Document:

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                                                                   EXHIBIT 10.14

                             AT&T WIRELESS SERVICES
                          EMPLOYEE STOCK PURCHASE PLAN

      AT&T WIRELESS SERVICES, a Delaware corporation, hereby adopts this AT&T
Wireless Services Employee Stock Purchase Plan (the "Plan") as of June 8, 2001.
The purposes of the Plan are as follows:

            (1) To assist employees of the Company and its Participating
      Subsidiaries in acquiring a stock ownership interest in the Company
      pursuant to a plan which is intended to qualify as an "employee stock
      purchase plan" under section 423 of the Internal Revenue Code of 1986, as
      amended.

            (2) To help employees provide for their future security and to
      encourage them to remain in the employment of the Company and its
      Participating Subsidiaries.

1.    DEFINITIONS

      Whenever any of the following terms are used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless the
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and plural forms of the terms defined):

      (a) "Code" means the Internal Revenue Code of 1986, as amended.

      (b) "Committee" means the committee appointed to administer the Plan
          pursuant to paragraph 12.

      (c) "Company" means AT&T Wireless Services, a Delaware corporation.

      (d) "Date of Exercise" means the date as of which an Option is exercised
and the Stock subject to that Option is purchased. With respect to any Option,
the Date of Exercise is the last day of the Purchase Period.

      (e) "Date of Grant" means the date as of which an Option is granted, as
set forth in paragraph 3(a).

      (f) "Effective Date" means June [__], 2001."

      (g) "Eligible Compensation" means the total of base pay, bonuses, and
commissions received from the Company or a Participating Subsidiary.""
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      (h) "Eligible Employee" means any employee of the Company or a
Participating Subsidiary who meets the following criteria:

            (1) the employee does not, immediately after the Option is granted,
      own (within the meaning Code Sections 423(b)(3) and 424(d)) stock
      possessing five percent or more of the total combined voting power or
      value of all classes of stock of the Company or of a Subsidiary;

            (2) the employee has completed one biweekly payroll cycle with the
      Company or a Subsidiary, and is still employed by the Company or a
      Subsidiary on the first day of the following calendar quarter or, if
      specified by the Committee for a future Option Period, any other minimum
      employment period not exceeding two years;

            (3) if specified by the Committee for a future Option Period, the
      employee's customary employment is for 20 hours or more per week or any
      lesser number of hours established by the Committee; and

            (4) if specified by the Plan Administrator for a future Option
      Period, the employee customarily works a minimum of five months per year
      or any lesser number of months established by the Plan Administrator.

      If the Company permits any employee of a Participating Subsidiary to
participate in the Plan, then all employees of that Participating Subsidiary who
meet the requirements of this paragraph 1(h) shall also be considered Eligible
Employees.

      (i) "Option" means an option granted under the Plan to an Eligible
Employee to purchase shares of Stock.

      (j) "Option Period" means with respect to any Option the period beginning
upon the Date of Grant and ending on the last day of the calendar quarter
containing the Date of Grant, or ending on such other date as the Committee
shall determine. No Option Period may exceed 27 months from the Date of Grant.

      (k) "Option Price" with respect to any Option has the meaning set forth in
paragraph 4(b).

      (l) "Participant" means an Eligible Employee who has complied with the
provisions of paragraph 3(b).

      (m) "Participating Subsidiary" means any present or future Subsidiary that
the Committee or the Senior Vice President-Human Resources of the Company, or
his or her delegate, designates to be eligible to participate in the Plan, and
that elects to participate in

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the Plan. The naming of any entity as a Participating Subsidiary is expressly
contingent upon satisfaction of all legal requirements for offering the Plan to
employees of such entity or obtaining an appropriate waiver with respect to any
such legal requirements.

      (n) "Periodic Deposit Account" means the account established and
maintained by the Company to which shall be credited pursuant to Section 3(c)
amounts received from Participants for the purchase of Stock under the Plan.

      (o) "Plan" means the AT&T Wireless Services Employee Stock Purchase Plan,
as amended from time to time.

      (p) "Plan Year" means the calendar year.

      (q) "Purchase Period" means, with respect to any Option Period, the period
beginning upon the Date of Grant and ending on the last day of the calendar
quarter containing the Date of Grant, or ending on such other date or dates
within the Option Period as the Committee shall determine. There may be more
than one Purchase Period within an Option Period.

      (r) "Stock" means shares of AT&T Wireless Common Stock, par value $0.01
per share.

      (s) "Stock Purchase Account" means the account established and maintained
by the Company to which shall be credited pursuant to Section 4(c) Stock
purchased upon exercise of an Option under the Plan.

      (t) "Subsidiary" means any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company, if at the time of the
granting of the Option, each of the corporations, other than the last
corporation, in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

2.    STOCK SUBJECT TO PLAN

      Subject to the provisions of paragraph 9 (relating to adjustment upon
changes in the Stock), the Stock that may be sold pursuant to Options granted
under the Plan for the period commencing on the Effective Date and ending
January 1, 2011 shall not exceed in the aggregate:

      (a)   five million two hundred thousand (5,200,000) shares, plus

      (b)   an annual increase to be added as of the first day of each fiscal
            year of the Company's fiscal year beginning in 2002 equal to the
            lesser of (i) nine million one hundred thousand (9,100,000) shares,
            (ii) 0.0035% of the outstanding shares of Stock as of the end of the
            Company's immediately preceding fiscal year on a fully

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            diluted basis (assuming exercise of all outstanding options and
            warrants and conversion of all outstanding convertible preferred
            stock) and (iii) a lesser amount determined by the Board; provided,
            however, that any shares from any increases in previous years that
            are not actually issued shall be added to the aggregate number of
            shares available for issuance under the Plan.

3.    GRANT OF OPTIONS

      (a)   GENERAL STATEMENT

      Except as otherwise determined by the Committee, the Company shall grant
Options under the Plan to all Eligible Employees on the first day of each
calendar quarter; provided, however, that the first Option Period shall commence
on or after the Effective Date on a date, which could be other than the first
day of a calendar quarter, to be specified by the Company's Senior Vice
President-Human Resources. The term of each Option shall end on the last day of
the Option Period with respect to which the Option is granted. Except as
otherwise determined by the Committee, with respect to each Option Period, each
Eligible Employee shall be granted an Option, on the Date of Grant, as follows:

            (1)   The maximum number of whole or fractional shares of Stock
                  subject to each Option and purchasable during any Purchase
                  Period shall equal (i) $25,000 (ii) divided by the average of
                  the high and low price of a share of Stock on the New York
                  Stock Exchange on the Date of Grant (iii) with the result
                  reduced by the number of whole or fractional shares of Stock
                  purchased during that calendar year under the Plan or under
                  any other employee stock purchase plan of the Company or of
                  any Subsidiary which is intended to qualify under Code Section
                  423; and

            (2)   The maximum number of whole or fractional shares of Stock that
                  may be purchased by an Eligible Employee during the Option
                  Period shall equal (i) 10% of the Eligible Employee's
                  Compensation from the Date of Grant (or, if later, the
                  immediately prior Date of Exercise) through the Date of
                  Exercise divided by (ii) the Option Price.

