Exhibit 10.1

EQUALIZATION RIGHTS AGREEMENT
 
This Equalization Rights Agreement (this “Agreement”) is by and between John T.
Stankey, the Chief Executive Officer-AT&T Entertainment and Internet Services
(“Employee”) and AT&T Services, Inc., a Delaware corporation (the “Company”).
 
WHEREAS, Employee is an officer of the Company;
 
WHEREAS, Employee is expected to take on certain additional responsibilities in
connection with his role as the Chief Executive Officer-AT&T Entertainment and
Internet Services for the Company in connection with the acquisition by an
affiliate of the Company of DIRECTV, a Delaware corporation (“DIRECTV”);
 
WHEREAS, in connection with such responsibilities related to DIRECTV, it is
expected that Employee will retain his primary residence and work address in
Texas, but will also spend time working outside of Texas (all such work outside
of Texas, “Business-Related Travel”) and that other jurisdictions may assert
that Employee owes income tax in those jurisdictions in respect of his
Business-Related Travel;
 
WHEREAS, the Company wishes to provide Employee with certain equalization rights
related to any additional income taxes incurred as a result of Employee’s new
responsibilities requiring Business-Related Travel whether or not certain of the
termination events specified in Paragraph 6 have occurred;
 
WHEREAS, the parties recognize that payments to Employee under this Agreement
may continue during a period when Employee is no longer an employee of the
Company or its affiliates; and
 
WHEREAS, the Human Resources Committee of the Board of Directors of the Company
has approved this Agreement.
 
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto agree
as follows:
 
 
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1. Certain Payments by the Company.  In the event that, on or after July 24,
2015 while Employee has a primary residence and work address in Texas, any
payment or distribution or benefit received by Employee pursuant to the terms of
any agreement (including this Agreement) between Employee and the Company or any
of its affiliates or any other payment or distribution or benefit made or
provided by the Company or any of its affiliates, to or for the benefit of
Employee (a “Payment”) is subject to any income tax imposed by any State other
than the State of Texas or any locality outside of the State of Texas as a
result of Business-Related Travel following the date of this Agreement (such
state or local income tax, is hereinafter collectively referred to as “State
Income Taxes”, which for the avoidance of doubt does not include an Equalization
Payment), then Employee shall be entitled to receive an additional payment (an
“Equalization Payment”), even if Employee is not then employed by the Company or
its affiliate, in an amount such that after subtracting any income taxes paid
solely with respect to Equalization Payments, Employee retains an amount of the
Equalization Payment equal to the State Income Taxes paid upon the
Payments.  The Company shall also make a payment for any costs or expenses
(including reasonable attorneys’ fees), penalties, interest, claims, fines,
losses, damages or liabilities incurred by Employee in connection with any
claim, action, suit, proceeding or investigation, whether civil, administrative
or investigative, arising out of State Income Taxes (collectively, “Losses”) and
the Company shall also advance expenses related thereto as incurred by Employee
to the fullest extent permitted under applicable law; provided, that Employee
provides an undertaking to repay such advances if it is ultimately determined
that Employee is not entitled to the payment described in this sentence;
provided, further, that Employee shall not be entitled to any payment in respect
of such Losses to the extent arising out of Employee’s willful misconduct or
fraud (notwithstanding any review and approval of the Employee’s Income Tax
Returns by the Company pursuant to Paragraph 3).  The Company shall not be
liable to any tax authority for any taxes, penalties, or interest assessed by
any tax authority or other governmental entity against Employee.
 
2. Notice and Proceedings.  If Employee wishes to claim a payment under the
provisions of the second sentence of Paragraph 1 of this Agreement, upon
learning of any such claim, action, suit, proceeding or investigation by any
governmental entity (a “Third-Party Claim”), Employee shall promptly notify the
Company thereof, but the failure to so notify shall not relieve the Company of
any liability it may have to Employee, except to the extent such failure
materially prejudices the Company.  In the event of any such Third-Party Claim,
(i) the Company shall have the right to assume the defense thereof and the
Company shall not be liable to Employee for any legal expenses of other counsel
or any other expenses subsequently incurred by Employee in connection with the
defense thereof, except that if the Company elects not to assume such defense or
fails to make the payments contemplated by this Agreement, Employee may retain
counsel satisfactory to the Company, and the Company shall pay all reasonable
fees and expenses of such counsel for Employee promptly following receipt of a
statement therefor; provided, however, that the Company shall be obligated
pursuant to this Paragraph 2 to pay for only one firm of counsel for Employee in
any jurisdiction, (ii) Employee will cooperate in the defense of any such
Third-Party Claim (including, without limitation, by permitting the Company and
its representatives, at times and dates mutually acceptable to the parties, to
inspect, review and make copies of Employee’s income tax returns and related
records as the Company deems necessary or appropriate from time to time) and
(iii) the Company shall not be liable for any settlement effected without its
prior written consent.  Notwithstanding the foregoing, the Company shall not
have any obligation hereunder to Employee if and when a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the making of the payment in the manner contemplated hereby
is prohibited by applicable law.  In addition, the Company shall have the right
to settle any such Third-Party Claim; provided, however, that the Company shall
not, without the prior written consent of Employee, settle, compromise or offer
to settle or compromise any Third-Party Claim on a basis that would result in
(i) the imposition of a consent order, injunction or decree that would restrict
the future activity or conduct of Employee, (ii) a finding or admission of a
violation of law by Employee or (iii) any monetary liability of Employee for
State Income Taxes that do not qualify for treatment as an Equalization Payment
under Paragraph 1.
 
