under either table. Pension Plan Tables First Table YEARS OF SERVICE
Final Average Annual -------------------------------------------------------------------------------------- Compensation
15 20 25 30 35 40 45 - ------------------------------------------------------------------------------------------------------------ $500,000 $112,500 $150,000 $187,500 $225,000 $262,500 $293,750 $325,000 600,000 135,000 180,000 225,000 270,000 315,000 352,500 390,000 700,000 157,500 210,000 262,500 315,000 367,500 411,250 455,000 800,000 180,000 240,000 300,000 360,000 420,000 470,000 520,000 900,000 202,500 270,000 337,500 405,000 472,500 528,750 585,000 1,000,000 225,000 300,000 375,000 450,000 525,000 587,500 650,000 1,100,000 247,500 330,000 412,500 495,000 577,500 646,250 715,000 1,200,000 270,000 360,000 450,000 540,000 630,000 705,000 780,000 1,300,000 292,500 390,000 487,500 585,000 682,500 763,750 845,000 1,400,000 315,000 420,000 525,000 630,000 735,000 822,500 910,000 1,500,000 337,500 450,000 562,500 675,000 787,500 881,250 975,000 1,600,000 360,000 480,000 600,000 720,000 840,000 940,000 1,040,000 1,700,000 382,500 510,000 637,500 765,000 892,500 998,750 1,105,000
Second Table YEARS OF SERVICE
Final Average Annual --------------------------------------------------------------------------------------- Compensation
15 20 25 30 35 40 45 - ------------------------------------------------------------------------------------------------------------ $500,000 $176,703 $217,480 $244,665 $265,054 $278,646 $285,443 $292,239 600,000 212,043 260,976 293,598 318,065 334,376 342,531 350,687 700,000 247,384 304,472 342,531 371,075 390,105 399,620 409,134 800,000 282,724 347,968 391,464 424,086 445,834 456,708 467,582 900,000 318,065 391,464 440,397 477,097 501,563 513,797 526,030 1,000,000 353,405 434,960 489,330 530,108 557,293 570,885 584,478 1,100,000 388,746 478,456 538,263 583,118 613,022 627,974 642,925 1,200,000 424,086 521,952 587,196 636,129 668,751 685,062 701,373 1,300,000 459,427 565,448 636,129 689,140 724,480 742,151 759,821 1,400,000 494,767 608,944 685,062 742,151 780,210 799,239 818,269 1,500,000 530,108 652,440 733,995 795,161 835,939 856,328 876,716 1,600,000 565,448 695,936 782,928 848,172 891,668 913,416 935,164 1,700,000 600,789 739,432 831,861 901,183 947,397 970,505 993,612
The calculation of "final average annual compensation" is the highest average compensation for 60 consecutive months of the 120 consecutive-month period preceding retirement and includes compensation that would appear under the "Salary" and "Bonus" columns of the summary compensation table. As of December 31, 1999, Mr. Lillis, Mr. Ames, Ms. Peters, Mr. Post and Mr. Eichler had 14, 32, 26, 11, and 15 actual years of service, respectively. Mr. Lillis is eligible for a variable percentage of his final average annual compensation (calculated as his highest average compensation over any 60 consecutive-month period of his employment) based upon his age at retirement, less any amounts payable under any MediaOne Group pension plans. The -9- applicable percentage is 50% at age 58 (his present age), and increases by varying increments from year to year - i.e., 5% per year through age 58, and then 2% per year through age 61, and 1% thereafter through age 65. Benefits set forth in the preceding tables are computed as an annual straight-life annuity and are not subject to deduction for Social Security. ITEM 12. Security Ownership of Certain Beneficial Owners and Management. Based solely upon a review of schedules and reports filed with the Securities and Exchange Commission, the company knows of no single person or group that is the beneficial owner of more than five percent of the company's common stock other than as set forth in the following table.
Name and Address of Beneficial Owner Number of Shares Percent of Class -------------------------------------------- -------------------------- ------------------------- Amos B. Hostetter, Jr 56,320,191 8.76% The Pilot House Lewis Wharf Boston, Massachusetts 02110.
The following table shows the stock ownership of the Company's Directors, the executive officers of the Company listed in the Summary Compensation Table and the Directors and executive officers as a group in each case, as of December 31, 1999. Shares owned by all Directors and executive officers as a group amount to approximately 1.1% of the common stock outstanding.
