EXHIBIT 10d
[Verizon Logo]
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
July 1, 2002
Xx. Xxxxxx X. Xxxxx
[Address]
[Address]
Dear Xxxxxx:
I am pleased to offer you this new employment agreement (the "Agreement")
with Verizon Communications Inc. ("Verizon"), and, as an indication of my
confidence in your abilities, I have added an automatic renewal provision. For
purposes of this Agreement, the term "Company" means Verizon, all corporate
subsidiaries and other companies affiliated with Verizon, all companies in which
Verizon has an ownership or other proprietary interest of more than 10 percent,
and their successors and assigns.
The many opportunities and challenges facing the Company are enormous and
exciting. As a leader in our industry, we will be constantly challenged with
sustaining our market growth and presence. We will meet these challenges by
leveraging the strength of our talented and committed leaders. This Agreement
demonstrates my continued confidence in you.
I value you and the leadership, vision, and commitment you bring to the
Company. I am excited by the prospect of you continuing as a key member of the
Company's leadership team.
The terms and conditions of this Agreement are set forth below.
1. PURPOSE - Verizon enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market requires the
Company to make critical strategic, marketing, and technical decisions. These
decisions by the Company will be based, in whole or in part, on confidential
analyses of the evolving telecommunications market, confidential assessments of
the technical capabilities and strategic plans of the Company and competing
businesses, and confidential or proprietary information regarding the Company's
technology, resources, and business opportunities or other confidential or
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 2
proprietary information relating to the Company's business. Verizon seeks by
this Agreement to ensure that you remain a part of the executive management team
that plays a central role in this decision-making process.
In consideration for your entering into this Agreement, including the
restrictions on the disclosure and use of confidential or proprietary
information and the limitations on your engaging in competitive activities, the
Company is providing you with the security of a written two-year agreement,
short- and long-term award opportunities, and other benefits.
2. GENERAL - Under this Agreement, you shall continue as a senior executive
of the Company. As a senior executive, you shall report to the Chief Executive
Officer of Verizon (the "CEO").
3. TERM - The term of employment under this Agreement ("Term of
Employment") shall commence on July 1, 2002, and end on June 30, 2004; provided
that, on the last day of the Term of Employment, the Term of Employment shall
automatically be extended for an additional two years unless, on or before that
date, the Term of Employment terminates or the Company notifies you in writing
that the Term of Employment shall not be extended. For example, on June 30,
2004, the Term of Employment shall be extended until June 30, 2006, unless, on
or before June 30, 2004, the Term of Employment terminates or the Company
notifies you in writing that the Term of Employment shall not be extended, and,
if the Term of Employment is extended until June 30, 2006, the Term of
Employment shall be extended on that date until June 30, 2008, unless, on or
before June 30, 2006, the Term of Employment terminates or the Company notifies
you in writing that the Term of Employment shall not be extended.
Notwithstanding the preceding provisions of this paragraph 3, the Company
reserves the right to terminate your employment and the Term of Employment at
any time. Your employment and the Term of Employment also may terminate for
other reasons (such as your resignation, retirement, death, or disability). The
consequences of the termination of your employment are specified in paragraph 11
("Termination Of Employment").
4. DUTIES AND RESPONSIBILITIES - You shall continue to serve as a senior
executive of the Company in such capacities, with such titles and authorities,
as the CEO or his successor may from time to time prescribe, and you shall
perform all duties incidental to such positions, shall cooperate fully with the
CEO or his successor, and shall work cooperatively with the other officers of
the Company. You shall continue to devote your entire business skill, time, and
effort diligently to the affairs of the Company in accordance with the duties
assigned to you, and you shall perform all such duties, and otherwise conduct
yourself, in a manner
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 3
reasonably calculated in good faith by you to promote the best interests of the
Company. During the Term of Employment, except to the extent specifically
permitted in writing by the CEO or his successor, and except for memberships on
boards of directors that you held on October 3, 2000 (the date of your previous
employment agreement with Verizon), you shall not, directly or indirectly,
render any services of a business, commercial, or professional nature to any
other person or organization other than the Company or a person or organization
in which the Company has a financial interest, whether or not the services are
rendered for compensation.
