Exhibit 10.(dd)
AGREEMENT
THIS AGREEMENT is made and entered into as of the 23rd day of November,
1998, by and between BellSouth Corporation, a Georgia corporation ("Company"),
and Xx. X. X. Xxxxxxxx ("Executive"):
Reasons for this Agreement. Executive is currently employed by Company as
its Chairman of the Board, President and Chief Executive Officer. Executive has
been employed by Company and its Affiliated Companies since 1964 in a variety of
capacities, including as Vice Chairman of the Board Finance and Administration
from 1989 until 1991, as President and Chief Executive Officer of Company's
principal subsidiary, BellSouth Telecommunications, Inc., from 1992 until 1994,
and as Vice Chairman of the Board of Directors and Chief Operating Officer of
Company from 1995 until 1996. Executive has served as Company's President and
Chief Executive Officer since January 1, 1997 and, in addition, as Chairman of
the Board of Directors since December 31, 1997.
In connection with Company's executive succession planning, Executive and
Company entered into a separation agreement on February 23, 1989, which was
amended and restated on January 25, 1995 (the "Prior Separation
Agreement"),which contemplated Executive's retirement at age sixty (60).
Executive and Company now desire to replace the Prior Separation Agreement with
this Agreement to incent Executive's continued service beyond age sixty (60)
through staged vesting of equity-based awards and protections in the event of
Executive's preretirement death or disability. In addition, Executive possesses
Confidential Information which could be used by Executive to Company's or
Affiliated Companies' detriment and, in connection with his employment,
Executive has developed important relationships and contacts with customers and
employees valuable to Company and Affiliated Companies.
Agreement. In consideration of the covenants and agreements contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Executive and Company agree as
follows:
1. Prior Separation Agreement. Executive and Company agree and acknowledge
that, upon execution of this Agreement, the Prior Separation Agreement is null
and void and of no further force or effect, except as otherwise provided in
Section 22 of this Agreement.
2. Definitions. For purposes of this Agreement, the following terms shall
have the meaning specified below:
(a) "Affiliated Companies" - BellSouth Corporation and its subsidiaries
and associated companies.
(b) "Base Salary" - the gross annual base salary payable to Executive
including the amount of any before-tax contributions made by Executive from such
salary to the BellSouth Retirement Savings Plan, any other qualified cash or
deferred arrangement sponsored by
Company or an Affiliated Company, or a successor to any such plan, as the case
may be, and the amount of any other deferrals of such salary under any
nonqualified deferred compensation plans maintained by Company or an Affiliated
Company.
(c) "Cause" - Executive's willfully engaging in conduct that is
demonstrably and materially injurious to Company or Affiliated Companies. For
purposes of this subsection, no act, or failure to act, on the part of Executive
shall be deemed "willful" unless committed by Executive in bad faith and without
reasonable belief that such action or omission was in the best interest of
Company or Affiliated Companies. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to Executive a certificate of a resolution duly adopted by
the affirmative vote of not less than seventy-five percent (75%) of the entire
membership of the Board of Directors of Company, at a meeting of the Board
(after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's legal counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive has engaged in
the conduct set forth in this subsection and specifying the particulars thereof
in detail.
(d) "CIC Agreement" - the Executive Severance Agreement entered into by
and between Executive and Company on October 17, 1996, providing certain
benefits in the event of a change in corporate control of Company, attached
hereto as Exhibit "A" and incorporated by this reference herein.
(e) "Confidential Information" - information, whether generated internally
or externally, relating to Company's business or to Affiliated Companies'
businesses which derives economic value, actual or potential, from not being
generally known to other Persons and is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy or confidentiality,
including, but not limited to, economic studies and analyses, technical or
nontechnical data, programs, patterns, compilations, devices, methods, models
(including cost and/or pricing models and operating models), techniques,
drawings, processes, employee compensation data, financial data (including
marketing information and strategies and personnel data), lists of actual or
potential customers or suppliers, and information relating to regulatory and
business policies, plans, and strategies. For purposes of this Agreement,
Confidential Information does not include information which is not a trade
secret three (3) years after termination of Executive's employment with Company.
(f) "Customers" - customers, suppliers, and retailers of Company or
Affiliated Companies in the Territory (1) with whom Executive dealt on behalf of
Company or Affiliated Companies, (2) whose dealings with Company or Affiliated
Companies were coordinated or supervised directly or indirectly by Executive, or
(3) about whom Executive obtained Confidential Information during the two (2)
years immediately prior to the termination of Executive's services.
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(g) "Disability" - an illness, injury or other incapacity which qualifies
Executive for long-term disability benefits under the principal management
long-term disability plan of Company.
(h) "Good Reason" - shall mean the occurrence, without Executive's express
written consent, of any of the following circumstances:
(i) the assignment to Executive of duties inconsistent with
Executive's status or responsibilities as in effect immediately prior to
such assignment, including imposition of business travel obligations which
differ materially from prior business travel obligations;
(ii) diminution in the status or responsibilities of Executive's
position from that which existed immediately prior to such change, whether
by reason of Company ceasing to be a public company, becoming a subsidiary
of a successor public company, or otherwise;
(iii) a reduction in Executive's annual base salary as in effect
immediately before such reduction or the failure to pay a bonus award to
which Executive is otherwise entitled under any of the short-term or
long-term incentive plans in which Executive participates (or any
successor incentive compensation plans) at the time such awards are
usually paid;
(iv) a change in the principal place of Executive's employment, as
in effect immediately prior to such change, to a location more than
thirty-five (35) miles distant from the location of such principal place
at such time;
(v) the failure by Company to continue in effect any bonus,
incentive compensation, or stock plan in which the Executive participates,
unless an equivalent alternative compensation arrangement (embodied in an
ongoing substitute or alternative plan) has been provided to Executive, or
the failure by Company to continue Executive's participation in any such
bonus, incentive compensation or stock plan on substantially the same
basis, both in terms of the amount of benefits provided and the level of
Executive's participation relative to other participants; and
(vi) (A) except as required by law, the failure by Company to
continue to provide to Executive benefits substantially equivalent, in the
aggregate, to those enjoyed by Executive under the qualified and
nonqualified employee pension and welfare benefit plans of Company,
including, without limitation, any pension, life insurance, medical,
dental, health and accident, disability, retirement or savings plans in
which Executive was eligible to participate immediately prior thereto; (B)
the taking of any action by Company which would directly or indirectly
materially reduce or deprive Executive of the perquisites enjoyed by
Executive immediately before such action (including Company-
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paid and/or reimbursed club memberships, financial counseling fees and the
like); or (C) the failure by Company or a successor to provide Executive
with the number of paid vacation days (and the policies and practices for
taking such days) as was previously provided under the Company's vacation
policy or practice.
Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(i) "Person" - any individual, corporation, bank, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental or other legal or business entity.
(j) "Retirement Date" - the date on or after Executive's sixtieth (60th)
birthday on which Executive terminates employment with the consent of Company's
Board of Directors; provided, that no such consent of the Board of Directors
shall be required on or after Executive's sixty-fifth (65th) birthday.
(k) "SERP" - the BellSouth Corporation Supplemental Executive Retirement
Plan, as amended from time to time.
(l) "Stock Plan" - the BellSouth Corporation Stock Plan and related award
agreements, as amended from time to time.
3. Equity Awards. In connection with execution of this Agreement, Company
shall grant to Executive an award of 674,459 nonqualified stock options and an
award of 76,220 restricted shares (such awards collectively being sometimes
referred to in this Agreement as the "Equity Awards"). The Equity Awards shall
be granted pursuant to an agreement (the "Equity Award Agreement") substantially
identical to the BellSouth Corporation Equity Award Agreement attached hereto as
Exhibit "B" and incorporated by this reference herein. Share issuances in
connection with the Equity Awards shall be made pursuant to an effective
registration statement under the registration requirements of the Securities Act
of 1933, as amended, and in compliance with applicable state securities laws,
and listed on the New York Stock Exchange. In the event that the shares issued
to Executive upon exercise of nonqualified stock options or upon vesting of
restricted shares pursuant to the Equity Awards are not fully salable by him
under the Securities Act of 1933, as amended, Company will register such shares
thereunder.
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4. Retirement. At the Retirement Date:
a. Equity Awards. The Equity Awards shall no longer be subject to
any restriction related to continued employment or continued performance
of services to Company or Affiliated Companies, and shall be fully vested
and exercisable (subject to the otherwise applicable terms of the Equity
Award Agreement).
b. Supplemental Executive Retirement Plan. Executive shall become
entitled to an aggregate annual benefit under the SERP based on seventy
percent (70%) of Included Earnings (as such term is defined in SERP)
instead of the formula described in section 4(a)(i) of the SERP.
c. Financial Counseling. Executive shall become entitled to benefits
described in the BellSouth Corporation Financial Counseling Plan, or any
successor plan, for the year of retirement and for seven (7) years
thereafter, such benefits to be provided by the Company as if eligibility
therefor extended to such date under the terms of such plan. Benefits
described in this subsection 4.c shall be subject to all otherwise
applicable terms and conditions of the Financial Counseling Plan.
d. Company Automobile. Executive may, at his election, purchase from
Company (or an Affiliated Company) any Company-owned automobile provided
to him for its wholesale price determined by Company as of the Retirement
Date, if Executive notifies the Company of his intention to do so within
thirty (30) days after his Retirement Date.
e. Office Space. Executive shall be provided appropriate office
space and secretarial assistance at Company's principal place of business
for remainder of Executive's life.
5. Death or Disability. If Executive's employment with Company is
terminated prior to the Retirement Date by reason of Executive's death or
Disability:
a. Death/Disability Benefit. Company shall pay to Executive, as soon
thereafter as is reasonably practicable, a single lump sum cash payment
equal to the sum of (1) twice Executive's Base Salary in effect at the
time of such termination, plus (2) twice the standard award amount
applicable to Executive under the BellSouth Corporation Officer Short Term
Incentive Award Plan, or any successor short term plan ("STIAP"), for the
year in which such termination occurs, less withholdings.
Any such payment made by reason of Executive's death shall be made
to Executive's surviving spouse or, if none, to Executive's estate;
provided, however, that such payment shall instead be made to such other
beneficiary or beneficiaries as may be designated by Executive in a form
reasonably acceptable to Company.
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b. Long-Term Awards. All outstanding grants or awards to Executive
under any long-term incentive compensation plan or program of Company in
which Executive participates (including, without limitation, all grants
and awards under the Stock Plan) shall no longer be subject to any
restriction related to continued employment or continued performance of
services to Company or Affiliated Companies, and shall be fully vested and
exercisable (subject to the otherwise applicable terms of any such plan or
program). Notwithstanding the foregoing, if Executive's employment with
Company is so terminated prior to Executive's sixtieth (60th) birthday,
vesting of the Equity Awards described in Section 3 of this Agreement
shall not be accelerated pursuant to this subsection 5.b..
6. Other Terminations of Employment. If Executive's employment with
Company is terminated prior to the Retirement Date, other than for reasons of
death or Disability, and such termination is either (i) by Company, other than
for Cause, or (ii) by Executive for Good Reason:
a. Short-Term Incentive Award. Executive shall be entitled to an
award under the STIAP equal to the greater of (i) the amount to which
Executive would be entitled under STIAP without regard to this Agreement,
and (ii) the amount based on performance results for the year in which
such termination occurs, prorated to the date of termination. The payment
described in this subsection 6.a shall be subject to the otherwise
applicable terms and conditions of STIAP.
b. Separation Allowance. Company shall pay to Executive, as soon
thereafter as is reasonably practicable, as a separation allowance a
single lump-sum cash payment equal to the sum of (1) twice Executive's
Base Salary in effect on the date of termination, plus (2) twice the
standard award amount applicable to Executive under the STIAP for the year
in which his date of termination occurs, less withholdings.
c. Long-Term Awards. All outstanding grants or awards to Executive
under any long-term incentive compensation plan or program of Company in
which Executive participates (including, without limitation, all grants
and awards under the Stock Plan) shall no longer be subject to any
restriction related to continued employment or continued performance of
services to Company or Affiliated Companies, and shall be fully vested and
exercisable (subject to the otherwise applicable terms of any such plan or
program). Notwithstanding the foregoing, if Executive's employment with
Company is so terminated prior to Executive's sixtieth (60th) birthday,
vesting of the Equity Awards described in Section 3 of this Agreement
shall not be accelerated pursuant to this subsection 6.c..
7. Discharge and Waiver. Company's obligations under this Agreement, and
Executive's entitlement to the compensation and benefits described herein, are
expressly
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conditioned upon execution by Executive of a waiver and release and agreement
not to xxx, in form and substance reasonably acceptable to Company, pursuant to
which Executive fully releases and forever discharges Company and Affiliated
Companies, and any employee, officer, director, representative, agent, successor
or assign of Company and Affiliated Companies (both in their personal and
official capacities), and all persons acting by, through and under or in concert
with any of them, from any and all claims, demands, causes of action, remedies,
obligations, costs and expenses of whatever nature, whether under the common
law, state law, federal law (including but not limited to the Age Discrimination
in Employment Act of 1967) or otherwise, through the Retirement Date, including
those arising from or in connection with the terms and conditions of employment
with the Company and Affiliated Companies or the termination of that employment.
This paragraph is not intended to affect benefits to which Executive may be
entitled under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or any
pension or benefit plan in which Executive is a participant.
8. Nondisparagement. Executive agrees that now and in the future he will
protect and preserve the Company's and Affiliated Companies' goodwill and
reputation in the industry and in the community, with customers and the public,
and will refrain from public or private comments or actions which are derogatory
or which may tend to disparage Company's or Affiliated Companies' reputations or
otherwise tend to injure Company or Affiliated Companies in their business or
public affairs. Company agrees that now and in the future it will protect and
preserve Executive's reputation in the industry and in the community, with
customers and the public, and will refrain from public or private comments or
actions which are derogatory or which may tend to disparage Executive's
reputation or otherwise tend to injure Executive in his private or public
affairs.
9. Confidential Information. Executive agrees to protect Confidential
Information. Executive will not use, except in connection with work for Company
or Affiliated Companies, threaten to use, disclose or threaten to disclose, give
or threaten to give to others any Confidential Information.
10. Employment with Competitors. Company's obligations to provide any of
the benefits, entitlements, interests or payments described in this Agreement or
in the Equity Award Agreement are expressly conditioned upon execution by
Executive of an agreement, in form and substance reasonably acceptable to
Company, pursuant to which during the period of two (2) years after the
Executive's employment with Company is terminated for any reason, Executive
agrees, to the extent permitted by applicable law, not to provide services to
any Person which provides products or services identical to or similar to
Company's or Affiliated Companies' products and services, whether as an
employee, consultant, independent contractor, or otherwise.
11. Hiring or Solicitation of Company Employees. During Executive's
employment through the Retirement Date and for a period of two (2) years after
the Retirement Date, Executive will not hire or induce or attempt to induce or
solicit to leave employment with Company or Affiliated Companies, for himself or
on behalf of any other Person, anyone who is
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or was, during Executive's employment with Company, an employee of Company or
Affiliated Companies. However, Executive may offer employment on behalf of
himself or on behalf of any company or entity to any such employee who
terminated his or her employment without any inducement or attempted inducement
or solicitation by Executive.
12. Solicitation of Customers. During the period of two (2) years after
the Retirement Date, Executive agrees not to solicit, induce, direct or take
away any Customers, for the purpose of providing products or services identical
to or substantially similar to Company's or Affiliated Companies' products and
services.
