EX-10 2 exh10aeightkcebc.txt FORM OF PERFORMANCE SHARE AWARE AGREEMENT AT&T 2004 Long Term Incentive Program Performance Share Award Agreement [GRAPHIC OMITTED] ****EMPLOYEE MUST RETURNED SIGNED AGREEMENT ON OR BEFORE [date] OR THIS AWARD WILL BECOME NULL AND VOID**** Pursuant to the AT&T 2004 Long Term Incentive Program (the "Plan") of AT&T Corp. ("AT&T" or the "Company"), and in accordance with the terms and conditions of the Plan, a copy of which is available to you*, and your agreement to the further terms, conditions and restrictions set forth below, you have been granted, as of the date of grant set forth below, a number of performance shares ("Performance Shares"), as set forth below. The Plan is hereby incorporated by reference and made a part hereof. The grant and this Agreement are subject to all terms and conditions of the Plan, and the parties agree to be bound by the terms thereof. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall control. The Committee shall have the right, in its discretion, to alter or amend the Plan and this Agreement, from time to time, consistent with the terms of the Plan. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. -------------------------------------------------------------------------------- Participant -------------------------------------------------------------------------------- Social Security Number -------------------------------------------------------------------------------- Number of Performance Shares Granted -------------------------------------------------------------------------------- Date of Grant -------------------------------------------------------------------------------- Performance Period January 1, 2005 - December 31, 2007 -------------------------------------------------------------------------------- Your Performance Share Award will be distributed only after the end of the Performance Period, except in certain circumstances as indicated in the terms and conditions set forth in this Agreement. o The percentage of the Performance Share Award that will be distributed to you shall depend on the satisfaction, at the completion of the Performance Period, of performance criteria that have been established by the AT&T Board of Directors ("the AT&T Board") or the Committee. Distribution Period and Form of Payout o The determination of whether, and to what extent, such criteria have been satisfied, and the determination of the percentage of the Performance Share Award to be distributed to you shall be conclusively determined by the AT&T Board or the Committee. o The Performance Shares to which you become entitled based on the satisfaction of such criteria are called ("Retained Shares"). The number of Retained Shares will be determined as soon as practicable after the completion of the Performance Period and shall be distributed in Shares of AT&T common stock, except in certain circumstances as indicated in the termination of employment provisions set forth in this Agreement. -------------------------------------------------------------------------------- This Performance Share Award Agreement (this "Agreement") Effectiveness shall be effective only if and when AT&T receives your of Agreement signature of acceptance of the terms of this Agreement as required below. -------------------------------------------------------------------------------- As soon as administratively practicable after the completion of the distribution period described above (the "Distribution Period"), (or to the extent applicable, the completion of any elected deferral period for any Book Entry upon Performance Share), and subject to the income tax Completion of withholding provisions described in the Agreement, AT&T Distribution will deliver to you or your legal representative a statement Period reflecting ownership of the corresponding Shares in book entry form. You are responsible for complying with any securities and exchange control laws or any other legal requirements applicable to you in connection with the distribution of such Shares. -------------------------------------------------------------------------------- Upon the distribution of any Retained Shares, and in accordance with ordinary payroll practices, you will receive Dividend a cash payment in an amount equal to all dividends payable Equivalent on one Share (subject to any appropriate adjustment pursuant Payments to Section 4(c) of the Plan) on all record dates within the Performance Period with respect to which this Performance Share Award was outstanding, multiplied by the number of Retained Shares distributed to you upon the distribution. -------------------------------------------------------------------------------- You may irrevocably elect, in accordance with policies adopted by the Committee, to defer the distribution of all Deferral or any portion of this Performance Share Award that you Election otherwise would have become entitled to receive upon the conclusion of the distribution period pursuant to the terms of this Agreement. -------------------------------------------------------------------------------- * AT&T employees should access the Corporate Forms Library in the AT&T Workforce Services web site for these documents. -------------------------------------------------------------------------------- You agree that the Company is not responsible for the tax consequences to you of the granting or distribution of this Performance Share Award and the distribution of Shares in respect thereof, and that it is your responsibility to consult with a personal tax advisor regarding all matters with respect to the tax consequences of the granting and vesting of the Performance Shares and the distribution of Income Tax Shares in respect thereof. At the conclusion of the Withholding Distribution Period, AT&T (or your local employer, as Requirements applicable) shall determine and report to the proper taxing (Applicable to authorities the ordinary income recognized by you based on all Participants) the number of Retained Shares to be issued to you on such date multiplied by the Fair Market Value on such date. AT&T (and your local employer, as applicable) shall have the right to deduct or cause to be deducted from, or collect or cause to be collected with respect to, any distribution of Shares or payment of dividend equivalent amounts, any federal, state, or local taxes and/or social insurance contributions required by law to be withheld or paid with respect to such distribution and or payment, and you or