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EXHIBIT 10.13
SEPARATION AGREEMENT AND GENERAL RELEASE
This Agreement is by and between GTE Service Corporation (the "Company")
and Xxxx X. Xxxxxx ("Xxxxxx").
PART I
In consideration of the provisions in Part II, the Company agrees as
follows:
1. Xxxxxx will receive for the following:
(a) A payment under the GTE Corporation 1997 Executive Incentive Plan
("EIP") for the 1999 Plan Year, provided that such payment will be in an amount
determined by, and subject to the approval of, the Executive Compensation and
Organizational Structure Committee of the Board of Directors or its designee
("ECC").
(b) A prorated Performance Bonus (12/36ths) under the GTE Corporation
1997 Long-Term Incentive Plan ("LTIP") for the 1999-2001 Award Cycle, provided
that, except as specifically limited by the following sentence, such payment
will be governed by the terms of the LTIP and the relevant Performance Bonus
Agreement (including, but not limited to, those provisions in paragraph 7(a)
which provide for non-payment of an award in the event the participant engages
in prohibited competitive activities), and will be in an amount determined by,
and subject to the approval of, the ECC. Notwithstanding the foregoing, Section
8 ("Payment after Change in Control") of the Performance Bonus Agreement for the
1999-2001 Award Cycle shall not be applicable, under any circumstances, to any
payment made pursuant to this paragraph and, thus, Xxxxxx will not be eligible
for the Target Payment provided for by Section 8.
(c) A Merger Implementation and Retention Bonus, pursuant to the terms
of the agreement dated January 11, 1999 governing same (including, but not
limited to, those provisions concerning forfeiture and repayment upon breach of
covenants contained in that agreement) and subject to, as provided for in that
agreement, closing of the proposed merger with Xxxx Atlantic Corporation or a
subsidiary thereof.
(d) The benefits specified by Xxxxxx'x Executive Severance Agreement,
dated June 4, 1998, and Xxxxxx'x Employment Agreement, dated January 7, 1999
(the "January 1999 Agreement"), as amended by Xxxxxx'x Agreement with the
Company, dated November 1, 1999 (the "November 1999 Agreement") and the November
MacDonald memorandum (the "November 1999 Memorandum").
Any payment under this section shall be made at the time such payments
are made to similarly situated executives. Xxxxxx will not be eligible to defer
any portion of, and will not be eligible for an Equity Participation Program
match on, any portion of such payments.
2. By making this Agreement, the Company does not admit that it has done
any wrongful act, and the Company specifically states that it has not committed
any tort, breach of contract, or violation of any federal, state, or local
statute or ordinance.
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PART II
In consideration of the provisions in Part I, Xxxxxx agrees as follows:
1. Effective either December 31, 1999 or, if Xxxxxx elects, January 1,
2000, Xxxxxx irrevocably retires from his position with the Company and from any
officer, director, or other positions he holds for GTE Corporation or any of its
affiliates, and from any internal or external Boards where he represents GTE (as
defined in paragraph 3 below). Xxxxxx agrees not to seek reinstatement, recall,
or future employment with GTE on or after the date of this Agreement.
Xxxxxx agrees that GTE retains the right to make future organizational changes,
including but not limited to the right to combine, create, and/or fill
positions, including, but not limited to, his former position. He agrees,
further, that he is not eligible for and will not seek an alternative position
with GTE (as defined in paragraph 3 below) prior to his separation from
employment.
2. Xxxxxx agrees and understands that the EIP and prorated LTIP payments
described in Part I, paragraph 1 and the benefits described in the November 1999
Agreement above are more than any payments or benefits due to him under the
Company's policies or practices. Except as relating to severance and retention
benefits he is entitled to receive under his Executive Severance Agreement, the
January 1999 Agreement, the November 1999 Memorandum, and the November 1999
Agreement or any bonus to which he may become entitled under his Merger
Implementation and Retention Bonus agreement, Xxxxxx waives and forever
discharges GTE (as defined in paragraph 3 below) from any liability to provide
any notice of termination, including but not limited to any notice under the
Worker Adjustment and Retraining Notification Act, or to pay any salary, bonus
(short or long term), salary continuance, separation pay, severance pay,
retention bonus, or pay, retirement incentive, or payments or benefits arising
under any other plan, policy, practice, or program (offered on a qualified or
non-qualified or voluntary or involuntary basis) which may have been payable as
a result of the termination of his employment, except as provided in paragraph 3
below. Xxxxxx agrees that, should the Company offer any retirement incentive,
early retirement, or voluntary or involuntary separation plan or program on or
after the date of this Agreement, he shall not be eligible to participate. In
addition, Xxxxxx has not relied on any statement, agreement, or promise of
eligibility for any benefits, other than those set forth in this Agreement.
