Amended and Restated Change-In-Control Severance Agreement
This CHANGE-IN-CONTROL SEVERANCE AGREEMENT dated as of January 6, 1997
(the "Effective Date"), and as amended and restated as of December ___, 1997 (as
so amended and restated, the "Agreement"), is made between 360 Communications
Company, a Delaware corporation having its principal offices at 0000 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxx (the "Company"), and 1 ("Executive").
Recitals
A. Executive is a key executive of the Company and an integral part of
its management.
B. The Company recognizes that the possibility of a change in control
of the Company may result in the departure or distraction of management to the
detriment of the Company and its shareowners.
C. The Company wishes to assure Executive of certain benefits should
Executive's employment terminate following a change in control of the Company.
D. The Company and Executive entered into that certain
Change-in-control Severance Agreement dated January 6, 1997 (the "Existing
Agreement") and desire to amend and restate such original Agreement in its
entirety as set forth below.
In consideration of the foregoing and the mutual covenants contained in
this Agreement, the Company and Executive agree to amend and restate the
Original Agreement as follows:
Agreement
Section 1. Definitions. The following terms shall have the meanings indicated
below:
"Base Salary" means the amount of compensation as determined by the
Board or the Compensation Committee for the calendar year during which a
Qualifying Termination occurs.
"Beneficiary" means, except where otherwise required by the Employee
Retirement Income Security Act of 1974 or the terms of an applicable employee
benefit plan, the person or persons designated by Executive, in a writing
provided to the Company prior to Executive's death, to receive amounts payable
to Executive under this Agreement. Subject to such exception, in the absence of
such a written beneficiary designation, the Beneficiary shall be Executive's
surviving spouse, or if none, Executive's estate.
"Board" means the Board of Directors of the Company.
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"Cause" means the occurrence of any one or more of the following as
determined in the good faith and reasonable judgment of the Board:
(i) Executive's conviction for committing an act of fraud,
embezzlement, theft, or any other act constituting a felony involving
moral turpitude or causing material harm, financial or otherwise, to
the Company,
(ii) a demonstrably willful and deliberate act or failure to
act which is committed in bad faith, without reasonable belief that
such action or inaction is in the best interests of the Company, which
causes material harm, financial or otherwise, to the Company, or
(iii) the consistent gross neglect of duties, or wanton
negligence by Executive in the performance of Executive's duties under
this Agreement.
A termination of Executive's employment shall not be deemed to be for Cause
unless each of the following conditions is satisfied:
(v) Written notice is provided to Executive not less than 15
days prior to the date of termination setting forth the Company's
intention to consider terminating Executive, including a statement of
the intended date of termination and a detailed description of the
specific facts that the Company believes to constitute Cause;
(w) None of the acts or omissions of Executive which the
Company believes to constitute Cause shall have occurred more than 12
months before the earliest date on which any member of the Board who is
not a party to the act or omission, knew or should have known of such
act or omission;
(x) Executive is offered an opportunity to respond to such
statement by appearing in person, together with Executive's legal
counsel, before the Board prior to the date of termination;
(y) By the affirmative vote of at least 75% of the
non-employee members of the Board, the Board determines that the
specified actions of Executive constituted Cause and that Executive's
employment should accordingly be terminated for Cause; and
(z) The Company provides Executive a copy of the Board's
written determination setting forth in full specificity the basis of
such termination for Cause.
By determination of the Board, the Company may suspend Executive from his duties
for a period of up to 30 days with full pay and benefits hereunder during the
period of time in which the Board is making a determination as to whether to
terminate Executive for Cause. Any purported termination for Cause by the
Company which does not satisfy each substantive and procedural requirement of
this definition shall be treated for all purposes under this Agreement as a
termination by the Company without Cause.