5. LOCATION - During the Term of Employment, you shall perform services for
the Company at its New York City headquarters, or at any other location
designated by the Company as necessary or appropriate for the discharge of your
responsibilities under this Agreement. In the event of any change in your
principal work location, you shall be eligible for relocation assistance under
the terms of any Company relocation policy applicable to other senior executives
of the Company in your salary band at the time of such relocation.
6. BASE SALARY - During the Term of Employment, your annual base salary
shall not be less than your annual base salary on the date of this Agreement;
provided that if you are granted a merit increase in your base salary, your base
salary shall not thereafter be reduced below that increased level during the
Term of Employment. The Human Resources Committee of Verizon's Board of
Directors or its designee shall review your base salary at least annually.
7. SHORT-TERM AND LONG-TERM BONUS OPPORTUNITIES - During the Term of
Employment, the Company shall provide you with annual short-term and long-term
bonus opportunities equivalent to those available to other senior executives of
the Company in your salary band. While you are not guaranteed an annual
short-term or long-term bonus award in any amount, (a) the value of your annual
short-term bonus opportunity shall be not less than 75 percent of your
then-current base salary, and (b) the value of your annual long-term bonus
opportunity shall not be less than 425 percent of your then-current base salary.
8. BENEFITS AND PERQUISITES - For the immediate future, you shall-
(1) participate in the tax-qualified and nonqualified retirement
plans and in the other employee benefit plans (such as the
medical and dental plans), programs, and policies in which
you currently participate; and
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 4
(2) be eligible for the perquisites available to senior
executives in your salary band;
provided that the Company retains the right to amend or terminate any benefit
plan, policy, program, or perquisite at any time.
9. ANNUAL PHYSICAL - You are encouraged to take an annual physical
examination from a physician at the Company's expense and to certify in writing
to the Company's designee each year (1) that you have had the examination and
(2) the nature and extent of any medical impairments that prevent you from
currently performing the essential functions of your position.
10. EXCISE TAX GROSS-UP - Under certain circumstances you may become
entitled to a gross-up payment with respect to the excise tax imposed by section
4999 of the Internal Revenue Code (the "Code"). The terms governing the gross-up
payment are set forth in Exhibit A, which is incorporated herein by reference.
11. TERMINATION OF EMPLOYMENT - (a) VOLUNTARY TERMINATION BY YOU - You may
terminate your employment under this Agreement for a reason other than
Retirement (as defined in subparagraph (c), below) or Good Reason (as defined in
subparagraph (d), below) by giving the CEO, at least 30 calendar days'
(exclusive of vacation days) in advance of such termination, written notice of
your intent to so terminate. The termination shall automatically become
effective upon the expiration of such notice period. Upon the effective date of
such termination, your base salary and any other Company benefits and
perquisites shall cease to accrue, you shall forfeit all then-outstanding stock
options, and you shall forfeit all rights under this Agreement which as of the
relevant date have not yet been earned. A termination of employment in
accordance with this subparagraph (a) shall be deemed a "Voluntary Termination."
(b) TERMINATION DUE TO DEATH OR DISABILITY - If, during the Term of
Employment, you terminate employment because of death or disability (as defined
under the Company-sponsored long-term disability plan that applies to you at the
time your employment is so terminated), the Company shall make a lump-sum cash
payment to you equal to the excess of (1) one times the sum of your base salary
and short-term bonus (at 50% of maximum), over (2) any amounts payable to you
under Company-sponsored disability plans. You shall also be entitled to
accelerated vesting of all outstanding stock options, and you shall be entitled
to exercise all then-outstanding stock options until the earlier of (1) the
fifth anniversary of the date your employment terminates (or any later date
prescribed by the terms of the option relating to termination of employment) or
(2) the expiration of
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 5
the option; provided that if you terminate employment because of death, your
rights under this subparagraph (b) shall pass to your estate. For this purpose,
your base salary shall be based on your base salary rate in effect immediately
before your employment terminated.