your legal representative or beneficiary hereby consent to such deductions. Subject to applicable securities laws, AT&T (and your local employer, as applicable) is authorized to automatically withhold an appropriate number of Retained Shares to satisfy such tax and/or social insurance withholding and distribute only the net number of Shares to you. -------------------------------------------------------------------------------- Termination of Your termination of employment from the Company or one of Employment and its Affiliates, will cause this Performance Share Award to this Performance be cancelled effective upon your termination date, except as Share Award described below: Agreement normal retirement a) upon termination of employment after the attainment of age and AT&T service equal to: Age and AT&T service of Any age 30 years 50 25 years 55 20 years 65 10 years; the Performance Shares shall be prorated based on the number of full months** of employment in the Performance Period and distributed to you as soon as practicable following the year of your retirement. The payout level for this Award will be determined by the level of performance criteria met from the beginning of the applicable Performance Period through the end of the calendar year of your retirement. under an FMP, b) upon termination of employment, under the AT&T Force sale, divestiture, Management Program or the AT&T E-Band and Officer outsourcing separation plans; sale, divestiture or outsourcing of your business unit or position from AT&T; the Performance Shares shall be prorated based on the number of full months** of employment in the Performance Period and distributed to you as soon as practicable following the year of your termination. The payout level for this Award will be determined by the level of performance criteria met from the beginning of the applicable Performance Period through the end of the calendar year of your termination. Disability c) upon termination of employment due to disability entitling you to Company provided long term disability benefits under a Company provided long term disability plan, then this Award shall be prorated based on the number of full months** of employment in the Performance Period and distributed to you as soon as practicable following the year of your termination. The payout level for this Award will be determined by the level of performance criteria met from the beginning of the applicable Performance Period through the end of the calendar year of your termination. ** Terminations on or after the 16th of a month will be treated as occurring at the end of the month of the proration calculation; terminations prior to the 16th of a month will be treated as occurring at the end of the previous month for the proration calculation. Fractional Shares will be rounded up to the nearest whole Share. -------------------------------------------------------------------------------- In the case of your death, any distribution in respect of this Performance Share Award granted hereunder shall be made to your estate. You may, in accordance with procedures established by the Committee, designate one or more beneficiaries to receive all or part of any distribution to be made hereunder in case of your death, and you may change or revoke such designation at any time. In the event of your Distribution death, any distribution hereunder that is subject to such a Upon Death designation (to the extent such designation is valid and enforceable under applicable law) shall be made to such beneficiary or beneficiaries in accordance with this Agreement. If there shall be any question as to the legal right of any beneficiary to receive a distribution hereunder, the amount in question shall be distributed to your estate, in which event neither AT&T nor any Affiliate shall have any further liability to anyone with respect to such distribution. In case of your death prior to the end of the Performance Period, the number of Performance Shares shall be prorated, based on the number of full months*** of employment in the Performance Period. The prorated Performance Shares shall be distributed in cash (valued in accordance with procedures established by the Committee) within a reasonable time after your death. All other Performance Shares granted hereunder shall be cancelled. *** The month of death will be counted as a full month, unless this Award was previously prorated as set forth in a, b, or c of the Termination of Employment provisions of this Agreement. Fractional Shares will be rounded up to the nearest whole Share. -------------------------------------------------------------------------------- Transfer to or from AT&T and any Affiliate, shall not be Transfer or considered a termination of employment for purposes of this Leave of Agreement. Nor shall it be considered a termination of Absence employment for purposes of this Agreement if you are placed on a military leave or other approved leave of absence, unless the Committee shall otherwise determine. -------------------------------------------------------------------------------- This Performance Share Award shall be forfeited and cancelled if, prior to the distribution of this Award, without the consent of AT&T, while employed by AT&T, or Competition after termination of such employment, you establish a relationship with a competitor of the Company or engage in activity which is in conflict with or adverse to the interest of AT&T, as determined in accordance with the AT&T Non-Competition Guideline (the "Guideline"), a copy of which is available to you*. -------------------------------------------------------------------------------- Employment Neither the Plan nor this Agreement shall be construed as Rights giving you the right to be retained in the employ of AT&T or any Affiliate. -------------------------------------------------------------------------------- At all times during the Performance Period (or to the extent applicable, any elected deferral period for this Performance Transferability Share Award), such Performance Share Award shall be nontransferable and may not be pledged, assigned or alienated in any way. -------------------------------------------------------------------------------- You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, your employer and AT&T and its Subsidiaries and its Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that AT&T and your employer hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in AT&T, details of all Performance Shares or any other entitlement to shares of stock awarded, canceled, distributed or outstanding in your favor, for the purpose of implementing, administering and Data managing the Plan ("Data"). You understand that Data may be Privacy transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, or elsewhere, and that the recipient's country may have different data privacy laws and protections than your country. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you deposit any Shares acquired upon distribution of the Performance Share. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting in writing your local human resources representative. You understand that withdrawal of consent may affect your ability to realize benefits from the Performance Shares. -------------------------------------------------------------------------------- Upon a Change in Control (as defined in Section 2(e) of the Plan), this Performance Share Award will be prorated for the Change in number of full months within the Performance Period prior to Control the Change in Control and distributed based upon the level of performance achieved within such Performance Period in accordance with Section 11(d) of the Plan. -------------------------------------------------------------------------------- * AT&T employees should access the Corporate Forms Library in the AT&T Workforce Services web site for these documents. -------------------------------------------------------------------------------- You shall not have the right to vote the Shares underlying the Performance Shares or, except as set forth above with respect to dividend equivalents, any other rights as a holder of Shares until such time as the Performance Shares shall have been delivered to you. Anything in this Agreement to the contrary notwithstanding, if, at any time specified herein for the issuance of Shares to you, any law, regulation or requirement of any governmental authority having jurisdiction shall require either the Company or you to take any action in connection with the Shares then to be issued, the issuance of such Shares shall be deferred until such action shall have been taken. Any dispute or disagreement which shall arise under, or as a result of, or pursuant to, this Agreement shall be determined by the Committee in its absolute and uncontrolled discretion, and any such determination or any other determination by the Committee under or pursuant to this Agreement and any interpretation by the Committee of the terms of this Agreement shall be final, binding and conclusive on all persons affected thereby. This Agreement may be amended by the AT&T Board of Directors or the Committee provided that no such amendment shall impair your rights hereunder without your consent. Notwithstanding any other provision to the contrary herein, the AT&T Board, if it determines in its sole discretion that it is necessary or desirable under the circumstances, may authorize the proration or early distribution (or a combination thereof) of the Performance Shares in the case of termination of the Plan. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of New York and applicable Federal law. Notwithstanding any other provisions contained in this Agreement, the following provisions shall apply to any Participant who is a "covered employee" within the meaning Other of Section 162(m) of the Code (i.e., the CEO and four most Corporate highly compensated officers of the Company, other than the Provisions CEO, as of the end of the Performance Period): (a) The Awards to all such Participants who are "covered employees" shall be Other Stock Unit Awards having a total value as of the end of the Period equal to 0.13% of the "Net Cash Provided by Operating Activities," as publicly disclosed in the Company's consolidated financial statements for each year in the Performance Period, adjusted by the percentage change in the Fair Market Value of a Share from the first trading day to the last trading day in the Performance Period, and the value of the Award to each Participant with respect to such Performance Period, as of the end of the Performance Period, shall be such total value divided by the number of Participants who are "covered employees" as of the end of such Performance Period, subject to adjustment as described in (b) below. "Fair Market Value" of a Share on the applicable trading day shall be the average of high and low per Share sale prices on the New York Stock Exchange on such day. Prior to the payment of any Award to a "covered employee" with respect to a Performance Period, the Committee shall certify the amounts under this paragraph (a) with respect to such Performance Period. (b) The Committee, in its sole discretion, shall have the authority to set the actual Other Stock Unit Award to any Participant at any amount lower than the amount described in paragraph (a) above, based on factors, including but not limited to the financial and other criteria of the Company established by the Committee, and individual merit. The Other Stock Unit Award to any Participant may have a value less than (including no award), but never more than, the value determined under (a) above. (c) The value of the actual Other Stock Unit Award payable to any Participant shall be distributed in cash and/or Shares as determined by the Committee. Notwithstanding any other provisions contained in this Agreement, the Committee, at the time of the distribution may elect in its sole discretion to substitute a cash payment in lieu of all or any portion of the Shares. -------------------------------------------------------------------------------- Please indicate your acceptance of the terms of this Performance Share Award Agreement and acknowledge that you have reviewed copies of the Plan and the Guideline summary, in each case as currently in effect and available to you*, by signing at the place provided and returning original of this Performance Share Award Agreement. IF YOU FAIL TO SIGN AND RETURN THIS DOCUMENT, ACCEPTING THE TERMS OF THIS AWARD AGREEMENT FOR ANY REASON WHATSOEVER ON OR BEFORE [date], YOU WILL BE DEEMED TO HAVE REJECTED YOUR PERFORMANCE SHARE AWARD AND YOUR AWARD WILL BE NULL AND VOID. ACCEPTED AND AGREED: /s/ Mirian Graddick-Weir ------------------------------ Mirian Graddick-Weir -------------------------------------------------------------------------------- AT&T Corp. Employee Signature * AT&T employees should access the Corporate Forms Library in the AT&T Workforce Services web site for these documents.