13. Interpretation; Severability of Invalid Provisions. Executive
acknowledges and agrees that the limitations described in this Agreement,
including specifically the limitations upon his activities, are reasonable in
scope, are necessary for the protection of Company's business, and form an
essential part of the consideration for which this Agreement has been entered
into. It is the intention of the parties that the provisions of this Agreement
be enforced to the fullest extent permissible under applicable laws and public
policies. Nonetheless, the rights and restrictions contained in this Agreement
may be exercised and shall be applicable and binding only to the extent they do
not violate any applicable laws and are intended to be limited to the extent
necessary so that they will not render this Agreement illegal, invalid or
unenforceable. If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable by a court of competent jurisdiction, the remaining
provisions shall remain in full force and effect. The provisions of this
Agreement do not in any way limit or abridge Company's rights under the laws of
unfair competition, trade secret, copyright, patent, trademark or any other
applicable law(s), all of which are in addition to and cumulative of Company's
rights under this Agreement. Executive agrees that the existence of any claim by
Executive against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to enforcement by Company of any or all of such
provisions or covenants.
14. Employment Rights. This Agreement does not constitute, and should not
be construed as, an employment contract. Employee acknowledges that he is and
shall remain an employee at will who may be terminated by Company or any
Affiliated Company by whom he may be employed or to whom he may be assigned from
time to time, for any reason and at any time. Similarly, Employee may resign for
any reason at any time, subject to forfeiting the compensation and benefits
described in this Agreement. Employee understands that he, like any other
employee, has been and will be subject to his employer's performance standards
and disciplinary rules.
15. Relief. The parties acknowledge that a breach or threatened breach by
Executive of any of the terms of this Agreement would result in material and
irreparable damage and injury to Company, and that it would be difficult or
impossible to establish the full monetary value of such damage. Therefore,
Company shall be entitled to injunctive relief by a court of appropriate
jurisdiction in the event of Executive's breach or threatened breach of any of
the terms contained in this Agreement.
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16. Legal Fees and Expenses. Company shall pay to Executive the amount of
all legal fees and expenses as and when incurred by Executive in contesting or
disputing any termination of employment or in seeking to obtain or enforce any
right or benefit provided by this Agreement, regardless of the outcome, unless
in the case of a legal action brought by or in the name of Executive, a final
determination is made by a court of competent jurisdiction that such action was
not brought by Executive in good faith.
17. Tolling Provision. The duration of any post-termination obligation
contained in this Agreement shall be extended by the length of time during which
Executive is in breach of the provision, not to exceed three (3) years from the
Retirement Date.
18. Agreement Binding. This Agreement shall inure to the benefit of
Company and its successors, assignees, and designees and shall be binding upon
Executive and Executive's heirs, executors, administrators and personal
representatives.
19. Entire Agreement; Previous Agreement. Except as otherwise specifically
provided herein, this Agreement contains the entire agreement between the
parties and no statements, promises or inducements made by any party hereto, or
agent of either party, which are not contained in this Agreement shall be valid
or binding; provided, however, that the matters dealt with herein supersede
previous written agreements between the parties on the same subject matters only
to the extent such previous provisions are inconsistent with this Agreement and
other provisions in written agreements between the parties not inconsistent with
this Agreement are not affected. This Agreement may not be enlarged, modified or
altered except in writing signed by the parties.
20. Nonwaiver. The failure of Company to insist upon strict performance of
the terms of this Agreement, or to exercise any option herein, shall not be
construed as a waiver or a relinquishment for the future of such term or option,
but rather the same shall continue in full force and effect.
21. Notices. All notices, requests, demands and other communications
required or permitted by this Agreement or by any statute relating to this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first-class, certified mail, postage prepaid, addressed as
follows:
To Company: BellSouth Corporation
Office of the General Counsel
Suite 2002
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
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To Executive: X. X. Xxxxxxxx
22. Pooling of Interests Accounting Treatment. Notwithstanding anything to
the contrary in this Agreement, if the application of any provision(s) of this
Agreement, including without limitation the grant of Equity Awards described in
Section 3, or of the Agreement in its entirety, would preclude the use of
pooling of interests accounting treatment with respect to a transaction for
which such treatment otherwise is available and to be adopted by Company, this
Agreement shall be modified as it applies to such transaction, to the minimum
extent necessary to prevent such impact, including if necessary the invalidation
of such provisions (or the entire Agreement, as the case may be). If the pooling
of interests accounting rules require modification or invalidation of one or
more provisions of this Agreement as it applies to such transaction, the adverse
impact on Executive shall, to the extent reasonably possible, be proportionate
to the adverse impact on other similarly situated employees of Company. The
Board of Directors of Company shall, in its sole and absolute discretion, make
all determinations necessary under this subsection; provided, that
determinations regarding the application of the pooling of interests accounting
rules for these purposes shall be made by Company with the concurrence of
Company's independent auditors at the time such determination is to be made. If
the Equity Awards as described in Section 3 of this Agreement are invalidated by
operation of this Section 22, all provisions of this Agreement (including
without limitation the restrictive covenants described in Sections 8, 9, 10, 11
and 12 of this Agreement), other than the provisions of Section 5 regarding
death or Disability, shall likewise be invalidated, and the Prior Separation
Agreement shall be reinstated with full force and effect as if this Agreement
had never been executed. If all of the benefits to Executive described in
Sections 3, 4, 5, and 6 of this Agreement are invalidated by operation of this
Section 22, the entire Agreement (including without limitation the restrictive
covenants described in Sections 8, 9, 10, 11 and 12 of this Agreement) shall
likewise be invalidated. If this entire Agreement is invalidated by operation of
this Section 22, the Prior Separation Agreement shall be reinstated with full
force and effect as if this Agreement had never been executed.
23. Nonduplication. Notwithstanding any other provisions of this
Agreement, if Executive becomes entitled to severance benefits under Article III
of the CIC Agreement, such severance benefits shall be in lieu of any benefits
to which Executive is otherwise entitled under this Agreement, other than the
Equity Awards. Except as otherwise specifically provided in this Section 23,
both this Agreement and the CIC Agreement shall continue in full force and
effect, and Article X(e) of the CIC Agreement shall be interpreted consistently
herewith.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
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25. Governing Law; Consultation with Counsel. This Agreement shall be
construed under and governed by the laws of the State of Georgia. Executive has
been advised to consult with an attorney, acknowledges having had ample
opportunity to do so and fully understands the binding effect of this Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized representative, and Executive has executed this
Agreement, as of the date written above.
EXECUTIVE: BELLSOUTH CORPORATION:
By:
---------------------------- -----------------------------------------
X. X. Xxxxxxxx Title: Vice President - Human Resources
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Exhibit A
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of
______________, 19__, by and between BellSouth Corporation, a Georgia
corporation (the "Company"), and ____________________ (the "Executive").
Reasons for This Agreement. The Company recognizes the valuable services
that the Executive has rendered and continues to render to the Company and its
Affiliated Companies. On behalf of itself, its Affiliated Companies and its
shareholders, the Company desires to encourage the Executive's continued service
and dedication in the performance of the Executive's duties, and attention to
the business and affairs of the Company and its Affiliated Companies,
notwithstanding the possibility, threat or occurrence of a change in control.
The Company believes that it is in the best interests of the Company and its
shareholders to minimize the distractions, risks and uncertainties for the
Executive which may be expected to arise in connection with a change in control
by providing assurances to the Executive that the Executive will not be
materially disadvantaged by a change in control.
Agreement. In consideration of the Executive's continued service to the
Company, the covenants and agreements contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company agree as follows:
I. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified below:
(a) "Affiliated Companies" shall mean all of the Company's subsidiaries,
divisions, and other affiliated companies or entities.
(b) "Cause" shall mean the Executive's willfully engaging in conduct that
is demonstrably and materially injurious to the Company. For purposes of this
subsection I(b), no act, or failure to act, on the part of the Executive shall
be deemed "willful" unless committed by the Executive in bad faith and without
reasonable belief that such action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a certificate of a resolution duly adopted by the affirmative
vote of not less than
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seventy-five percent (75%) of the entire membership of the Board of Directors of
the Company, at a meeting of the Board (after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive's legal
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive has engaged in the conduct set forth in this
subsection I(b) and specifying the particulars thereof in detail.
(c) "Change in Control" shall mean:
(i) any "person" (as such term is defined in the Securities Exchange
Act of 1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company (or of another
entity owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the
Company's then outstanding voting securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company and any new director whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors who either were directors at
the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof;
(iii) the consummation of a merger, plan of reorganization,
consolidation, share exchange, or other transaction, in one or a series of
related transactions, involving the Company, if immediately following such
merger, plan of reorganization, consolidation, share exchange, or other
transaction or transactions the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities representing
seventy percent (70%) or less of the combined voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger, plan of reorganization, consolidation,
share exchange, or other transaction or transactions;
(iv) the consummation of a transaction involving the sale or other
disposition by the Company or one or more of its Subsidiaries, in one or a
series of related transactions, of interests in an entity or entities, or
of assets, which for the most recent audited twelve-month period produced
total operating revenues or net income aggregating more than thirty
percent (30%) of the total operating revenues or net income of the Company
and its Subsidiaries (taken as a whole), if following such transaction or
transactions, any such entity is no longer a Subsidiary or such assets are
no longer held by a Subsidiary;
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(v) the complete liquidation or dissolution of the Company or the
sale of all or substantially all of the assets of the Company; or
(vi) the consummation of any other transaction which a majority of
the Board of Directors of the Company, in its sole and absolute
discretion, shall determine constitutes a Change in Control.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Confidential Information" shall mean information, whether generated
internally or externally, relating to the Company's business or to the
Affiliated Companies' businesses which derives economic value, actual or
potential, from not being generally known to other persons and is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy or
confidentiality, including, but not limited to, studies and analyses, technical
or nontechnical data, programs, patterns, compilations, devices, methods, models
(including cost and /or pricing models and operating models), techniques,
drawings, processes, employee compensation data, financial data (including
marketing information and strategies and personnel data), lists of actual or
potential customers or suppliers, and information relating to regulatory and
business policies, plans, and strategies. For purposes of this Agreement,
Confidential Information does not include information which is not a trade
secret three (3) years after termination of Executive's employment with Company.
(f) "Disability" shall mean an illness, injury or other incapacity which
qualifies the Executive for long-term disability benefits under the principal
management long-term disability plan of the Executive's employer.
(g) "Excise Tax" shall have the meaning ascribed to such term in
subsection VII(a) of this Agreement.
(h) "Good Reason" shall mean the occurrence after a Change in Control,
without the Executive's express written consent, of any of the following
circumstances:
(i) the assignment to the Executive of duties inconsistent with the
Executive's status or responsibilities as in effect immediately prior to a
Change in Control, including imposition of business travel obligations
which differ materially from business travel obligations immediately prior
to the Change in Control;
(ii) diminution in the status or responsibilities of the Executive's
position from that which existed immediately prior to the Change in
Control, whether by reason of the Company ceasing to be a public company,
becoming a subsidiary of a successor public company, or otherwise;
15
(iii) a reduction in the Executive's annual base salary as in effect
immediately before the Change in Control or the failure to pay a bonus
award to which the Executive is otherwise entitled under any of the
short-term or long-term incentive plans in which the Executive
participates (or any successor incentive compensation plans) at the time
such awards are usually paid;
(iv) a change in the principal place of the Executive's employment,
as in effect immediately prior to the Change in Control, to a location
more than thirty-five (35) miles distant from the location of such
principal place at such time;
(v) the failure by the Company to continue in effect any bonus,
incentive compensation, or stock option plan in which the Executive
participates immediately prior to the Change in Control, unless an
equivalent alternative compensation arrangement (embodied in an ongoing
substitute or alternative plan) has been provided to the Executive, or the
failure by the Company to continue the Executive's participation in any
such bonus, incentive compensation or stock option plan on substantially
the same basis, both in terms of the amount of benefits provided and the
level of the Executive's participation relative to other participants, as
existed immediately prior to the time of the Change in Control;
(vi) (A) except as required by law, the failure by the Company to
continue to provide to the Executive benefits substantially equivalent, in
the aggregate, to those enjoyed by the Executive under the qualified and
nonqualified employee pension and welfare benefit plans of the Company,
including, without limitation, any pension, life insurance, medical,
dental, health and accident, disability, retirement or savings plans in
which the Executive was eligible to participate immediately prior to the
Change in Control; (B) the taking of any action by the Company which would
directly or indirectly materially reduce or deprive the Executive of the
perquisites enjoyed by the Executive immediately prior to the Change in
Control (including Company-paid and/or reimbursed club memberships,
financial counseling fees and the like); or (C) the failure by the Company
or a successor to provide the Executive with the number of paid vacation
days (and the policies and practices for taking such days) as was provided
under the Company's vacation policy or practice as was in effect
immediately prior to the Change in Control;
(vii) the failure of the Company or any successor to obtain a
satisfactory written agreement from any successor to assume and agree to
perform this Agreement, as contemplated in subsection IX(a); or
(viii) any purported termination of the Executive's employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of subsection II(b). For purposes of this Agreement, no such
purported termination shall be effective except as constituting Good
Reason.
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The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(i) "Gross-Up Payment" shall have the meaning ascribed to such term in
subsection VII(a) of this Agreement.
(j) "Notice of Termination" shall have the meaning ascribed to such term
in subsection II(b) of this Agreement.
(k) "Payments" shall have the meaning ascribed to such term in subsection
VII(a) of this Agreement.
(l) "Potential Change in Control" shall mean:
(i) the Company (or an Affiliated Company) enters into an agreement,
the consummation of which would result in the occurrence of a Change in
Control;
(ii) an individual or entity, or a group or groups of individuals or
entities, acquires rights, whether pursuant to an agreement with the
Company (or an Affiliated Company) or otherwise, the exercise of which
would result in the occurrence of a Change in Control;
(iii) an individual or entity (including the Company), or a group or
groups of individuals or entities, publicly announces an intention to take
or to consider taking action(s) which, if taken, would result in the
occurrence of a Change in Control; or
(iv) the Board of Directors of the Company adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(m) "Retirement" shall mean the Executive's voluntary termination of
employment with the Company, other than for Good Reason, and in accordance with
the Company's retirement policy generally applicable to its employees or in
accordance with any outstanding or contemporaneous retirement arrangement
established with respect to the Executive.
(n) "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the total combined voting power of all classes of stock is owned
directly or indirectly by the Company and any joint venture, partnership or
limited liability company (or other similar entity) of which fifty percent (50%)
or more of the capital or profits interest is owned directly or indirectly by
the Company.
(o) "Tax Counsel" shall have the meaning ascribed to such term in
subsection VII(b) of this Agreement.
17
(p) "Termination" shall have the meaning ascribed to such term in
subsection II(a) of this Agreement.
(q) "Termination Date" shall mean:
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of his
duties during such thirty (30) day period); and
(ii) if the Executive's employment is terminated for Cause or Good
Reason or for any reason other than death or Disability, the date
specified in the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the case of a
termination for Good Reason shall not be less than thirty (30) days nor
more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
(r) "Tier I Officer" shall mean the chief executive officer of the
Company, the Company's senior strategic planning officer, the Company's senior
mergers and acquisitions officer, the chief financial officer of the Company,
the chief legal officer of the Company, and any other officer of the Company or
of a Subsidiary, elected by the Company's Board of Directors, who is assigned to
the Company's officer compensation Band A (or successor compensation level).
(s) "Tier II Officer" shall mean any officer of the Company or of a
Subsidiary, elected by the Company's Board of Directors, who is assigned to the
Company's officer compensation Band B (or successor compensation level) and who
is not described in subsection I(r).
(t) "Tier IIA Officer" shall mean any officer of the Company or of a
Subsidiary, elected by the Company's Board of Directors, who is assigned to the
Company's officer compensation Band BB (or successor compensation level) and who
is not described in subsection I (r).
