AGREEMENT REGARDING
CHANGE IN CONTROL
This Agreement entered into as of the 1st day of August,
1996, by and between Ameritech Corporation, a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxx (the
"Executive"),
WITNESSETH THAT:
WHEREAS, the Company wishes to induce the Executive
to remain in its employ, to provide fair and equitable treatment
and a competitive compensation package to the Executive, and to
assure continued attention of the Executive to her duties without
any distraction arising out of uncertain personal circumstances
in a change in control environment; and
WHEREAS, the Company recognizes that in the event of a
change in control of the Company it is likely that the
Executive's authorities, duties and responsibilities would be
substantially altered; and
WHEREAS, the Company and the Executive accordingly desire to
enter into this Agreement on the terms and conditions set forth
below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, it is hereby agreed by and between
the parties as follows:
1. Term of Agreement. The "Term" of this Agreement shall
commence on the date hereof and shall continue through December
31, 1996; provided, however, that on such date and on each
December 31 thereafter, the Term of this Agreement shall
automatically be extended for one additional year (but not beyond
the Executive's attainment of age 65) unless, not later than the
preceding November 1 the Company shall have given notice that it
does not wish to extend the Term; and provided, further, that if
a Change in Control (as defined in paragraph 2 below) shall have
occurred during the original or any extended Term of this
Agreement, the Term of this Agreement shall continue for a period
of twenty-four months beyond the month in which such Change in
Control occurs, but not beyond the Executive's attainment of age
65.
2. Change in Control. For purposes of this Agreement, the
term "Change in Control" means a change in the beneficial
ownership of the Company's voting stock or a change in the
composition of the Company's Board of Directors which occurs as
follows:
(a) any "person" (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) other
than:
(i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or
(ii) the Executive or any person acting in concert with
the Executive
is or becomes a beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of stock of the Company
representing 20% or more of the total voting power of
the Company's then outstanding stock; provided,
however, that this subparagraph (a) shall not apply to
any tender offer made pursuant to an agreement with the
Company approved by the Company's Board of Directors
and entered into before the offeror has become a
beneficial owner of stock of the Company representing
5% or more of the combined voting power of the
Company's then outstanding stock;
(b) a tender offer is made for the stock of the Company,
and the person making the offer owns or has accepted
for payment stock of the Company representing 20% or
more of the total voting power of the Company's then
outstanding stock; provided, however, that this
subparagraph (b) shall not apply to any tender offer
made pursuant to an agreement with the Company approved
by the Company's Board of Directors and entered into
before the offeror has become a beneficial owner of
stock of the Company representing 5% or more of the
combined voting power of the Company's then outstanding
stock;
(c) during any period of 24 consecutive months there shall
cease to be a majority of the Board of Directors
comprised as follows: individuals who at the beginning
of such period constitute the Board of Directors and
any new director(s) whose election by the Board of
Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-
third (2/3) of the directors then still in office who
either were directors at the beginning of the period or
whose election or nomination for election was
previously so approved; or
(d) the stockholders of the Company approve a merger or
consolidation of the Company with any other company
other than:
(i) a merger or consolidation which would result in
the Company's voting stock outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting stock of the surviving entity) more than
70% of the combined voting power of the Company's
or such surviving entity's outstanding voting
stock immediately after such merger or
consolidation; or
(ii) a merger or consolidation which would result in
the directors of the Company who were directors
immediately prior thereto continuing to constitute
at least 50% of the directors of the surviving
entity immediately after such merger or
consolidation.
For purposes of subparagraph (d) above, the phrase "surviving
entity" shall mean only an entity in which all of the Company's
stockholders who are stockholders immediately before the merger
or consolidation (other than stockholders exercising dissenter
rights) become stockholders by the terms of the merger or
consolidation, and the phrase "directors of the Company who were
directors immediately prior thereto" shall not include (A) any
director of the Company who was designated by a person who has
entered into an agreement with the Company to effect a
transaction described in subparagraph (a) or subparagraph (d)
above, or (B) any director who was not a director at the
beginning of the 24-consecutive-month period preceding the date
of such merger or consolidation, unless her election by the Board
of Directors or nomination for election by the Company's stock
holders was approved by a vote of at least two-thirds (2/3) of
the directors who were directors before the beginning of such
period.