Share Subject Total Number to Options Name of Shares (Included in Total) A. Gary Ames.................................................. 948,892 836,796 Kathleen A. Cote.............................................. 11,152 42,000 Robert L. Crandall............................................ 67,873 50,073 Grant A. Dove................................................. 63,088 54,488 Frank M. Eichler.............................................. 500,521 440,117 Allan D. Gilmour.............................................. 65,361 54,488 Pierson M. Grieve............................................. 129,488 51,988 Charles M. Lillis............................................. 2,213,305 1,805,493 Janice C. Peters.............................................. 1,113,490 976,013 Richard A. Post............................................... 572,402 528,850 Charles P. Russ, III.......................................... 411,027 325,407 Louis A. Simpson.............................................. 78,000 42,000 John "Jack" Slevin............................................ 78,000 42,000 Daniel W. Yohannes............................................ 45,296 42,000 All Directors and Executive Officers (as a group)............. 6,297,895 5,291,713
-10- ITEM 13. Certain Relationships and Related Transactions. None PART IV ITEM 14. Financial Statement Schedules, Reports on Form 8-K and Exhibits. (a) Documents filed as part of this report (page references are to Form 10-K filed on March 23, 2000):
Page Number (1) Report of Independent Accountants.......................................... 44 (2) Consolidated Financial Statements: Consolidated Statements of Operations--for the years ended December 31, 1999, 1998 and 1997......................................... 46 through 47 Consolidated Balance Sheets as of December 31, 1999 and 1998............... 48 Consolidated Statements of Cash Flows--for the years ended December 31, 1999, 1998 and 1997......................................... 49 (3) Consolidated Statements of Shareowners' Equity For the years ended December 31, 1999, 1998 and 1997....................... 50 Notes to Consolidated Financial Statements................................. 51 through 100 (4) Consolidated Financial Statement Schedule: II -- Valuation and Qualifying Accounts.................................... 5 through 1
Financial statement schedules other than those listed above have been omitted because the required information is contained in the financial statements and notes thereto, or because such schedules are not required or applicable. (b) Reports on Form 8-K: MediaOne Group filed the following reports on Form 8-K during the fourth quarter of 1999: (i) Current Report dated and filed on October 27, 1999 providing financial statements, financial information and exhibits relating to the filing with the Securities & Exchange Commission by MediaOne Group, Inc. of 26 million Premium Income Exchangeable Securities(SM) ("PIES"(SM)) of MediaOne Group, Inc. and $7.00% Exchangeable Notes due November 15, 2002 subject to exchange into ADRs representing ordinary shares of Vodafone AirTouch Public Limited Company. (ii) Current Report dated and filed on November 3, 1999 providing notification of a Press Release by MediaOne Group announcing its third quarter earnings results. (c) Exhibits: Exhibits identified in parentheses below are on file with the Securities and Exchange Commission ("SEC") and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission.
Exhibit Number (2-A) - Agreement and Plan of Merger dated as of May 6, 1999 by and among AT&T Corp., Meteor Acquisition Inc. and MediaOne Group, Inc. (Exhibit 2 to Current Report on Form 8-K dated and filed on May 6, 1999). (2-B) - Form of Separation Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-A to Form 10-K, for the fiscal year ended December 31, 1997, File No. 1-8611). (2-C) - Form of Employee Matters Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-B to Form 10-K, for the fiscal year ended December 31, 1997, File No. 1-8611). (2-D) - Form of Tax Sharing Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-C to Form 10-K, for the fiscal year ended December 31, 1997, File No. 1-8611). -11- Exhibit Number (3-A) - Form of Restated Certificate of Incorporation of MediaOne Group, Inc. (Annex A-2 to definitive proxy statement on Schedule 14A dated April 20, 1998). (3-B) - Form of Amended and Restated Bylaws of MediaOne Group, Inc. (Exhibit 3(ii) to Current Report on Form 8-K dated June 24, 1998, File No. 1-8611). (4-A) - Form of Amended and Restated Rights Agreement between MediaOne Group, Inc. and its Rights Agent (Exhibit 1 to Form 8-A filed on February 11, 1999 and Exhibit 4 to Current Report filed on Form 8-K dated February 9, 1999 and filed on February 11, 1999, File No. 1-8611). (4-B) - No instrument which defines the rights of holders of long and intermediate term debt of MediaOne Group, Inc. and all of its subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation, the Registrant hereby agrees to furnish a copy of any such instrument to the SEC upon request. (10-A) - MediaOne Group, Inc. Executive Short-Term Incentive Plan (Exhibit 10-A to Form 10-K, for the fiscal year ended December 31, 1998, File No. 1-8611). (10-B) - Amended MediaOne Group 1994 Stock Plan (Exhibit 10-B to Form 10-K, for the fiscal year ended December 31, 1998, File No. 1-8611). (10-C) - MediaOne Group Executive Life Insurance Plan (Exhibit 10-C to Form 10-K, for the fiscal year ended December 31, 1998, File No. 1-8611). (10-D) - MediaOne Group Executive Disability Plan (Exhibit 10-D to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-E) - MediaOne Group Non-Qualified Pension Plan (Exhibit 10-E to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-F) - MediaOne Group Mid-Career Pension Plan (Exhibit 10-F to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-G) - MediaOne Group Deferred Compensation Plan (Exhibit 10-G to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-H) - MediaOne Group Executive Financial Counseling Plan (Exhibit 10-H to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-I) - MediaOne Group Executive Non-Qualified Stock Option Agreement (Exhibit 10-I to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-J) - Form of LTIP Option Agreement (Exhibit 10-J to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-K) - Form of Executive Restricted Stock Agreement (Exhibit 10-K to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-L) - Form of Executive Retention Agreement (Restricted Stock Only) (Exhibit 10-L to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). (10-M) - Form of Executive Retention Agreement (Restricted Stock and Options) (Exhibit 10-M to Form 10-K for the fiscal year ended December 31, 1998, File No. 1-8611). -12- Exhibit Number (10-N) - Admission Agreement dated as of May 16, 1993 between Time Warner Entertainment Company, L.P. and U S WEST, Inc. (Exhibit 10 to Current Report filed on Form 8-K dated May 24, 1998, File No. 1-8611). (10-O) - Form of Executive Change of Control Agreement (Exhibit 10g to Form 10-Q for fiscal quarter ended June 30, 1998, file No. 1-8611). (10-P) - Form of Change of Control Agreement for Chief Executive Officer (Exhibit 10e to Form 10-Q for fiscal quarter ended June 30, 1998, File No. 1-8611). (10-Q) - Form of Business Unit Change of Control Agreement (Exhibit 10f to Form 10-Q for fiscal quarter ended June 30, 1998, File No. 1-8611). (10-R) - Form of Executive Severance Agreement (Exhibit 10ab to Form 10-K for fiscal year ended December 31, 1995, File No. 1-8611). 