3. Xxxxxx agrees to release GTE Service Corporation, GTE Corporation, Xxxx
Atlantic Corporation, any related and affiliated companies, and their successors
(including, after the merger, Xxxx Atlantic Corporation and any affiliated
companies), and any and all current, former and future directors, employees,
officers, agents, and contractors of these companies, and any and all employee
pension or welfare benefit plans of these companies, including current and
former trustees and administrators of these plans (the entities and persons
referenced above are collectively referred to in this Agreement as "GTE") from
all known and unknown claims, charges, or demands Xxxxxx may have based on his
employment with GTE or the termination of that employment, including a release
of any rights or claims Xxxxxx may have under the Age Discrimination in
Employment Act ("ADEA"), which prohibits age discrimination in employment; Title
VII of the Civil Rights Act of 1964, and the Civil Rights Act of 1991, which
prohibit discrimination in employment based on race, color, sex, religion, and
national origin; the Americans with Disabilities Act, which prohibits
discrimination based upon disability; Section 1981 of the Civil Rights Act of
1866, which prohibits discrimination based on race; the Employee Retirement
Income Security Act, which governs employee benefits; any state laws against
discrimination; or any other federal, state, or local statute or common law
relating to employment. This includes a release by Xxxxxx of any claims for
wrongful discharge, breach of contract, employment-related torts, or any other
claims in any way related to Xxxxxx'x employment with GTE or the termination of
that employment.
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This release does not include, however, a waiver of any claim to the payments
provided for by this Agreement or any right Xxxxxx may have to vested benefits
under any pension, savings, or deferred compensation plan; pay for banked and
accrued (but unused) vacation; outstanding stock options; outstanding stock
appreciation rights; or any severance benefits to which he is entitled under his
Executive Severance Agreement and the November 1999 Agreement. Notwithstanding
the preceding paragraph, Xxxxxx does not release, discharge, or waive any rights
to indemnification Xxxxxx may have under the By-Laws of the Company, the laws of
the State of New York, or any insurance coverage maintained by or on the behalf
of the Company, nor will the Company take any action intended, directly or
indirectly, to encumber or adversely affect Xxxxxx'x rights under such
indemnification arrangement.
GTE hereby releases Xxxxxx, Xxxxxx'x family, heirs, successors, agents and
attorneys from, and agrees not to xxx or join in any suit against such parties
for, all known and unknown claims, charges, or demands GTE may have based on
Xxxxxx'x conduct that he believed to be in good faith to be in the course and
scope of his employment; provided, however, that this release will not extend to
any conduct of Xxxxxx that constituted a knowing violation of any law,
regulation, or ordinance.
4. Xxxxxx has not filed and promises not to file, or permit to be filed on
his behalf, any lawsuit or complaint against GTE regarding the claims released
in Part II, paragraph 3 above. Xxxxxx also promises to opt out of and to take
such other steps as he has the power to take to disassociate himself from any
class seeking relief against GTE regarding any claims released in Part II,
paragraph 3. If a court, administrative agency, arbitrator, or any other
decision maker with authority awards Xxxxxx money damages or other relief, with
respect to claims released in Part II, paragraph 3, Xxxxxx hereby assigns to the
Company all rights and interest in such money damages and other relief.
5. Xxxxxx agrees not to disclose the terms of this Agreement, that this
Agreement exists, or that he received any payments from the Company to anyone
except his attorney, his financial planner, or his immediate family. If he does
disclose the terms of this Agreement to his immediate family, his financial
planner, or his attorney, he will advise them that they must not disclose the
terms of this Agreement.
