President Employment Agreement - Dave Dorman

Exhibit (10)(iii)(A)35


EMPLOYMENT AGREEMENT


This Agreement, effective December 1, 2000, by and between David Dorman ("Executive") and AT&T Corp., a New York Corporation with its principal place of business at 295 N. Maple Avenue, Basking Ridge New Jersey ("Company") (collectively "the Parties"):


WHEREAS, Executive seeks employment with the Company; and


WHEREAS, the Company seeks to secure Executive's services on the terms provided herein;


NOW THEREFORE, in consideration of the mutual covenants set forth below, the Parties agree as follows:


Term of Employment. Effective December 1, 2000 ("Effective Date"), the Company will hire Executive on a full time basis to render exclusive services to the Company and its affiliates under the terms set forth in this Agreement. The Executive accepts this employment and will render services as required by the Company using the Executive's best efforts and will report to the Company's Chief Executive Officer ("CEO"). Employment under this Agreement shall terminate December 31, 2002; provided, however, that on December 31, 2002, and on each December 31 thereafter ("Extension Date"), Employment under this Agreement shall extend automatically for one additional year unless either the Company or the Executive provides the other written notice of its or his desire to terminate the Agreement no less than sixty (60) days prior to the Extension Date.


Title of Executive. At Effective Date, Executive's title shall be President of AT&T Corp. In the event that AT&T Wireless and AT&T Broadband become independent companies from the entity referred to on Effective Date as AT&T Corp., then Executive's title shall become President and Chief Operating Officer of AT&T Corp.'s remaining business units. For purposes of this paragraph, "independent companies" shall mean that AT&T Wireless and AT&T Broadband have undergone a divestiture from AT&T Corp. and are no longer subject to ownership or control by AT&T Corp.


Compensation and Benefits.


Base Salary. The Executive shall receive salary compensation ("Base Salary") from the Company in payment for all of Executive's services under this Agreement at an annual rate of Nine Hundred Fifty Thousand ($950,000.00) dollars per year, subject to review by the Company's compensation committee on an annual basis with regard to the possibility of an increase in Base Salary. The Company shall pay Executive the Base Salary in monthly installments.


Annual Bonus. The Annual Bonus ("Annual Bonus") for Company executives is based on measures of Company and individual performance. The Company makes no representations under the terms of this Agreement regarding criteria for or amounts of bonuses paid during the term of this Agreement. However, Executive shall be entitled to receive an annual bonus during the term of this Agreement under the same terms and conditions of other Company executives. The target amount for Executive's Annual Bonus shall be one hundred percent of base salary,
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Nine Hundred Fifty Thousand ($950,000.00) Dollars, subject to review by the Company's compensation committee on an annual basis with regard to the possibility of an increased Annual Bonus. Executive shall become eligible for a bonus under this paragraph beginning in 2002 for performance year 2001 and for each March thereafter during the term of this Agreement.


AT&T Long Term Incentive Compensation. All compensation under this Paragraph 4 shall be subject to the terms of the AT&T 1997 Long Term Incentive Program and the AT&T Non-Competition Guideline, attached to this Agreement as Attachments A and B, respectively.


2000 AT&T Performance Shares. On the Effective Date, Company will grant Executive Fifty Thousand Five Hundred (50,500) AT&T Performance Shares covering the 2000-2002 performance period. Payment for Performance Shares awarded under this paragraph 4(a) are contingent upon the Company's attainment of financial performance measurements determined by the Company's Board of Directors. Payout, if any, for shares awarded under this paragraph shall be made during the first quarter of 2003 or as otherwise determined by the Company's Board of Directors.


2000 AT&T Stock Options. On the Effective Date, Company will grant Executive options for Three Hundred Fifty Six Thousand Seven Hundred (356,700) shares of AT&T Common Stock. For stock options granted under this paragraph 4(b), the term of the stock option grant is ten years and the stock options will vest Twenty-Five percent (25%) annually beginning on the first anniversary of Effective Date. The stock option price shall be Nineteen and 7813/10000 Dollars ($19.7813) per share, the fair market value of AT&T Common Stock on December 1, 2000.


