Exhibit 99.7
CONFORMED
COPY
EMPLOYMENT
AGREEMENT
AGREEMENT
by and between SBC Communications Inc. (the “ Company
”) and David W. Dorman (the “ Executive ”)
dated as of the 30th day of January, 2005 (the “
Agreement ”).
The
Company has determined that it is in the best interests of the
Company and its shareholders to assure that AT&T Corp., a New
York corporation (“ AT&T ”) will have the
continued dedication of the Executive pending the merger (the
“ Merger ”) of AT&T with Tau Merger Sub
Corporation, a New York corporation and a wholly-owned subsidiary
of the Company (“ Merger Sub ”) pursuant to the
Agreement and Plan of Merger dated as of January 30, 2005, by
and among AT&T, the Company and Merger Sub (the “
Merger Agreement ”) and to provide the Merger Sub and
the Company after the Merger with continuity of management.
Therefore, in order to accomplish these objectives, the Company has
entered into this Agreement. Capitalized terms used but not defined
in this Agreement shall have the meaning set forth in the Merger
Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1.
Effective Date . The “ Effective Date”
shall mean the date that the Effective Time (as defined in the
Merger Agreement) occurs. If the Merger Agreement is terminated,
this Agreement shall terminate at the same time, and neither party
shall have any obligation to the other under this Agreement.
2.
Employment Period . Provided that the Executive is the
Chairman of the Board of Directors of AT&T and Chief Executive
Officer of AT&T immediately prior to the Effective Time the
Company hereby agrees that it or an Affiliated Company will employ
the Executive, and the Executive hereby agrees to enter into the
employ of the Company or such Affiliated Company, subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the Date of Termination, as
defined herein (the “ Employment Period ”).
“ Affiliated Company ” means any company
controlled by, controlling or under common control with the
Company, which shall include AT&T.
3.
Terms of Employment . (a) Position and Duties .
(i) During the Employment Period, the Executive shall be
elected to the Board of Directors of the Company and shall serve as
President of the Company, reporting directly to the Chief Executive
Officer of the Company (the “ CEO ”), with such
authority, duties and responsibilities as may be assigned to him
from time to time by the CEO. During the Employment Period, the
Executive’s services shall be performed at such locations as
may be designated by the CEO.
(ii) During
the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees
to devote substantially all of his attention and time during normal
business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, subject to
complying with Section 9(b), it
shall not be a violation of
this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance
of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall thereafter be permissible under this
Agreement, subject to complying with Section 9(b).
(b)
Compensation . (i) Base Salary . During the
Employment Period, the Executive shall receive an annual base
salary (the “ Annual Base Salary ”) at an annual
rate equal to the Executive’s current salary for 2005 as such
amount may be increased prior to the Effective Date in the ordinary
course of business consistent with past practice. The Annual Base
Salary shall be paid at such intervals as the Company pays
executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed for increase at least
annually, beginning no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective
Date. Any increase in the Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement. The Annual Base Salary shall not be reduced after any
such increase and the term “Annual Base Salary” shall
refer to the Annual Base Salary as so increased.
(ii)
Annual Bonus . In addition to the Annual Base Salary, the
Executive shall be eligible to be awarded, for each fiscal year
ending during the Employment Period, an annual bonus (the “
Annual Bonus ”) in cash on substantially the same
terms as peer executives of the Company and the Affiliated
Companies, provided however that for the fiscal year beginning
immediately prior to the Effective Date such Annual Bonus shall be
prorated and shall be at least at the same target percentage of
Annual Base Salary as was established by AT&T for 2005 pursuant
to the AT&T Short-Term Incentive Plan . Pursuant to the
AT&T Short-Term Incentive Plan, the Executive shall receive a
prorated bonus for the portion of the year during which occurs the
Effective Date reflecting the period of such fiscal year that
elapses through the Effective Date.
(iii)
Incentive Awards . On the Effective Date, all options to
purchase shares of AT&T common stock shall vest in full, and
each such option shall remain exercisable for the remainder of its
full term as provided by their terms. In addition, all other
AT&T equity-based or other long or short-term incentive awards
shall vest in full or be paid out, as the case may be, and any
performance awards shall be distributed as provided by their terms.
The Executive shall also be eligible to participate on the same
terms as peer executives of the Company and the Affiliated
Companies in all long-term incentive plans of the Company beginning
with the first performance period starting after the Effective
Date.
(iv)
Welfare and Other Benefit Plans . During the Employment
Period, the Executive and/or the Executive’s family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs and all other benefit programs, including
perquisites, provided by the Company and the Affiliated Companies
(including, without limitation, medical, prescription, dental,
disability, employee life,
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group life, accidental
death and travel accident insurance plans and programs) to the
extent applicable generally to other peer executives of the Company
and the Affiliated Companies, but in no event shall such plans,
practices, policies and programs provide the Executive during the
Initial Period with benefits that are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company. It is understood that the Executive shall not receive
duplicate benefits from the Company or its Affiliated Companies.