6. Xxxxxx further agrees to take no action that would disparage or cause
GTE (including its employees, directors, and shareholders) embarrassment or
humiliation or otherwise cause or contribute to GTE (including its employees,
directors, and shareholders) being held in disrepute or in a negative light by
the general public or GTE's clients, shareholders, customers, federal or state
regulatory agencies, employees, agents, officers, or directors.
Xxxxxx will cooperate and make all reasonable efforts to assist the Company in
any investigation of matters involving GTE. Xxxxxx also agrees to testify as a
witness and be available for interviews and to assist GTE in preparation for any
legal proceedings involving GTE in which Xxxxxx has direct knowledge or specific
expertise. Xxxxxx will be compensated appropriately and reimbursed for
reasonable expenses.
Nothing in this Agreement shall be construed to prevent Xxxxxx from giving
compelled truthful testimony before any federal or state agency or in any
judicial proceeding; provided that, in order to permit GTE to seek an injunction
or other judicial relief, he will timely notify GTE in advance of any such
proceeding in which he expects to be called to testify or for which he has
received a subpoena.
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No executive officer or member of the Board of Directors of GTE Corporation will
take any action that is intended to disparage or cause Xxxxxx embarrassment or
humiliation or otherwise cause or contribute to Xxxxxx being held in disrepute
or in a negative light by the general public. Notwithstanding the foregoing, GTE
reserves all rights to take any lawful measure to protect confidential and
proprietary information or to enforce any provision of this Agreement and to
provide truthful testimony before any federal or state agency or in any judicial
proceeding.
7. Xxxxxx acknowledges and agrees that GTE has the right to seek injunctive
relief in order to preclude Xxxxxx from engaging in activity that would
constitute or result in a breach of his obligations under this Agreement or the
Covenants set forth in his January 7, 1999 Agreement. If Xxxxxx breaches this
Agreement or files a lawsuit or complaint regarding claims Xxxxxx has released,
in addition to the Additional Remedies set forth in his January 7, 1999
Agreement, Xxxxxx will pay for all costs incurred by GTE, including reasonable
attorneys' fees, in defending against his claim or in any suit by GTE to enforce
this Agreement.
8. Xxxxxx understands that he has been given 21 days to review and consider
this Agreement before signing it. Xxxxxx further understands that he may use as
much of this 21-day period as he wishes prior to signing this Agreement.
9. Xxxxxx may revoke this Agreement within seven days after he signs it. If
Xxxxxx wishes to revoke this Agreement within this seven-day period, written
notice of revocation should be delivered to the office of J. Xxxxxxx XxxXxxxxx,
by the close of business seven days after Xxxxxx signs the Agreement. This
Agreement will not become effective or enforceable until seven days after Xxxxxx
signs it. If Xxxxxx revokes this Agreement, it will not be effective or
enforceable, and he will not receive the benefits described in Part I, paragraph
1.
10. Xxxxxx agrees that the Company advised him to consult with an attorney
before signing this Agreement.
11. The parties participated jointly in the negotiation of this Agreement,
and each party had the opportunity to obtain the advice of legal counsel and to
review, comment upon, and redraft this Agreement. Accordingly, it is agreed that
no rule of construction shall apply against any party or in favor of any party,
and any uncertainty or ambiguity shall not be interpreted against any one party
and in favor of the other.
12. Xxxxxx and the Company agree that the sections in the January 7, 1999
Agreement captioned Governing Law, Additional Remedies and Arbitration will
apply to any disputes relating to this Agreement.
13. In the event that any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement.
14. This Separation Agreement and General Release, Xxxxxx'x Executive
Severance Agreement, Xxxxxx'x Employment Agreement dated January 7, 1999, the
November 1999 Agreement, the November 1999 Memorandum, and Xxxxxx'x Merger
Implementation and Retention Bonus Agreement constitute the entire Agreement
between Xxxxxx and the Company as to the subject matter addressed herein and
shall be binding upon the heirs, successors, and assigns of Xxxxxx and the
Company. No other promises or agreements with regard to this subject matter have
been made to Xxxxxx other than those in this Agreement. Xxxxxx is not relying on
any statement, representation, or warranty that is not contained in this
Agreement.