      (b)   ELECTION TO PARTICIPATE

      Each Eligible Employee who elects to participate in the Plan shall
communicate to the Company, in accordance with procedures established by the
Committee, an election to participate in the Plan whereby the Eligible Employee
designates a stated whole percentage equaling at least 1%, but no more than 10%,
of his or her Eligible Compensation during the Option Period to be deposited
periodically in his or her Periodic Deposit Account under subparagraph 3(c). The
cumulative amount deposited in the Periodic Deposit Account during a Plan Year
with respect to a Participant may not exceed the limitation stated in
subparagraph 3(d). Participation shall commence on the first day of the calendar
quarter next following

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receipt by the Committee of the Eligible Employee's election or, for the first
Option Period, on the date specified by the Senior Vice President-Human
Resources. A Participant's election to participate in the Plan shall continue in
effect during the current and subsequent Option Periods until changed pursuant
to subparagraph 3(c).

      (c)   PERIODIC DEPOSIT ACCOUNTS

      The Company shall maintain a Periodic Deposit Account for each Participant
and shall credit to that account in U.S. dollars all amounts received under the
Plan from the Participant. No interest will be paid to any Participant or
credited to his or her Periodic Deposit Account under the Plan with respect to
such funds. All amounts credited to a Participant's Periodic Deposit Account
shall be used to purchase Stock under subparagraph 4(c).

      Credits to an Eligible Employee's Periodic Deposit Account shall be made
by payroll deduction or other alternate payment arrangements, in accordance with
rules and procedures established by the Committee. An Eligible Employee may
increase, decrease, or eliminate the periodic credits to his or her Periodic
Deposit Account for future periods by filing a new election at any time during
an Option Period. The change shall become effective in accordance with the
Committee's rules and procedures as soon as practicable after the Company
receives the election, but the change will not affect amounts deposited with
respect to Eligible Compensation sooner than the Eligible Compensation payable
with respect to the next pay period after the Company receives the
authorization. If an Eligible Employee elects to eliminate the periodic credits
to his or her Periodic Deposit Account for future periods, exercise of the
Option shall occur as provided in subparagraph 4(a), unless the Participant has
withdrawn pursuant to paragraph 5.

      (d)   $25,000 LIMITATION

      No Eligible Employee shall be permitted to purchase Stock under the Plan
or under any other employee stock purchase plan of the Company or of any
Subsidiary which is intended to qualify under Code Section 423, at a rate which
exceeds $25,000 in fair market value of Stock (determined at the time the Option
is granted) for each calendar year in which any such Option granted to such
Participant is outstanding at any time.

4.    EXERCISE OF OPTIONS

      (a)   GENERAL STATEMENT

      On each Date of Exercise, the entire Periodic Deposit Account of each
Participant shall be used to purchase at the Option Price whole and/or
fractional shares of Stock subject to the Option. Each Participant automatically
and without any act on his or her part will be deemed to have exercised his or
her Option on each such Date of Exercise to the extent that

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the amounts then credited to the Participant's Periodic Deposit Account under
the Plan are used to purchase Stock.

      (b)   OPTION PRICE DEFINED

      The Option Price per share of Stock to be paid by each Participant on each
exercise of his or her Option shall be an amount in U.S. dollars equal to 85% of
the lesser of (i) the fair market value of a share of Stock on the Date of Grant
for the relevant Option Period, or (ii) the fair market value of a share of
Stock as of the applicable Date of Exercise. The fair market value of a share of
Stock as of a given date shall be the average of the high and low price of a
share of Stock on the New York Stock Exchange on such date.

      (c)   STOCK PURCHASE ACCOUNTS; STOCK CERTIFICATES

      The Company shall maintain a Stock Purchase Account for each Participant
to reflect the Stock purchased under the Plan by the Participant. Upon exercise
of an Option by a Participant pursuant to subparagraph 4(a), the Company shall
credit to the Participant's Stock Purchase Account the whole or fractional
shares of Stock purchased at that time.

      Except as provided in paragraph 6, certificates with respect to Stock
credited to a Participant's Stock Purchase Account shall be issued only on
request by the Participant for a distribution of whole shares or when necessary
to comply with the transaction requirements outside the United States. Upon
issuance of such a Stock certificate to a Participant, the Participant's Stock
Purchase Account shall be adjusted to reflect the number of shares of Stock
distributed to the Participant.

5.    WITHDRAWAL

      A Participant may withdraw all but not less than all the amounts credited
to his or her Periodic Deposit Account and not yet used to exercise his or her
Option under the Plan at any time by giving written notice to the Committee. All
of the amounts credited to the Participant's Periodic Deposit Account shall be
paid to such Participant promptly after receipt of notice of withdrawal, and
such Participant's Option for the Option Period shall be automatically
terminated, and no further amounts for the purchase of shares of Stock shall be
withheld for such Option Period. If a Participant withdraws from an Option
Period, payroll deductions shall not resume at the beginning of the succeeding
Option Period unless the Participant delivers to the Committee a new election to
participate in the Plan.

      A Participant's withdrawal from an Option Period shall not have any effect
upon his or her eligibility to participate in any similar plan of the Company or
a Subsidiary or in succeeding Option Periods that commence after the termination
of the Option Period from which the Participant withdraws.

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6.    RIGHTS ON RETIREMENT, DEATH, TERMINATION OF EMPLOYMENT

      If a Participant retires, dies, or otherwise terminates employment, or if
the corporation that employs a Participant ceases to be a Participating
Subsidiary, then to the extent practicable no further amounts shall be credited
to the Participant's Periodic Deposit Account from any pay due and owing to the
Participant after such retirement, death, or other termination of employment.
All amounts credited to such a Participant's Periodic Deposit Account shall be
used on the next Date of Exercise in that Option Period to purchase Stock under
paragraph 4. Such a Participant's Stock Purchase Account shall be terminated,
and Stock certificates with respect to whole shares of Stock and cash with
respect to fractional shares of Stock shall be distributed as soon as
practicable after such Date of Exercise.