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"Change in Control" means the first to occur of any one or more of the
following:
(i) the acquisition or holding by any person, entity or
"group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), other than by the Company, any Subsidiary or any
employee benefit plan of the Company or a Subsidiary, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
30% or more of the then-outstanding common stock of the Company
("Common Stock") or the then-outstanding Voting Power of the Company;
provided, however, that no Change in Control shall occur solely by
reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 60% of both the then-outstanding
common shares and the then-outstanding Voting Power of such corporation
are then-beneficially owned, directly or indirectly, by the persons who
were the beneficial owners of the Common Stock immediately before such
acquisition, in substantially the same proportions as their respective
ownership, immediately before such acquisition, of the then-outstanding
Common Stock and Voting Power of the Company; or
(ii) individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided that any individual who becomes
a director after the Effective Date whose election or nomination for
election by the Company's stockholders was approved by at least a
majority of the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened "election contest" relating to the
election of the directors of the Company (as such terms are used in
Rule 14a-11 under the Exchange Act)) shall be deemed to be members of
the Incumbent Board; or
(iii) approval by the stockholders of the Company of (1) a
merger, reorganization or consolidation (an "Extraordinary
Transaction") with respect to which persons who were the respective
beneficial owners of the Common Stock immediately before such
Extraordinary Transaction would not, if such Extraordinary Transaction
were to be consummated immediately after such stockholder approval (but
otherwise in accordance with the terms presented in writing to the
stockholders of the Company for their approval), beneficially own,
directly or indirectly, more than 60% of both the then-outstanding
common shares and the then-outstanding Voting Power of the corporation
resulting from such Extraordinary Transaction, in substantially the
same proportions as their respective ownership, immediately before such
Extraordinary Transaction, of the then-outstanding Common Stock and
Voting Power of the Company, (2) a liquidation or dissolution of the
Company or (3) the sale or other disposition of all or substantially
all of the assets of the Company in one transaction or a series of
related transactions.
Notwithstanding the foregoing, a Change in Control will not occur with respect
to any person who is, by agreement or understanding (written or otherwise), a
participant on such person's own behalf in a transaction which causes the Change
in Control to occur.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning specified in the introductory paragraph of
this Agreement.
"Compensation Committee" means the Compensation Committee of the Board
(or such other committee of the Board that may be responsible for executive
compensation).
"Continuation Period" has the meaning specified in Section 2.1(b).
"Effective Date" has the meaning specified in the introductory
paragraph of this Agreement.
"Excess Parachute Payment" has the meaning specified in Section 280G of
the Code.
"Exchange Act" means the Securities Exchange Act of 1934.
"Excise Tax" has the meaning specified in Section 2.2.
"Executive" has the meaning specified in the introductory paragraph of
this Agreement.
"Good Reason" shall mean the occurrence, without Executive's prior
written consent, of any one or more of the following:
(i) the assignment to Executive of any duties which result in
a material adverse change in Executive's position (including status,
offices, titles, and reporting requirements), authority, duties, or
other responsibilities with the Company, or any other action of the
Company which results in a material adverse change in such position,
authority, duties, or responsibilities, other than an insubstantial and
inadvertent action which is remedied by the Company promptly after
receipt of notice thereof given by Executive,
(ii) any relocation of Executive of more than 35 miles from
the place where Executive was located at the time of the Change in
Control, or
(iii) a material reduction or elimination of any component of
Executive's rate of compensation, including (x) Base Salary, (y) the
annual incentive payment or (z) benefits or perquisites which Executive
was receiving immediately prior to a Change in Control.
"including" means including without limitation.
"IRS" means the Internal Revenue Service.
"Qualifying Termination" means the occurrence of any one or more of the
following:
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(i) The Company's termination of Executive's employment other
than for Cause within 30 days prior to a Change in Control or within 24
months following a Change in Control;
(ii) Executive's voluntary termination of employment for Good
Reason within 30 days prior to a Change in Control or within 24 months
following a Change in Control;
(iii) Executive's voluntary termination of employment at any
time (whether or not for Good Reason) during the 30-day period which
begins on the first anniversary of a Change in Control; or
(iv) A successor of the Company fails to assume expressly the
Company's entire obligations under this Agreement prior to becoming
such a successor as required by Section 4.1(b).
A Qualifying Termination shall not include a termination of Executive's
employment by reason of death, disability, Executive's voluntary termination
other than for Good Reason (except as provided in clause (iii) of the
immediately preceding sentence), or the Company's termination of Executive's
employment for Cause.
"Section" shall, unless the context otherwise requires, mean a section
of this Agreement.
"Subsidiary" means a United States or foreign corporation with respect
to which the Company owns, directly or indirectly, 50% or more of the
then-outstanding common stock.
"Voting Power" means the combined voting power of the then-outstanding
securities of a corporation entitled to vote generally in the election of
directors.
Section 2. Employment Termination
2.1. Benefits Payable. In the event Executive has a Qualifying
Termination, the Company shall provide Executive all of the following severance
benefits ("Severance Benefits"):
(a) The Company shall pay to Executive each of the following:
(i) The accrued but unpaid portion, if any, of Executive's
Base Salary, annual incentive for the year prior to the year in which
Executive's Qualifying Termination occurred (but actually earned,
vacation pay, unreimbursed business expenses, and all other items
earned by Executive on or before the date of the Qualifying Termination
(in full satisfaction for these amounts owed to Executive).