II. Termination of Employment Following Change in Control.
(a) Entitlement to Benefits. If at the time a Change in Control occurs the
Executive is either a Tier I Officer or a Tier II Officer or a Tier IIA Officer,
the Executive shall be entitled to the benefits provided in Section III hereof
upon the subsequent termination of his employment with the Company (or its
successor) within two (2) years after the occurrence of the Change in Control,
unless such termination is (i) a result of the Executive's death or Retirement,
(ii) for Cause, (iii) a result of the Executive's Disability, or (iv) by the
Executive other than for Good Reason. Such termination of the Executive's
employment which is not as a result of the
18
Executive's death, Retirement or Disability and (x) if by the Company, is not
for Cause, or (y) if by the Executive, is for Good Reason, shall be referred to
hereinafter as a "Termination."
If, within two (2) years after the occurrence of a Change in Control, such
Executive's employment shall be terminated for Cause or by the Executive for
other than Good Reason, the Company shall pay the Executive his full base salary
through the Termination Date at the rate in effect at the time Notice of
Termination is given and shall pay any amounts to be paid to the Executive
pursuant to any other compensation plans, programs or employment agreements then
in effect, and the Company shall have no further obligations to the Executive
under this Agreement.
(b) Notice of Termination. Any termination of the Executive's employment,
within two (2) years after the occurrence of a Change in Control, by the Company
or by the Executive, shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific provision of
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(c) Potential Change in Control. If, after a Potential Change in Control
has occurred, the Executive's employment with the Company or a Subsidiary
employing the Executive is terminated under circumstances which would constitute
a Termination if a Change in Control had occurred, and such termination was at
the request of a party who has taken steps to effect a Change in Control or who
is otherwise involved in the Potential Change in Control, or was otherwise
caused by the Potential Change in Control, then for all purposes of this
Agreement, (i) a Change in Control shall be deemed to have occurred at the time
such Potential Change in Control occurred, and (ii) such termination shall be
deemed to have been a Termination (if such termination would have constituted a
Termination had it followed an actual Change in Control). Notwithstanding the
foregoing, the two (2) year period described in the first sentence of subsection
II(a) of the Agreement shall not commence upon any such deemed Change in
Control.
III. Compensation Upon Termination of Employment Following Change in Control.
Upon a Termination of the Executive's employment, the Executive shall be
entitled to the following benefits:
(a) Severance Payment. The Company shall pay to the Executive as a
severance allowance, no later than the seventh (7th) day following the
Termination Date, a lump sum cash payment equal to the applicable percentage of
the sum of (1) the Executive's Base Salary in effect immediately before the
Change in Control plus (2) the amount of the Standard Award applicable to the
Executive under the BellSouth Corporation Short Term Incentive Plan, or
19
successor plan ("STIP"), for the Award Year in which the Change in Control
occurs. The "applicable percentage" as used in the preceding sentence shall be
(i) 300%, if immediately before the Change in Control the Executive was a Tier I
Officer, (ii) 200%, if immediately before the Change in Control the Executive
was a Tier II Officer and (iii) 250%, if immediately before the Change in
Control the Executive was a Tier IIA Officer.
For purposes of this Section III, (A) the term "Base Salary" shall
refer to the gross annual base salary payable to the Executive including the
amount of any before-tax and after-tax contributions made by the Executive from
such salary to or under any Code Section 125 plan, to or under any Code Section
401(k) plan, such as the BellSouth Retirement Savings Plan or other plan(s)
sponsored by the Company or an Affiliated Company, or a successor to any such
plan, and the amount of any other deferrals of such salary under any
nonqualified deferred compensation plans or arrangements maintained by the
Company or an Affiliated Company, and (B) the terms "Standard Award" and "Award
Year" shall have the meanings ascribed to such terms under STIP, or comparable
terms used in any successor plan.
(b) Short Term Award. The Company shall pay the Executive, no later than
the seventh (7th) day following the Termination Date, a lump sum cash payment
equal to the amount of the Standard Award applicable to the Executive under STIP
for the Award Year in which the Termination occurs, multiplied by the greater of
(i) one hundred percent (100%), or (ii) the percentage which would be payable
under STIP based on actual performance results as of the most recently completed
calendar quarter, in either case pro rated to the Termination Date. Such amount
shall offset (dollar for dollar) any obligation the Company or any Affiliated
Company may have under STIP to the Executive, but the Executive shall in no
event be required to repay any such amount should, for example, it exceed the
amount to which the Executive would otherwise have become entitled under STIP.
(c) Long Term Award. The Company shall pay to the Executive, no later than
the seventh (7th) day following the Termination Date, a lump sum cash payment
equal to the amount determined by multiplying the number of units outstanding
for the Executive for all performance periods under the BellSouth Corporation
Shareholder Return Cash Plan, or successor plan ("SRCP"), by the value of all
dividends accrued under SRCP to such date and by multiplying such amount by the
greater of (i) one hundred percent (100%), or (ii) the percentage which would be
payable under SRCP based on actual performance results as of the most recently
completed calendar quarter. Such amount shall offset (dollar for dollar) any
obligation the Company or any Affiliated Company may have under SRCP to the
Executive, but the Executive shall in no event be required to repay any such
amount should, for example, it exceed the amount to which the Executive would
otherwise have become entitled under SRCP.
(d) Vesting of Executive Benefits. All benefits of the Executive under
nonqualified deferred compensation plans and agreements (including without
limitation the BellSouth Corporation Deferred Compensation Plan, the BellSouth
Corporation Deferred Income Plan, the BellSouth Corporation Compensation
Deferral Plan, and the successors(s) to any such plan(s)),
20
nonqualified supplemental retirement and excess benefit plans (including without
limitation the BellSouth Corporation Supplemental Executive Retirement Plan and
the nonqualified excess benefit plan described in the BellSouth Personal
Retirement Account Pension Plan, and the successor(s) to any such plan(s)), and
life insurance plans or arrangements available only to executives or senior
management (including without limitation the BellSouth Corporation Executive
Life Insurance Plan and the BellSouth Corporation Senior Manager Life Insurance
Plan, and the successor(s) to any such plan(s)), in which the Executive is a
participant or to which the Executive is a party, shall be immediately vested
and all benefits and rights earned or accrued under such plans and agreements
through the Termination Date shall thereafter be nonforfeitable. Without
limiting the generality of the foregoing, all such benefits shall no longer be
subject to any reduction or forfeiture under, for example, any requirement,
provision or restriction in any plan or agreement regarding competition with
BellSouth or any Affiliated Company, recalculation of benefits as a result of
changes in the law (or interpretations thereof), or the continued performance of
services to the Company or Affiliated Companies. If the Executive is described
in Section 4.4 (a)(i)(B)(4) of the BellSouth Corporation Supplemental Executive
Retirement Plan, which provides service credit under that plan for service with
a former affiliate of the Company, or comparable provision of any successor
plan, the Executive's benefit under such plan shall be calculated as if his
credit for service with a former affiliate has been fully earned under such
provision prior to the Termination.
(e) Outplacement Services. The Company shall make available to the
Executive, at the Company's expense, outplacement services, the scope and
provider of which shall be selected by the Executive. The maximum amount for
which the Company shall be responsible under this subsection III (e) shall be
(i) $30,000, if immediately before the Change in Control the Executive was a
Tier I Officer, (ii) $20,000, if immediately before the Change in Control the
Executive was a Tier II Officer, and (iii) $25,000, if immediately before the
Change in Control the Executive was a Tier IIA Officer.
(f) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section III, nor shall the amount of
any payment or benefit provided for in this Section III be reduced by any
compensation earned by the Executive as the result of employment by another
employer or by retirement or other benefits received after the Termination Date
or otherwise. The Company's obligation to make payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company or any Affiliated Company may have against the
Executive or other parties.
IV. Stock Options.
Upon a Change in Control, all nonqualified stock options, incentive stock
options, and stock appreciation rights previously granted to the Executive under
the BellSouth Corporation Stock Option Plan and the BellSouth Corporation Stock
Plan, and any successor plan(s), which
21
are not already vested, shall be vested and immediately exercisable (subject to
the otherwise applicable terms of such plans and related option agreements).
V. Legal Fees and Expenses.
The Company shall pay to the Executive all legal fees and expenses as and
when incurred by the Executive in contesting or disputing any termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement,
regardless of the outcome, unless in the case of a legal action brought by or in
the name of the Executive, a final determination is made by a court of competent
jurisdiction that such action was not brought by the Executive in good faith.
VI. Interest.
If the Company fails to make, or cause to be made, any payment provided
for herein by the date on which the payment is due, the Company shall make such
payment together with interest thereon. The interest shall accrue and be
compounded monthly. The interest rate shall be a per annum rate equal to 120
percent of the prime rate as reported by The Wall Street Journal for the first
business day of each month, effective for the ensuing month. The interest rate
shall be adjusted at the beginning of each month.
VII. Gross-Up For Excise Taxes.
(a) Gross-Up Payments. In the event that any payment or the value of any
benefit received or to be received by the Executive in connection with the
Executive's Termination or contingent upon a Change in Control, whether received
or to be received pursuant to the terms of this Agreement or of any other plan,
arrangement or agreement (the "Payments"), would be subject to the excise tax
imposed by Code Section 4999 or any comparable federal, state or local excise
tax (such excise taxes, together with any interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), as determined as
provided below, the Company shall pay to or for the benefit of the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of the Excise Tax on the Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Section VII, and any interest, penalties or additions to tax payable by
the Executive with respect thereto, shall be equal to the total value of the
Payments. The intent of the parties is that the Company shall be solely
responsible for and shall pay any Excise Tax on any Payments and the Gross-Up
Payment and any income and employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up Payments as well as any loss of
deduction caused by the Gross-Up Payment.
(b) Determinations Regarding Gross-Up Payments. All determinations
required to be made under this Section VII, including without limitation whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determinations, shall be
made by tax counsel selected by the
22
Company and reasonably acceptable to the Executive ("Tax Counsel"). The Company
shall instruct the Tax Counsel to timely provide the data required by this
Section VII to the Executive. All fees and expenses of the Tax Counsel shall be
paid solely by the Company. Any Excise Tax as determined pursuant to this
subsection VII(b) shall be paid by the Company to the Internal Revenue Service
or other appropriate taxing authority on the Executive's behalf promptly after
receipt of the Tax Counsel's determination. If the Tax Counsel determines that
there is substantial authority, within the meaning of Section 6662 of the Code
(or appropriate authority under any successor provisions), that no Excise Tax is
payable by the Executive, the Tax Counsel shall furnish the Executive with a
written opinion that failure to disclose or report the Excise Tax on the
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by the Tax Counsel shall be
binding upon the Company, absent manifest error.
(c) Overpayments, Underpayments. As a result of the uncertainty in the
application of Section 4999 of the Code, at the time of the initial
determination by the Tax Counsel hereunder it is possible that Gross-Up Payments
not made by the Company should have been made ("underpayments"), or that
Gross-Up Payments will have been made by the Company which should not have been
made ("overpayments"). In either such event, the Tax Counsel shall determine the
amount of the underpayment or overpayment that has occurred. In the case of an
underpayment, the amount of such underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. In the case of an overpayment,
the Executive shall, at the direction and expense of the Company, take such
steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by,
the Company, and otherwise reasonably cooperate with the Company to correct such
overpayment; provided, however, that (i) the Executive shall not in any event be
obligated to return to the Company an amount greater than the net after-tax
portion of the overpayment that he has retained or has recovered as a refund
from the applicable taxing authorities and (ii) this provision shall be
interpreted in a manner consistent with the intent of this Section VII, which is
to make the Executive whole, on an after-tax basis, from the application of the
Excise Tax, it being understood that the correction of an overpayment may result
in the Executive repaying to the Company an amount which is less than the
overpayment.
VIII. Confidential Information.
Executive agrees to protect all Confidential Information. Executive will
not use, except in connection with work for Company or Affiliated Companies,
threaten to use, disclose or threaten to disclose, give or threaten to give to
others any Confidential Information.
23
IX. Successors; Enforcement; Dispute Resolution.
(a) Obligations of Successors. The Company will require any successor
(whether direct 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 is required to perform it. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive had
terminated employment for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, the "Company" shall mean the Company as
hereinabove defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(b) Enforceable by Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees (the "Beneficiaries"). In the event of the death of the
Executive while any amount would still be payable hereunder if such death had
not occurred, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's Beneficiaries.
(c) Pooling of Interests Accounting Treatment. Notwithstanding anything to
the contrary in this Agreement, if the application of any provision(s) of this
Agreement, or of the Agreement in its entirety, would preclude the use of
pooling of interests accounting treatment with respect to a transaction for
which such treatment otherwise is available and to be adopted by the Company,
this Agreement shall be modified as it applies to such transaction, to the
minimum extent necessary to prevent such impact, including if necessary the
invalidation of such provisions (or the entire Agreement, as the case may be) to
the extent they otherwise would have been triggered by such transaction. If the
pooling of interests accounting rules require modification or invalidation of
one or more provisions of this Agreement as it applies to such transaction, the
adverse impact on the Executive shall, to the extent reasonably possible, be
proportionate to the adverse impact on other similarly situated employees of the
Company. The Board of Directors of the Company shall, in its sole and absolute
discretion, make all determinations necessary under this subsection; provided,
that determinations regarding the application of the pooling of interests
accounting rules for these purposes shall be made by the Company with the
concurrence of the Company's independent auditors at the time such determination
is to be made.
(d) Governing Law. Except as otherwise expressly provided herein, this
Agreement and the rights and obligations hereunder shall be construed and
enforced in accordance with the laws of the State of Georgia.
24
(e) Dispute Resolution. The parties agree to attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement by
mediation in accordance with the Center for Public Resources Model Procedure for
Mediation of Business Disputes. If the matter has not been resolved pursuant to
the aforesaid mediation procedure within 60 days of the commencement of such
procedure (which period may be extended by mutual agreement), or if either party
will not participate in a mediation, the controversy shall be settled by
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by a sole arbitrator. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be Atlanta, Georgia, unless otherwise agreed upon. The arbitrator is not
empowered to award punitive or other damages that are in excess of actual,
contractual damages.
X. General Provisions.
(a) Term of Agreement. This Agreement shall become effective on the date
hereof and shall continue in effect until the earliest of (a) January 1, 2000,
if no Change in Control or Potential Change in Control has occurred before that
date or, if as of such date a Potential Change in Control shall have occurred,
the earliest date thereafter on which the threat of such Potential Change in
Control becoming a Change in Control is eliminated; (b) the termination of the
Executive's employment with the Company for any reason prior to a Potential
Change in Control; (c) the termination of the Executive's employment with the
Company, other than as described in subsection II(c), prior to a Change in
Control; (d) the Company's termination of the Executive's employment for Cause,
or the Executive's resignation for other than Good Reason, following a Change in
Control. Notwithstanding the foregoing, commencing on January 1, 2000 (or such
later expiration date prescribed by clause (a) of the preceding sentence), and
on the third anniversary of such date, and successive third anniversaries
thereafter, the expiration date prescribed by clause (a) of the preceding
sentence shall automatically be extended for an additional three (3) years
unless, not later than one hundred eighty (180) days prior to the date on which
this Agreement would otherwise automatically be extended, one of the parties
hereto shall have given notice to the other party that it (or he or she) does
not wish to extend the term of this Agreement. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall in no event terminate before
both the Company and the Executive have fulfilled, or have had satisfied, all of
their rights, obligations and liabilities under this Agreement.
(b) Amendment. No amendment or modification to this Agreement shall be
effective unless in writing and signed by both the Company and the Executive.
(c) Disposition of Employer. In the event the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such Subsidiary is sold
or otherwise disposed of prior to a Change in Control (and in a transaction
which is not a Change in Control)
25
unless the Executive continues in employment with the Company or a Subsidiary
after such sale or other disposition. If the Company or Subsidiary employing the
Executive is sold or disposed of following a Change in Control, this Agreement
shall continue through its original term or any extended term then in effect.
(d) Withholding. All payments made hereunder shall be reduced by any
applicable federal, state, or local withholding or other taxes or charges as may
be required by applicable law.