10-S - Form of letter dated November 15, 1999 to Chairman, President and Chief Executive Officer of MediaOne Group, Inc. regarding Change of Control Agreement. 10-T - Form of Amendment to Change of Control Letter Agreement Between MediaOne Group, Inc. and Chief Executive Officer. 10-U - Form of letter dated November 15, 1999 to Senior Executive Officer of MediaOne Group, Inc. regarding Change of Control Agreement. 10-V - Form of Amendment to Change of Control Letter Agreement Between MediaOne Group, Inc. and Senior Executive Officer. (12) - Computation of Ratio of Earnings to Fixed Charges of MediaOne Group, Inc. (21) - Subsidiaries of MediaOne Group, Inc. (23) - Consent of Independent Accountants. (24) - Powers of Attorney. (99) - Annual Report on Form 11-K for the MediaOne Savings Plan/ESOP for the year ended December 31, 1999, to be filed by amendment.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Englewood, State of Colorado, on April 28, 2000. MediaOne Group, Inc. By: /s/ Richard A. Post ---------------------------------------- Richard A. Post Executive Vice President and Chief Financial Officer -13- EX-10 2 EXHIBITS 10-S THROUGH 10-V EXHIBIT 10-S
Jerry Rybin 188 Inverness Drive West FAX 303 858.3738 Vice President Compensation and 8th Floor Benefits Phone 303 858.3748 Englewood, CO 80112 Sharon A. O'Leary 188 Inverness Drive West FAX 303 858.5832 Vice President Law 5th Floor Phone 303 858.5854 Englewood, CO 80112
November 15, 1999 [NAME] Chairman, President and Chief Executive Officer MediaOne Group, Inc. 188 Inverness Drive West, Suite 500 Englewood, CO 80112 Re: Change of Control Agreement Dear [NAME]: As you know, MediaOne Group, Inc. ("MediaOne") has agreed to merge with AT&T Corp. ("AT&T"). This letter agreement is being entered into in connection with the Agreement and Plan of Merger (the "Agreement"), dated as of May 6, 1999, by and among MediaOne, AT&T, and Meteor Acquisition, Inc. (AT&T and Meteor Acquisition, Inc. are, collectively, the "Company"). Pursuant to the Agreement, among other things, MediaOne will merge with and into the Company (the "Merger"), subject to the terms and conditions set forth in the Agreement. The purpose of this letter agreement is to confirm our mutual understandings and agreements with regard to the Change of Control Agreement, as amended, between the you (the "Executive"), and MediaOne dated as of [DATE] (the "Change of Control Agreement"), as it relates to the Executive. Capitalized terms which are used but not defined herein shall have the meanings ascribed to such terms in the Change of Control Agreement. Within thirty (30) business days of the date of this letter agreement , MediaOne agrees to pay , and the Executive agrees to accept payment of, the amounts described under the heading "Total Accelerated Payments" on the schedule attached hereto as Exhibit 1 (the "Total Accelerated Payments"). The Executive agrees, on Executive's behalf and on behalf of Executive's heirs, assigns, executors, administrators and legal representatives, that upon the Executive's receipt of the Total Accelerated Payments, the Additional Pay payable (or that will become payable) under Section IV(b) of the Change of Control Agreement will be reduced by the amount of the Total Accelerated Payments (without interest from the time of the initial payment). Each of the Company, MediaOne and the Executive agrees that the receipt by the Executive of the Total Accelerated Payments shall be without prejudice to any other provision of the Change of Control Agreement, including, without limitation, rights to payments and other benefits due to the Executive (other than the Total Accelerated Payments) pursuant to Section IV of the Change of Control Agreement, and that nothing in this letter agreement shall have any effect whatsoever on the rights of the Executive to receive from the Company or MediaOne gross-up and reimbursement with respect to Excise Taxes as set forth in Section IV(e) of the Change of Control Agreement. In the event that after receipt by the Executive of the Total Accelerated Payments (i) the Merger is not consummated pursuant to the Agreement; ii) the Executive's employment is terminated by MediaOne or the Company for Cause or (iii) the Executive's employment is terminated by the Executive prior to the expiration of the Ninety Day Period other than for Good Reason, death or disability, Executive agrees, on Executive's behalf and on behalf of Executive's heirs, assigns, executors, administrators and legal representatives, to reimburse MediaOne for an amount equal to the Total Accelerated Payments within ten (10) business days following either the termination of the Agreement (for any reason), or such termination of Executive, as the case may be, and subject to receipt of a loan from MediaOne as provided herein, (the "Reimbursement"). Within the time set for Reimbursement and at Executive's sole election, in order to assist Executive in making such Reimbursement, MediaOne shall lend to Executive an amount equal to the sum total of any and all federal, state and local taxes previously withheld on behalf of or paid by Executive ("Initial Tax Amount") with regard to receipt of the Total Accelerated Payments, and Executive shall deliver a promissory note to MediaOne in a form reasonably satisfactory to both parties under which Executive shall agree to repay such loan by paying MediaOne, the Initial Tax Amount at the time and to the extent Executive obtains any tax refund or reduction in taxes by reason of making Reimbursement to MediaOne . In the event that the Executive is or becomes liable for any taxes, including, without limitation, any interest or penalties imposed with respect to such taxes with respect to (x) the loan arrangement contemplated by this letter agreement or (y) the Total Accelerated Payments that would not have been payable had such Total Accelerated