2001 Long Term Incentive Grants. In 2001, the Company shall make a grant to Executive of a long term incentive award as determined by the Company's Board of Directors valued at Nine Million Five Hundred Thousand Dollars ($9,500,000.00). Executive's award shall be issued at the same time, valued in the same manner, and contain the same components in the same ratio as the awards made to other members of the Operations Group. The valuation and conditions of payment for Executive's award under this paragraph 4(c) shall be determined by the Company's Board of Directors at the time such award is made to Executive and other members of the Operations Group.


Special Retention Bonus. The Company shall issue Executive in 2001 a Special Retention Bonus of Restricted Stock Units equal at the time issued to an amount four times Executive's Base Salary as defined in paragraph 3(a) of this Agreement or Three Million Eight Hundred Thousand Dollars ($3,800,000.00). Restricted Stock Units issued to Executive under this paragraph 4(d) are subject to the vesting provisions and all other conditions applicable to other members of the Company's Operations Group, as will be determined by the Company's Board of Directors in January 2001.


Special Stock Option Grant. If AT&T Corp. issues a separate stock tracking the performance of AT&T Consumer Services ("Consumer Tracking Stock"), then Executive shall receive a stock option grant for Consumer Tracking Stock in an amount that, based on ratio of tracking stock to Long Term Incentive payments, is consistent with Consumer Tracking Stock
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provided to the CEO and other members of the Company's Operations Group and subject to the same terms as any stock option grant for Consumer Tracking Stock made to the Company's CEO and Operations Group.


Restitution for Concert Forfeitures. In order to address certain forfeitures associated with Executive leaving Concert, and to incent Executive to join the Company, Executive will be provided with the following incentive compensation. The AT&T Non-Competition Guideline shall be applicable to all compensation awarded to Executive under this paragraph 5, except that Executive shall be prohibited from engaging in Competitive Activity, as that term in defined in the Non-Competition Guideline, for one (1) year for purposes of compensation under this paragraph 5. Any payment to Executive by the Company made under this paragraph 5 shall be reduced by the amount of the payment, if any, made to Executive by Concert for any item set forth in this paragraph.


March 2001 Bonus. The Company shall pay Executive in or about March 2001 a bonus for performance year 2000 in the amount of Eight Hundred Thousand Dollars ($800,000.00). To the extent that Executive would have received more than this amount from Concert Global Networks USA L.L.C. ("Concert") for performance during 2000, then the Company shall pay Executive the amount he would have received from Concert had he remained employed at Concert through March 2001.


Restricted Shares. On the Effective Date, the Company shall award the Executive a one-time award of Thirty Five Thousand Nine Hundred Fifty-Six (35,956) Restricted Shares to vest on April 1, 2002. Restricted Shares awarded under this paragraph 5(b) shall replace phantom restricted stock units of the Company and British Telecommunications P.L.C. ("BT") granted on April 1, 1999 according to the terms of the offer letter given to Executive at the outset of his employment with the global venture between the Company and BT later referred to as Concert (the "Concert Offer Letter"). The Concert Offer Letter is attached to this Agreement as Attachment C.


Special Deferral Account. The Company shall be responsible for Concert's 2000 payment of Five Hundred Thousand Dollars ($500,000.00), with interest credited effective April 1, 2000, to Executive under the terms of Concert's retention package applicable to Executive. Concert's payment under this paragraph 5(c) shall be placed by the Company into a deferral account ("Special Deferral Account") previously established and containing the Company's 1999 payment of Five Hundred Thousand Dollars ($500,000.00) made on Executive's behalf per the terms of the Concert Offer Letter. On April 1, 2001, the Company shall place an additional Five Hundred Thousand Dollars ($500,000.00) in the Special Deferral Account. The terms and conditions of the original payment made in 1999, including the interest amount, shall continue for the original payment and the payments made under this paragraph 5(c).