(ii) A pro-rated incentive equal to:
(x) Executive's full annual target incentive,
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multiplied by
(y) a fraction, the numerator of which is the number
of calendar months (counting a partial calendar month as a
full month) that have elapsed (in the calendar year in which
Executive's effective date of termination occurs) prior to
Executive's effective date of termination, and the denominator
of which is 12.
(iii) Three times Executive's Base Salary in effect upon the
date of the Qualifying Termination or, if greater, three times
Executive's Base Salary in effect immediately prior to the occurrence
of the Change in Control.
(iv) Three times Executive's then-current target incentive
opportunity established under the Company's annual incentive plan for
the year in which the Qualifying Termination occurs (or, if no such
incentive opportunity has yet been established for such year, such
incentive opportunity established for the immediately preceding year)
or, if greater, three times Executive's target incentive opportunity in
effect immediately prior to the occurrence of the Change in Control.
(v) Payment or reimbursement (at Executive's option) for
outplacement services, of a scope and nature customary for executives
holding comparable positions and provided by a nationally-recognized
outplacement firm of Executive's selection, for a period of up to two
years commencing on the date of Executive's Qualifying Termination.
Notwithstanding the foregoing, the aggregate amount of such
reimbursement shall not exceed 25% of Executive's Base Salary as of the
date of the Qualifying Termination.
(vi) All other compensation and benefits to which Executive
has a vested right on the date of the Qualifying Termination, except to
the extent Executive elects to receive payment of such compensation at
a later date.
(b) The Company shall continue Executive's health benefit coverage (at
the same cost to Executive, and at the same coverage level, as in effect as of
the date of the Qualifying Termination) for 36 months from the date of the
Qualifying Termination (the "Continuation Period"). The required COBRA health
benefit continuation period shall begin concurrently with the start of this
benefit continuation period, subject to the following:
Except as otherwise required by COBRA, the providing of this
post-employment health benefit coverage by the Company shall be
discontinued prior to the end of the Continuation Period to the extent
that similar benefits are available to Executive from a subsequent
employer, as determined by the Board or the Compensation Committee in
the exercise of good faith and reasonable judgment, except that, to the
extent such subsequent coverage excludes (or would exclude) preexisting
conditions, such post-employment coverage shall be continued. Executive
shall from time to time promptly provide the Board written notice, in
reasonable detail, of the availability of health benefit coverage from
a subsequent employer.
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(c) All of the Severance Benefits described in Section 2.1(a) shall be
paid in cash to Executive in a single lump sum as soon as possible after the
effective date of the Qualifying Termination (but in no event more than 10 days
after such date), except that the Severance Benefits described in Section
2.1(a)(v) shall be paid or reimbursed to Executive promptly following submission
of an invoice of the firm providing the outplacement services described in such
subsection. Executive shall not be obligated to seek other employment or take
any other action to mitigate the amounts payable to Executive under this
Agreement.
2.2. Excise Tax Payment. If any portion of the amounts payable under
Section 2.1, or under any other agreement with, or plan of the Company,
including stock options, restricted stock, or other long-term incentives would
constitute an Excess Parachute Payment, such that an excise tax is payable under
Section 4999 of the Code in respect of such amounts, then the Company shall pay
to Executive, in cash, an additional amount equal to such excise tax and any
interest or penalties incurred by Executive with respect thereto (collectively,
"Excise Tax"), together with any federal and state income, employment and other
excise taxes payable by Executive in respect of such payment (and to cover the
resulting income, employment, and other excise taxes resulting from each
successive payment, and so on as necessary to completely offset the Excise Tax
impact). For this purpose, Executive shall be deemed to be subject to the
highest marginal rate of federal and state taxes. This payment shall be made as
soon as possible following the date of Executive's Qualifying Termination, but
in no event later than 30 calendar days after such date.
2.3. Subsequent Recalculation of Excise Tax Payment. (a) In the event
it is finally determined by the IRS that the Excise Tax payable by Executive is
greater than the amount computed pursuant to Section 2.2, the Company shall
reimburse Executive for any additional amount necessary to make Executive whole
(less any amounts received by Executive that Executive would not have received
had the computations initially been computed as subsequently adjusted),
including the value of any underpaid Excise Tax due to the IRS.
(b) In the event it is finally determined by the IRS that the Excise
Tax payable by Executive is less than the amount computed pursuant to Section
2.2, Executive shall promptly reimburse the Company for any amounts Executive
received pursuant to Section 2.2 in excess of the amount necessary to offset all
of the Excise Tax impact, including the value of any excise, income and
employment taxes. If Executive fails promptly to so reimburse the Company, the
Company, in addition to any other remedies available to it, shall be entitled to
reduce the amount of any payments due Executive by the amount required to be so
reimbursed.