 
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3. Income Tax Returns.  Employee shall be responsible for the preparation of and
prepare (or cause to be prepared) all state and local income tax returns,
reports or similar filings required to be filed with respect to Employee’s
income taxes (each such return, report or similar filing, an “Income Tax
Return”).  Employee shall use his best efforts to deliver (or cause to be
delivered) the State Income Tax Returns to the Company for its review and
approval not later than fifteen (15) days prior to the due date of such State
Income Tax Returns, as the due date for such return may be varied by lawful
extension.  Employee shall incorporate any reasonable changes requested by the
Company at least three (3) days prior to the anticipated filing date of the
State Income Tax Returns.  Employee shall cause all Income Tax Returns to be
filed on a timely basis (taking into account any lawful extension of time within
which to file as Employee may reasonably require) and shall be fully responsible
for penalties and interest charges assessed by any tax authority or other
governmental entity due to Employee’s failure to do so, which penalties and
interest charges shall not be eligible for treatment as an Equalization Payment.
 
4. Net Recovery.  In calculating the amount of any Equalization Payment pursuant
to this Agreement, there shall be deducted an amount equal to any net tax
benefit (including the utilization of a tax deduction, tax loss or tax credit
carried forward) that the Employee actually realizes resulting from Employee’s
payment of State Income Taxes or Losses.
 
5. Refunds.  The Company shall be entitled to any refunds of State Income Taxes
and any repayments of Losses by unrelated third-parties that were paid by the
Company pursuant to this Agreement.  Employee shall promptly pay to the Company
the amount of any refund or repayment made available to which the Company is
entitled under this Paragraph 5.
 
6. Term.  This Agreement shall terminate with respect to periods following such
time as (i) Employee is no longer principally responsible for DIRECTV or its
successor entities or operations, (ii) Employee no longer maintains his primary
residence in the State of Texas, (iii) Employee’s actions or omissions with
respect to the preparation of the Income Tax Returns constitute willful
misconduct or fraud or (iv) Employee’s employment with the Company is
terminated; provided, that, in the case of termination pursuant to clause (iii)
above, the provisions of this Agreement shall immediately terminate and this
Agreement shall be of no further force and effect, except that Employee shall
continue to have liability for any prior breach hereof.  For the avoidance of
doubt, the obligations of the parties pursuant to this Agreement will continue
following the occurrence of any of the events specified in clauses (i), (ii) or
(iv) of the preceding sentence with respect to periods preceding such event.
 
7. Rights Cumulative.  The rights and remedies provided herein are cumulative,
and the exercise of any right or remedy, whether pursuant hereto, to any other
agreement, or to law, shall not preclude or waive the right to exercise any or
all other rights and remedies,
 
8. Successors and Assigns.  This Agreement may not be assigned by Employee;
provided, however, that Employee’s rights to payments hereunder shall, upon his
death, inure to the benefit of Employee’s personal or legal representatives,
executors, administrators, heirs, distributees, devisees and legatees.  This
Agreement shall inure to the benefit of and may be assigned by the Company to
the successors and assigns of the Company.
 
 
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9. No Oral Modification or Waiver.  No provision of this Agreement may be
modified, waived, or discharged unless agreed to in writing by both parties
hereto.  Except as otherwise expressly provided in this Agreement, the failure
of a party to insist upon strict adherence to any term, condition or other
provision of this Agreement shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term, condition or other provision of this Agreement.
 
10. Governing Law.  This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Texas without regard to its
conflict of laws provisions.
 
11. Severability.  The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.  If any provision of
this Agreement, or the application of such provision to any person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application of
such provision, in any other jurisdiction.
 
12. Counterparts.  This Agreement may be executed in two or more counterparts
(and by facsimile or delivery of a pdf. signature page hereto), each of which
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
 
13. Entire Agreement.  This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, between the parties with
respect to the subject matter hereof.
 
[signature page follows]
 

 
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In witness whereof, the undersigned have executed this Agreement as of the 20th
day of August, 2015.
 
EMPLOYEE
AT&T SERVICES, INC.
    /s/ John T. Stankey By:       /s/ Tom Moore
John T. Stankey
 
 
 
 
Name:  Tom Moore
Title:     Senior Vice President-Compensation,
Benefits, and Policy
 
 

 
 
 

 
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