      Notwithstanding anything in the Plan to the contrary and except to the
extent permitted under Code Section 423(a), a Participant's Option shall not be
exercisable more than three months after the Participant retires or otherwise
terminates employment from the Company or a Participating Subsidiary, including
as a result of the corporation ceasing to be a Participating Subsidiary.

7.    RESTRICTION UPON ASSIGNMENT

      An Option granted under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution, and is exercisable during the
Participant's lifetime only by the Participant. The Company will not recognize
and shall be under no duty to recognize any assignment or purported assignment
by a Participant, other than by will or the laws of descent and distribution, of
the Participant's interest in the Plan or of his or her Option or of any rights
under his or her Option.

8.    NO RIGHTS OF STOCKHOLDER UNTIL EXERCISE OF OPTION

      A Participant shall not be deemed to be a stockholder of the Company, or
have any rights or privileges of a stockholder, with respect to the number of
shares of Stock subject to an Option. A Participant shall have the rights and
privileges of a stockholder of the Company when, but not until, the
Participant's Option is exercised pursuant to paragraph 4(a) and the Stock
purchased by the Participant at that time has been credited to the Participant's
Stock Purchase Account.

9.    CHANGES IN THE STOCK; ADJUSTMENTS OF AN OPTION

      If, while any Options are outstanding, the outstanding shares of Stock
have increased, decreased, changed into, or been exchanged for a different
number or kind of shares or securities of the Company, or there has been any
other change in the capitalization of the Company, through merger,
reorganization, consolidation, recapitalization, stock split, reverse stock
split, spin-off, or similar transaction or other change in corporate structure
affecting the Stock, appropriate and proportionate adjustments may be made by
the Committee in the

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number, class and/or kind of shares which are subject to purchase under
outstanding Options, including, if the Committee deems appropriate, the
substitution of similar options to purchase shares of another company (with such
other company's consent). In addition, in any such event, the number and/or kind
of shares that may be offered in the Options shall also be proportionately
adjusted. No adjustments shall be made for dividends paid in the form of Stock.

10.   USE OF FUNDS; REPURCHASE OF STOCK

      All funds received or held by the Company under the Plan will be included
in the general funds of the Company free of any trust or other restriction and
may be used for any corporate purpose. The Company shall not be required to
repurchase from any Eligible Employee shares of Stock that the Eligible Employee
acquires under the Plan.

11.   WITHHOLDING

      The Company shall be entitled to make appropriate arrangements to comply
with any withholding requirements imposed by federal, state, foreign or local
law with respect to the purchase or disposition of shares of Stock under the
Plan, including, without limitation, deducting any applicable withholding from
the Participant's compensation, selling shares of Stock acquired under the Plan,
or deducting from the proceeds of a disposition of shares of Stock acquired
under the Plan.

12.   ADMINISTRATION BY COMMITTEE

      (a)   APPOINTMENT OF COMMITTEE

      The board of directors of the Company, or its delegate, shall appoint a
Committee, which shall be composed of one or more members, to administer the
Plan on behalf of the Company. Each member of the Committee shall serve for a
term commencing on the date specified by the board of directors of the Company,
or its delegate, and continuing until he or she dies or resigns or is removed
from office by such board of directors, or its delegate.

      (b)   DUTIES AND POWERS OF COMMITTEE

      It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to:

      (1)   determine when the initial and subsequent Option Periods and
            Purchase Periods will commence;

      (2)   interpret the Plan and the Options;

      (3)   adopt such rules for the administration, interpretation, and
            application of the Plan as are consistent with the Plan and
            Code Section 423; and

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      (4)   interpret, amend, or revoke any such rules.

      In its absolute discretion, the board of directors of the Company may at
any time and from time to time exercise any and all rights and duties of the
Committee under the Plan. The Committee may delegate any of its responsibilities
under the Plan by designating in writing other persons to carry out any or all
of such responsibilities.

      (c)   MAJORITY RULE

      The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.

      (d)   COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS

      Each member of the Committee who is an employee of the Company or a
Subsidiary shall receive no additional compensation for his or her services
under the Plan. Each Committee member who is not an employee of the Company or a
Subsidiary shall receive such compensation for his or her services under the
Plan as the board of directors of the Company, or its delegate, may determine.
All expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The Committee
may employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company, and its officers and directors shall be
entitled to rely upon the advice, opinions, or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Participants, the
Company, and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination, or interpretation.

13.   NO RIGHTS AS AN EMPLOYEE

      Nothing in the Plan or any Option shall be construed to give any person
(including any Eligible Employee or Participant) the right to remain in the
employ of the Company or a Subsidiary or to affect the right of the Company and
Subsidiaries to terminate the employment of any person (including any Eligible
Employee or Participant) at any time with or without cause, to the extent
otherwise permitted under law.

14.   TERM OF PLAN

      No Option may be granted during any period of suspension of the Plan or
after termination of the Plan, and in no event may any Option be granted under
the Plan after April 1, 2011.

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15.   AMENDMENT OF THE PLAN

      The board of directors of the Company, or its delegate, may amend,
suspend, or terminate the Plan at any time; provided that approval by the
Company's stockholders shall be required to amend the Plan to increase the
number of shares of Stock reserved for the Options under the Plan.

16.   EFFECT UPON OTHER PLANS

      The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary, except to the
extent required by law. Nothing in the Plan shall be construed to limit the
right of the Company or any Subsidiary (a) to establish any other forms of
incentives or compensation for employees of the Company or any Subsidiary or (b)
to grant or assume options otherwise than under the Plan in connection with any
proper corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation, or otherwise, of the business, stock, or assets of any
corporation, firm, or association.

17.   NOTICES

      Any notice to be given under the terms of the Plan to the Company shall be
addressed to the Company in care of the Committee, and any notice to be given to
the Eligible Employee shall be addressed to the Eligible Employee at his or her
last address as reflected in the Company's records. By a notice given pursuant
to this paragraph 17, either party may hereafter designate a different address
for notices to be given to it or the Eligible Employee. Any notice which is
required to be given to the Eligible Employee shall, if the Eligible Employee is
then deceased, be given to the Eligible Employee's personal representative if
such representative has previously informed the Company of his or her status and
address by written notice under this paragraph 17. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office,
branch post office, or other depository regularly maintained by the United
States Postal Services.