(c) Each party shall promptly give the other notice of any IRS inquiry,
examination, claim or refund with respect to the applicability or amount of
Excise Tax payable by Executive, and the parties shall cooperate with each other
in resolving any issues thereon raised by the IRS.
Section 3. Term of Agreement
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The initial term of this Agreement ("Initial Term") shall be until
December 31, 1998. The Initial Term shall automatically shall be extended for an
additional three-year term at the end of the Initial Term, and successively
thereafter for a three-year term after each such additional term (each, an
"Additional Term"), unless the Company or Executive shall deliver to the other
party written notice of intent not to extend such this Agreement, delivered at
least six months before the end of the Initial Term or the Additional Term then
in effect. In the event such notice is properly delivered by either party, this
Agreement, along with all corresponding rights, duties, and covenants, shall
automatically expire at the end of the Initial Term or Additional Term then in
effect; provided, however, that if a Change in Control occurs during the Initial
Term or any Additional Term, then the term of this Agreement shall not expire
before the end of a two-year period commencing on the date of the Change in
Control.
Section 4. Assignment
4.1. Assignment by Company. (a) This Agreement shall be binding upon,
and shall inure to the benefit of, the Company and its successors. Any such
successor shall be deemed to be the Company for all purposes of this Agreement.
As used in this Agreement, the term "successor" shall mean any surviving
corporation in a merger or consolidation, or any person, corporation,
partnership, or other business entity which, whether by purchase or otherwise,
acquires all or substantially all of the assets of the Company. Notwithstanding
such assignment, the Company shall remain, with such successor, jointly and
severally liable for all its obligations hereunder. Without limiting the
generality of the foregoing, it is specifically agreed that an assignment of
this Agreement by the Company will not diminish Executive's rights under Section
2 hereof.
(b) The Company shall require any successor to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession were to take
place.
(c) Except as provided in this Section, this Agreement may not be
assigned by the Company.
4.2. Assignment by Executive. This Agreement shall inure to the benefit
of and be enforceable by Executive's personal or legal representatives,
executors, and administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die while any amounts payable to Executive under
this Agreement remain outstanding, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Beneficiary.
Section 5. Dispute Resolution and Notice
5.1. Dispute Resolution. (a) Executive shall have the right and option
to elect to have any good faith dispute or controversy arising under or in
connection with this Agreement settled by litigation or by arbitration. If
arbitration is selected, such proceeding shall be conducted before a panel of
three arbitrators sitting in a location selected by Executive within 50 miles
from the location of Executive's principal place of employment, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the award of the arbitrator in any court having jurisdiction.
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(b) All expenses of such litigation or arbitration, including but not
limited to the reasonable fees and expenses of the legal representative for
Executive, and necessary costs and disbursements incurred as a result of such
dispute or legal proceeding, and any prejudgment interest, shall be borne by the
Company, whether or not the Executive prevails in such litigation or
arbitration. The Company shall pay (or reimburse Executive for) such fees and
expenses on a monthly basis within 10 days after Executive's submission of a
written request for payment or reimbursement, as applicable, together with
reasonable evidence that the fees and expenses were incurred. If Executive does
not prevail (after exhaustion of all available judicial or arbitral remedies, as
applicable), and a court of competent jurisdiction decides that Executive had no
reasonable basis for bringing an action or arbitration hereunder or lacked good
faith in doing so, no further reimbursement for legal fees and expenses shall be
due to Executive, and Executive shall repay the Company for any amounts
previously paid by it hereunder pursuant to this Section 5.1.
5.2. Notice. Any notices or other communications provided for by this
Agreement shall be sufficient if in writing and sent by registered or certified
mail to Executive at the last address Executive has filed in writing with the
Company or, in the case of the Company, the Board, or the Compensation Committee
of the Board, at the Company's principal offices.
Section 6. Miscellaneous
6.1. Entire Agreement. This Agreement supersedes any prior agreements
or understandings, oral or written, between Executive and the Company, with
respect to the subject matter hereof and constitutes the entire agreement of the
parties with respect thereto. The captions of this Agreement are not part of the
provisions hereof and shall be of no effect.
6.2. Modification. This Agreement may not be terminated or in any way
amended except by a written agreement executed by the Company and Executive.
6.3. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
6.4. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
6.5. Tax Withholding. The Company may withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
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6.6. Governing Law. To the extent not preempted by federal law, the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the State of Illinois, without reference to principles of conflict
of laws.
IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of the date first above written.
ATTEST 360 COMMUNICATIONS COMPANY
By: By:
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxx
Corporate Secretary President and Chief Executive Officer
EXECUTIVE:
1
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