(c) RETIREMENT - You may terminate your employment under this Agreement
by reason of Retirement (as defined below) by giving the CEO, at least 30
calendar days' (exclusive of vacation days) in advance of such termination,
written notice of your intent to so terminate. The termination shall
automatically become effective upon the expiration of such notice period. Upon
the effective date of such termination, you shall be entitled to a pro-rated
portion of any short-term and long-term bonuses (when and to the extent that
they are earned) and accelerated vesting of all outstanding stock options (other
than the Founders' Grant), and you shall be entitled to exercise all
then-outstanding stock options (excluding nonvested Founders' Grant options)
until the earlier of (1) the fifth anniversary of the date your employment
terminates (or any later date prescribed by the terms of the option relating to
termination of employment) or (2) the expiration of the option. For purposes of
this Agreement, "Retirement" means attaining normal retirement age under the
terms of the Verizon Management Pension Plan (the "Pension Plan") or satisfying
the Rule of 75 under the Pension Plan. Except as provided by the preceding
provisions of this subparagraph (c), upon the effective date of your Retirement,
your base salary and any other Company benefits and perquisites shall cease to
accrue; provided that you shall otherwise be eligible to receive any and all
compensation and benefits for which a similarly situated senior executive would
be eligible under the applicable provisions of the compensation and benefit
plans in which he is then eligible to participate, as those plans may be amended
from time to time.
(d) TERMINATION FOR GOOD REASON - (1) You may terminate your employment
under this Agreement for Good Reason by giving the CEO, at least 30 calendar
days' (exclusive of vacation days) in advance of such termination (the "Notice
Period"), written notice of your intent to so terminate, setting forth in
reasonable detail the facts and circumstances deemed to provide a basis for such
termination. For purposes of this Agreement, "Good Reason" means a material
breach by the Company of the terms and conditions of this Agreement, a material
reduction in your overall compensation opportunities, or your assignment to a
new principal work location that is more than 50 miles from your previous
principal work location. A "Good Reason" shall not occur merely because of a
change in the individual (or position) to whom (or to which) you report. In
addition, a "Good Reason" shall not occur merely because the Company notifies
you, in accordance
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 6
with paragraph 3 ("Term"), that the Term of Employment shall not be extended for
an additional two-year period.
(2) Notwithstanding the foregoing, the Company shall have 15
calendar days from its receipt of such notice to cure the action specified in
the notice. In the event of a cure by the Company within the 15-day period, the
action in question shall not constitute Good Reason.
(3) Except as provided in subparagraph (d)(2), above, at the end
of the Notice Period, the Good Reason termination shall take effect, and your
obligation to serve the Company, and the Company's obligation to employ you,
under the terms of this Agreement shall terminate simultaneously, and you shall
be deemed to have incurred an Involuntary Termination Without Cause, with the
consequences described in subparagraph (e), below; provided that your rights
under this subparagraph (d) are contingent on your execution of a release in
accordance with paragraph 12 ("Release").
(4) If you do not fulfill the notice and explanation requirements
imposed by this subparagraph (d), the resulting termination of employment shall
be deemed a Voluntary Termination.
(e) INVOLUNTARY TERMINATION WITHOUT CAUSE - The Company may terminate
your employment under this Agreement at any time and for any reason. However, if
the Company terminates your employment during the Term of Employment for any
reason other than death, disability, or Cause (as defined in subparagraph (f),
below), such termination shall be deemed an Involuntary Termination by the
Company, and you shall be entitled to receive the following payments and
benefits in lieu of any payment or benefit otherwise provided pursuant to
paragraphs 6 ("Base Salary") through 8 ("Benefits And Perquisites"):
(1) The Company shall make a lump-sum cash severance payment to
you equal to the excess of (i) two times the sum of your
base salary and short-term bonus (at 50% of maximum), over
(ii) the sum of any amounts paid or payable to you under any
Company-sponsored severance plan, program, policy, contract,
account, or arrangement;
(2) Your unvested stock options shall immediately vest, and you
may exercise all of your then-outstanding stock options at
any time up to the earlier of (i) the fifth anniversary of
the date your employment terminates (or
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 7
any later date prescribed by the terms of the option
relating to termination of employment) or (ii) the
expiration of the option; and
(3) You shall be eligible for outplacement services to the
extent that such services are then available to senior
executives in your salary band;
provided that your rights under this subparagraph (e) are contingent on your
execution of a release in accordance with paragraph 12 ("Release"). For purposes
of this paragraph 11(e), the Company shall not be deemed to have terminated your
employment during the Term of Employment if the Company notifies you, in
accordance with paragraph 3 ("Term"), that the Term of Employment shall not be
extended for an additional two-year period.