Payments been made pursuant to the terms of and at the time or times provided in the Change of Control Agreement (including, without limitation, by reason of (i) the Executive's inability to fully deduct for Federal, state and local tax purposes all or any portion of the reimbursement (ii) the imposition of any state or local taxes or (iii) a reduction in tax rate or other change in law that has the effect of increasing the amount of taxes that would have been otherwise payable) (an "Executive Tax Liability"), the Company and MediaOne shall indemnify the Executive, on an after-tax basis, from and against any such Executive Tax Liability and expenses (including, without limitation, attorney, accountant, and expert witness fees) incurred in connection with the preparation and filing of tax returns or any action, suit, claim, liability or proceeding (a "Claim") arising by reason of this letter agreement, including, without limitation, any audit or other proceeding relating to the defense of an Executive Tax Liability and any related Claims of third parties, whether or not the Merger is consummated. In addition, the Company and MediaOne shall compensate the Executive for the time involved in the defense and settlement of Claims at a rate of $500 per hour. Any payments required pursuant to this paragraph shall be made within thirty business days after written demand therefor from the Executive. Except as expressly set forth herein, this letter agreement shall not be deemed to affect or modify any provision of the Change of Control Agreement. This letter agreement may not be amended or terminated without the prior written consent by an authorized officer of MediaOne and the Executive. This letter agreement may be executed in any number of counterparts which together shall constitute but one agreement. This letter agreement may not be assigned by any party hereto and shall be binding on and inure to the benefit of their respective successors and, in the case of the Executive, heirs and other legal representatives. Each of the Company, MediaOne and the Executive has caused this letter agreement to be duly executed as of the date first above written. AGREED AND ACCEPTED: By: ____________________________________ Name: Grant A. Dove Title: Chairman, Human Resources and Executive Succession Committee of the Board of Directors By: ____________________________________ (Chief Executive Officer) EXHIBIT 10-T FORM OF AMENDMENT TO CHANGE OF CONTROL LETTER AGREEMENT BETWEEN MEDIAONE GROUP, INC. AND [CHIEF EXECUTIVE OFFICER] THIS AMENDMENT, dated as of October 20, 1999 (the "Amendment"), is made by and between MediaOne Group, Inc. and __________________________ ("Executive"). RECITALS WHEREAS, Executive and MediaOne Group, Inc. entered into a change of control agreement set forth in a letter dated July 16, 1998 (the "Agreement"), a copy of which is attached to this Amendment; WHEREAS, in connection with the merger of MediaOne Group, Inc. into an affiliate of AT&T Corp. ("AT&T") pursuant to their May 6, 1999, merger agreement, AT&T has agreed to certain changes in the Agreement in order to facilitate the merger of the companies; NOW THEREFORE, in consideration of the mutual terms and conditions set forth in this Amendment, MediaOne Group, Inc. (for itself and its successors) and Executive hereby agree to the following changes in the Agreement: Agreement 1. The first sentence of Section I(h) concerning the definition of the term Cause is revised to read as follows: "For purposes of this Agreement, "Cause" shall mean Executive's willful breach or failure to perform his employment duties, provided, however, that solely for the purposes of the proposed merger of the Company into AT&T Corp. ("AT&T") pursuant to that certain Agreement and Plan of Merger, dated as of May 6, 1999, by and among the Company, AT&T Corp. and Meteor Acquisition, Inc. (the "AT&T Merger"), following the effective time of the AT&T Merger, "Cause" shall be limited to Executive's commission of a felony related to employment with the Company or its successor." 2. The following language is inserted as a proviso after the word "Company" at the end of Section 1(x) concerning the Retirement of an executive: "; provided, however, that if Executive's termination from employment qualifies as voluntary for Good Reason or as involuntary without Cause, neither the fact that Executive is also eligible for retirement benefits (including without limitation any right under an individual agreement or otherwise to be treated as if he was eligible for retirement benefits), nor the fact that Executive applies to receive such retirement benefits, shall be considered as a basis for withholding payments or benefits that would otherwise be provided under the terms of this Agreement." 3. The following language is added as subsection (iii) of Section I(bb) concerning the termination date in the event of an executive's death: "(iv) In the event of Executive's death, the date Executive died." 4. In Section III(a) concerning eligibility for payments and benefits under the Agreement: (a) The following language is inserted as a new sentence following the first sentence: "Notwithstanding anything to the contrary in this Agreement, solely for the purposes of the proposed AT&T Merger, in the event of death or Disability of Executive following a Change of Control, Executive, or in the case of death, Executive's Beneficiaries (as defined below in Subsection VI(b)), shall receive the benefits to which Executive or his Beneficiaries are entitled to under Section IV of this Agreement and any and all retirement plans, pension plans, disability policies and other applicable plans, programs, policies, agreements or arrangements of the Company ("Change of Control Benefits"), provided, however, in the event the AT&T Merger is not consummated, Executive or his Beneficiaries shall not be entitled to any Change of Control Benefits except to the extent otherwise entitled to such benefits in the absence of a Change of Control. (b) The existing second sentence is revised to read as follows: "For purposes of this Agreement, "Termination" shall mean termination of Executive's employment that is not as a result of Executive's Retirement, death or Disability (other than death or Disability occurring on or after a Change of Control related to the AT&T Merger) and (x) if by the Company, is not for Cause, or (y) if by the Executive, is for Good Reason, or (z) if by reason of death or Disability, is a result of death or Disability occurring on or after a Change of Control related to the AT&T Merger." 