18.   TITLES

      Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.

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                                                                   EXHIBIT 10.15

                          AT&T WIRELESS SERVICES, INC.
                                 ADJUSTMENT PLAN

      SECTION 1. PURPOSE. The purpose of the AT&T Wireless Services, Inc. 2001
Adjustment Plan (the "Plan") is to permit selected Employees and Non-Employee
Directors of AT&T Corp. ("AT&T") and its Affiliates and of AT&T Wireless
Services, Inc. (the "Company") and its Affiliates to retain and preserve, in
connection with the Distribution, the portion represented by AT&T Wireless Group
of the value of the equity-based incentive compensation granted to them pursuant
to any AT&T Long Term Incentive Plan (as such term is defined in the Employee
Benefits Agreement); specifically (i) to grant Options to purchase the Company's
Common Stock, as part of and in connection with the adjustment of options
granted under any AT&T Long Term Incentive Plan in connection with the
Distribution and resulting in two separately exercisable options, one to
purchase the Common Stock (an "Adjusted Option") and one to purchase AT&T common
stock, par value $1.00 per share, (ii) to grant Options to purchase the
Company's Common Stock, as a result of the conversion of certain options to
purchase shares of AT&T Wireless Group common stock, par value $1.00 per share
(the "Converted Options"); (iii) to grant other Awards pursuant to the
adjustment of awards granted under any AT&T Long Term Incentive Plan ("Adjusted
Awards") pursuant to terms of the Employee Benefits Agreement; (iv) to grant
Options or other Awards after the Distribution to holders of Adjusted Options,
Converted Options, or other Awards (or of other options or awards granted in
respect thereof in accordance with the Plan) in exchange for new Options or
other Awards granted pursuant to Section 4(a) or upon the adjustment of
outstanding Options or other Awards pursuant to Section 4(c); and (iv) the
administration of the Adjusted Options, Converted Options and other Awards
granted pursuant to the Employee Benefits Agreement (and any other Options or
Awards granted in respect thereof in accordance with the Plan).

      SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:

      (a) "Affiliate" shall mean (i) any Person that directly, or through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Company or AT&T., as the case may be, or (ii) any entity in which the
Company or AT&T, as the case may be, has a significant equity interest, as
determined by the Committee.

      (b) "AT&T Controlled Group" shall mean AT&T's controlled group of
corporations as defined in Section 1563 of the Code.

      (c) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share, Performance Unit, dividend equivalent, Other
Stock Unit Award, or any other right, interest, or option relating to Shares or
other property granted pursuant to the provisions of the Plan.
<PAGE>   2
      (d) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted by the Committee hereunder,
which may, but need not, be executed or acknowledged by both the Company and the
Participant.

      (e) "Board" shall mean the Board of Directors of the Company.

      (f) "Change in Control" shall mean the happening of any of the following
events;

            (i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (an "Entity") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding Shares (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); excluding,
however, the following: (1) any acquisition directly from the Company, other
than an acquisition by virtue of the exercise of a conversion privilege unless
the security being so converted was itself acquired directly from the Company,
(2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (4) any acquisition by any corporation
pursuant to a transaction that complies with clauses (A), (B) and (C) of Section
2(e)(iii);

            (ii) A change in the composition of the Board as constituted
immediately following the consummation of the Distribution (the
"Post-Distribution Board Date") such that the individuals who, as of the
Post-Distribution Board Date, constitute the Board (such Board shall be
hereinafter revered to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that for
purposes of this definition, any individual who becomes a member of the Board
subsequent to the Post-Distribution Board Date, whose election, or nomination
for election, by the Company's stockholders was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso
shall be considered as though such individual were a member of the Incumbent
Board; and provided, further however, that any such individual whose initial
assumption of office occurs as a result of or in connection with either an
actual or threatened solicitation with respect to the election of directors (as
such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an Entity other than the Board shall not be so considered as
a member of the Incumbent Board;

            (iii) The consummation of a merger, reorganization or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (each, a "Corporate Transaction"); excluding however, any Corporate
Transaction pursuant to which (A) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities

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<PAGE>   3
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation or other Person that as a result of such transaction
owns the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries (a "Parent Company")) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Entity (other than the
Company, any employee benefit plan (or related trust) of the Company, such
corporation resulting from such Corporate Transaction or, if reference was made
to equity ownership of any Parent Company for purposes of determining whether
clause (A) above is satisfied in connection with the applicable Corporate
Transaction, such Parent Company) will beneficially own, directly or indirectly,
20% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding voting securities of such corporation entitled to vote
generally in the election of directors unless such ownership resulted solely
from ownership of securities of the Company prior to the Corporate Transaction,
and (C) individuals who were members of the Incumbent Board will immediately
after the consummation of the Corporate Transaction constitute at least a
majority of the members of the board of directors of the corporation resulting
from such Corporate Transaction (or, if reference was made to equity ownership
of any Parent Company for purposes of determining whether clause (A) above is
satisfied in connection with the applicable Corporate Transaction, of the Parent
Company); or

            (iv) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

            Notwithstanding the foregoing, the Distribution shall not be deemed
a Change in Control.

      (g) "Change in Control Price" means, with respect to a Share, the higher
of (A) the highest reported sales price, regular way, of such Share in any
transaction reported on the New York Stock Exchange Composite Tape or other
national exchange on which such Shares are listed or on the Nasdaq National
Market during the 60-day period prior to and including the date of a Change in
Control or (B) if the Change in Control is the result of a tender or exchange
offer or a Corporate Transaction, the highest price per such Share paid in such
tender or exchange offer or Corporate Transaction; provided, however, that in
the case of Incentive Stock Options and Stock Appreciation Rights relating to
Incentive Stock Options, the Change in Control Price shall be the Fair Market
Value of such Share on the date such Incentive Stock Option or Stock
Appreciation Right is exercised or deemed exercised pursuant to Section 11 (b).
To the extent that the consideration paid in any such transaction described
above

                                      -3-
<PAGE>   4
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration shall be determined in the
sole discretion of the Board.

      (h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

      (i) "Committee" shall mean the Compensation Committee of the Board, or any
successor to such committee, composed of no fewer than two directors each of
whom is a Non-Employee Director and an "outside director" within the meaning of
Section 162(m) of the Code, or any successor provision thereto.

      (j) "Company" shall mean AT&T Wireless Services, Inc., a Delaware
corporation.