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Xxxxxx acknowledges that he has read this Agreement carefully, fully understands
the meaning of the terms of this Agreement, and is signing this Agreement
knowingly and voluntarily.
Subscribed and sworn to before ------------------------------
me this ___ day of _______________, 1999. Xxxx X. Xxxxxx
----------------------------------------- -------------------
Notary Public Date
Subscribed and sworn to before GTE Service Corporation
me this ___ day of _______________, 1999.
----------------------------------------- ------------------------------
Notary Public By:
Title:
-------------------
Date
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Nov 1, 1999
Xxxx X. Xxxxxx
[Address]
[Address]
Dear Kent:
On behalf of the GTE Board of Directors and the entire management team, I want
to thank you for the critical contributions you have made in your career at GTE
and your role in positioning GTE as a leader in the telecommunications industry
as we face the challenges ahead of the twenty first century.
I am writing to summarize the arrangements that we have agreed upon regarding
your transition from employment with GTE Service Corp. ("GTE").
1. You will have elected to retire from employment with GTE as of December 31,
1999 or January 1, 2000. You will notify me of the retirement date you have
selected as soon as possible.
2. Except as modified by this Agreement, your entitlement to separation benefits
following the separation of your employment will be governed by the relevant
provisions of your Employment Agreement, dated January 7, 1999 ("Employment
Agreement") and your Executive Severance Agreement, dated June 4, 1998 ("ESA").
Thus, you will be entitled to severance, benefits, outplacement counseling, and
eligible for a tax gross-up payment, if applicable, pursuant to Sections 2.1,
2.2, 2.3, 2.6, 5.2, and 5.4 of your ESA, as well as additional pension and
benefit credit (in lieu of service credit under Section 2.5 of your ESA) and the
Long-Term Retention Incentive in accordance with the terms of your Employment
Agreement. In addition, you will receive a Merger Implementation and Retention
Bonus (assuming the merger closes) in accordance with, and subject to the terms
of, your agreement governing that bonus.
3. At the same time that GTE makes the severance payment to you pursuant to
Section 2.1 of your ESA, GTE also will make a cash payment to you equal to the
sum of your current base pay and 130% of your norm EIP payment for 1999 (or
greater, but not to exceed the average of the EIP ESA formula). This additional
cash payment (which will not be in lieu of any other payment you are entitled to
receive) will not be treated as compensation for purposes of calculating your
benefits under GTE's benefit plans, policies, and
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Xxxx X. Xxxxxx
November 1, 1999
Page 2
arrangements. This payment will be subject to your compliance with the covenants
set forth in your January 7, 1999 agreement captioned "Covenants", as modified
by this Agreement, "Confidentiality" and "Additional Remedies."
4. The benefits described in this Agreement are the only separation benefits to
which you are entitled under your Employment Agreement, your ESA, and GTE's
benefit plans, policies, and arrangements.
5. You will be eligible for a payment under the GTE Corporation 1997 Executive
Incentive Plan ("EIP") for 1999 and a prorated (12/36ths) Performance Bonus
under the GTE 1997 Long-Term Incentive Plan ("LTIP") for the 1999-2001 Award
Cycle. These payments will be calculated as described in the attached Separation
Agreement and General Release (the "Release"). Consistent with the terms of the
Release, both your EIP payment and your prorated Performance Bonus will be paid
at the time such payments are made to similarly situated executives. You will
not participate in the EIP beyond 1999, and you will not participate in LTIP for
future Award Cycles nor will you be eligible to receive any additional grants of
stock options.
6. In accordance with GTE policy, you will not be eligible to defer any portion
of the severance payments provided for by your ESA and by this Agreement, the
payments under the EIP, the prorated payment under LTIP, and any Merger
Implementation and Retention Bonus and, thus, you will not be eligible for a
match on these amounts under the Equity Participation Program.