(f) INVOLUNTARY TERMINATION FOR CAUSE - (1) Nothing in this Agreement
prevents the Company from terminating your employment under this Agreement for
Cause. In the event of your termination for Cause, the Company shall pay you
your full accrued base salary and accrued vacation time through the date of your
termination, you shall forfeit all then-outstanding stock options if you are not
eligible for Retirement at the time of your termination, and the Company shall
have no further obligations under this Agreement; provided that you shall
otherwise be eligible to receive any and all compensation and benefits for which
a similarly situated senior executive would be eligible under the applicable
provisions of the compensation and benefit plans in which he is then eligible to
participate, as those plans may be amended from time to time.
(2) For purposes of this Agreement, "Cause" is defined as (i)
grossly incompetent performance or substantial or continuing inattention to or
neglect of the duties and responsibilities assigned to you; fraud,
misappropriation or embezzlement involving the Company or a material breach of
any provision incorporated in paragraph 13 ("Covenants"), as determined by the
CEO in his discretion, or (ii) commission of any felony of which you are finally
adjudged guilty by a court of competent jurisdiction.
(3) If the Company terminates your employment for Cause, the
Company shall provide you with a written statement of the grounds for such
termination within 10 business days after the date of termination.
12. RELEASE - You shall not be entitled to any benefits under paragraphs 10
("Excise Tax Gross-Up"), 11(d) ("Termination For Good Reason"), and 11(e)
("Involuntary Termination Without Cause") following the termination of your
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 8
employment unless, at the time your employment terminates, you execute a release
satisfactory to the Company releasing the Company, its affiliates, shareholders,
directors, officers, employees, representatives, and agents and their successors
and assigns from any and all employment-related claims you or your successors
and beneficiaries might then have against them (excluding any claims you might
then have under this Agreement, or any employee benefit plan that is subject to
the vesting standards imposed by the Employee Retirement Income Security Act of
1974, as amended).
13. COVENANTS - In consideration for the benefits and agreements described
above, you agree to comply with the covenants set forth in Exhibit B hereto,
which is incorporated herein by reference.
14. REQUEST FOR WAIVER - Nothing in this Agreement bars you from
requesting, at the time of your termination of employment or at any time
thereafter, that the CEO, in his sole discretion, waive in writing the Company's
rights to enforce some or all of the provisions incorporated in paragraph 13
("Covenants").
15. OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by
paragraph 13 ("Covenants") are in addition to, and not in lieu of, any and all
other policies and agreements of the Company regarding the subject matter of the
foregoing obligations.
16. NONDUPLICATION OF BENEFITS - No provision of this Agreement shall
require the Company to provide you with any payment, benefit, or grant that
duplicates any payment, benefit, or grant that you are entitled to receive under
any Company compensation or benefit plan, award agreement, or other arrangement.
17. OTHER COMPANY PLANS - Except to the extent otherwise explicitly
provided by this Agreement, any awards made to you under any Company
compensation or benefit plan or program shall be governed by the terms of that
plan or program and any applicable award agreement thereunder as in effect from
time to time. Notwithstanding the foregoing, you shall not be entitled to
participate in any Company compensation or benefit plan that is established
after your employment with the Company terminates, and except as specifically
provided in this Agreement, you shall not be entitled to any additional grants
or awards under any Company compensation or benefit plan after your employment
with the Company terminates. The amounts paid, provided, or credited under this
Agreement shall not be treated as compensation for purposes of determining any
benefits payable under any Company-sponsored pension, savings, life insurance,
or other employee benefit plan except to the extent provided by the terms of
such plan.
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 9
18. FORFEITURE - (a) If you breach any of the obligations incorporated in
paragraph 13 ("Covenants"), or engage in serious misconduct that is contrary to
written policies of the Company and is harmful to the Company or its reputation,
you shall forfeit:
(1) all credits that are added to your Retirement Contribution
Sub-Account in the Verizon Income Deferral Plan (or to any
successor account in that plan or a successor plan) ("Retirement
Contribution Sub-Account"), on or after January 1, 2002;
(2) any interest or other earnings or gains on or after January 1,
2002, with respect to any credits in your Retirement Contribution
Sub-Account (including any interest, or other earnings or gains
attributable to any credit regardless of when the credit was
added to your Retirement Contribution Sub-Account); and
(3) any unpaid incentive compensation (such as performance bonus
awards or other awards under the Verizon Communications Inc.