      (k) "Covered Employee" shall mean a "covered employee" within the meaning
of Section 162(m)(3) of the Code, or any successor provision thereto.

      (l) "Distribution" shall mean the split-off of AT&T Wireless Group from
AT&T pursuant to that Separation and Distribution Agreement dated as of June
[__], 2001 between the Company and AT&T.

      (m) "Employee" shall mean any employee of the Company or any of its
Affiliates or of AT&T or any of its Affiliates. Unless otherwise determined by
the Committee in its sole discretion, for purposes of the Plan, an Employee
shall be considered to have terminated employment and to have ceased to be an
Employee if his or her employer ceases to be an Affiliate of the Company, even
if he or she continues to be employed by such employer.

      (n) "Employee Benefits Agreement" shall mean that certain Employee
Benefits Agreement between AT&T and the Company dated as of the 7th day of
June, 2001, in connection with the Distribution.

      (0) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

      (p) "Fair Market Value" shall mean, with respect to any property, the
market value of such property determined by such methods or procedures as shall
be established from time to time by the committee.

      (q) "Incentive Stock Option" shall mean an Option granted under Section 6
that is intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.

      (r) "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3) promulgated under the Exchange Act, or any successor definition
adopted by the Securities and Exchange Commission.

                                      -4-
<PAGE>   5
      (s) "Nonstatutory Stock Option" shall mean an Option granted under Section
6 that is not intended to be an Incentive Stock Option.

      (t) "Option" shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.

      (u) "Other Stock Unit Award" shall mean any right granted to a Participant
by the Committee pursuant to Section 10.

      (v) "Participant" shall mean an Employee or Non-Employee Director who is
selected by the Committee to receive an Award under the Plan.

      (w) "Performance Award" shall mean any Award of performance shares or
performance units pursuant to Section 9.

      (x) "Performance Period" shall mean that period established by the
Committee at the time any Performance Award is granted or at any time thereafter
during which any performance goals specified by the Committee with respect to
such Award are to be measured.

      (y) "Performance Share" shall mean any grant pursuant to Section 9 hereof
of a unit valued by reference to a designated number of Shares, which value may
be paid to the Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant or
thereafter.

      (z) "Performance Unit" shall mean any grant pursuant to Section 9 of a
unit valued by reference to a designated amount of property other than Shares,
which value may be paid to the Participant by delivery of such property as the
Committee shall determine, including, without limitation, cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.

      (Aa) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.

      (Bb) "Restricted Stock" shall mean any Share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such Share and with
such other restrictions as the Committee, in its sole discretion, may impose
(including, without limitation, any restriction on the right to vote such Share,
and the right to receive any cash dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.

                                      -5-
<PAGE>   6
      (Cc) "Restricted Stock Award" shall mean an award of Restricted Stock
under Section 8 hereof.

      (Dd) "Shares" shall mean the shares of Common Stock of the Company, par
value $0.01 per share (the "Shares").

      (Ee) "Stock Appreciation Right" shall mean any right granted to a
Participant pursuant to Section 7 to receive, upon exercise by the Participant,
the excess of (i) the Fair Market Value of one Share on the date of exercise or,
if the Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise over (ii) the grant price of the right on the date
of grant, or if granted in connection with an outstanding Option on the date of
grant of the related Option, as specified by the Committee in its sole
discretion, which, except in the case of Substitute Awards or in connection with
an adjustment provided in Section 4(c), shall not be less than the Fair Market
Value of one Share on such date of grant of the right or the related Option, as
the case may be. Any payment by the Company in respect of such right may be made
in cash, Shares, other property, or any combination thereof, as the Committee,
in its sole discretion, shall determine.

      (Ff) "Subsidiary" shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 % or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.

      (Gg) "Substitute Awards" shall mean Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, by a company acquired
by the Company or with which the Company combines.

      (Hh) "AT&T Wireless Group" shall mean the businesses, assets and
liabilities the financial performance and economic value of which are intended
to be reflected by the AT&T Wireless Group common stock, par value $1.00 per
share, of AT&T prior to the Distribution.

      SECTION 3. ADMINISTRATION. The Plan shall be administered by the
Committee. The Committee shall have full power and authority, subject to such
orders or resolutions not inconsistent with the provisions of the Plan as may
from time to time be adopted by the Board, subject to Sections 1 and 4 and the
terms of the Employee Benefit Agreement to: (a) select the Employees of the
Company and its Affiliates and Non-Employee Directors of the Company to whom
Awards may from time to time be granted hereunder; (b) determine the type or
types of Award to be granted to each Participant hereunder, (c) determine the
number of Shares to be covered by each Award granted hereunder; (d) determine
the terms and conditions, not inconsistent with the provisions of the Plan, of
any Award granted

                                      -6-
<PAGE>   7
hereunder; (e) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property or canceled or
suspended; (f) determine whether, to what extent and under what circumstances
cash, Shares and other property and other amounts payable with respect to an
Award made under this Plan shall be deferred either automatically or at the
election of the Participant; (g) interpret and administer the Plan and any
instrument or agreement entered into under the Plan; (h) establish such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (i) make any other determination and take
any other action that the Committee deems necessary or desirable far
administration of the Plan. Decisions of the Committee shall be final,
conclusive and binding upon all persons, including the Company, any Participant,
any stockholder, and any employee of the Company or any of its Affiliates or of
AT&T or any of its Affiliates. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.
Notwithstanding the foregoing or anything else to the contrary in the Plan, any
action or determination by the Committee specifically affecting or relating to
an Award to a Non-Employee Director shall be approved and ratified by the Board.
All Adjusted Options and Adjusted Awards shall have the terms and conditions
described in the Employee Benefits Agreement.

      SECTION 4. SHARES SUBJECT TO THE PLAN.

      (a) Subject to adjustment as provided in Section 4(c), there are
authorized for issuance under the Plan that number of shares of Common Stock
equal to the number of shares of Common Stock issuable upon exercise of the
Adjusted Options, the Converted Options and the Adjusted Awards; provided, that
if any Shares subject to an Award held by a Transferred Individual (as that term
is defined in the Employee Benefits Agreement) are forfeited or if any Award
held by a Transferred Individual which is based on Shares is settled for cash,
or expires or otherwise is terminated without issuance of such Shares, the
Shares subject to such Award shall to the extent of such cash settlement,
forfeiture or termination again be available for Awards under the Plan. In the
event that any Option or other Award granted hereunder to a Transferred
Individual is exercised through the tendering of Shares (either actually or by
attestation) or in the event that withholding tax liabilities arising from such
Option or other Award are satisfied by the tendering of Shares or by the
withholding of Shares by the Company, only the number of Shares issued net of
the Shares tendered or withheld shall be counted for purposes of determining the
maximum number of Shares available for issuance under the Plan. In addition,
Substitute Awards shall not reduce the Shares authorized for issuance under the
Plan or authorized for grant to a Participant in any calendar year.