Conversion of Concert Long Term Incentive Program. The Company shall pay Executive under this paragraph 5(d) as follows in lieu of amounts Executive would have been entitled to receive under Concert's Long Term Incentive Program: (i) on Effective Date, the Company shall provide to Executive Five Hundred Forty Thousand Five Hundred Forty (540,540) Restricted Shares to vest on April 1, 2002; and (ii) a cash payment in April 2003 in the
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amount of Three Million Eighty Thousand Dollars ($3,080,000.00). The cash payment outlined in this paragraph 5(d) is subject to Executive's employment through December 31, 2002, subject to Paragraph 14 relating to Company Initiated Termination or Good Reason Termination. If Executive wishes to make an election under Section 83(b) for payments made to him under this paragraph 5(d), then the Company will loan Executive Three Million, Seven Hundred Ninety Thousand, Five Hundred Twenty and 99/100 Dollars ($3,790,520.99) for Executive to pay federal and state taxes, with an additional loan to Executive in April 2001 for the payment of any additional federal taxes resulting from this election; provided, however, that Executive shall repay the Company the full amount of the loans by December 31, 2002. Interest on the loan under this paragraph for the payment of taxes shall be forgiven by the Company; provided, however, that the short-term interest rate set forth in Section 1274(d) of the United States Internal Revenue Code shall be in effect for each month in which there is an unpaid balance on this loan and this interest rate shall result in imputed income to Executive. Taxes for such imputed income are payable by Executive.


Point Cast Stock Price Indemnification Payment. The Company shall not be responsible for the Point Cast stock price indemnification payment of One Million Four Hundred Thousand Dollars ($1,400,000.00).


Repayment of Outstanding Loan. On January 2, 2001, the Company shall demand repayment of a loan made to Executive on or about March 19, 1999 in the amount of Two Million Dollars ($2,000,000.00). The interest on this loan is forgiven by the Company; provided, however, that the interest on this loan from the inception of this loan through December 31, 2000 shall be imputed income to Executive for 2000 and Executive agrees that the taxes on the forgiven interest shall be his responsibility. The interest on this loan for January 1 and 2, 2001 shall be imputed income to the Executive for 2001 and shall be his responsibility. The interest rate for this loan shall be the short-term interest rate set forth in Section 1274(d) of the United States Internal Revenue Code.


Company Issuance of New Loan. On January 2, 2001, the Company shall issue a loan to Executive in the amount of Two Million Dollars ($2,000,000.00). The Company shall forgive all interest charges on the loan under this paragraph; provided, however, that the short-term interest rate set forth under Section 1274(d) of the United States Internal Revenue Code shall be in effect for each month in which there is an unpaid balance on this loan and this interest rate shall result in imputed income to Executive and the taxes on this imputed income are payable by Executive. Executive shall repay the Company for this loan in full on April 1, 2002.


Other Compensation.


Perquisites. During Executive's employment under this Agreement, the Company shall provide Executive with the perquisites of employment as are commonly provided to other Company executives and shall reimburse Executive for reasonable and necessary business expenses.


Benefits. During Executive's employment under this Agreement, the Company shall provide to Executive coverage under benefit programs in accordance with those Executive, mid-career hire and Senior Management benefit plans as are generally made available to other Company executives.
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Attachment D outlines the benefits available on the Effective Date. The Company reserves the right to modify and/or eliminate any benefit plan applicable to Executive; provided, however, that any modification or deletion of a benefit plan shall not affect Executive to any greater or lesser extent than any other Company executive.


Special Temporary Living Allowance. Executive shall work in Atlanta, Georgia through December 31, 2000 and in New Jersey thereafter. Executive's travel between Atlanta, Georgia and New Jersey for December 2000 shall be reimbursed as a business expense. Beginning January 1, 2001 and continuing until Executive moves his residence to the New Jersey area, the Company shall pay Executive Six Thousand Dollars ($6,000.00) per month as a Special Temporary Living Allowance to compensate Executive for his temporary housing in New Jersey and trips to his Atlanta home. The Company shall gross-up for tax purposes the Special Temporary Living Allowance. The Company's obligation to pay Executive a Special Temporary Living Allowance shall terminate the earlier of December 31, 2002 or termination of Executive's employment with the Company.


Relocation. The Company shall pay for Executive's relocation under the terms of AT&T Relocation Plan B. The terms and conditions of AT&T Relocation Plan B shall apply, including but not limited to the requirement that Executive use a registered real estate broker approved by the relocation firm assigned to Executive. The Company shall not reimburse Executive for any relocation expense incurred after the earlier of December 31, 2002 or Executive's last date of employment with the Company. All requests for reimbursement under this paragraph 6(d) shall be submitted to the Company by the earlier of March 31, 2003 o ...