(e) Nonduplication. If an Executive who becomes entitled to the benefits
described in Section III shall also be entitled to severance pay or enhanced
benefits, or both, under the terms of a contract or arrangement (other than a
benefit plan or arrangement generally applicable to executives), including
without limitation agreements entered into by the Executive and the Company or a
Participating Company in connection with executive succession planning, the
Executive shall be entitled to the benefits under Section III only if the
Executive waives and relinquishes all rights to all such payments and benefits
under such other contract or arrangement.
(f) Notices. All notices provided for in this Agreement shall be in
writing. Notices to the Company shall be deemed given when personally delivered
or sent by certified or registered mail or overnight delivery service to Room
19A01, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, Attention:
Corporate Secretary. Notices to the Executive shall be deemed given when
personally delivered or sent by certified or registered mail or overnight
delivery service to the last address for the Executive shown on the records of
the Company. Either the Company or the Executive may, by notice to the other,
designate an address other than the foregoing for the receipt of subsequent
notices.
(g) Waivers. No waiver of any provision of this Agreement shall be valid
unless approved in writing by the party giving such waiver. No waiver of a
breach under any provision of this Agreement shall be deemed to be a waiver of
such provision or any other provision of this Agreement or any subsequent
breach. No failure on the part of either the Company or the Executive to
exercise, and no delay in exercising, any right or remedy conferred by law or
this Agreement shall operate as a waiver of such right or remedy, and no
exercise or waiver, in whole or in part, of any right or remedy conferred by law
or herein shall operate as a waiver of any other right or remedy.
(h) Severability. If any provision of this Agreement shall be held
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of this Agreement or part thereof, each of which shall remain in full
force and effect. If the making of any payment or the provision of any other
benefit required under this Agreement shall be held unlawful or otherwise
invalid or unenforceable, such unlawfulness, invalidity or unenforceability
shall not prevent any other payment or benefit from being made or provided under
this Agreement, and if the making of any
26
payment in full or the provision of any other benefit required under this
Agreement in full would be unlawful or otherwise invalid or unenforceable, then
such unlawfulness, invalidity or unenforceability shall not prevent such payment
or benefit from being made or provided in part, to the extent that it would not
be unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable shall be made or provided under
this Agreement.
(i) Agents. The Company may make arrangements to cause any agent or other
party, including an Affiliated Company, to make any payment or to provide any
benefit that the Company is required to make or to provide hereunder; provided,
that no such arrangement shall relieve or discharge the Company of its
obligations hereunder except to the extent that such payments or benefits are
actually made or provided.
(j) Headings. The headings of the various sections and subsections of this
Agreement are solely for convenience and shall not be relied upon in construing
the provisions of the Agreement. Any reference to a section or subsection shall
refer to a section or subsection of the Agreement unless specified otherwise.
(k) Gender and Number. Any use of gender in this Agreement will be deemed
to include all genders when appropriate, and use of the singular number will be
deemed to include the plural when appropriate, and vice versa in each instance.
(l) Entire Agreement. This Agreement contains the entire agreement between
the parties and no statements, promises or inducements made by any party hereto,
or agents of either party, which are not contained in this Agreement shall be
valid or binding; provided, however, that except as expressly provided herein
the matters dealt with herein supersede previous written agreements between the
parties on the same subject matters only to the extent such previous provisions
are inconsistent with this Agreement and other provisions in written agreements
between the parties not inconsistent with this Agreement are not affected.
(m) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute a single instrument.
(n) Employment. Except in the event of a Change in Control and,
thereafter, only as specifically set forth in this Agreement, nothing in this
Agreement shall be construed to (i) limit in any way the right of the Company or
a Subsidiary to terminate the Executive's employment at any time for any reason
or for no reason; or (ii) be evidence of any agreement or understanding,
expressed or implied, that the Company or a Subsidiary will employ the Executive
in any particular position, on any particular terms or at any particular rate
remuneration.
27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE: BELLSOUTH CORPORATION
By:
---------------------------- -----------------------------------------
Title:
--------------------------------------
28
Exhibit B
BELLSOUTH CORPORATION
EQUITY AWARD AGREEMENT
THIS AGREEMENT is made and entered into as of the 23rd day of November,
1998, by and between BellSouth Corporation, a Georgia corporation (the
"Company") and Xx. X. X. Xxxxxxxx (the "Executive"):
In consideration of the mutual covenants, terms and conditions set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company, pursuant to action of its Board of
Directors (the "Board") approving the agreement between the parties hereto of
even date herewith and this Agreement, the Company and the Executive, hereby
agree to the terms of this Equity Award Agreement (the "Agreement"):
1. Equity Awards.
(a) Non-qualified Stock Option. The Company hereby grants a Non-qualified
Stock Option (the "NQSO") to the Executive to purchase from the Company Six
Hundred Seventy-Four Thousand Four Hundred Fifty-Nine (674,459) shares of the
Company's common stock, $1.00 par value (the "Stock"), at an option price per
share of $82.00 (the "Option Price"), effective as of the date set forth above.
(b) Restricted Stock. The Company hereby grants to the Executive
Seventy-Six Thousand Two Hundred Twenty (76,220) restricted shares of the
Company's Stock (the "Restricted Stock"), effective as of the date set forth
above.
2. Vesting of Equity Awards. Subject to the following provisions of this
Agreement (i) twenty percent (20%) of the NQSO shall become exercisable each
year on the date of the Executive's birthday, with the first 20% becoming
exercisable on the Executive's sixtieth (60th) birthday, and with each
additional 20% becoming exercisable on each subsequent birthday, provided that
at each such date the Executive remains employed by the Company, and (ii) twenty
percent (20%) of the Restricted Stock shall become vested each year on the date
of the Executive's birthday, with the first 20% vesting on the Executive's
sixtieth (60th) birthday, and with each additional 20% vesting on each
subsequent birthday, provided that at each such date the Executive remains
employed by the Company. In the event that the Executive's employment terminates
between the Executive's birthdays, there will be no pro rata vesting of
Restricted Stock, or additional options becoming exercisable under the NQSO, for
the portion of the year the Executive is employed between the last birthday and
the date of termination.
29
3. Definitions. For purposes of this Agreement, the following terms shall have
the meaning as specified below:
(a) "Cause" - Executive's willfully engaging in conduct that is
demonstrably and materially injurious to the Company. For purposes of this
subsection, no act, or failure to act, on the part of the Executive shall be
deemed "willful" unless committed by the Executive in bad faith and without
reasonable belief that such action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's legal counsel, to
be heard before the Board), finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in this subsection and
specifying the particulars thereof in detail.
(b) "CIC Agreement" - the Executive Severance Agreement entered into by
and between the Executive and the Company on October 17, 1996, providing certain
benefits in the event of a change in corporate control of the Company, attached
hereto as Exhibit "A" and incorporated by this reference herein.
(c) "Disability" - an illness, injury or other incapacity which qualifies
the Executive for long-term disability benefits under the principal management
long-term disability plan of the Company.
(d) "Equity Awards" - the NQSO and the Restricted Stock granted pursuant
to this Agreement.
(e) "Executive's Beneficiary" - the beneficiary or beneficiaries named
from time to time by the Executive as his beneficiary for purpose of the Equity
Awards. Each designation shall be on a form, as prescribed by the Company, will
be effective only when received by the Company, and will revoke all prior
designations by the Executive. If the Executive dies with no such beneficiary
designation in effect, his beneficiary shall be his estate, and his Equity
Awards will pass under the terms of his will or pursuant to the laws of descent
and distribution applicable to the Executive, as the case may be.
(f) "Good Reason" - the occurrence, without the Executive's express
written consent, of any of the following circumstances:
30
(1) the assignment to the Executive of duties inconsistent with the
Executive's status or responsibilities as in effect immediately prior to such
assignment, including imposition of business travel obligations which differ
materially from prior business travel obligations;
(2) diminution in the status or responsibilities of the Executive's
position from that which existed immediately prior to such change, whether by
reason of the Company ceasing to be a public company, becoming a subsidiary of a
successor public company, or otherwise;
(3) a reduction in the Executive's annual base salary as in effect
immediately before such reduction or the failure to pay a bonus award to which
the Executive is otherwise entitled under any of the short-term or long-term
incentive plans in which the Executive participates (or any successor incentive
compensation plans) at the time such awards are usually paid;
(4) a change in the principal place of the Executive's employment,
as in effect immediately prior to such change, to a location more than
thirty-five (35) miles distant from the location of such principal place at such
time;
(5) the failure by the Company to continue in effect any bonus,
incentive compensation, or stock plan in which the Executive participates,
unless an equivalent alternative compensation arrangement (embodied in an
ongoing substitute or alternative plan) has been provided to the Executive, or
the failure by the Company to continue the Executive's participation in any such
bonus, incentive compensation or stock plan on substantially the same basis,
both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants; and
(6) (A) except as required by law, the failure by the Company to
continue to provide to the Executive benefits substantially equivalent, in the
aggregate, to those enjoyed by the Executive under the qualified and
nonqualified employee pension and welfare benefit plans of the Company,
including, without limitation, any pension, life insurance, medical, dental,
health and accident, disability, retirement or savings plans in which the
Executive was eligible to participate immediately prior thereto; (B) the taking
of any action by the Company which would directly or indirectly materially
reduce or deprive the Executive of the perquisites enjoyed by the Executive
immediately before such action (including the Company-paid and/or reimbursed
club memberships, financial counseling fees and the like); or (C) the failure by
the Company or a successor to provide the Executive with the number of paid
vacation days (and the policies and practices for taking such days) as was
previously provided under the Company's vacation policy or practice.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
31
(g) "Person" - any individual, corporation, bank, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental or other legal or business entity.
4. Retirement. If the Executive's employment with the Company is terminated due
to retirement at or after age 65, or with the consent of the Board at or after
age 60, the NQSO shall be fully exercisable and the Restricted Stock shall be
fully vested.
5. Death or Disability. If the Executive's employment with the Company is
terminated by reason of the Executive's death or Disability, at or after age 60,
the NQSO shall be fully exercisable and the Restricted Stock shall be fully
vested.
6. Other Terminations of Employment. If the Executive's employment with the
Company is terminated, at or after age 60, either (i) by the Company other than
for Cause, or (ii) by the Executive for Good Reason, the NQSO shall be fully
exercisable and the Restricted Stock shall be fully vested.
7. Change in Control.
(a) NQSO. If prior to the Executive's termination of employment, a Change
in Control of the Company occurs, as that term is defined in the CIC Agreement,
the NQSO shall be fully exercisable.
(b) Restricted Stock. If prior to the Executive's termination of
employment, a Change in Control of the Company occurs, as that term is defined
in the CIC Agreement, and within two (2) years after the occurrence of the
Change in Control the Executive's employment is terminated by reason of the
Executive's death or Disability, by the Company other than for Cause, or by the
Executive for Good Reason, the Restricted Stock shall be fully vested.
8. Pooling of Interests Accounting Treatment. Notwithstanding anything to the
contrary in this Agreement, if the application of any provision(s) of this
Agreement, or of the Agreement in its entirety, would preclude the use of
pooling of interests accounting treatment with respect to a transaction for
which such treatment otherwise is available and to be adopted by the Company,
this Agreement shall be modified as it applies to such transaction, to the
minimum extent necessary to prevent such impact, including if necessary the
invalidation of such provisions (or the entire Agreement, as the case may be).
The Board shall, in its sole and absolute discretion, make all determinations
necessary under this paragraph; provided, that determinations regarding the
application of the pooling of interests accounting rules for these purposes
shall be made by the Company with the concurrence of the Company's independent
auditors at the time such determination is to be made.
9. NQSO. Only with respect to the grant of the NQSO, the following provisions
apply:
32
(a) Expiration. The NQSO shall expire, and the Executive shall have no
further rights with respect to the NQSO under the terms of this Agreement, on
the earlier of:
(1) the date the NQSO has been exercised in full under this
Agreement; or
(2) the twelfth anniversary of the date of this Agreement.
(b) Forfeiture. In the event of the Executive's termination of employment,
any portion of the NQSO that has not become exercisable in accordance with the
provisions of this Agreement shall be forfeited, and shall no longer be
exercisable. The portion of the NQSO that is not so forfeited, by reason of
being exercisable prior to or upon termination of employment, shall remain
exercisable until it would otherwise expire under the foregoing provisions of
this Agreement.
(c) Method of Exercise. This NQSO may be exercised by properly completing
and actually delivering the applicable Notice of Exercise Form, in whole or in
part (but if in part, in an amount equal to at least 100 shares or, if less, the
number of shares remaining to be exercised under the NQSO), on any business day
of the Company after the NQSO (or such portion thereof) has become exercisable
and has not expired or been forfeited, to the Company, together with payment in
full of the Option Price for the shares of Stock the Executive desires to
purchase through such exercise in the manner specified in the Notice of Exercise
Form. As provided in the Notice of Exercise Form, payment may be made in the
form of cash or shares of Stock, or a combination of cash and shares of Stock.
(d) Effective Date of Exercise. An exercise under paragraph 9(c) shall be
effective on the date a properly completed Notice of Exercise Form, together
with full payment of the Option Price, actually is delivered to and accepted by
the executive compensation group at the Company headquarters, or as otherwise
specified in an applicable Notice of Exercise Form.
(e) Value of Stock. Any shares of Stock which are tendered to the Company
as payment and any shares of Stock which are transferred by the Company shall be
valued at their fair market value on the date as of which the exercise is
effective or, if the exercise is effective on a date other than a business day
for the New York Stock Exchange, on the immediately preceding business day. For
purposes of this Agreement, fair market value shall equal, for any day, the
average of the high and the low daily sales prices of a share of Stock on the
New York Stock Exchange for that day or, if there are no sales on such day, for
the most recent prior day on which a share of Stock was sold on the New York
Stock Exchange.
(f) Transferability. The Executive may transfer his rights under the NQSO
by properly completing and delivering to the executive compensation group at the
Company headquarters a Non-qualified Stock Option Assignment Form and satisfying
such other conditions as the Company may impose, provided that such transfer is
without consideration and to (i) one or more of the Executive's spouse, parents,
spouse's parents, siblings, siblings' lineal
33
descendents, children, children's lineal descendents, children's spouses and
children's spouses' lineal descendents, including in all cases legally adopted
individuals, or (ii) a trust, partnership or similar entity for the benefit
solely of one or more of the family members described above. The rights of any
such transferee thereafter shall be non-transferable except that such
transferee, where applicable under the terms of the transfer by the Executive,
shall have the right previously held by the Executive to designate a
Beneficiary. The Executive may make such a transfer of his rights with respect
to less than all of the total number of shares of Stock subject to the NQSO
provided that each such transfer shall apply to at least twenty percent (20%) of
the total number of shares of Stock initially subject to the Agreement.
(g) Stockholder Status. The Executive shall have no rights as a
stockholder with respect to any shares of Stock under the NQSO under this
Agreement before the date such shares have been duly issued to the Executive,
and no adjustment shall be made for dividends of any kind or description
whatsoever or for distributions of other rights of any kind or description
whatsoever respecting such Stock.
(h) Exercise Restrictions. The Company shall have the right to restrict or
otherwise delay the issuance of any shares of Stock purchased or paid under this
Agreement until the requirements of any applicable laws or regulations and any
stock exchange requirements have been in the Company's judgment satisfied in
full. Furthermore, any shares of Stock which are issued as a result of purchases
or payments made under this Agreement shall be issued subject to such
restrictions and conditions on any resale and on any other disposition as the
Company shall deem necessary or desirable under any applicable laws or
regulations or in light of any stock exchange requirements.