Long-Term Incentive Plan) that you are otherwise entitled to
receive.
(b) The remedies available under this paragraph are in addition to, and
not in lieu of, the remedies available under paragraph 25 ("Additional
Remedies").
19. NO DEEMED WAIVER - Failure to insist upon strict compliance with any of
the terms, covenants, or conditions of this Agreement shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
20. TAXES - The Company may withhold from any benefits payable under this
Agreement all taxes that the Company reasonably determines to be required
pursuant to any law, regulation, or ruling. However, it is your obligation to
pay all required taxes on any amounts and benefits provided under this
Agreement, including the benefits and perquisites provided to you pursuant to
paragraph 8 ("Benefits and Perquisites"), regardless of whether withholding is
required.
21. CONFIDENTIALITY - Except to the extent otherwise required by law, you
shall not disclose, in whole or in part, any of the terms of this Agreement.
This
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 10
paragraph 21 does not prevent you from disclosing the terms of this Agreement to
your spouse or to your legal, tax, or financial adviser, provided that you take
all reasonable measures to assure that he or she does not disclose the terms of
this Agreement to a third party except as otherwise required by law.
22. GOVERNING LAW - To the extent not preempted by federal law, the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the State of New York, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of this
provision to the substantive law of another jurisdiction.
23. ASSIGNMENT - Verizon may, without your consent, assign its rights and
obligations under this Agreement to any entity that is a part of the Company,
and if Verizon makes such an assignment, all references in this Agreement to
Verizon (except for references to Verizon common stock) shall be deemed to refer
to the assignee. However, you may not assign your rights and obligations under
this Agreement.
24. SEVERABILITY - The agreements contained herein and within the release
prescribed by paragraph 12 ("Release") shall each constitute a separate
agreement independently supported by good and adequate consideration, and shall
each be severable from the other provisions of the Agreement and such release.
If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Agreement or such release is void, illegal, or
unenforceable, the other terms, provisions, and portions of this Agreement or
such release shall remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable shall
either be limited so that they shall remain in effect to the extent permissible
by law, or such arbitrator or court shall substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to the Company,
to the fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
25. ADDITIONAL REMEDIES - In addition to any other rights or remedies,
whether legal, equitable, or otherwise, that each of the parties to this
Agreement may have, you acknowledge that
(a) The covenants incorporated in paragraph 13 ("Covenants") are
essential to the continued good will and profitability of the
Company;
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 11
(b) You have broad-based skills that will serve as the basis for
employment opportunities that are not prohibited by the covenants
incorporated in paragraph 13 ("Covenants");
(c) When your employment with the Company terminates, you shall be
able to earn a livelihood without violating any of the terms of
this Agreement;
(d) Irreparable damage to the Company shall result in the event that
the covenants incorporated in paragraph 13 ("Covenants") are not
specifically enforced and that monetary damages will not
adequately protect the Company from a breach of such covenants;
(e) If any dispute arises concerning the violation by you of the
covenants incorporated in paragraph 13 ("Covenants"), an
injunction may be issued restraining such violation pending the
determination of such controversy, and no bond or other security
shall be required in connection therewith;
(f) Such covenants shall continue to apply after any expiration,
termination, or cancellation of this Agreement; and
(g) Your breach of any of such covenants shall result in your
immediate forfeiture of all rights under this Agreement.
26. SURVIVAL - The provisions of paragraphs 13 ("Covenants") through 28
("Entire Agreement") shall survive the Term of Employment. In addition, if the
Term of Employment is not extended in accordance with paragraph 3 ("Term") but
your employment continues after the end of the Term of Employment, you shall be
subject to the obligations imposed by each of such paragraphs with respect to
such employment. Any obligations that the Company has incurred under this
Agreement to provide benefits that have vested under the terms of this Agreement
(including the Company's obligations under paragraph 11(c) ("Retirement")) shall
likewise survive the Term of Employment. Except as provided by the preceding
provisions of this paragraph 26, if the Term of Employment is not extended in
accordance with paragraph 3 ("Term") but your employment continues after the end
of the Term of Employment, the terms of such employment shall not be governed by
this Agreement.