5. The third sentence in the first paragraph of Section III(b) concerning notices of termination is revised to read as follows: "If after a Change of Control Executive's employment shall be terminated by the Company for Cause or by Executive for other than Good Reason, the Company shall pay Executive his full base salary through the Termination Date at the salary level in effect immediately prior to the effective date of the AT&T Merger and shall pay any amounts to be paid to Executive pursuant to any other compensation or stock or stock option plan(s), program(s) or employment agreement(s) then in effect, and the Company shall have no further obligations to Executive under this Agreement." 6. The second sentence of the second paragraph of Section III(b) concerning payments during the pendency of certain disputes shall be revised to read as follows: "Notwithstanding the pendency of any such dispute, the Company will continue to pay Executive his full compensation including, without limitation, base salary, bonus, incentive pay and equity grants, in effect immediately prior to the effective date of the AT&T Merger, and continue Executive's participation in all benefit plans or other perquisites in which Executive was participating, or which he was enjoying, immediately prior to the effective date of the AT&T Merger, until the dispute is finally resolved." 7. In the first sentence of Section IV(a), regarding the payment of standard benefits, the following clause shall be inserted after the term "Termination Date" at the end of the introductory sentence and before the colon: ", provided the Company may in its sole discretion elect to accelerate payment of the amounts listed in clauses (ii) and (iii), below, to a date prior to Executive's Termination Date." 8. Solely for the purposes of the AT&T Merger, in Section IV(b) concerning the payment of additional payments: (i) the term "Termination Date" is replaced by "Change of Control" in each place other than the second sentence, as amended in paragraph 11 of this Amendment, and (ii) the word "Termination" is replaced by "Change of Control." In the event the AT&T Merger is not consummated, Section IV(b) shall revert back to the language in effect immediately prior to this Amendment. 9. The second sentence in Section IV(b) concerning the payment of additional payments is revised to read as follows: "The Company shall pay the Additional Pay to Executive in a lump sum, in cash, not later than the fifteenth calendar day following the Termination Date, provided, the Company may in its sole discretion elect to accelerate payment of the Additional Pay to a date prior to Executive's Termination Date." 10. The first two sentences of Section IV(d) concerning health care benefits are revised in their entirety to read as follows: "Following the Termination Date, the Company shall continue to provide for the lifetime of Executive, or in the case of death, the lifetime of Executive's surviving spouse or domestic partner, substantially the same level of health, vision and dental benefits, including, without limitation, surviving spouse and domestic partner benefits, to Executive and Executive's eligible dependents that the Company would provide to Executive and Executive's eligible dependents if Executive were first eligible for retiree health, vision and dental benefits immediately prior to the effective time of the AT&T Merger, regardless of whether such retiree health, vision and dental benefit plan(s) continue for any other employee or retiree. The eligibility of Executive's dependents shall be determined by the terms of any retiree health, vision and dental benefit plan(s) or program(s) in effect immediately prior to the effective time of the AT&T Merger." 11. The third sentence of Section IX concerning miscellaneous provisions is revised to read as follows: "No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in (i) this Agreement, (ii) the change of control/non-compete payments memo, (iii) the accelerated payments letter, (iv) the best payment amendments, and (v) the release agreement." 12. The following language is added as Section XIII concerning Executive's non-competition obligation: "XIII. Non-Compete. (a) Obligation. Solely for the purposes of the AT&T Merger, Executive acknowledges that reasonable limits on his ability to engage in activities competitive with the Company are warranted. Accordingly, subject to Board approval of the Non-Compete Fee (as defined below), Executive agrees that during one year from the effective date of the AT&T Merger (the "Term"), he shall not, without the express prior written consent of the Company, be employed in his general area of expertise in a management or executive capacity by any of the local exchange companies specifically identified in Attachment 1 to this Amendment or any of the multi channel video programming distribution companies specifically identified in Attachment 2 to this Amendment ("Non-Compete Obligation"). (b) Fees. Subject to Board approval, for and in complete consideration of Executive's full and faithful performance of the Non-Compete Obligation, Company agrees to pay Executive a fee in the amount of _______________ Dollars ($____________) (the "Non-Compete Fee") on Executive's Termination Date in immediately available funds, provided, however, the Company may in its sole discretion elect to accelerate payment of the Non-Compete Fee to a date prior to Executive's Termination Date. (c) Early Termination. The Non-Compete Obligation shall terminate prior to the expiration of the Term, upon the occurrence of any one of the following events: (i) Upon Executive's death; (ii) Upon thirty (30) days written notice from Company to Employee. In the event of an early termination of the Non-Compete Obligation, neither Executive nor Executive's Beneficiaries shall have any obligation to repay the Non-Compete Fee to the Company. 13. Except as expressly modified by this Amendment, the terms and conditions of each Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Executive and MediaOne Group, Inc. have executed this Amendment, in duplicate, as of the date set forth above. MediaOne Group, Inc. By: __________________________________ _________________________________ Grant A. Dove [Chief Executive Officer] Chairman, Human Resources and Executive Succession Committee of the Board of Directors ATTACHMENT 1 Local Exchange Companies SBC Corp (including Pacific Telesis and Ameritech) Bell Atlantic (including NYNEX and Southern New England Telephone) Bell South GTE Sprint U S WEST (including Quest) ATTACHMENT 2 Multi Channel Video Programming Distribution DirecTV Echostar RCN SBC Bell South Bell Atlantic GTE Seren Innovations Sprint MCI/Worldcom --------------------------- EXHIBIT 10-U
Charles M. Lillis 188 Inverness Drive West, 5th Floor FAX 303 858.5811 Chairman, President & CEO Englewood, CO 80112-5209 Phone 303 858.5885