      (b) Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares, treasury shares, or shares purchased in the open
market or otherwise.

      (c) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split, spin-off or
similar transaction or other change in corporate structure affecting the Shares,
such adjustments and other substitutions shall be made to the Plan and to Awards
as the Committee in its sole discretion deems equitable or

                                      -7-
<PAGE>   8
appropriate, including, without limitation, such adjustments in the aggregate
number, class and kind of securities that may be delivered under the Plan, in
the aggregate or to any one Participant, in the number, class, kind and option
or exercise price of securities subject to outstanding Options, Stock
Appreciation Rights or other Awards granted under the Plan, and in the number,
class, and kind of securities subject to Awards granted under the Plan
(including, if the Committee deems appropriate, the substitution of similar
options to purchase the shares of, or other awards denominated in the shares of,
another company) as the Committee may determine to be appropriate in its sole
discretion; provided, however, that the number of Shares subject to any Award
shall always be a whole number.

      SECTION 5. ELIGIBILITY. Subject to Sections 1 and 4, any Employee or
Non-Employee Director shall be eligible to be selected as a Participant;
provided, however, that Incentive Stock Options shall only be awarded to
Employees of the Company.

      SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted under the Plan shall be evidenced by an Award Agreement in such form as
the Committee may from time to time approve. Any such Option shall be subject to
the following terms and conditions and to such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:

      (a) OPTION PRICE. Subject to the terms of the Employee Benefits Agreement,
the purchase price per Share purchasable under an Option shall be determined by
the Committee in its sole discretion; provided that, except in the case of
Substitute Awards or in connection with an adjustment provided for in Section
4(c), such purchase price shall not be less than the Fair Market Value of the
Share on the date of the grant for an Incentive Stock Option.

      (b) OPTION PERIOD. Subject to the terms of the Employee Benefits
Agreement, the term of each Option shall be fixed by the Committee in its sole
discretion; provided that if no term is fixed by the Committee, or if the Option
is an Incentive Stock Option, the Option shall not be exercisable after the
expiration of ten years from the date the Option is granted.

      (c) EXERCISABILITY. Subject to the terms of the Employee Benefits
Agreement, options shall be exercisable at such time or times as determined by
the Committee at or subsequent to grant.

      (d) METHOD OF EXERCISE. Subject to the other provisions of the Plan, any
Option may be exercised by the Participant in whole or in part at such time or
times, and the Participant may make payment of the option price in such form or
forms, including, without limitation, payment by delivery of cash, delivery of
Shares (either actually or by attestation) owned by the Participant for at least
six months (or any shorter period sufficient to avoid a charge to the Company's
earnings for financial reporting purposes) or delivery of other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total option price, or by any
combination of

                                      -8-
<PAGE>   9
cash, such Shares and other consideration as the Committee may specify in the
applicable Award Agreement.

      (e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
established by the Committee, and except as otherwise provided in Section 11,
the aggregate Fair Market Value (determined as of the time of grant) of the
Shares with respect to which Incentive Stock Options held by any Participant
which are exercisable for the first time by such Participant during any calendar
year under the Plan (and under any other benefit plans of the Company or any
Subsidiary) shall not exceed $100,000 or, if different, the maximum limitation
in effect at the time of grant under Section 422 of the Code, or any successor
provision, and any regulations promulgated thereunder. Incentive Stock Options
shall be granted only to Participants who are employees of the Company or a
Subsidiary of the Company. The terms of any Incentive Stock Option granted
hereunder shall comply in all respects with the provisions of Section 422 of the
Code or any successor provision, and any regulations promulgated thereunder. The
aggregate number of Shares with respect to which Incentive Stock Options may be
issued under the Plan shall not exceed eighty-six (86) million.

      (f) FORM OF SETTLEMENT. Subject to the terms of the Employee Benefits
Agreement, in its sole discretion, the Committee may provide, at the time of
grant, that the Shares to be issued upon an Option's exercise shall be in the
form of Restricted Stock or other similar securities, or may reserve the right
so to provide after the time of grant.

      SECTION 7. STOCK APPRECIATION RIGHTS. Subject to the terms of the Employee
Benefits Agreement, Stock Appreciation Rights may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan
and may, but need not, relate to a specific Option granted under Section 6. The
provisions of Stock Appreciation Rights need not be the same with respect to
each recipient. Any Stock Appreciation Right related to a Nonstatutory Stock
Option may be granted at the same time such Option is granted or at any time
thereafter before exercise or expiration of such Option. Any Stock Appreciation
Right related to an Incentive Stock Option must be granted at the same time such
Option is granted. In the case of any Stock Appreciation Right related to any
Option, the Stock Appreciation Right or applicable portion thereof shall
terminate and no longer be exercisable upon the termination or exercise of the
related Option, except that a Stock Appreciation Right granted with respect to
less than the full number of Shares covered by a related Option shall not be
reduced until the exercise or termination of the related Option exceeds the
number of Shares not covered by the Stock Appreciation Right. Any Option related
to any Stock Appreciation Right shall no longer be exercisable to the extent the
related Stock Appreciation Right has been exercised. The Committee may impose
such conditions or restrictions on the exercise of any Stock Appreciation Right
as it shall deem appropriate; provided that no Stock Appreciation Right shall
have a term that is longer then ten years.

      SECTION 8. RESTRICTED STOCK.

                                      -9-
<PAGE>   10
      Subject to Sections 1 and 4 and the terms of the Employee Benefits
Agreement,

      (a) ISSUANCE. A Restricted Stock Award shall be subject to restrictions
imposed by the Committee during a period of time specified by the Committee (the
"Restriction Period"). Restricted Stock Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient.

      (b) REGISTRATION. Any Restricted Stock issued hereunder may be evidenced
in such manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book entry registration or issuance of a stock
certificate or certificates. In the event any stock certificates are issued in
respect of shares of Restricted Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award.