3. Compensation After a Change in Control. During any
period in which the Executive is employed by the Company after a
Change in Control, there shall be no reduction in the base
salary, long and short term incentives and bonuses, employee
benefits (including medical insurance, disability income
protection, and life insurance and death benefits), fringe
benefits and perquisites to which the Executive was entitled
prior to the Change in Control.
4. Severance Payments. Subject to the provisions
of paragraphs 5 and 6 below, in the event that (i) the
Executive's employment with the Company is involuntarily
terminated by the Company for any reason other than death,
Disability (as defined below) or Just Cause (as defined below)
during the twenty-four month period following a Change in Control
or (ii) the Executive's employment with the Company is terminated
by the Executive for any reason during the thirty-day period
beginning on the first anniversary of a Change in Control, the
Executive shall continue to receive all medical insurance,
disability income protection, life insurance coverage and death
benefits, fringe benefits and perquisites to which the Executive
was entitled prior to the Change in Control for a period of not
less than the 24 consecutive months immediately following the
date of her termination of employment, and shall be entitled to a
lump sum payment in cash no later than ten business days and no
earlier than two business days after the date of termination
equal to the sum of:
(a) an amount equal to 2.99 (or, if less, the number of
years remaining until the Executive's attainment of age
65) times the Executive's annual salary rate in effect
immediately prior to the Change in Control;
(b) an amount equal to 2.99 (or, if less, the number of
years remaining until the Executive's attainment of age
65) times the Executive's short term incentive award
and other bonuses payable for the calendar year
preceding the Change in Control; and
(c) the actuarial equivalent of the additional
pension benefits which the Executive would have accrued
under the terms of the Ameritech Management Pension
Plan, the Ameritech Senior Management Retirement and
Survivor Protection Plan and each other tax-qualified
or nonqualified defined benefit pension plan maintained
by the Company (determined without regard to any
termination or any amendment adversely affecting the
Executive which is adopted on or after a Change in
Control or in contemplation of a Change in Control) if,
on the date of Termination, the Executive had been
credited with two additional years of service and two
additional years of compensation at her annual base
salary rate and target short term incentive award in
effect on the date of the Change in Control for benefit
accrual purposes and were two years older than her
actual age on such date; provided, however, that the
additional service, compensation and age credits under
this paragraph (c) shall be proportionately reduced if
the Executive is at least age 63 on the date of termi
nation and eliminated if the Executive is age 65 or
older on such date. For purposes of this subparagraph
(c), actuarial equivalence shall be determined in
accordance with the terms of the Ameritech Senior
Management Retirement and Survivor Protection Plan for
purposes of lump sum payments under that plan, but
without regard to any amendment of that plan adopted on
or after a Change in Control or in contemplation of a
Change in Control which would reduce the amount of such
lump sum payment.
For purposes of this Agreement, the Executive's employment with
the Company shall be deemed to have been involuntarily terminated
by the Company if the Executive's duties and responsibilities are
significantly diminished by the Company without the Executive's
consent. For purposes of this Agreement, the term "Disability"
means an incapacity, due to physical injury or illness or mental
illness, causing a Participant to be unable to perform her duties
for the Company on a full-time basis for a period of at least six
consecutive months and the term "Just Cause" means willful
misconduct, dishonesty, conviction of a felony or excessive
absenteeism not related to illness or disability.