10. Restricted Stock. Only with respect to the grant of the Restricted Stock,
the following provisions apply:
(a) Stock Certificates. The certificates for the Stock (the
"Certificates") shall be registered in the name of the Executive. The Executive,
immediately upon receipt of the Certificates, shall execute with the Company an
escrow agreement provided by the Company for this purpose substantially in the
form attached hereto as Exhibit "B" (the "Escrow Agreement") and deposit the
Certificates with the escrow agent under such agreement (the "Escrow Agent")
together with stock powers appropriately endorsed in blank. After the Executive
becomes vested in the Restricted Stock in accordance with the foregoing
provisions of this Agreement, the Escrow Agent shall release the applicable
Certificate representing the number of vested Stock shares to the Executive (or
to his Beneficiary or his legal representative, if appropriate). In the event of
the Executive's termination of employment, any shares of Restricted Stock that
are not vested in accordance with the foregoing provisions of this Agreement
shall be forfeited, and the Escrow Agent shall transfer the applicable
Certificate representing the number of forfeited shares of Stock to the Company.
34
(b) Stockholder Status. The Executive shall have all of the rights of a
stockholder with respect to the Restricted Stock prior to any forfeiture,
including the right to vote the Stock and to receive all regular cash dividends
paid with respect to the Stock, subject to terms of this Agreement and the
Escrow Agreement. Notwithstanding the above, the Executive shall have no right
to sell, assign, transfer, exchange or encumber or make subject to any
creditor's process, whether voluntary or involuntary or by operation of law, any
of his interest in Stock to the extent not then vested under the foregoing
provisions, and any attempt to do so shall be of no effect. In addition, all
shares of capital stock or other securities issued with respect to or in
substitution of any Stock not then vested under the foregoing provisions,
whether by the Company or by another issuer, any cash or other property received
on account of a redemption of such Stock or with respect to such Stock upon the
liquidation, sale or merger of the Company, and any other distributions with
respect to such Stock with the exception of regular cash dividends, shall remain
subject to the terms and conditions of this Agreement.
11. Entire Agreement. Unless specifically provided herein, this Agreement
contains the entire agreement between the parties with respect to the matters
dealt with herein, and shall supersede previous written agreements between the
parties on the same subject matters only to the extent such prior agreements are
inconsistent with this Agreement and other provisions in written agreements
between the parties not inconsistent with this Agreement are not affected. The
parties hereto acknowledge that this Equity Award is not made pursuant to, or
subject to, any stock plan currently administered by the Company, as of the date
of signing.
12. Employment and Termination. This Agreement shall not give the Executive the
right to continued employment by the Company shall not adversely affect the
right of the Company to terminate the Executive's employment with or without
cause at any time.
13. Securities Law Restrictions. The Executive acknowledges that the Stock
issued pursuant to the Equity Awards shall be subject to such restrictions and
conditions on any resale and on any other disposition as the Company shall deem
necessary or desirable under any applicable laws or regulations or in light of
any stock exchange requirements and that the Certificates shall bear legends as
determined to be appropriate by the Company.
14. Tax Withholding. The Company shall have the right to withhold from any
payment to the Executive, require payment from the Executive, or take such other
action which the Company deems necessary to satisfy any income or other tax
withholding or reporting requirements arising from the Equity Awards, and the
Executive shall provide to the Company such information, and pay to it upon
request such amounts, as it determines are required to comply with such
requirements. With respect to exercises by a transferee or a transferee's
Beneficiary, the Company shall not withhold any amount attributable to the
Executive's tax liability from any payment of cash or shares of Stock to a
transferee or a transferee's Beneficiary upon exercise of a transferred NQSO by
such person, but may require the payment of an amount equal to the
35
Company's or any subsidiary's withholding tax obligation as a condition to such
exercise or as a condition to the release of cash or shares of Stock upon such
exercise.
15. Jurisdiction and Venue. The Executive consents to the jurisdiction and venue
of the Superior Court of Xxxxxx County, Georgia, and the United States District
Court for the Northern District of Georgia for all purposes in connection with
any suit, action, or other proceeding relating to this Agreement or the Escrow
Agreement, including the enforcement of any rights under this Agreement or the
Escrow Agreement and any process or notice of motion in connection with such
situation or other proceeding may be serviced by certified or registered mail or
personal service within or without the State of Georgia, provided a reasonable
time for appearance is allowed.
16. Modification of Agreement. The Executive's rights under this Agreement can
be modified, suspended or canceled only in accordance with a written agreement
between, and signed by, the parties hereto.
17. Adjustments. Notwithstanding paragraph 16, in the event that the Board shall
determine that any dividend or other distribution (whether in the form of cash,
Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange or other similar corporate transaction or event, affects Stock
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of the Executive under this Agreement, then the Board,
in such manner as it may deem equitable, shall adjust any or all of (i) the
number of shares or kind of Stock which may thereafter be delivered in
connection with Equity Awards, (ii) the number and kind of Stock that may be
delivered or deliverable in respect of outstanding Equity Awards, and (iii) the
exercise price, xxxxx xxxxx, or purchase price relating to any Equity Award, or,
if deemed appropriate, make provision for a cash payment with respect to any
outstanding Equity Award.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BELLSOUTH CORPORATION:
By:
-------------------------------------
Title: Vice President - Human Resources
X. X. XXXXXXXX:
----------------------------------------
36
BELLSOUTH CORPORATION
EQUITY AWARD AGREEMENT
THIS AGREEMENT is made and entered into as of the 23rd day of November,
1998, by and between BellSouth Corporation, a Georgia corporation (the
"Company") and Xx. X. X. Xxxxxxxx (the "Executive"):
In consideration of the mutual covenants, terms and conditions set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company, pursuant to action of its Board of
Directors (the "Board") approving the agreement between the parties hereto of
even date herewith and this Agreement, the Company and the Executive, hereby
agree to the terms of this Equity Award Agreement (the "Agreement"):
1. Equity Awards.
(a) Non-qualified Stock Option. The Company hereby grants a Non-qualified
Stock Option (the "NQSO") to the Executive to purchase from the Company Six
Hundred Seventy-Four Thousand Four Hundred Fifty-Nine (674,459) shares of the
Company's common stock, $1.00 par value (the "Stock"), at an option price per
share of $82.00 (the "Option Price"), effective as of the date set forth above.
(b) Restricted Stock. The Company hereby grants to the Executive
Seventy-Six Thousand Two Hundred Twenty (76,220) restricted shares of the
Company's Stock (the "Restricted Stock"), effective as of the date set forth
above.
2. Vesting of Equity Awards. Subject to the following provisions of this
Agreement (i) twenty percent (20%) of the NQSO shall become exercisable each
year on the date of the Executive's birthday, with the first 20% becoming
exercisable on the Executive's sixtieth (60th) birthday, and with each
additional 20% becoming exercisable on each subsequent birthday, provided that
at each such date the Executive remains employed by the Company, and (ii) twenty
percent (20%) of the Restricted Stock shall become vested each year on the date
of the Executive's birthday, with the first 20% vesting on the Executive's
sixtieth (60th) birthday, and with each additional 20% vesting on each
subsequent birthday, provided that at each such date the Executive remains
employed by the Company. In the event that the Executive's employment terminates
between the Executive's birthdays, there will be no pro rata vesting of
Restricted Stock, or additional options becoming exercisable under the NQSO, for
the portion of the year the Executive is employed between the last birthday and
the date of termination.
37
3. Definitions. For purposes of this Agreement, the following terms shall have
the meaning as specified below:
(a) "Cause" - Executive's willfully engaging in conduct that is
demonstrably and materially injurious to the Company. For purposes of this
subsection, no act, or failure to act, on the part of the Executive shall be
deemed "willful" unless committed by the Executive in bad faith and without
reasonable belief that such action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's legal counsel, to
be heard before the Board), finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in this subsection and
specifying the particulars thereof in detail.
(b) "CIC Agreement" - the Executive Severance Agreement entered into by
and between the Executive and the Company on October 17, 1996, providing certain
benefits in the event of a change in corporate control of the Company, attached
hereto as Exhibit "A" and incorporated by this reference herein.
(c) "Disability" - an illness, injury or other incapacity which qualifies
the Executive for long-term disability benefits under the principal management
long-term disability plan of the Company.
(d) "Equity Awards" - the NQSO and the Restricted Stock granted pursuant
to this Agreement.
(e) "Executive's Beneficiary" - the beneficiary or beneficiaries named
from time to time by the Executive as his beneficiary for purpose of the Equity
Awards. Each designation shall be on a form, as prescribed by the Company, will
be effective only when received by the Company, and will revoke all prior
designations by the Executive. If the Executive dies with no such beneficiary
designation in effect, his beneficiary shall be his estate, and his Equity
Awards will pass under the terms of his will or pursuant to the laws of descent
and distribution applicable to the Executive, as the case may be.
(f) "Good Reason" - the occurrence, without the Executive's express
written consent, of any of the following circumstances:
(1) the assignment to the Executive of duties inconsistent with the
Executive's status or responsibilities as in effect immediately prior to such
assignment, including imposition of business travel obligations which differ
materially from prior business travel obligations;
38
(2) diminution in the status or responsibilities of the Executive's
position from that which existed immediately prior to such change, whether by
reason of the Company ceasing to be a public company, becoming a subsidiary of a
successor public company, or otherwise;
(3) a reduction in the Executive's annual base salary as in effect
immediately before such reduction or the failure to pay a bonus award to which
the Executive is otherwise entitled under any of the short-term or long-term
incentive plans in which the Executive participates (or any successor incentive
compensation plans) at the time such awards are usually paid;
(4) a change in the principal place of the Executive's employment,
as in effect immediately prior to such change, to a location more than
thirty-five (35) miles distant from the location of such principal place at such
time;
(5) the failure by the Company to continue in effect any bonus,
incentive compensation, or stock plan in which the Executive participates,
unless an equivalent alternative compensation arrangement (embodied in an
ongoing substitute or alternative plan) has been provided to the Executive, or
the failure by the Company to continue the Executive's participation in any such
bonus, incentive compensation or stock plan on substantially the same basis,
both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants; and
(6) (A) except as required by law, the failure by the Company to
continue to provide to the Executive benefits substantially equivalent, in the
aggregate, to those enjoyed by the Executive under the qualified and
nonqualified employee pension and welfare benefit plans of the Company,
including, without limitation, any pension, life insurance, medical, dental,
health and accident, disability, retirement or savings plans in which the
Executive was eligible to participate immediately prior thereto; (B) the taking
of any action by the Company which would directly or indirectly materially
reduce or deprive the Executive of the perquisites enjoyed by the Executive
immediately before such action (including the Company-paid and/or reimbursed
club memberships, financial counseling fees and the like); or (C) the failure by
the Company or a successor to provide the Executive with the number of paid
vacation days (and the policies and practices for taking such days) as was
previously provided under the Company's vacation policy or practice.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(g) "Person" - any individual, corporation, bank, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental or other legal or business entity.
39
4. Retirement. If the Executive's employment with the Company is terminated due
to retirement at or after age 65, or with the consent of the Board at or after
age 60, the NQSO shall be fully exercisable and the Restricted Stock shall be
fully vested.
5. Death or Disability. If the Executive's employment with the Company is
terminated by reason of the Executive's death or Disability, at or after age 60,
the NQSO shall be fully exercisable and the Restricted Stock shall be fully
vested.
6. Other Terminations of Employment. If the Executive's employment with the
Company is terminated, at or after age 60, either (i) by the Company other than
for Cause, or (ii) by the Executive for Good Reason, the NQSO shall be fully
exercisable and the Restricted Stock shall be fully vested.
7. Change in Control.
(a) NQSO. If prior to the Executive's termination of employment, a Change
in Control of the Company occurs, as that term is defined in the CIC Agreement,
the NQSO shall be fully exercisable.
(b) Restricted Stock. If prior to the Executive's termination of
employment, a Change in Control of the Company occurs, as that term is defined
in the CIC Agreement, and within two (2) years after the occurrence of the
Change in Control the Executive's employment is terminated by reason of the
Executive's death or Disability, by the Company other than for Cause, or by the
Executive for Good Reason, the Restricted Stock shall be fully vested.
8. Pooling of Interests Accounting Treatment. Notwithstanding anything to the
contrary in this Agreement, if the application of any provision(s) of this
Agreement, or of the Agreement in its entirety, would preclude the use of
pooling of interests accounting treatment with respect to a transaction for
which such treatment otherwise is available and to be adopted by the Company,
this Agreement shall be modified as it applies to such transaction, to the
minimum extent necessary to prevent such impact, including if necessary the
invalidation of such provisions (or the entire Agreement, as the case may be).
The Board shall, in its sole and absolute discretion, make all determinations
necessary under this paragraph; provided, that determinations regarding the
application of the pooling of interests accounting rules for these purposes
shall be made by the Company with the concurrence of the Company's independent
auditors at the time such determination is to be made.
9. NQSO. Only with respect to the grant of the NQSO, the following provisions
apply:
(a) Expiration. The NQSO shall expire, and the Executive shall have no
further rights with respect to the NQSO under the terms of this Agreement, on
the earlier of:
(1) the date the NQSO has been exercised in full under this
Agreement; or
40
(2) the twelfth anniversary of the date of this Agreement.
(b) Forfeiture. In the event of the Executive's termination of employment,
any portion of the NQSO that has not become exercisable in accordance with the
provisions of this Agreement shall be forfeited, and shall no longer be
exercisable. The portion of the NQSO that is not so forfeited, by reason of
being exercisable prior to or upon termination of employment, shall remain
exercisable until it would otherwise expire under the foregoing provisions of
this Agreement.
(c) Method of Exercise. This NQSO may be exercised by properly completing
and actually delivering the applicable Notice of Exercise Form, in whole or in
part (but if in part, in an amount equal to at least 100 shares or, if less, the
number of shares remaining to be exercised under the NQSO), on any business day
of the Company after the NQSO (or such portion thereof) has become exercisable
and has not expired or been forfeited, to the Company, together with payment in
full of the Option Price for the shares of Stock the Executive desires to
purchase through such exercise in the manner specified in the Notice of Exercise
Form. As provided in the Notice of Exercise Form, payment may be made in the
form of cash or shares of Stock, or a combination of cash and shares of Stock.
(d) Effective Date of Exercise. An exercise under paragraph 9(c) shall be
effective on the date a properly completed Notice of Exercise Form, together
with full payment of the Option Price, actually is delivered to and accepted by
the executive compensation group at the Company headquarters, or as otherwise
specified in an applicable Notice of Exercise Form.
(e) Value of Stock. Any shares of Stock which are tendered to the Company
as payment and any shares of Stock which are transferred by the Company shall be
valued at their fair market value on the date as of which the exercise is
effective or, if the exercise is effective on a date other than a business day
for the New York Stock Exchange, on the immediately preceding business day. For
purposes of this Agreement, fair market value shall equal, for any day, the
average of the high and the low daily sales prices of a share of Stock on the
New York Stock Exchange for that day or, if there are no sales on such day, for
the most recent prior day on which a share of Stock was sold on the New York
Stock Exchange.
(f) Transferability. The Executive may transfer his rights under the NQSO
by properly completing and delivering to the executive compensation group at the
Company headquarters a Non-qualified Stock Option Assignment Form and satisfying
such other conditions as the Company may impose, provided that such transfer is
without consideration and to (i) one or more of the Executive's spouse, parents,
spouse's parents, siblings, siblings' lineal descendents, children, children's
lineal descendents, children's spouses and children's spouses' lineal
descendents, including in all cases legally adopted individuals, or (ii) a
trust, partnership or similar entity for the benefit solely of one or more of
the family members described above. The rights of any such transferee thereafter
shall be non-transferable except that such transferee,
41
where applicable under the terms of the transfer by the Executive, shall have
the right previously held by the Executive to designate a Beneficiary. The
Executive may make such a transfer of his rights with respect to less than all
of the total number of shares of Stock subject to the NQSO provided that each
such transfer shall apply to at least twenty percent (20%) of the total number
of shares of Stock initially subject to the Agreement.