27. ARBITRATION - Any dispute arising out of or relating to this Agreement
(except any dispute arising out of or relating to paragraph 13 ("Covenants")),
and any dispute arising out of or relating to your employment, shall be settled
by final
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 12
and binding arbitration, which shall be the exclusive means of resolving any
such dispute, and the parties specifically waive all rights to pursue any other
remedy, recourse, or relief. With respect to disputes by the Company arising out
of or relating to paragraph 13 ("Covenants"), the Company has retained all its
rights to legal and equitable recourse and relief, including but not limited to
injunctive relief, as referred to in paragraph 25 ("Additional Remedies"). The
arbitration shall be expedited and conducted in the State of New York pursuant
to the Center for Public Resources ("CPR") Rules for Non-Administered
Arbitration in effect at the time of notice of the dispute before one neutral
arbitrator appointed by CPR from the CPR Panel of neutrals unless the parties
mutually agree to the appointment of a different neutral arbitrator. The
arbitration shall be governed by the Federal 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. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever shall such an arbitration award include any award of damages other
than the amounts in controversy under this Agreement. The parties waive the
right to recover, in such arbitration, punitive damages. Each party hereby
agrees that New York City is the proper venue for any litigation seeking to
enforce any provision of this Agreement or to enforce any arbitration award
under this paragraph 27, and each party hereby waives any right it otherwise
might have to defend, oppose, or object to, on the basis of jurisdiction, venue,
or forum nonconveniens, a suit filed by the other party in any federal or state
court in New York City to enforce any provision of this Agreement or to enforce
any arbitration award under this paragraph 27. Each party also waives any right
it might otherwise have to seek to transfer from a federal or state court in New
York City a suit filed by the other party to enforce any provision of this
Agreement or to enforce any arbitration award under this paragraph 27.
28. ENTIRE AGREEMENT - Except for the terms of the compensation and benefit
plans in which you participate (including any award agreements issued
thereunder), this Agreement, including the Exhibits hereto, sets forth the
entire understanding of you and the Company, and supersedes all prior agreements
and communications, whether oral or written, between the Company (or Bell
Atlantic or GTE or any of their respective subsidiaries) and you regarding the
subject matter of this Agreement, including your October 3, 2000, employment
agreement with Verizon. This Agreement shall not be modified except by written
agreement of you and Verizon.
Xx. Xxxxxx X. Xxxxx
July 1, 2002
Page 13
Xxxxxx, I believe that this Agreement continues to provide you and your family
with a firm foundation of financial security as our Company faces many new
challenges and opportunities. I recognize that the Company and the
telecommunications industry operate in a rapidly changing and demanding
environment. It is my hope that this Agreement demonstrates to you the level of
confidence that I have in your abilities to meet the commitments that I expect
from you. Please indicate your acceptance by signing below and returning the
signed Agreement to me or Xxxx Xxxxxx within ten business days after your
receipt of this Agreement.
Sincerely yours,
/s/ Xxxx Xxxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxxx
Chief Executive Officer
cc: X. Xxxxxx
I agree to the terms described above.
/s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
Attachments: Exhibit A - Excise Tax Gross-Up
Exhibit B - Covenants
EXHIBIT A
EXCISE TAX GROSS-UP
1. GROSS-UP PAYMENT - If any payment or benefit received or to be received
by you from the Company pursuant to the terms of the Agreement to which this
Exhibit A is attached or otherwise (the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed by section 4999 of the Internal Revenue
Code (the "Code") as determined in accordance with this Exhibit A, the Company
shall pay you, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount that you retain, after deduction of the
Excise Tax on the Payments and any federal, state, and local income tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties, or additions
to tax payable by you with respect thereto, shall be equal to the total present
value (using the applicable federal rate (as defined in section 1274(d) of the
Code) in such calculation) of the Payments at the time such Payments are to be
made.