November 15, 1999 [NAME] [Senior Executive Officer] MediaOne Group, Inc. 188 Inverness Drive West, Suite 530 Englewood, CO 80112 RE: Change of Control Agreement Dear [NAME]: As you know, MediaOne Group, Inc. ("MediaOne") has agreed to merge with AT&T Corp. ("AT&T"). This letter agreement is being entered into in connection with the Agreement and Plan of Merger (the "Agreement"), dated as of May 6, 1999, by and among MediaOne, AT&T, and Meteor Acquisition, Inc. (AT&T and Meteor Acquisition, Inc. are, collectively, the "Company"). Pursuant to the Agreement, among other things, MediaOne will merge with and into the Company (the "Merger"), subject to the terms and conditions set forth in the Agreement. The purpose of this letter agreement is to confirm our mutual understandings and agreements with regard to the Change of Control Agreement, as amended, between the you (the "Executive"), and MediaOne dated as of July 16, 1998 (the "Change of Control Agreement"), as it relates to the Executive. Capitalized terms which are used but not defined herein shall have the meanings ascribed to such terms in the Change of Control Agreement. Within thirty (30) business days of the date of this letter agreement, MediaOne agrees to pay, and the Executive agrees to accept payment of, the amounts described under the heading "Total Accelerated Payments" on the schedule attached hereto as Exhibit 1 (the "Total Accelerated Payments"). The Executive agrees, on Executive's behalf and on behalf of Executive's heirs, assigns, executors, administrators and legal representatives, that upon the Executive's receipt of the Total Accelerated Payments, the Additional Pay payable (or that will become payable) under Section IV(b) of the Change of Control Agreement will be reduced by the amount of the Total Accelerated Payments (without interest from the time of the initial payment). Each of the Company, MediaOne and the Executive agrees that the receipt by the Executive of the Total Accelerated Payments shall be without prejudice to any other provision of the Change of Control Agreement, including, without limitation, rights to payments and other benefits due to the Executive (other than the Total Accelerated Payments) pursuant to Section IV of the Change of Control Agreement, and that nothing in this letter agreement shall have any effect whatsoever on the rights of the Executive to receive from the Company or MediaOne gross-up and reimbursement with respect to Excise Taxes as set forth in Section IV(e) of the Change of Control Agreement. In the event that after receipt by the Executive of the Total Accelerated Payments (i) the Merger is not consummated pursuant to the Agreement; (ii) the Executive's employment is terminated by MediaOne or the Company for Cause or (iii) the Executive's employment is terminated by the Executive prior to the expiration of the Ninety Day Period other than for Good Reason, death or disability, Executive agrees, on Executive's behalf and on behalf of Executive's heirs, assigns, executors, administrators and legal representatives, to reimburse MediaOne for an amount equal to the Total Accelerated Payments within ten (10) business days following either the termination of the Agreement (for any reason), or such termination of Executive, as the case may be, and subject to receipt of a loan from MediaOne as provided herein, (the "Reimbursement"). Within the time set for Reimbursement and at Executive's sole election, in order to assist Executive in making such Reimbursement, MediaOne shall lend to Executive an amount equal to the sum total of any and all federal, state and local taxes previously withheld on behalf of or paid by Executive ("Initial Tax Amount") with regard to receipt of the Total Accelerated Payments, and Executive shall deliver a promissory note to MediaOne in a form reasonably satisfactory to both parties under which Executive shall agree to repay such loan by paying MediaOne, the Initial Tax Amount at the time and to the extent Executive obtains any tax refund or reduction in taxes by reason of making Reimbursement to MediaOne. In the event that the Executive is or becomes liable for any taxes, including, without limitation, any interest or penalties imposed with respect to such taxes with respect to (x) the loan arrangement contemplated by this letter agreement or (y) the Total Accelerated Payments that would not have been payable had such Total Accelerated Payments been made pursuant to the terms of and at the time or times provided in the Change of Control Agreement (including, without limitation, by reason of (i) the Executive's inability to fully deduct for Federal, state and local tax purposes all or any portion of the reimbursement (ii) the imposition of any state or local taxes or (iii) a reduction in tax rate or other change in law that has the effect of increasing the amount of taxes that would have been otherwise payable) (an "Executive Tax Liability"), the Company and MediaOne shall indemnify the Executive, on an after-tax basis, from and against any such Executive Tax Liability and expenses (including, without limitation, attorney, accountant, and expert witness fees) incurred in connection with the preparation and filing of tax returns or any action, suit, claim, liability or proceeding (a "Claim") arising by reason of this letter agreement, including, without limitation, any audit or other proceeding relating to the defense of an Executive Tax Liability and any related Claims of third parties, whether or not the Merger is consummated. In addition, the Company and MediaOne shall compensate the Executive for the time involved in the defense and settlement of Claims at a rate of $500 per hour. Any payments required pursuant to this paragraph shall be made within thirty (30) business days after written demand therefor from the Executive. Except as expressly set forth herein, this letter agreement shall not be deemed to affect or modify any provision of the Change of Control Agreement. This letter agreement may not be amended or terminated without the prior written consent by an authorized officer of MediaOne and the Executive. This letter agreement may be executed in any number of counterparts which together shall constitute but one agreement. This letter agreement may not be assigned by any party hereto and shall be binding on and inure to the benefit of their respective successors and, in the case of the Executive, heirs and other legal representatives. Each of the Company, MediaOne and the Executive has caused this letter agreement to be duly executed as of the date first above written. AGREED AND ACCEPTED: - --------------------------------------- Charles M. Lillis Chairman, President and CEO By: ____________________________________ Senior Executive Officer EXHIBIT 10-V [FORM OF] CHANGE OF CONTROL LETTER AGREEMENT BETWEEN MEDIAONE GROUP, INC. AND [SENIOR EXECUTIVE OFFICER] THIS AMENDMENT, dated as of October 20, 1999 (the "Amendment"), is made by and between MediaOne Group, Inc. and _______________________ ("Executive"). RECITALS WHEREAS, Executive and MediaOne Group, Inc. entered into a change of control agreement set forth in a letter dated July 16, 1998 (the "Agreement"), a copy of which is attached to this Amendment; WHEREAS, in connection with the merger of MediaOne Group, Inc. into an affiliate of AT&T Corp. ("AT&T") pursuant to their May 6, 1999, merger agreement, AT&T has agreed to certain changes in the Agreement in order to facilitate the merger of the companies; NOW THEREFORE, in consideration of the mutual terms and conditions set forth in this Amendment, MediaOne Group, Inc. (for itself and its successors) and Executive hereby agree to the following changes in the Agreement: AGREEMENT 1. The first sentence of Section I(h) concerning the definition of the term Cause is revised to read as follows: "For purposes of this Agreement, "Cause" shall mean Executive's willful breach or failure to perform his employment duties, provided, however, that solely for the purposes of the proposed merger of the Company into AT&T Corp. ("AT&T") pursuant to that certain Agreement and Plan of Merger, dated as of May 6, 1999, by and among the Company, AT&T Corp. and Meteor Acquisition, Inc. (the "AT&T Merger"), following the effective time of the AT&T Merger, "Causez" shall be limited to Executive's commission of a felony related to employment with the Company or its successor." 2. The following language is inserted as a proviso after the word "Company" at the end of Section 1(x) concerning the Retirement of an executive: "; provided, however, that if Executive's termination from employment qualifies as voluntary for Good Reason or as involuntary without Cause, neither the fact that Executive is also eligible for retirement benefits (including without limitation any right under an individual agreement or otherwise to be treated as if he was eligible for retirement benefits), nor the fact that Executive applies to receive such retirement benefits, shall be considered as a basis for withholding payments or benefits that would otherwise be provided under the terms of this Agreement." 3. The following language is added as subsection (iii) of Section I(bb) concerning the termination date in the event of an executive's death: "(iv) In the event of Executive's death, the date Executive died." 4. The following language is added as Section I(cc) concerning the ninety (90) day period following the closing of the AT&T merger: "(cc) Ninety Day Period. The meaning of this term is set forth in Subsection III(a)." 5. In Section III(a) concerning eligibility for payments and benefits under the Agreement: (a) The following language is inserted as a new sentence following the first sentence: "Notwithstanding anything to the contrary in this Agreement, solely for the purposes of the proposed AT&T Merger, in the event of death or Disability of Executive following a Change of Control, Executive, or in the case of death, Executive's Beneficiaries (as defined below in Subsection VI(b)), shall receive the benefits to which Executive or his Beneficiaries are entitled to under Section IV of this Agreement and any and all retirement plans, pension plans, disability policies and other applicable plans, programs, policies, agreements or arrangements of the Company ("Change of Control Benefits"), provided, however, in the event the AT&T Merger is not consummated, Executive or his Beneficiaries shall not be entitled to any Change of Control Benefits except to the extent otherwise entitled to such benefits in the absence of a Change of Control." (b) The existing second sentence is revised to read as follows: "For purposes of this Agreement, "Termination" shall mean termination of Executive's employment that is not as a result of Executive's Retirement, death or Disability (other than death or Disability occurring on or after a Change of Control related to the AT&T Merger) and (x) if by the Company, is not for Cause, or (y) if by the Executive, is for Good Reason, or (z) if by reason of death or Disability, is a result of death or Disability occurring on or after a Change of Control related to the AT&T Merger." 6. The following sentence is added to the end of Section III(a) concerning eligibility for payments and benefits under the Agreement: "Notwithstanding anything to the contrary in this Agreement, ninety (90) days following the effective date of the AT&T Merger "Ninety Day Period"), all conditions precedent to entitlement to the benefits afforded upon a termination without Cause or for Good Reason under this Agreement shall be deemed satisfied in full and Executive shall be entitled to the benefits provided in Section IV hereof upon the subsequent termination of his employment with the Company, for any reason whatsoever other than for Cause, within three (3) years after the effective date of the AT&T Merger. Accordingly, following the expiration of the Ninety Day Period, "Termination" shall mean a termination of Executive's employment for any reason whatsoever other than for Cause, including, without limitation, termination by Executive other than for Good Reason." 7. The third sentence in the first paragraph of Section III(b) concerning notices of termination is revised to read as follows: "If after a Change of Control, but prior to the expiration of the Ninety Day Period Executive's employment shall be terminated by the Company for Cause or by Executive for other than Good Reason, the Company shall pay Executive his full base salary through the Termination Date at the salary level in effect immediately prior to the effective date of the AT&T Merger and shall pay any amounts to be paid to Executive pursuant to any other compensation or stock or stock option plan(s), program(s) or employment agreement(s) then in effect, and the Company shall have no further obligations to Executive under this Agreement." 8. The second sentence of the second paragraph of Section III(b) concerning payments during the pendency of certain disputes shall be revised to read as follows: "Notwithstanding the pendency of any such dispute, the Company will continue to pay Executive his full compensation including, without limitation, base salary, bonus, incentive pay and equity grants, in effect immediately prior to the effective date of the AT&T Merger, and continue Executive's participation in all benefit plans or other perquisites in which Executive was participating, or which he was enjoying, immediately prior to the effective date of the AT&T Merger, until the dispute is finally resolved." 