(g) Stockholder Status. The Executive shall have no rights as a
stockholder with respect to any shares of Stock under the NQSO under this
Agreement before the date such shares have been duly issued to the Executive,
and no adjustment shall be made for dividends of any kind or description
whatsoever or for distributions of other rights of any kind or description
whatsoever respecting such Stock.
(h) Exercise Restrictions. The Company shall have the right to restrict or
otherwise delay the issuance of any shares of Stock purchased or paid under this
Agreement until the requirements of any applicable laws or regulations and any
stock exchange requirements have been in the Company's judgment satisfied in
full. Furthermore, any shares of Stock which are issued as a result of purchases
or payments made under this Agreement shall be issued subject to such
restrictions and conditions on any resale and on any other disposition as the
Company shall deem necessary or desirable under any applicable laws or
regulations or in light of any stock exchange requirements.
10. Restricted Stock. Only with respect to the grant of the Restricted Stock,
the following provisions apply:
(a) Stock Certificates. The certificates for the Stock (the
"Certificates") shall be registered in the name of the Executive. The Executive,
immediately upon receipt of the Certificates, shall execute with the Company an
escrow agreement provided by the Company for this purpose substantially in the
form attached hereto as Exhibit "B" (the "Escrow Agreement") and deposit the
Certificates with the escrow agent under such agreement (the "Escrow Agent")
together with stock powers appropriately endorsed in blank. After the Executive
becomes vested in the Restricted Stock in accordance with the foregoing
provisions of this Agreement, the Escrow Agent shall release the applicable
Certificate representing the number of vested Stock shares to the Executive (or
to his Beneficiary or his legal representative, if appropriate). In the event of
the Executive's termination of employment, any shares of Restricted Stock that
are not vested in accordance with the foregoing provisions of this Agreement
shall be forfeited, and the Escrow Agent shall transfer the applicable
Certificate representing the number of forfeited shares of Stock to the Company.
(b) Stockholder Status. The Executive shall have all of the rights of a
stockholder with respect to the Restricted Stock prior to any forfeiture,
including the right to vote the Stock and to receive all regular cash dividends
paid with respect to the Stock, subject to terms of this
42
Agreement and the Escrow Agreement. Notwithstanding the above, the Executive
shall have no right to sell, assign, transfer, exchange or encumber or make
subject to any creditor's process, whether voluntary or involuntary or by
operation of law, any of his interest in Stock to the extent not then vested
under the foregoing provisions, and any attempt to do so shall be of no effect.
In addition, all shares of capital stock or other securities issued with respect
to or in substitution of any Stock not then vested under the foregoing
provisions, whether by the Company or by another issuer, any cash or other
property received on account of a redemption of such Stock or with respect to
such Stock upon the liquidation, sale or merger of the Company, and any other
distributions with respect to such Stock with the exception of regular cash
dividends, shall remain subject to the terms and conditions of this Agreement.
11. Entire Agreement. Unless specifically provided herein, this Agreement
contains the entire agreement between the parties with respect to the matters
dealt with herein, and shall supersede previous written agreements between the
parties on the same subject matters only to the extent such prior agreements are
inconsistent with this Agreement and other provisions in written agreements
between the parties not inconsistent with this Agreement are not affected. The
parties hereto acknowledge that this Equity Award is not made pursuant to, or
subject to, any stock plan currently administered by the Company, as of the date
of signing.
12. Employment and Termination. This Agreement shall not give the Executive the
right to continued employment by the Company shall not adversely affect the
right of the Company to terminate the Executive's employment with or without
cause at any time.
13. Securities Law Restrictions. The Executive acknowledges that the Stock
issued pursuant to the Equity Awards shall be subject to such restrictions and
conditions on any resale and on any other disposition as the Company shall deem
necessary or desirable under any applicable laws or regulations or in light of
any stock exchange requirements and that the Certificates shall bear legends as
determined to be appropriate by the Company.
14. Tax Withholding. The Company shall have the right to withhold from any
payment to the Executive, require payment from the Executive, or take such other
action which the Company deems necessary to satisfy any income or other tax
withholding or reporting requirements arising from the Equity Awards, and the
Executive shall provide to the Company such information, and pay to it upon
request such amounts, as it determines are required to comply with such
requirements. With respect to exercises by a transferee or a transferee's
Beneficiary, the Company shall not withhold any amount attributable to the
Executive's tax liability from any payment of cash or shares of Stock to a
transferee or a transferee's Beneficiary upon exercise of a transferred NQSO by
such person, but may require the payment of an amount equal to the Company's or
any subsidiary's withholding tax obligation as a condition to such exercise or
as a condition to the release of cash or shares of Stock upon such exercise.
15. Jurisdiction and Venue. The Executive consents to the jurisdiction and venue
of the Superior Court of Xxxxxx County, Georgia, and the United States District
Court for the Northern
43
District of Georgia for all purposes in connection with any suit, action, or
other proceeding relating to this Agreement or the Escrow Agreement, including
the enforcement of any rights under this Agreement or the Escrow Agreement and
any process or notice of motion in connection with such situation or other
proceeding may be serviced by certified or registered mail or personal service
within or without the State of Georgia, provided a reasonable time for
appearance is allowed.
16. Modification of Agreement. The Executive's rights under this Agreement can
be modified, suspended or canceled only in accordance with a written agreement
between, and signed by, the parties hereto.
17. Adjustments. Notwithstanding paragraph 16, in the event that the Board shall
determine that any dividend or other distribution (whether in the form of cash,
Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange or other similar corporate transaction or event, affects Stock
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of the Executive under this Agreement, then the Board,
in such manner as it may deem equitable, shall adjust any or all of (i) the
number of shares or kind of Stock which may thereafter be delivered in
connection with Equity Awards, (ii) the number and kind of Stock that may be
delivered or deliverable in respect of outstanding Equity Awards, and (iii) the
exercise price, xxxxx xxxxx, or purchase price relating to any Equity Award, or,
if deemed appropriate, make provision for a cash payment with respect to any
outstanding Equity Award.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BELLSOUTH CORPORATION:
By:
-------------------------------------
Title: Vice President - Human Resources
X. X. XXXXXXXX:
----------------------------------------
44
Exhibit A
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of
______________, 19__, by and between BellSouth Corporation, a Georgia
corporation (the "Company"), and ____________________ (the "Executive").
Reasons for This Agreement. The Company recognizes the valuable services
that the Executive has rendered and continues to render to the Company and its
Affiliated Companies. On behalf of itself, its Affiliated Companies and its
shareholders, the Company desires to encourage the Executive's continued service
and dedication in the performance of the Executive's duties, and attention to
the business and affairs of the Company and its Affiliated Companies,
notwithstanding the possibility, threat or occurrence of a change in control.
The Company believes that it is in the best interests of the Company and its
shareholders to minimize the distractions, risks and uncertainties for the
Executive which may be expected to arise in connection with a change in control
by providing assurances to the Executive that the Executive will not be
materially disadvantaged by a change in control.
Agreement. In consideration of the Executive's continued service to the
Company, the covenants and agreements contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company agree as follows:
I. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified below:
(a) "Affiliated Companies" shall mean all of the Company's subsidiaries,
divisions, and other affiliated companies or entities.
(b) "Cause" shall mean the Executive's willfully engaging in conduct that
is demonstrably and materially injurious to the Company. For purposes of this
subsection I(b), no act, or failure to act, on the part of the Executive shall
be deemed "willful" unless committed by the Executive in bad faith and without
reasonable belief that such action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the
45
Executive a certificate of a resolution duly adopted by the affirmative vote of
not less than seventy-five percent (75%) of the entire membership of the Board
of Directors of the Company, at a meeting of the Board (after reasonable notice
to the Executive and an opportunity for the Executive, together with the
Executive's legal counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive has engaged in the conduct set
forth in this subsection I(b) and specifying the particulars thereof in detail.
(c) "Change in Control" shall mean:
(i) any "person" (as such term is defined in the Securities Exchange
Act of 1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company (or of another
entity owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the
Company's then outstanding voting securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company and any new director whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors who either were directors at
the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof;
(iii) the consummation of a merger, plan of reorganization,
consolidation, share exchange, or other transaction, in one or a series of
related transactions, involving the Company, if immediately following such
merger, plan of reorganization, consolidation, share exchange, or other
transaction or transactions the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities representing
seventy percent (70%) or less of the combined voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger, plan of reorganization, consolidation,
share exchange, or other transaction or transactions;
(iv) the consummation of a transaction involving the sale or other
disposition by the Company or one or more of its Subsidiaries, in one or a
series of related transactions, of interests in an entity or entities, or
of assets, which for the most recent audited twelve-month period produced
total operating revenues or net income aggregating more than thirty
percent (30%) of the total operating revenues or net income of the Company
and its Subsidiaries (taken as a whole), if following such transaction or
transactions, any such entity is no longer a Subsidiary or such assets are
no longer held by a Subsidiary;
46
(v) the complete liquidation or dissolution of the Company or the
sale of all or substantially all of the assets of the Company; or
(vi) the consummation of any other transaction which a majority of
the Board of Directors of the Company, in its sole and absolute
discretion, shall determine constitutes a Change in Control.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Confidential Information" shall mean information, whether generated
internally or externally, relating to the Company's business or to the
Affiliated Companies' businesses which derives economic value, actual or
potential, from not being generally known to other persons and is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy or
confidentiality, including, but not limited to, studies and analyses, technical
or nontechnical data, programs, patterns, compilations, devices, methods, models
(including cost and /or pricing models and operating models), techniques,
drawings, processes, employee compensation data, financial data (including
marketing information and strategies and personnel data), lists of actual or
potential customers or suppliers, and information relating to regulatory and
business policies, plans, and strategies. For purposes of this Agreement,
Confidential Information does not include information which is not a trade
secret three (3) years after termination of Executive's employment with Company.
(f) "Disability" shall mean an illness, injury or other incapacity which
qualifies the Executive for long-term disability benefits under the principal
management long-term disability plan of the Executive's employer.
(g) "Excise Tax" shall have the meaning ascribed to such term in
subsection VII(a) of this Agreement.
(h) "Good Reason" shall mean the occurrence after a Change in Control,
without the Executive's express written consent, of any of the following
circumstances:
(i) the assignment to the Executive of duties inconsistent with the
Executive's status or responsibilities as in effect immediately prior to a
Change in Control, including imposition of business travel obligations
which differ materially from business travel obligations immediately prior
to the Change in Control;
(ii) diminution in the status or responsibilities of the Executive's
position from that which existed immediately prior to the Change in
Control, whether by reason of the Company ceasing to be a public company,
becoming a subsidiary of a successor public company, or otherwise;
47
(iii) a reduction in the Executive's annual base salary as in effect
immediately before the Change in Control or the failure to pay a bonus
award to which the Executive is otherwise entitled under any of the
short-term or long-term incentive plans in which the Executive
participates (or any successor incentive compensation plans) at the time
such awards are usually paid;
(iv) a change in the principal place of the Executive's employment,
as in effect immediately prior to the Change in Control, to a location
more than thirty-five (35) miles distant from the location of such
principal place at such time;
(v) the failure by the Company to continue in effect any bonus,
incentive compensation, or stock option plan in which the Executive
participates immediately prior to the Change in Control, unless an
equivalent alternative compensation arrangement (embodied in an ongoing
substitute or alternative plan) has been provided to the Executive, or the
failure by the Company to continue the Executive's participation in any
such bonus, incentive compensation or stock option plan on substantially
the same basis, both in terms of the amount of benefits provided and the
level of the Executive's participation relative to other participants, as
existed immediately prior to the time of the Change in Control;
(vi) (A) except as required by law, the failure by the Company to
continue to provide to the Executive benefits substantially equivalent, in
the aggregate, to those enjoyed by the Executive under the qualified and
nonqualified employee pension and welfare benefit plans of the Company,
including, without limitation, any pension, life insurance, medical,
dental, health and accident, disability, retirement or savings plans in
which the Executive was eligible to participate immediately prior to the
Change in Control; (B) the taking of any action by the Company which would
directly or indirectly materially reduce or deprive the Executive of the
perquisites enjoyed by the Executive immediately prior to the Change in
Control (including Company-paid and/or reimbursed club memberships,
financial counseling fees and the like); or (C) the failure by the Company
or a successor to provide the Executive with the number of paid vacation
days (and the policies and practices for taking such days) as was provided
under the Company's vacation policy or practice as was in effect
immediately prior to the Change in Control;
(vii) the failure of the Company or any successor to obtain a
satisfactory written agreement from any successor to assume and agree to
perform this Agreement, as contemplated in subsection IX(a); or
(viii) any purported termination of the Executive's employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of subsection II(b). For purposes of this Agreement, no such
purported termination shall be effective except as constituting Good
Reason.
48
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.
(i) "Gross-Up Payment" shall have the meaning ascribed to such term in
subsection VII(a) of this Agreement.
(j) "Notice of Termination" shall have the meaning ascribed to such term
in subsection II(b) of this Agreement.
(k) "Payments" shall have the meaning ascribed to such term in subsection
VII(a) of this Agreement.
(l) "Potential Change in Control" shall mean:
(i) the Company (or an Affiliated Company) enters into an agreement,
the consummation of which would result in the occurrence of a Change in
Control;
(ii) an individual or entity, or a group or groups of individuals or
entities, acquires rights, whether pursuant to an agreement with the
Company (or an Affiliated Company) or otherwise, the exercise of which
would result in the occurrence of a Change in Control;
(iii) an individual or entity (including the Company), or a group or
groups of individuals or entities, publicly announces an intention to take
or to consider taking action(s) which, if taken, would result in the
occurrence of a Change in Control; or
(iv) the Board of Directors of the Company adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(m) "Retirement" shall mean the Executive's voluntary termination of
employment with the Company, other than for Good Reason, and in accordance with
the Company's retirement policy generally applicable to its employees or in
accordance with any outstanding or contemporaneous retirement arrangement
established with respect to the Executive.
(n) "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the total combined voting power of all classes of stock is owned
directly or indirectly by the Company and any joint venture, partnership or
limited liability company (or other similar entity) of which fifty percent (50%)
or more of the capital or profits interest is owned directly or indirectly by
the Company.
(o) "Tax Counsel" shall have the meaning ascribed to such term in
subsection VII(b) of this Agreement.
49
(p) "Termination" shall have the meaning ascribed to such term in
subsection II(a) of this Agreement.
(q) "Termination Date" shall mean:
(i) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of his
duties during such thirty (30) day period); and
(ii) if the Executive's employment is terminated for Cause or Good
Reason or for any reason other than death or Disability, the date
specified in the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the case of a
termination for Good Reason shall not be less than thirty (30) days nor
more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
(r) "Tier I Officer" shall mean the chief executive officer of the
Company, the Company's senior strategic planning officer, the Company's senior
mergers and acquisitions officer, the chief financial officer of the Company,
the chief legal officer of the Company, and any other officer of the Company or
of a Subsidiary, elected by the Company's Board of Directors, who is assigned to
the Company's officer compensation Band A (or successor compensation level).
(s) "Tier II Officer" shall mean any officer of the Company or of a
Subsidiary, elected by the Company's Board of Directors, who is assigned to the
Company's officer compensation Band B (or successor compensation level) and who
is not described in subsection I(r).
(t) "Tier IIA Officer" shall mean any officer of the Company or of a
Subsidiary, elected by the Company's Board of Directors, who is assigned to the
Company's officer compensation Band BB (or successor compensation level) and who
is not described in subsection I (r).
II. Termination of Employment Following Change in Control.
(a) Entitlement to Benefits. If at the time a Change in Control occurs the
Executive is either a Tier I Officer or a Tier II Officer or a Tier IIA Officer,
the Executive shall be entitled to the benefits provided in Section III hereof
upon the subsequent termination of his employment with the Company (or its
successor) within two (2) years after the occurrence of the Change in Control,
unless such termination is (i) a result of the Executive's death or Retirement,
(ii) for Cause, (iii) a result of the Executive's Disability, or (iv) by the
Executive other than for Good Reason. Such termination of the Executive's
employment which is not as a result of the
50
Executive's death, Retirement or Disability and (x) if by the Company, is not
for Cause, or (y) if by the Executive, is for Good Reason, shall be referred to
hereinafter as a "Termination."