2. CALCULATIONS - For purposes of determining whether any of the Payments
shall be subject to the Excise Tax and the amount of such excise tax,
(a) The total amount of the Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the excise tax,
except to the extent that, in the written opinion of independent
counsel selected by Verizon and reasonably acceptable to you
("Independent Counsel"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, or such "excess parachute payments" (in whole
or in part) are not subject to the Excise Tax;
(b) The amount of the Payments that shall be subject to the Excise Tax
shall be equal to the lesser of (i) the total amount of the Payments
or (ii) the amount of "excess parachute payments " within the meaning
of section 280G(b)(1) of the Code (after applying clause (a), above);
and
(c) The value of any noncash benefits or any deferred payment or benefit
shall be determined by Independent Counsel in accordance with the
principles of section 280G(d)(3) and (4) of the Code.
3. TAX RATES - For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income taxes at the highest marginal
rates of federal income taxation applicable to individuals in the calendar year
in which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rates of taxation applicable to individuals as are in
effect in the state and locality of your residence in the calendar year in which
the Gross-Up
-2-
Payment is to be made, net of the maximum reduction in federal income taxes that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income tax
at the highest marginal rates.
4. TIME OF GROSS-UP PAYMENTS - The Gross-Up Payments provided for in this
Exhibit A shall be made upon the earlier of (a) the payment to you of any
Payment or (b) the imposition upon you, or any payment by you, of any Excise
Tax.
5. ADJUSTMENTS TO GROSS-UP PAYMENTS - If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax is less than the
amount previously taken into account hereunder, you shall repay the Company,
within 30 days of your receipt of notice of such final determination or opinion,
the portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state, and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax or a federal, state, and
local income tax deduction) plus any interest received by you on the amount of
such repayment, provided that if any such amount has been paid by you as an
Excise Tax or other tax, you shall cooperate with the Company in seeking a
refund of any tax overpayments, and you shall not be required to make repayments
to the Company until the overpaid taxes and interest thereon are refunded to
you.
6. ADDITIONAL GROSS-UP PAYMENT - If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax exceeds the amount
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
within 30 days of the Company's receipt of notice of such final determination or
opinion.
7. CHANGE IN LAW OR INTERPRETATION - In the event of any change in or
further interpretation of section 280G or 4999 of the Code and the regulations
promulgated thereunder, you shall be entitled, by written notice to Verizon, to
request a written opinion of Independent Counsel regarding the application of
such change or further interpretation to any of the foregoing, and Verizon shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable.
8. FEES AND EXPENSES - All fees and expenses of Independent Counsel
incurred in connection with this Exhibit A shall be borne by Verizon.
9. SURVIVAL - The Company's obligation to make a Gross-Up Payment with
respect to Payments made or accrued before the end of the Term of Employment
-3-
shall survive the Term of Employment unless (a) your employment is terminated
for Cause pursuant to paragraph 11(f) of the Agreement to which this Exhibit A
is attached ("Involuntary Termination For Cause"), (b) you fail to execute a
release in accordance with paragraph 12 of such Agreement ("Release"), or (c)
you fail to comply with the covenants incorporated in paragraph 13 of such
Agreement ("Covenants"), in which event the Company's obligation under this
Exhibit A shall terminate immediately.
10. DEFINED TERMS - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit A shall have the definitions given to
those terms in the Agreement to which this Exhibit A is attached.
EXHIBIT B
COVENANTS
1. NONCOMPETITION - In consideration for the benefits and agreements
described in the Agreement to which this Exhibit B is attached, you agree that:
(a) PROHIBITED CONDUCT - During the period of your employment with the
Company, and for the period ending six months after your termination of
employment for any reason from the Company, you shall not, without the prior
written consent of the CEO(s):
(1) personally engage in Competitive Activities (as defined
below); or
(2) work for, own, manage, operate, control, or participate in
the ownership, management, operation, or control of, or
provide consulting or advisory services to, any individual,
partnership, firm, corporation, or institution engaged in
Competitive Activities, or any company or person affiliated
with such person or entity engaged in Competitive
Activities; provided that your purchase or holding, for
investment purposes, of securities of a publicly-traded
company shall not constitute "ownership" or "participation
in ownership" for purposes of this paragraph so long as your
equity interest in any such company is less than a
controlling interest;
provided that this paragraph (a) shall not prohibit you from (i) being employed
by, or providing services to, a consulting firm, provided that you do not
personally engage in Competitive Activities or provide consulting or advisory
services to any individual, partnership, firm, corporation, or institution
engaged in Competitive Activities, or any company or person affiliated with such
person or entity engaged in Competitive Activities, or (ii) engaging in the
private practice of law as a sole practitioner or as a partner in (or as an
employee of or counsel to) a law firm in accordance with applicable legal and
professional standards.