      (c) FORFEITURE. Except as otherwise determined by the Committee at the
time of grant or thereafter, upon termination of employment for any reason
during the restriction period, all Shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant and reacquired by the Company.
Unrestricted Shares, evidenced in such manner as the Committee shall deem
appropriate, shall be issued to the grantee promptly after expiration of the
period of forfeiture, as determined or modified by the Committee.

      (d) MINIMUM VESTING CONDITION. The minimum Restriction Period applicable
to any Restricted Stock Award that is not subject to performance conditions
restricting transfer shall be three (3) years from the date of grant; provided,
however, that a Restriction Period of less than three (3) years may be approved
under the Plan for such Awards with respect to up to [] ([12]) million Shares.

      SECTION 9. PERFORMANCE AWARDS. Subject to Sections 1 and 4 and the terms
of the Employee Benefits Agreement, Performance Awards may be issued hereunder
to Participants, for no cash consideration or for such minimum consideration as
may be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. Except as provided in
Section 11, Performance Awards will be distributed only after the end of the
relevant Performance Period. Performance Awards may be paid in cash, Shares,
other property or any combination thereof, in the sole discretion of the
Committee at the time of payment. The performance levels to be achieved for each
Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or, in
accordance with procedures established by the Committee, on a deferred basis.

                                      -10-
<PAGE>   11
      SECTION 10. OTHER STOCK UNIT AWARDS.

      Subject to Sections 1 and 4 and the terms of the Employee Benefits
Agreement,

      (a) STOCK AND ADMINISTRATION. Other Awards of Shares and other Awards that
are valued in whole or in part by reference to, or are otherwise based on,
Shares or other property ("Other Stock Unit Awards") may be granted hereunder to
Participants, either alone or in addition to other Awards granted under the
Plan. Other Stock Unit Awards may be paid in Shares, cash or any other form of
property as the Committee shall determine. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to determine the
Participants to whom and the time or times at which such Awards shall be made,
the number of Shares to be granted pursuant to such Awards, and all other
conditions of the Awards. The provisions of Other Stock Unit Awards need not be
the same with respect to each recipient.

      (b) TERMS AND CONDITIONS. Subject to the provisions of the Plan and any
applicable Award Agreement and the terms of the Employee Benefits Agreement,
Awards and Shares subject to Awards made under this Section 10 may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the Shares are issued, or, if later, the date on which any applicable
restriction, performance, or deferral period lapses. Shares (including
securities convertible into Shares) subject to Awards granted under this Section
10 may be issued for no cash consideration or for such minimum consideration as
may be required by applicable law. Shares (including securities convertible into
Shares) purchased pursuant to a purchase right awarded under this Section 10
shall be purchased for such consideration as the Committee shall in its sole
discretion determine, which, except in the case of Substitute Awards, shall not
be less than the Fair Market Value of such Shares or other securities as of the
date such purchase right is awarded. Notwithstanding the foregoing, no
additional terms and conditions shall be placed on Adjusted Options or Adjusted
Awards without the consent of the Participant.

      SECTION 11. CHANGE IN CONTROL PROVISIONS.

      (a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
the contrary, unless the Committee shall determine otherwise at the time of
grant with respect to a particular Award, in the event of a Change in Control:

            (i) any Options and Stock Appreciation Rights outstanding as of the
date such Change in Control is determined to have occurred, and which are not
then exercisable and vested, shall become fully exercisable and vested to the
full extent of the origin grant;

            (ii) the restrictions and deferral limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become free of all
restrictions and limitations and become fully vested and transferable to the
full extent of the original grant;

                                      -11-
<PAGE>   12
            (iii) all Performance Awards shall be considered to be earned and
payable in full, and any deferral or other restriction shall lapse and such
Performance Awards shall be immediately settled or distributed; and

            (iv) The restrictions and deferral limitations and other conditions
applicable to any Other Stock Unit Awards or any other Awards shall lapse, and
such Other Stock Unit Awards or such other Awards shall become free of all
restrictions, limitations, or conditions and become fully vested and
transferable to the full extent of the original grant.

      (b) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change in Control (the "Exercise
Period"), if the Committee shall determine at, or at anytime after, the time of
grant, a Participant holding an Option or Stock Appreciation Right shall have
the right, whether or not the Option or Stock Appreciation Right is fully
exercisable and in lieu of the payment of the purchase price for the Shares
being purchased under the Option or Stock Appreciation Right and by giving
notices to the Company, to elect (within the Exercise Period) to surrender all
or part of the Option or Stock Appreciation Right to the Company and to receive
cash, within 30 days of such notice, in an amount equal to the amount by which
the Change in Control Price per Share on the date of such election shall exceed
the purchase price per Share under the Option or Stock Appreciation Right (the
"Spread") multiplied by the number of Shares granted under the Option or Stock
Appreciation Right as to which the right granted under this Section 11(b) shall
have been exercised.

      SECTION 12. CODE SECTION 162(m) PROVISIONS.

      (a) Notwithstanding any other provision of the Plan, if the Committee
determines at the time Restricted Stock, a Performance Award or an Other Stock
Unit Award is granted to a Participant who is then an officer that such
Participant is, or is likely to be as of the end of the tax year in which the
Company would claim a tax deduction in connection with such Award, a Covered
Employee, then the Committee may provide that this Section 12 is applicable to
such Award.

      (b) If Restricted Stock, a Performance Award or an Other Stock Unit Award
is subject to this Section 12, then the lapsing of restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto, as applicable,
shall be subject to the achievement of one or more objective performance goals
established by the Committee, which shall be based on the attainment of
specified levels of one or any combination of the following; net cash provided
by operating activities, earnings per share from continuing operations,
operating income, revenues, gross margin, return on operating assets, return on
equity, economic value added, stock price appreciation, total stockholder
return, or cost control, of the Company or the Affiliate or division of the
Company for or within which the Participant is primarily employed or of AT&T or
the Affiliate or division of AT&T for or within which the Participant is
primarily employed. Such performance goals also may be based upon the
achievement of specified levels of Company performance (or performance of an
applicable

                                      -12-
<PAGE>   13
Affiliate or division of the Company) under one or more of the measures
described above relative to the performance of other corporations. Such
performance goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of, Section
162(m) of the Code, or any successor provision thereto, and the regulations
thereunder.

      (c) Notwithstanding any provision of the Plan other than Section 11, with
respect to any Restricted Stock, Performance Award or Other Stock Unit Award
that is subject to this Section 12, the Committee may adjust downwards, but not
upwards, the amount payable pursuant to such Award, and the Committee may not
waive the achievement of the applicable performance goals except in the case of
the death or disability of the Participant.