“ Initial Period ” means the first six
(6) calendar months of the Employment Period.
(v)
Expenses . During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the
Company’s policies.
(vi)
Office and Support Staff . During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments as provided generally at
any time thereafter with respect to other peer executives of the
Company and its Affiliated Companies and shall be provided during
the Initial Period with secretarial and administrative assistance
and security on the same basis as provided to him immediately prior
to the Effective Date . After the Date of Termination,
Executive shall continue to be provided with appropriate office
space and secretarial support in the city of his choice within the
United States where the Company has office facilities for five
years from the Date of Termination (if such termination is not by
the Company for Cause) provided that the Executive is not employed
by or does not otherwise perform any services for any competitor of
the Company or any of its Affiliated Companies.
(vii)
Vacation . During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the plans,
policies, programs and practices of the Company and its Affiliated
Companies as in effect with respect to the senior executives of the
Company.
4.
Termination of Employment . (a) Death or Disability .
The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 11(b) of this
Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the “ Disability
Effective Date ”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes
of this Agreement, “ Disability ” shall mean the
absence of the Executive from the Executive’s duties with the
Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.
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(b)
By the Company with or without Cause . The Company may
terminate the Executive’s employment during the Employment
Period with or without Cause. For purposes of this Agreement,
“ Cause ” shall mean:
(i) the
continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board of the
Company which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive’s duties, or
(ii) the
willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company, or
(iii) conviction
of a felony or guilty or nolo contendere plea by the Executive with
respect thereto (other than a traffic-related felony).
For purposes of this
provision, no act or failure to act, on the part of the Executive,
shall be considered “ willful ” unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i),
(ii), or (iii) above, and specifying the particulars thereof
in detail.
(c)
By the Executive . The Executive’s employment may be
terminated by the Executive for any reason.
(d)
Notice of Termination . Any termination by the Company or by
the Executive shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a “ Notice of
Termination ” means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not
more than thirty days after the giving of such notice). The failure
by the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Cause shall not
waive any right of the Company hereunder or preclude the Company
from asserting such fact or
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circumstance in enforcing
the Company’s rights hereunder. Any Notice of Termination by
the Executive shall include the Executive’s resignation as a
member of the Board of Directors of the Company.
(e)
Date of Termination . “ Date of Termination
” means (i) if the Executive’s employment is
terminated by the Company for Cause, or by the Executive for any
reason, the date of receipt of the Notice of Termination or any
later date specified therein within 30 days of such notice, as
the case may be, (ii) if the Executive’s employment is
terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies
the Executive of such termination and (iii) if the
Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may
be.
5.
Obligations of the Company and the Executive upon
Termination . (a) During the Initial Period . If, during
the Initial Period, the Executive’s employment shall
terminate for any reason other than by the Company for Cause:
(i) the
Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination (or on the first
business day that is 6 months after the Date of Termination to
the extent required pursuant to Section 409A of the Internal
Revenue Code of 1986, as amended (the “ Code ”))
the aggregate of the following amounts:
A. the sum of (1) the
Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, and (2) the
product of (x) the target Annual Bonus for the year in which
the Date of Termination occurs (and if no target Annual Bonus has
been set for such year, the target Annual Bonus for the immediately
preceding year) and (y) a fraction, the numerator of which is
the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination (reduced, if the
Date of Termination occurs during the same fiscal year as the
Effective Date, by the number of days during such fiscal year that
elapsed through the Effective Date), and the denominator of which
is 365 (the sum of the amounts described in clauses (1) and
(2), shall be hereinafter referred to as the “ Accrued
Obligations ”); and
B. an amount equal to the amount the
Executive would have been entitled to receive under any plan,
agreement or program of AT&T (other than the annual pension
provided in the AT&T SERP, as defined below) had his employment
been terminated without Cause immediately after the Effective Date
(subject to the execution by the Executive of any release required
under such plan, agreement or program); and
(ii) all
AT&T equity based or other incentive awards shall vest in full
and any stock options or stock appreciation rights shall remain
exercisable for the remainder of their terms as provided by their
terms had Executive been terminated without Cause by the Company
immediately after the Effective Date; and
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(iii) commencing
six months after the Date of Termination, the Executive shall be
paid, in lieu of any other non-qualified retirement benefits other
than those benefits in which the Executive was or becomes vested at
the Effective Date, the annuity specified in the letter agreement
dated July 29, 2003 (such annuity, the “ AT&T
SERP ”) provided that (1) in lieu of the percentage
specified in table (a) of the AT&T SERP the percentage
shall be 60, (2) Final 3-year Average Total Cash Compensation
shall be no less than it would have been had the Execu
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