(b) COMPETITIVE ACTIVITIES - For purposes of the Agreement to which
this Exhibit B is attached, "Competitive Activities" means business activities
relating to products or services of the same or similar type as the products or
services (1) which are sold (or, pursuant to an existing business plan, will be
sold) to paying customers of the Company, and (2) for which you then have
responsibility to plan, develop, manage, market, or oversee, or had any such
responsibility within your most recent 24 months of employment with the Company.
Notwithstanding the previous sentence, a business activity shall not be treated
as a Competitive Activity if the geographic marketing area of the relevant
products or services sold by you or
-2-
a third party does not overlap with the geographic marketing area for the
applicable products and services of the Company.
2. INTERFERENCE WITH BUSINESS RELATIONS - During the period of your
employment with the Company, and for a period ending with the expiration of 12
months following your termination of employment for any reason from the Company,
you shall not, without the written consent of the CEO(s):
(a) recruit or solicit any employee of the Company for employment or
for retention as a consultant or service provider;
(b) hire or participate (with another company or third party) in the
process of hiring (other than for the Company) any person who is
then an employee of the Company, or provide names or other
information about Company employees to any person or business
(other than the Company) under circumstances that could lead to
the use of that information for purposes of recruiting or hiring;
(c) interfere with the relationship of the Company with any of its
employees, agents, or representatives;
(d) solicit or induce, or in any manner attempt to solicit or induce,
any client, customer, or prospect of the Company (1) to cease
being, or not to become, a customer of the Company or (2) to
divert any business of such customer or prospect from the
Company; or
(e) otherwise interfere with, disrupt, or attempt to interfere with
or disrupt, the relationship, contractual or otherwise, between
the Company and any of its customers, clients, prospects,
suppliers, consultants, or employees.
3. RETURN OF PROPERTY; INTELLECTUAL PROPERTY RIGHTS - You agree that on or
before your termination of employment for any reason with the Company, you shall
return to the Company all property owned by the Company or in which the Company
has an interest, including files, documents, data and records (whether on paper
or in tapes, disks, or other machine-readable form), office equipment, credit
cards, and employee identification cards. You acknowledge that the Company is
the rightful owner of any programs, ideas, inventions, discoveries, patented or
copyrighted material, or trademarks that you may have originated or developed,
or assisted in originating or developing, during your period of employment with
the Company, where any such origination or development involved the use of
Company
-3-
time or resources, or the exercise of your responsibilities for or on behalf of
the Company. You shall at all times, both before and after termination of
employment, cooperate with the Company in executing and delivering documents
requested by the Company, and taking any other actions, that are necessary or
requested by the Company to assist the Company in patenting, copyrighting, or
registering any programs, ideas, inventions, discoveries, patented or
copyrighted material, or trademarks, and to vest title thereto in the Company.
4. PROPRIETARY AND CONFIDENTIAL INFORMATION - You shall at all times
preserve the confidentiality of all proprietary information and trade secrets of
the Company, except to the extent that disclosure of such information is legally
required. "Proprietary information" means information that has not been
disclosed to the public and that is treated as confidential within the business
of the Company, such as strategic or tactical business plans; undisclosed
financial data; ideas, processes, methods, techniques, systems, patented or
copyrighted information, models, devices, programs, computer software, or
related information; documents relating to regulatory matters and correspondence
with governmental entities; undisclosed information concerning any past,
pending, or threatened legal dispute; pricing and cost data; reports and
analyses of business prospects; business transactions that are contemplated or
planned; research data; personnel information and data; identities of users and
purchasers of the Company's products or services; and other confidential matters
pertaining to or known by the Company, including confidential information of a
third party that you know or should know the Company is bound to protect.
5. DEFINITIONS - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit B shall have the definitions given to
those terms in the Agreement to which this Exhibit B is attached.