      (d) The Committee shall have the power to impose such other restrictions
on Awards subject to this Section 12 as it may deem necessary or appropriate to
ensure that such Awards satisfy all requirements for "performance-based
compensation" within the meaning of Section 162(m)(4)(C) of the Code, or any
successor provision thereto.

      (e) Notwithstanding any provision of this Plan other than Section 4(c), no
Participant may be granted Options or Stock Appreciation Rights, or Restricted
Stock or Performance Awards subject to this Section 12 that are denominated in
Shares, in any calendar year period with respect to more than three million
(3,000,000) Shares, and the maximum dollar value payable with respect to
Performance Units and/or Other Stock Unit Awards that are valued with reference
to property other than Shares and granted to any Participant in any one calendar
year is $10,000,000.

      SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
provided, however, that no such amendment, alteration, suspension,
discontinuation, or termination shall be made without (a) stockholder approval
if such approval is necessary to qualify for or comply with any tax or
regulatory requirement for which or with which the Board deems it necessary or
desirable to qualify or comply or (b) the consent of the affected Participant,
if such action would impair the rights of such Participant under any outstanding
Award. Notwithstanding anything to the contrary herein, the Committee may amend
the Plan in such manner as may be necessary so as to have the Plan conform to
local rules and regulations in any jurisdiction outside the United States.

      The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his or her consent.

      SECTION 14. GENERAL PROVISIONS.

      (a) Unless the Committee determines otherwise at the time the Award is
granted or thereafter or unless previously provided for Adjusted Options or
Adjusted Awards: (i) no

                                      -13-
<PAGE>   14
Award, and no Shares subject to Awards described in Section 10 that have not
been issued or as to which any applicable restriction, performance, or deferral
period has not lapsed, may be sold, assigned, transferred, pledged, or otherwise
encumbered, except by will or by the laws of descent and distribution; provided,
however, that, if so determined by the Committee, a Participant may, in the
manner established by the Committee, designate a beneficiary to exercise the
rights of the Participant with respect to any Award upon the death of the
Participant; and (ii) each Award shall be exercisable, during the Participant's
lifetime, only by the Participant or, if permissible under applicable law, by
the Participant's guardian or legal representative.

      (b) Except as provided in the Employee Benefits Agreement, the term of
each Award shall be for such period of months or years from the date of its
grant as may be determined by the Committee; provided that the term of any Stock
Option or any Stock Appreciation Right exceed a period often (10) years from the
date of its grant.

      (c) Except as provided in the Employee Benefits Agreement, no Employee or
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Employees or Participants
under the Plan.

      (d) Subject to the terms and conditions of the Employee Benefits
Agreement, the prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have
executed an agreement or other instrument evidencing the Award and delivered a
copy thereof to the Company, and otherwise complied with the then applicable
terms and conditions.

      (e) Except as provided in Section 12, the Committee shall be authorized to
make adjustments in performance award criteria or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws, regulations
or accounting principles. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry it into effect. Except for
adjustments to Adjusted Options and Adjusted Awards provided by the Employee
Benefits Agreement, in the event that the Company shall assume outstanding
employee benefit awards or the right or obligation to make future such awards in
connection with the acquisition of or combination with another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.

      (f) Except for Adjusted Options and Adjusted Awards, the Committee shall
have full power and authority to determine whether, to what extent, and under
what circumstances any Award shall be canceled or suspended. Except as provided
in the Employee Benefits Agreement with respect to AT&T Employees or with
respect to Adjusted Options or Adjusted Awards held by an AT&T Employee, in
addition, all outstanding Awards to any

                                      -14-
<PAGE>   15
Participant shall be canceled if the Participant, without the consent of the
Company, while employed by the Company or after termination of such employment,
establishes a relationship with a competitor of the Company or engages in
activity that is in conflict with or adverse to the interest of the Company, as
determined under the Company's Non-Competition Guideline.

      (g) All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

      (h) No Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would comply with all applicable requirements of the U.S. federal
securities laws and any other laws to which such offer, if made, would be
subject.

      (i) The Committee shall be authorized to establish procedures pursuant to
which the payment of any Award may be deferred. Subject to the provisions of the
Plan and any Award Agreement, the recipient of an Award (including, without
limitation, any deferred Award) may, if so determined by the Committee, be
entitled to receive, currently or on a deferred basis, cash dividends, or cash
payments in amounts equivalent to cash dividends on Shares ("dividend
equivalents"), with respect to the number of Shares covered by the Award, as
determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested.

      (j) Except as otherwise required in any applicable Award Agreement or by
the terms of the Plan, recipients of Awards under the Plan shall not be required
to make any payment or provide consideration other than the rendering of
services.

      (k) To the extent permitted by Delaware law, the Committee may delegate to
one or more Senior Managers or a committee of Senior Managers, subject to
Sections 1 and 4 and the terms of the Employee Benefits Agreement, the right to
grant Awards to Employees who are not officers or directors of the Company and,
except for Adjusted Options and Adjusted Awards which did not provide for this
right previously, to cancel or suspend Awards to Employees who are not officers
or directors of the Company.

      (l) The Company shall be authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due in respect of an
Award or payment hereunder and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Committee shall be authorized to

                                      -15-
<PAGE>   16
establish procedures for election by Participants to satisfy such obligation for
the payment of such taxes by delivery of or transfer of Shares to the Company
(up to the employer's minimum required tax withholding rate to the extent the
Participant has owned the surrendered shares for less than six months if such a
limitation is necessary to avoid a charge to the Company for financial reporting
purposes), or by directing the Company to retain Shares (up to the employer's
minimum required tax withholding rate) otherwise deliverable in connection with
the Award.

      (m) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.

      (n) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Washington and applicable federal law.

      (o) If any provision of the Plan is or becomes or is deemed invalid,
illegal, or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder Plan shall remain in full force and effect.

      (p) Awards may be granted to Participants who are foreign nationals or
employed outside the United States, or both, on such terms and conditions
different from those applicable to Awards to Employees employed in the United
States as may, in the judgment of the Committee, be necessary or desirable in
order to recognize differences in local law or tax policy. The Committee also
may impose conditions on the exercise or vesting of Awards in order to minimize
the Company's obligation with respect to tax equalization for Employees on
assignments outside their home country.

      SECTION 15. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of June
[__], 2001.

      SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the Plan
after June [__], 2003, but any Award theretofore granted may extend beyond that
date.

                                      -16-

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