9. In the first sentence of Section IV(a), regarding payment of standard benefits, the phrase "rate in effect at the time the Notice of Termination is given" is replaced with the following: "rate in effect immediately prior to the effective date of the AT&T Merger" 10. Solely for the purposes of the AT&T Merger, in Section IV(b) concerning the payment of additional payments: (i) the term a "Termination Date" is replaced by "Change of Control" in each place other than the second sentence, as amended in paragraph 11 of this Amendment, and (ii) the word "Termination" is replaced by "Change of Control." In the event the AT&T Merger is not consummated, Section IV(b) shall revert back to the language in effect immediately prior to this Amendment. 11. The second sentence in Section IV(b) concerning the payment of additional payments is revised to read as follows: "The Company shall pay the Additional Pay to Executive in a lump sum, in cash, not later than the fifteenth calendar day following the Termination Date, provided, the Company may in its sole discretion elect to accelerate payment of the Additional Pay to a date prior to Executive's Termination Date." 12. Section IV(d) concerning health care benefits is revised in its entirety to read as follows: "Following the Termination Date, the Company shall continue to provide for the lifetime of Executive, or in the case of death, the lifetime of Executive's surviving spouse or domestic partner, substantially the same level of health, vision and dental benefits, including, without limitation, surviving spouse and domestic partner benefits, to Executive and Executive's eligible dependents that the Company would provide to Executive and Executive's eligible dependents if Executive were first eligible for retiree health, vision and dental benefits immediately prior to the effective time of the A T&T Merger, regardless of whether such retiree health, vision or dental benefit plan(s) continue for any other employee or retiree. The eligibility of Executive's dependents shall be determined by the terms of any retiree health, vision and dental benefit plan(s) or program(s) in effect immediately prior to the effective time of the AT&T Merger." 13. The following language is added as Section XII concerning defenses AT&T may raise with respect to payments and benefits under the Agreement: "XII. AT&T Defenses. Notwithstanding anything to the contrary in the preceding terms of this Agreement, solely for the purposes of the AT&T Merger, the Company shall not and, following the effective time of the AT&T Merger, neither AT&T nor any of its affiliates or Subsidiaries shall assert any defenses with respect to the payments and benefits to be provided under this Agreement by reason of Executive's termination, including without limitation whether a Change of Control has occurred and whether or not Executive's termination was for Cause, other than the following: (a) Ninety Day Period. During the Ninety Day Period, a defense may be asserted as to whether Executive's termination was for Good Reason, and as to whether Executive committed a felony (related to employment with the Company or its successor) after the effective time of the AT&T Merger as to which a termination for Cause was applicable; and (b) Post-Ninety Day Period. With respect to termination of employment after expiration of the Ninety Day Period , the only defense that may be asserted shall be whether Executive committed a felony (related to employment with the Company or its successor) after the effective time of the AT&T Merger as to which a termination for Cause was applicable." 14. The third sentence of Section IX concerning miscellaneous provisions is revised to read as follows: "No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in (i) this Agreement, (ii) the bonus/change of control/non-compete payments memo, (iii) the accelerated payments letter, (iv) the best payment amendments, and (v) the release agreement." 15. The following language is added as Section XIII concerning Executive's non- competition obligation: "XIII. Non-Compete. (a) Obligation. Solely for the purposes of the AT&T Merger, Executive acknowledges that reasonable limits on his ability to engage in activities competitive with the Company are warranted. Accordingly, subject to Board approval of the Non-Compete Fee (as defined below), Executive agrees that during _______ year(s) from the effective date of the AT&T Merger (the "Term"), he shall not, without the express prior written consent of the Company, be employed in a management or executive capacity by any of the local exchange companies specifically identified in Attachment 1 to this Amendment or any of the multi channel video programming distribution companies specifically identified in Attachment 2 to this Amendment ("Non-Compete Obligation"). (b) Fees. Subject to Board approval, for and in complete consideration of Executive's full and faithful performance of the Non-Compete Obligation, Company agrees to pay Executive a fee in the amount of _______________ Dollars ($____________) (the "Non- Compete Fee") on Executive's Termination Date in immediately available funds, provided, however, the Company may in its sole discretion elect to accelerate payment of the Non-Compete Fee to a date prior to Executive's Termination Date. (c) Early Termination. The Non-Compete Obligation shall termin- ate prior to the expiration of the Term, upon the occurrence of any one of the following events: (i) Upon Executive's death; (ii) Upon thirty (30) days written notice from Company to Employee. In the event of an early termination of the Non-Compete Obligation, neither Executive nor Executive's Beneficiaries shall have any obligation to repay the Non-Compete Fee to the Company." 16. Except as expressly modified by this Amendment, the terms and conditions of each Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Executive and MediaOne Group, Inc. have executed this Amendment, in duplicate, as of the date set forth above. MediaOne Group, Inc. [/S/ CHARLES M. LILLIS] ______________________________ Charles M Lillis [Senior Executive Officer] Chairman, President and CEO Date: ______________________ Date: _____________________ ATTACHMENT 1 Local Exchange Companies SBC Corp (including Pacific Telesis and Ameritech) Bell Atlantic (including NYNEX and Southern New England Telephone) Bell South GTE Sprint U S WEST (including Quest) ATTACHMENT 2 Multi Channel Video Programming Distribution DirecTV Echostar RCN SBC Bell South Bell Atlantic GTE Seren Innovations Sprint MCI/Worldcom - ------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----