If, within two (2) years after the occurrence of a Change in Control, such
Executive's employment shall be terminated for Cause or by the Executive for
other than Good Reason, the Company shall pay the Executive his full base salary
through the Termination Date at the rate in effect at the time Notice of
Termination is given and shall pay any amounts to be paid to the Executive
pursuant to any other compensation plans, programs or employment agreements then
in effect, and the Company shall have no further obligations to the Executive
under this Agreement.
(b) Notice of Termination. Any termination of the Executive's employment,
within two (2) years after the occurrence of a Change in Control, by the Company
or by the Executive, shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific provision of
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(c) Potential Change in Control. If, after a Potential Change in Control
has occurred, the Executive's employment with the Company or a Subsidiary
employing the Executive is terminated under circumstances which would constitute
a Termination if a Change in Control had occurred, and such termination was at
the request of a party who has taken steps to effect a Change in Control or who
is otherwise involved in the Potential Change in Control, or was otherwise
caused by the Potential Change in Control, then for all purposes of this
Agreement, (i) a Change in Control shall be deemed to have occurred at the time
such Potential Change in Control occurred, and (ii) such termination shall be
deemed to have been a Termination (if such termination would have constituted a
Termination had it followed an actual Change in Control). Notwithstanding the
foregoing, the two (2) year period described in the first sentence of subsection
II(a) of the Agreement shall not commence upon any such deemed Change in
Control.
III. Compensation Upon Termination of Employment Following Change in Control.
Upon a Termination of the Executive's employment, the Executive shall be
entitled to the following benefits:
(a) Severance Payment. The Company shall pay to the Executive as a
severance allowance, no later than the seventh (7th) day following the
Termination Date, a lump sum cash payment equal to the applicable percentage of
the sum of (1) the Executive's Base Salary in effect immediately before the
Change in Control plus (2) the amount of the Standard Award applicable to the
Executive under the BellSouth Corporation Short Term Incentive Plan, or
51
successor plan ("STIP"), for the Award Year in which the Change in Control
occurs. The "applicable percentage" as used in the preceding sentence shall be
(i) 300%, if immediately before the Change in Control the Executive was a Tier I
Officer, (ii) 200%, if immediately before the Change in Control the Executive
was a Tier II Officer and (iii) 250%, if immediately before the Change in
Control the Executive was a Tier IIA Officer.
For purposes of this Section III, (A) the term "Base Salary" shall
refer to the gross annual base salary payable to the Executive including the
amount of any before-tax and after-tax contributions made by the Executive from
such salary to or under any Code Section 125 plan, to or under any Code Section
401(k) plan, such as the BellSouth Retirement Savings Plan or other plan(s)
sponsored by the Company or an Affiliated Company, or a successor to any such
plan, and the amount of any other deferrals of such salary under any
nonqualified deferred compensation plans or arrangements maintained by the
Company or an Affiliated Company, and (B) the terms "Standard Award" and "Award
Year" shall have the meanings ascribed to such terms under STIP, or comparable
terms used in any successor plan.
(b) Short Term Award. The Company shall pay the Executive, no later than
the seventh (7th) day following the Termination Date, a lump sum cash payment
equal to the amount of the Standard Award applicable to the Executive under STIP
for the Award Year in which the Termination occurs, multiplied by the greater of
(i) one hundred percent (100%), or (ii) the percentage which would be payable
under STIP based on actual performance results as of the most recently completed
calendar quarter, in either case pro rated to the Termination Date. Such amount
shall offset (dollar for dollar) any obligation the Company or any Affiliated
Company may have under STIP to the Executive, but the Executive shall in no
event be required to repay any such amount should, for example, it exceed the
amount to which the Executive would otherwise have become entitled under STIP.
(c) Long Term Award. The Company shall pay to the Executive, no later than
the seventh (7th) day following the Termination Date, a lump sum cash payment
equal to the amount determined by multiplying the number of units outstanding
for the Executive for all performance periods under the BellSouth Corporation
Shareholder Return Cash Plan, or successor plan ("SRCP"), by the value of all
dividends accrued under SRCP to such date and by multiplying such amount by the
greater of (i) one hundred percent (100%), or (ii) the percentage which would be
payable under SRCP based on actual performance results as of the most recently
completed calendar quarter. Such amount shall offset (dollar for dollar) any
obligation the Company or any Affiliated Company may have under SRCP to the
Executive, but the Executive shall in no event be required to repay any such
amount should, for example, it exceed the amount to which the Executive would
otherwise have become entitled under SRCP.
(d) Vesting of Executive Benefits. All benefits of the Executive under
nonqualified deferred compensation plans and agreements (including without
limitation the BellSouth Corporation Deferred Compensation Plan, the BellSouth
Corporation Deferred Income Plan, the BellSouth Corporation Compensation
Deferral Plan, and the successors(s) to any such plan(s)),
52
nonqualified supplemental retirement and excess benefit plans (including without
limitation the BellSouth Corporation Supplemental Executive Retirement Plan and
the nonqualified excess benefit plan described in the BellSouth Personal
Retirement Account Pension Plan, and the successor(s) to any such plan(s)), and
life insurance plans or arrangements available only to executives or senior
management (including without limitation the BellSouth Corporation Executive
Life Insurance Plan and the BellSouth Corporation Senior Manager Life Insurance
Plan, and the successor(s) to any such plan(s)), in which the Executive is a
participant or to which the Executive is a party, shall be immediately vested
and all benefits and rights earned or accrued under such plans and agreements
through the Termination Date shall thereafter be nonforfeitable. Without
limiting the generality of the foregoing, all such benefits shall no longer be
subject to any reduction or forfeiture under, for example, any requirement,
provision or restriction in any plan or agreement regarding competition with
BellSouth or any Affiliated Company, recalculation of benefits as a result of
changes in the law (or interpretations thereof), or the continued performance of
services to the Company or Affiliated Companies. If the Executive is described
in Section 4.4 (a)(i)(B)(4) of the BellSouth Corporation Supplemental Executive
Retirement Plan, which provides service credit under that plan for service with
a former affiliate of the Company, or comparable provision of any successor
plan, the Executive's benefit under such plan shall be calculated as if his
credit for service with a former affiliate has been fully earned under such
provision prior to the Termination.
(e) Outplacement Services. The Company shall make available to the
Executive, at the Company's expense, outplacement services, the scope and
provider of which shall be selected by the Executive. The maximum amount for
which the Company shall be responsible under this subsection III (e) shall be
(i) $30,000, if immediately before the Change in Control the Executive was a
Tier I Officer, (ii) $20,000, if immediately before the Change in Control the
Executive was a Tier II Officer, and (iii) $25,000, if immediately before the
Change in Control the Executive was a Tier IIA Officer.
(f) No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section III, nor shall the amount of
any payment or benefit provided for in this Section III be reduced by any
compensation earned by the Executive as the result of employment by another
employer or by retirement or other benefits received after the Termination Date
or otherwise. The Company's obligation to make payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company or any Affiliated Company may have against the
Executive or other parties.
IV. Stock Options.
Upon a Change in Control, all nonqualified stock options, incentive stock
options, and stock appreciation rights previously granted to the Executive under
the BellSouth Corporation Stock Option Plan and the BellSouth Corporation Stock
Plan, and any successor plan(s), which
53
are not already vested, shall be vested and immediately exercisable (subject to
the otherwise applicable terms of such plans and related option agreements).
V. Legal Fees and Expenses.
The Company shall pay to the Executive all legal fees and expenses as and
when incurred by the Executive in contesting or disputing any termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement,
regardless of the outcome, unless in the case of a legal action brought by or in
the name of the Executive, a final determination is made by a court of competent
jurisdiction that such action was not brought by the Executive in good faith.
VI. Interest.
If the Company fails to make, or cause to be made, any payment provided
for herein by the date on which the payment is due, the Company shall make such
payment together with interest thereon. The interest shall accrue and be
compounded monthly. The interest rate shall be a per annum rate equal to 120
percent of the prime rate as reported by The Wall Street Journal for the first
business day of each month, effective for the ensuing month. The interest rate
shall be adjusted at the beginning of each month.
VII. Gross-Up For Excise Taxes.
(a) Gross-Up Payments. In the event that any payment or the value of any
benefit received or to be received by the Executive in connection with the
Executive's Termination or contingent upon a Change in Control, whether received
or to be received pursuant to the terms of this Agreement or of any other plan,
arrangement or agreement (the "Payments"), would be subject to the excise tax
imposed by Code Section 4999 or any comparable federal, state or local excise
tax (such excise taxes, together with any interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), as determined as
provided below, the Company shall pay to or for the benefit of the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of the Excise Tax on the Payments and any
federal, state and local income tax and Excise Tax upon the payment provided for
by this Section VII, and any interest, penalties or additions to tax payable by
the Executive with respect thereto, shall be equal to the total value of the
Payments. The intent of the parties is that the Company shall be solely
responsible for and shall pay any Excise Tax on any Payments and the Gross-Up
Payment and any income and employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up Payments as well as any loss of
deduction caused by the Gross-Up Payment.
(b) Determinations Regarding Gross-Up Payments. All determinations
required to be made under this Section VII, including without limitation whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determinations, shall be
made by tax counsel selected by the
54
Company and reasonably acceptable to the Executive ("Tax Counsel"). The Company
shall instruct the Tax Counsel to timely provide the data required by this
Section VII to the Executive. All fees and expenses of the Tax Counsel shall be
paid solely by the Company. Any Excise Tax as determined pursuant to this
subsection VII(b) shall be paid by the Company to the Internal Revenue Service
or other appropriate taxing authority on the Executive's behalf promptly after
receipt of the Tax Counsel's determination. If the Tax Counsel determines that
there is substantial authority, within the meaning of Section 6662 of the Code
(or appropriate authority under any successor provisions), that no Excise Tax is
payable by the Executive, the Tax Counsel shall furnish the Executive with a
written opinion that failure to disclose or report the Excise Tax on the
Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by the Tax Counsel shall be
binding upon the Company, absent manifest error.
(c) Overpayments, Underpayments. As a result of the uncertainty in the
application of Section 4999 of the Code, at the time of the initial
determination by the Tax Counsel hereunder it is possible that Gross-Up Payments
not made by the Company should have been made ("underpayments"), or that
Gross-Up Payments will have been made by the Company which should not have been
made ("overpayments"). In either such event, the Tax Counsel shall determine the
amount of the underpayment or overpayment that has occurred. In the case of an
underpayment, the amount of such underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. In the case of an overpayment,
the Executive shall, at the direction and expense of the Company, take such
steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by,
the Company, and otherwise reasonably cooperate with the Company to correct such
overpayment; provided, however, that (i) the Executive shall not in any event be
obligated to return to the Company an amount greater than the net after-tax
portion of the overpayment that he has retained or has recovered as a refund
from the applicable taxing authorities and (ii) this provision shall be
interpreted in a manner consistent with the intent of this Section VII, which is
to make the Executive whole, on an after-tax basis, from the application of the
Excise Tax, it being understood that the correction of an overpayment may result
in the Executive repaying to the Company an amount which is less than the
overpayment.
VIII. Confidential Information.
Executive agrees to protect all Confidential Information. Executive will
not use, except in connection with work for Company or Affiliated Companies,
threaten to use, disclose or threaten to disclose, give or threaten to give to
others any Confidential Information.
55
IX. Successors; Enforcement; Dispute Resolution.
(a) Obligations of Successors. The Company will require any successor
(whether direct 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 is required to perform it. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive had
terminated employment for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, the "Company" shall mean the Company as
hereinabove defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(b) Enforceable by Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees (the "Beneficiaries"). In the event of the death of the
Executive while any amount would still be payable hereunder if such death had
not occurred, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's Beneficiaries.
(c) Pooling of Interests Accounting Treatment. Notwithstanding anything to
the contrary in this Agreement, if the application of any provision(s) of this
Agreement, or of the Agreement in its entirety, would preclude the use of
pooling of interests accounting treatment with respect to a transaction for
which such treatment otherwise is available and to be adopted by the Company,
this Agreement shall be modified as it applies to such transaction, to the
minimum extent necessary to prevent such impact, including if necessary the
invalidation of such provisions (or the entire Agreement, as the case may be) to
the extent they otherwise would have been triggered by such transaction. If the
pooling of interests accounting rules require modification or invalidation of
one or more provisions of this Agreement as it applies to such transaction, the
adverse impact on the Executive shall, to the extent reasonably possible, be
proportionate to the adverse impact on other similarly situated employees of the
Company. The Board of Directors of the Company shall, in its sole and absolute
discretion, make all determinations necessary under this subsection; provided,
that determinations regarding the application of the pooling of interests
accounting rules for these purposes shall be made by the Company with the
concurrence of the Company's independent auditors at the time such determination
is to be made.
(d) Governing Law. Except as otherwise expressly provided herein, this
Agreement and the rights and obligations hereunder shall be construed and
enforced in accordance with the laws of the State of Georgia.
56
(e) Dispute Resolution. The parties agree to attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement by
mediation in accordance with the Center for Public Resources Model Procedure for
Mediation of Business Disputes. If the matter has not been resolved pursuant to
the aforesaid mediation procedure within 60 days of the commencement of such
procedure (which period may be extended by mutual agreement), or if either party
will not participate in a mediation, the controversy shall be settled by
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by a sole arbitrator. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be Atlanta, Georgia, unless otherwise agreed upon. The arbitrator is not
empowered to award punitive or other damages that are in excess of actual,
contractual damages.
X. General Provisions.
(a) Term of Agreement. This Agreement shall become effective on the date
hereof and shall continue in effect until the earliest of (a) January 1, 2000,
if no Change in Control or Potential Change in Control has occurred before that
date or, if as of such date a Potential Change in Control shall have occurred,
the earliest date thereafter on which the threat of such Potential Change in
Control becoming a Change in Control is eliminated; (b) the termination of the
Executive's employment with the Company for any reason prior to a Potential
Change in Control; (c) the termination of the Executive's employment with the
Company, other than as described in subsection II(c), prior to a Change in
Control; (d) the Company's termination of the Executive's employment for Cause,
or the Executive's resignation for other than Good Reason, following a Change in
Control. Notwithstanding the foregoing, commencing on January 1, 2000 (or such
later expiration date prescribed by clause (a) of the preceding sentence), and
on the third anniversary of such date, and successive third anniversaries
thereafter, the expiration date prescribed by clause (a) of the preceding
sentence shall automatically be extended for an additional three (3) years
unless, not later than one hundred eighty (180) days prior to the date on which
this Agreement would otherwise automatically be extended, one of the parties
hereto shall have given notice to the other party that it (or he or she) does
not wish to extend the term of this Agreement. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall in no event terminate before
both the Company and the Executive have fulfilled, or have had satisfied, all of
their rights, obligations and liabilities under this Agreement.
(b) Amendment. No amendment or modification to this Agreement shall be
effective unless in writing and signed by both the Company and the Executive.
(c) Disposition of Employer. In the event the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such Subsidiary is sold
or otherwise disposed of prior to a Change in Control (and in a transaction
which is not a Change in Control)
57
unless the Executive continues in employment with the Company or a Subsidiary
after such sale or other disposition. If the Company or Subsidiary employing the
Executive is sold or disposed of following a Change in Control, this Agreement
shall continue through its original term or any extended term then in effect.
(d) Withholding. All payments made hereunder shall be reduced by any
applicable federal, state, or local withholding or other taxes or charges as may
be required by applicable law.