5. Tax Limitations. If any payments under this Agreement,
after taking in account all other payments to which the Executive
is entitled from the Company, or any affiliate thereof, are more
likely than not to result in a loss of a deduction to the Company
by reason of section 280G of the Internal Revenue Code of 1986 or
any successor provision to that section, such payments shall be
reduced by the least amount required to avoid such loss of
deduction. If the Executive and the Company shall disagree as to
whether a payment under this Agreement is more likely than not to
result in the loss of a deduction, the matter shall be resolved
by an opinion of tax counsel chosen by the Company's independent
auditors. The Company shall pay the fees and expenses of such
counsel, and shall make available such information as may be
reasonably requested by such counsel to prepare the opinion. If,
by reason of the limitations of this paragraph 5, the maximum
amount payable to the Executive under paragraph 4 above cannot be
determined prior to the due date for such payment, the Company
shall pay on the due date the minimum amount which it in good
faith determines to be payable and shall pay the remaining
amount, with interest calculated at the rate prescribed by
section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as
soon as such remaining amount is determined in accordance with
this paragraph 5.
6. Source of Payments and Withholding. Any amount payable
under the terms of this Agreement shall be paid from the general
assets of the Company or from one or more trusts, the assets of
which are subject to the claims of the Company's general
creditors. All payments to the Executive under this Agreement
will be subject to all applicable withholding of state and
federal taxes.
7. Arbitration of All Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach
thereof shall be settled by arbitration in the City of Chicago,
in accordance with the laws of the State of Illinois, by three
arbitrators, one of whom shall be appointed by the Company, one
by the Executive and third of whom shall be appointed by the
first two arbitrators. If the first two arbitrators cannot agree
on the appointment of a third arbitrator, then the third
arbitrator shall be appointed by the Chief Judge of the United
States Court of Appeals for the Seventh Circuit. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators which shall be as provided in this paragraph 11.
Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. In the event
that it shall be necessary or desirable for the Executive to
retain legal counsel or incur other costs and expenses in
connection with enforcement of her rights under this Agreement,
the Company shall pay (or the Executive shall be entitled to
recover from the Company, as the case may be) her reasonable
attorneys' fees and costs and expenses in connection with
enforcement of her rights (including the enforcement of any
arbitration award in court). Payments shall be made to the
Executive at the time such fees, costs and expenses are incurred.
If, however, the arbitrators shall determine that, under the
circumstances, payment by the Company of all or a part of any
such fees and costs and expenses would be unjust, the Executive
shall repay such amounts to the Company in accordance with the
order of the arbitrators.
8. Mitigation and Set-Off. The Executive shall not be
required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts
payable to the Executive under this Agreement any amounts owed to
the Company by the Executive, any amounts earned by the Executive
in other employment after termination of her employment with the
Company, or any amounts which might have been earned by the
Executive in other employment had she sought such other
employment.
9. Severance Pay Plan. During the Term of this Agreement,
the Executive shall not participate in or have any rights under
either the Ameritech Senior Management Severance Pay Plan or the
Ameritech Management Employees Severance Pay Plan.
10. Non-Alienation. The Executive shall not have any right
to pledge, hypothecate, anticipate or in any way create a lien
upon any amounts provided under this Agreement; and no benefits
payable hereunder shall be assignable in anticipation of payment
either by voluntary or involuntary acts, or by operation of law.
Nothing in this paragraph shall limit the Executive's rights or
powers to dispose of her property by will or limit any rights or
powers which her executor or administrator would otherwise have.
11. Governing Law. The provisions of this Agreement shall
be construed in accordance with the laws of the State of
Illinois.
12. Amendment. This Agreement may be amended or canceled
by mutual agreement of the parties in writing without the consent
of any other person and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
13. Successors to the Company. This Agreement shall be
binding upon and inure to the benefit of the Company and any
successor of the Company. The Company will require any successor
(whether director or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no succession had
taken place.
14. 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.
15. Counterparts. This Agreement may be executed in two or
more counterparts, any one of which shall be deemed the original
without reference to the others.
IN WITNESS WHEREOF, the Executive has hereunto set her hand
and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name
and on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, all as of the date and year first
above written.
/s/ Xxxx X. Xxxxxx
Executive
Ameritech Corporation
By /s/ Xxxxx X. Xxxxx
Its Secretary
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
Assistant Secretary
