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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.
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A Delaware I.R.S. Employer Identification
Corporation No. 84-0926774
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188 Inverness Drive West, Colorado 80112
Telephone Number (303) 858-3000
_________________________
Securities registered pursuant to Section 12(b) of the Act:
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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
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_________________________
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
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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........................
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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.
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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.
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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.
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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
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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
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Annual Compensation Long-Term Compensation
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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
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(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.
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(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
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Deferred
Compensation Savings Plan Split-Dollar Term Portion
Name Company Match Company Match Premium Value Premium
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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
</TABLE>
(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 $8,908,991.
Individual Option/SAR Grants in Last Fiscal Year
The following table provides information on stock options granted to the
executive officers listed in the Summary Compensation Table during 1999. The
Company employed the Black-Scholes option pricing model to develop the
theoretical values set forth under the "Grant Date Present Value" column.
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Number of Percent of
Securities Total
Underlying Options/SARs Exercise
Options/ Granted to or Base Grant Date
SARs Employees in Price Expiration Present
Granted # Fiscal Year ($/sh) Date Value ($)
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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)
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(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 ($46.69).
(3) This value reflects the standard application of the Black-Scholes option
pricing model to options issued on common stock of MediaOne Group, Inc.,
using the following assumptions: volatility 30%, dividend yield 0.0%, and a
risk-free rate of return of 4.70% based on the options being outstanding
for an average term of 4.0 years.
(4) This value reflects the standard application of the Black-Scholes option
pricing model to options issued on common stock of MediaOne Group, Inc.,
using the following assumptions: volatility 30%, dividend yield 0.0%, and a
risk-free rate of return of 4.83% based on the options being outstanding
for an average term of 4.0 years.
(5) These stock options become fully exercisable one year from the date of
grant and do not include a reload feature. This value reflects the standard
application of the Black-Scholes option pricing model to options issued on
common stock of MediaOne Group, using the following assumptions: volatility
30%, dividend yield of 0%, and a risk-free rate of return of 5.75% based on
the options being outstanding for a term 5.76 years.
Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR
Values
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Shares Number of Unexercised Value of Unexercised
Acquired Value Options/SARs In-the-Money
on Exercise Realized at FY-End (#) Options/SARs
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Name (#) ($) Exercisable * Unexercisable * Exercisable Unexercisable
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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 $ -
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*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
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Final Average Annual --------------------------------------------------------------------------------------
Compensation
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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
</TABLE>
Second Table
YEARS OF SERVICE
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Final Average Annual ---------------------------------------------------------------------------------------
Compensation
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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
</TABLE>
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
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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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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.
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
-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):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
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.
</TABLE>
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-
EXHIBIT 10-S
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
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
</TABLE>
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
<TABLE>
<CAPTION>
<S> <C> <C>
Charles M. Lillis 188 Inverness Drive West, 5th Floor FAX 303 858.5811
Chairman, President & CEO Englewood, CO 80112-5209
Phone 303 858.5885
</TABLE>
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
- ------------------------------------------