7. Paragraphs (a) ("Prohibited Conduct") and (b) ("Competitive Activities") of
the Covenants section of your Employment Agreement are deleted and replaced by
the following:
"During the period of your employment with GTE, and for a period ending with 24
months following your separation from employment, you will not work for, own,
manage, operate, control, participate in the ownership, management, operation,
or control of, or provide consulting or advisory services to any of the
following companies or to any company or person affiliated with any of such
companies: SBC, BellSouth, US West, AT&T, Sprint, MCI Worldcom, Qwest
Communications, Xxxxxxxx Communications Group, Xxxxx 0, Xxxxxx Xxxxxxxx, Xxxxxx,
Xxxxxxxxxx, McLeodUSA, Winstar, and Nextlink, their respective affiliates,
subsidiaries, related entities, lines of business, and successors, and all
business entities, including joint ventures, in which any of them is a partner
or has an ownership interest; provided that your purchase or holding, for
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Xxxx X. Xxxxxx
November 1, 1999
Page 3
investment purposes, of securities in 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.
"It is our hope that if you seek other employment following your separation from
employment with GTE, you will do so outside the telecommunications industry.
However, if you wish to engage, during the period in which the preceding
paragraph applies, in any `Competitive Activities' (as that term was defined in
your Employment Agreement before its amendment on Nov 1, 1999) that are not
prohibited by the preceding paragraph, you will not do so without the advance
written consent of the Chairman of GTE (or, following the merger with Xxxx
Atlantic, the Chairman of the new company), which consent will not be
unreasonably withheld."
The two-year exercise period provided for stock options and stock appreciation
rights (collectively "options") by Section 2.7 of your ESA will be extended to
five years; provided that no option may be exercised after the expiration of the
maximum term of the option; and provided further that if GTE's Executive
Compensation and Organizational Structure Committee or its designee (the "ECC")
determines in its sole discretion that this paragraph would preclude the use of
pooling of interest accounting, the ECC may, in its sole discretion, eliminate
or modify this paragraph to the extent required to allow pooling of interest
accounting. In addition, and notwithstanding anything to the contrary in LTIP or
in your Stock Option Agreements ("Option Agreements"), all of your outstanding
options that were granted before 1999 will be subject, after December 31, 2001,
to the forfeiture provisions set forth in the Option Agreements, disregarding
the Change in Control provisions of LTIP and the Option Agreements. Options
granted to you in 1999 will be subject to such forfeiture provisions at all
times. The elimination or modification of this paragraph by the ECC in
accordance with the foregoing provisions will not entitle you to any additional
compensation or benefits.
8. GTE will provide you with the additional benefits specified in Xxxxx
XxxXxxxxx'x memorandum to you regarding transition arrangements, dated October
29, 1999. The financial counseling benefits specified in that memorandum will be
in lieu of the financial counseling benefit provided by Section 2.4 of your ESA.
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Xxxx X. Xxxxxx
November 1, 1999
Page 4
9. In consideration of the benefits conferred upon you by this Agreement, you
will, on your last day of employment with GTE, execute a Release furnished to
you by GTE, substantially in the form attached hereto. If you do not timely
execute the Release, or if you execute and then revoke the Release in accordance
with the terms of the Release, this Agreement will have no force or effect, and
you will not be entitled to any payments or benefits under this Agreement.
10. Except as modified by this Agreement, all of the terms of the Employment
Agreement, the ESA, and the other compensation and benefit plans in which you
participate shall remain in effect in accordance with their terms, including but
not limited to all of your outstanding stock options and stock appreciation
rights, deferred compensation, retirement arrangements, and the "Covenants" and
"Additional Remedies" sections of your Employment Agreement. This Agreement sets
forth the entire understanding of you and GTE regarding your transition from
employment with GTE, and supersedes all prior agreements and communications,
whether oral or written, between you and GTE regarding this subject. This
Agreement will not be modified except by written agreement of you and GTE.
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Xxxx X. Xxxxxx
November 1, 1999
Page 5
By way of information, Xxxxx XxxXxxxxx will be your contact person with regard
to the specific benefits you will be receiving under this Agreement.
Please indicate your acceptance by signing below and returning to me by November
22, 1999.
Again, on behalf of the entire GTE team, I want to thank you for your many
contributions and many years of valuable service with GTE.
Sincerely yours,
X.X. Xxx
cc: J.R. MacDonald
I agree to the terms set forth above.
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Xxxx X. Xxxxxx
Attachment
11
Revised 11/15/99
Revised 10/29/99
10/28/99
To: Xxxx Xxxxxx
Fr: Xxxxx XxxXxxxxx
Re: Transition Arrangements
As you requested, I wanted to summarize the points we have agreed to so far with
regard to your transition. By way of information, I will be serving as the
contact person for GTE as we work to finalize terms and thereafter will work
with you to implement them.