(e) Nonduplication. If an Executive who becomes entitled to the benefits
described in Section III shall also be entitled to severance pay or enhanced
benefits, or both, under the terms of a contract or arrangement (other than a
benefit plan or arrangement generally applicable to executives), including
without limitation agreements entered into by the Executive and the Company or a
Participating Company in connection with executive succession planning, the
Executive shall be entitled to the benefits under Section III only if the
Executive waives and relinquishes all rights to all such payments and benefits
under such other contract or arrangement.
(f) Notices. All notices provided for in this Agreement shall be in
writing. Notices to the Company shall be deemed given when personally delivered
or sent by certified or registered mail or overnight delivery service to Room
19A01, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, Attention:
Corporate Secretary. Notices to the Executive shall be deemed given when
personally delivered or sent by certified or registered mail or overnight
delivery service to the last address for the Executive shown on the records of
the Company. Either the Company or the Executive may, by notice to the other,
designate an address other than the foregoing for the receipt of subsequent
notices.
(g) Waivers. No waiver of any provision of this Agreement shall be valid
unless approved in writing by the party giving such waiver. No waiver of a
breach under any provision of this Agreement shall be deemed to be a waiver of
such provision or any other provision of this Agreement or any subsequent
breach. No failure on the part of either the Company or the Executive to
exercise, and no delay in exercising, any right or remedy conferred by law or
this Agreement shall operate as a waiver of such right or remedy, and no
exercise or waiver, in whole or in part, of any right or remedy conferred by law
or herein shall operate as a waiver of any other right or remedy.
(h) Severability. If any provision of this Agreement shall be held
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of this Agreement or part thereof, each of which shall remain in full
force and effect. If the making of any payment or the provision of any other
benefit required under this Agreement shall be held unlawful or otherwise
invalid or unenforceable, such unlawfulness, invalidity or unenforceability
shall not prevent any other payment or benefit from being made or provided under
this Agreement, and if the making of any
58
payment in full or the provision of any other benefit required under this
Agreement in full would be unlawful or otherwise invalid or unenforceable, then
such unlawfulness, invalidity or unenforceability shall not prevent such payment
or benefit from being made or provided in part, to the extent that it would not
be unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable shall be made or provided under
this Agreement.
(i) Agents. The Company may make arrangements to cause any agent or other
party, including an Affiliated Company, to make any payment or to provide any
benefit that the Company is required to make or to provide hereunder; provided,
that no such arrangement shall relieve or discharge the Company of its
obligations hereunder except to the extent that such payments or benefits are
actually made or provided.
(j) Headings. The headings of the various sections and subsections of this
Agreement are solely for convenience and shall not be relied upon in construing
the provisions of the Agreement. Any reference to a section or subsection shall
refer to a section or subsection of the Agreement unless specified otherwise.
(k) Gender and Number. Any use of gender in this Agreement will be deemed
to include all genders when appropriate, and use of the singular number will be
deemed to include the plural when appropriate, and vice versa in each instance.
(l) Entire Agreement. This Agreement contains the entire agreement between
the parties and no statements, promises or inducements made by any party hereto,
or agents of either party, which are not contained in this Agreement shall be
valid or binding; provided, however, that except as expressly provided herein
the matters dealt with herein supersede previous written agreements between the
parties on the same subject matters only to the extent such previous provisions
are inconsistent with this Agreement and other provisions in written agreements
between the parties not inconsistent with this Agreement are not affected.
(m) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute a single instrument.
(n) Employment. Except in the event of a Change in Control and,
thereafter, only as specifically set forth in this Agreement, nothing in this
Agreement shall be construed to (i) limit in any way the right of the Company or
a Subsidiary to terminate the Executive's employment at any time for any reason
or for no reason; or (ii) be evidence of any agreement or understanding,
expressed or implied, that the Company or a Subsidiary will employ the Executive
in any particular position, on any particular terms or at any particular rate
remuneration.
59
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE: BELLSOUTH CORPORATION
By:
---------------------------- -----------------------------------------
Title:
--------------------------------------
60
Exhibit B
BELLSOUTH CORPORATION
EQUITY AWARD AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement, effective November 23, 1998 by and among BellSouth
Corporation (the "Corporation"), X. X. Xxxxxxxx (the "Executive") and The Chase
Manhattan Bank, as escrow agent (the "Escrow Agent").
WITNESSETH THAT:
WHEREAS, the Corporation has, pursuant to a BellSouth Corporation Equity
Award Agreement dated the date hereof between the Corporation and the Executive
(the "Award Agreement"), made an award of restricted shares of common stock of
the Corporation to the Executive in recognition of the Executive's anticipated
service to be rendered to the Corporation; and
WHEREAS, in order to record the delivery of the certificates for such
shares and to enforce the restrictions, the certificates are being deposited
together with stock powers appropriately endorsed in blank with the Escrow Agent
hereunder; and
WHEREAS, the Corporation and the Executive desire to execute this Escrow
Agreement with the Escrow Agent in order to record the terms and conditions
under which such certificates have been delivered to the Escrow Agent and under
which the certificates will either be delivered to Executive or delivered to the
Corporation;
NOW THEREFORE, the Corporation, Executive and the Escrow Agent agree as
follow:
1. Receipt by Executive. Executive acknowledges receipt from the
Corporation of certificates for shares (the "Shares") of its common stock as
follows:
Certificate Number Number of Shares
------------------ ----------------
BLS475619 15,244
BLS475620 15,244
BLS475621 15,244
BLS475622 15,244
BLS475623 15,244
2. Investment Representation and Certificate Legend. Executive, by the
Executive's execution of this Agreement, certifies to the Corporation that (a)
the Shares received by the Executive have been received for the Executive's own
account, and the Executive has no present
61
intention to sell or otherwise dispose of any of the Shares and (b) the
Executive is aware that the transfer of the Shares is restricted.
3. Delivery to and Receipt by the Escrow Agent. The Executive hereby
delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt
from the Executive, of such certificates for the Shares, registered in the name
of Executive, in each case accompanied by stock powers executed in blank by
Executive covering all of the Shares.
4. Delivery by the Escrow Agent. Subject to the other terms of the Award
Agreement and this Escrow Agreement, the Executive shall become entitled to
redelivery of the Shares in accordance with the following schedule:
The Executive Shall be
On or After Entitled to the Following
This Date Number of Shares
--------- ----------------
May 30, 2002 15,244
May 30, 2003 15,244
May 30, 2004 15,244
May 30, 2005 15,244
May 30, 2006 15,244
Executive acknowledges and agrees that if the Executive forfeits any shares
under the Award Agreement), then all such Shares shall be returned to the
Corporation and all rights of the Executive with respect to those Shares shall
cease.
The Escrow Agent shall deliver the certificates for the Shares to the
Executive or to the Corporation in accordance with the written instructions of
the officer of the Corporation responsible for human resources matters (but in
no event the Executive). Such instructions shall be issued in accordance with
the provisions of the Award Agreement and this Agreement. The Escrow Agent shall
not be responsible for the propriety of any such instruction and will be fully
protected in making or omitting to make any delivery in accordance with such
instructions.
5. Distributions; Release; Voting. Executive shall be entitled to receive
all regular cash dividends paid upon and voting rights with respect to all of
the Shares held hereunder from time to time. All shares of capital stock or
other securities issued with respect to or in substitution of any of the Shares
not yet vested and held hereunder from time to time, whether by the Corporation
or by another issuer, any cash or other property received on account of a
redemption of such Shares or with respect to such Shares upon the liquidation,
sale or merger of the Corporation, and any other distributions with respect to
such Shares with the exception of regular cash dividends, shall remain subject
to all of the terms and conditions of this Escrow Agreement and shall be
redelivered to Executive or delivered to the Corporation under the same
circumstances as the portion of the Shares with respect to, or in substitution
for, which they were
62
issued. Any such cash received shall be invested in the Escrow Agent's Money
Management Account.
6. Reliance by the Escrow Agent. The Escrow Agent will be under no duties
whatsoever, except such duties as are specifically set forth as such in this
Escrow Agreement, and no implied covenant or obligation contrary to the terms of
this Agreement will be read into this Escrow Agreement against the Escrow Agent.
The Escrow Agent will be under no liability or obligation to anyone with respect
to any failure on the part of the Corporation or the Executive to perform any of
their respective obligations under the Award Agreement, or under the terms of
this Agreement, or for any error or omission whatsoever on the part of the
Corporation or the Executive. The Escrow Agent shall have no liability for
acting in reliance upon any instructions delivered to it and believed in good
faith by it to be from the Corporation with respect to matters for which it is
responsible under this Agreement. The Escrow Agent will be under no obligation
to interpret Award Agreement provisions, but may rely entirely upon the
interpretation of the Award Agreement by the Corporation.
7. Resignation. The Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving notice in writing of such resignation
to the Corporation 180 days in advance of the date when such resignation shall
take effect. The Corporation shall have the right to appoint a new escrow agent
hereunder.
8. Compensation. The Corporation hereby agrees to pay or reimburse the
Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorneys' fees, incurred or made by it in connection with
carrying out its duties hereunder.
9. Indemnification. The Corporation hereby agrees to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Escrow Agent,
arising out of or in connection with its entering into this Agreement and
carrying out its duties hereunder, including the costs and expenses of defending
itself against any claim of liability.
10. Notices. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if sent by registered mail, return receipt
requested, as follows:
The Chase Manhattan Bank
Corporate Trust Department
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
63
To the Executive at address as shown below or at such other address as any
of the above may have furnished to the other parties in writing by registered
mail, return receipt requested.
11. Binding Effect. This Escrow Agreement shall be binding upon and inure
to the benefit of the Corporation, the Executive and the Escrow Agent and their
respective heirs, representatives, successors and assigns.
Executive Signature:
----------------------------------------
Mailing Address:
Social Security No.:
BellSouth Corporation
By:
----------------------------------------
Representative
Attest:
----------------------------------------
Assistant Secretary
The Chase Manhattan Bank
By: ----------------------------------------
Attest: ----------------------------------------
BELLSOUTH CORPORATION
EQUITY AWARD AGREEMENT
ESCROW AGREEMENT
64
This Escrow Agreement, effective November 23, 1998 by and among BellSouth
Corporation (the "Corporation"), X. X. Xxxxxxxx (the "Executive") and The Chase
Manhattan Bank, as escrow agent (the "Escrow Agent").
WITNESSETH THAT:
WHEREAS, the Corporation has, pursuant to a BellSouth Corporation Equity
Award Agreement dated the date hereof between the Corporation and the Executive
(the "Award Agreement"), made an award of restricted shares of common stock of
the Corporation to the Executive in recognition of the Executive's anticipated
service to be rendered to the Corporation; and
WHEREAS, in order to record the delivery of the certificates for such
shares and to enforce the restrictions, the certificates are being deposited
together with stock powers appropriately endorsed in blank with the Escrow Agent
hereunder; and
WHEREAS, the Corporation and the Executive desire to execute this Escrow
Agreement with the Escrow Agent in order to record the terms and conditions
under which such certificates have been delivered to the Escrow Agent and under
which the certificates will either be delivered to Executive or delivered to the
Corporation;
NOW THEREFORE, the Corporation, Executive and the Escrow Agent agree as
follow:
1. Receipt by Executive. Executive acknowledges receipt from the
Corporation of certificates for shares (the "Shares") of its common stock as
follows:
Certificate Number Number of Shares
------------------ ----------------
BLS475619 15,244
BLS475620 15,244
BLS475621 15,244
BLS475622 15,244
BLS475623 15,244
2. Investment Representation and Certificate Legend. Executive, by the
Executive's execution of this Agreement, certifies to the Corporation that (a)
the Shares received by the Executive have been received for the Executive's own
account, and the Executive has no present intention to sell or otherwise dispose
of any of the Shares and (b) the Executive is aware that the transfer of the
Shares is restricted.
3. Delivery to and Receipt by the Escrow Agent. The Executive hereby
delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt
from the Executive, of
65
such certificates for the Shares, registered in the name of Executive, in each
case accompanied by stock powers executed in blank by Executive covering all of
the Shares.
4. Delivery by the Escrow Agent. Subject to the other terms of the Award
Agreement and this Escrow Agreement, the Executive shall become entitled to
redelivery of the Shares in accordance with the following schedule:
The Executive Shall be
On or After Entitled to the Following
This Date Number of Shares
--------- ----------------
May 30, 2002 15,244
May 30, 2003 15,244
May 30, 2004 15,244
May 30, 2005 15,244
May 30, 2006 15,244
Executive acknowledges and agrees that if the Executive forfeits any shares
under the Award Agreement), then all such Shares shall be returned to the
Corporation and all rights of the Executive with respect to those Shares shall
cease.
The Escrow Agent shall deliver the certificates for the Shares to the
Executive or to the Corporation in accordance with the written instructions of
the officer of the Corporation responsible for human resources matters (but in
no event the Executive). Such instructions shall be issued in accordance with
the provisions of the Award Agreement and this Agreement. The Escrow Agent shall
not be responsible for the propriety of any such instruction and will be fully
protected in making or omitting to make any delivery in accordance with such
instructions.
5. Distributions; Release; Voting. Executive shall be entitled to receive
all regular cash dividends paid upon and voting rights with respect to all of
the Shares held hereunder from time to time. All shares of capital stock or
other securities issued with respect to or in substitution of any of the Shares
not yet vested and held hereunder from time to time, whether by the Corporation
or by another issuer, any cash or other property received on account of a
redemption of such Shares or with respect to such Shares upon the liquidation,
sale or merger of the Corporation, and any other distributions with respect to
such Shares with the exception of regular cash dividends, shall remain subject
to all of the terms and conditions of this Escrow Agreement and shall be
redelivered to Executive or delivered to the Corporation under the same
circumstances as the portion of the Shares with respect to, or in substitution
for, which they were issued. Any such cash received shall be invested in the
Escrow Agent's Money Management Account.
6. Reliance by the Escrow Agent. The Escrow Agent will be under no duties
whatsoever, except such duties as are specifically set forth as such in this
Escrow Agreement,
66
and no implied covenant or obligation contrary to the terms of this Agreement
will be read into this Escrow Agreement against the Escrow Agent. The Escrow
Agent will be under no liability or obligation to anyone with respect to any
failure on the part of the Corporation or the Executive to perform any of their
respective obligations under the Award Agreement, or under the terms of this
Agreement, or for any error or omission whatsoever on the part of the
Corporation or the Executive. The Escrow Agent shall have no liability for
acting in reliance upon any instructions delivered to it and believed in good
faith by it to be from the Corporation with respect to matters for which it is
responsible under this Agreement. The Escrow Agent will be under no obligation
to interpret Award Agreement provisions, but may rely entirely upon the
interpretation of the Award Agreement by the Corporation.
7. Resignation. The Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving notice in writing of such resignation
to the Corporation 180 days in advance of the date when such resignation shall
take effect. The Corporation shall have the right to appoint a new escrow agent
hereunder.
8. Compensation. The Corporation hereby agrees to pay or reimburse the
Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorneys' fees, incurred or made by it in connection with
carrying out its duties hereunder.
9. Indemnification. The Corporation hereby agrees to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Escrow Agent,
arising out of or in connection with its entering into this Agreement and
carrying out its duties hereunder, including the costs and expenses of defending
itself against any claim of liability.
10. Notices. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if sent by registered mail, return receipt
requested, as follows:
The Chase Manhattan Bank
Corporate Trust Department
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
To the Executive at address as shown below or at such other address as any
of the above may have furnished to the other parties in writing by registered
mail, return receipt requested.
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11. Binding Effect. This Escrow Agreement shall be binding upon and inure
to the benefit of the Corporation, the Executive and the Escrow Agent and their
respective heirs, representatives, successors and assigns.
Executive Signature:
----------------------------------------
Mailing Address:
Social Security No.:
BellSouth Corporation
By:
----------------------------------------
Representative
Attest:
----------------------------------------
Assistant Secretary
The Chase Manhattan Bank
By: ----------------------------------------
Attest: ----------------------------------------
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