1. GTE will provide you an office at either a GTE site or a mutually agreeable
location for one year. In addition, we will provide you secretarial support
for the same period of time. Of course, if you commence new employment
during this one-year period, all of the above will cease.
2. You will keep your home computer, fax machine and other similar types of
equipment, and GTE will pay the costs of customary maintenance on that
equipment for the duration of its useful life.
3. The security that GTE has added to your home will be turned over to you
inasmuch as it would be more expensive to GTE to remove and restore the
home areas to their proper condition.
4. GTE will provide you with financial counseling for the calendar years 2000
and 2001 under the same terms as the counseling you presently receive.
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5. GTE will pay the dues for the TPC at Las Colinas and the LaSima Club for
one year. You will be responsible for payment of all other expenses. At the
end of the one-year period, the Company will assist you in transferring the
membership in the TPC at Las Colinas to your name or under our corporate
umbrella. Of course, you will be responsible for all expenses associated
with the transfer and maintenance of such membership thereafter.
If these terms correspond to your understanding, please sign below and
return to me.
cc: X. X. Xxx
I agree with the above terms.
-------------------------------- ----------------
Xxxx Xxxxxx Date
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February 4, 2000
Xxxx X. Xxxxxx
[Address]
[Address]
Dear Kent:
GTE has consulted Xxxxxx Xxxxxxxx regarding the impact of your option exercise
period on GTE's ability to use pooling of interest accounting treatment for the
proposed merger with Xxxx Atlantic. As a result, your November 1, 1999 letter
agreement is amended to clarify our understanding of the original terms of the
Agreement by replacing the last paragraph in paragraph 7 with the paragraph
below. This amendment is written in legal terms to be consistent with the
paragraph being replaced. While some of the language is identical to the
existing provisions, changes have been made where necessary to reflect our
initial understanding.
"Except as provided in the remainder of this paragraph, the two-year
exercise period provided for stock options and stock appreciation
rights (collectively "options") by Section 2.7 of your ESA will remain
in effect without change. Following either the merger with Xxxx
Atlantic, or the announced abandonment of the merger by GTE, GTE's
Executive Compensation and Organizational Structure Committee or its
designee (the "ECC") will consider whether the two-year exercise period
can be extended to five years without precluding the use of pooling of
interest accounting. If the ECC determines, in its sole discretion,
that the two-year exercise period can be so extended without precluding
the use of pooling of interest accounting, the ECC will so extend the
two-year exercise period to five years from the date of your
retirement; provided that no option may be exercised after the
expiration of the maximum term of the option. In addition, if the
two-year exercise period is extended in accordance with the preceding
provisions of this paragraph, notwithstanding anything to the contrary
in LTIP or in your Stock Option Agreements ("Option Agreements"), all
of your outstanding options that were granted before 1999 will be
subject, after December 31, 2001, to the forfeiture provisions set
forth in the Option Agreements, disregarding the Change in Control
provisions of LTIP and the Option Agreements. Options granted to you in
1999 will be subject to such forfeiture provisions at all times. If the
ECC determines in its sole discretion that this paragraph would
preclude the use of pooling of interest accounting, the ECC may, in its
sole discretion, eliminate or modify this paragraph to the extent
required to allow pooling of interest accounting. The
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Xxxx X. Xxxxxx
February 4, 2000
Page 2
elimination or modification of this paragraph by the ECC, or the
failure of the ECC to extend your option exercise period, in
accordance with the foregoing provisions will not entitle you to any
additional compensation or benefits."
In addition, separate and apart from the above and consistent with paragraph 4
of my October 28, 1999 memorandum to you, GTE will provide you with financial
counseling at a cost not to exceed $50,000 per year for the calendar years 2000
and 2001. Any financial counseling costs that you incur in excess of $50,000 per
year will be your responsibility.
If you have any question about this amendment, please let me know.
Sincerely yours,
J. Xxxxxxx XxxXxxxxx
Executive Vice President-
Human Resources & Administration
JRM:jls
c: X. Xxxxxx
