Exhibit 10gg
[Verizon Logo]
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
January 26, 2001
Xx. Xxxx X. Xxxxxx
[Address]
[Address]
Dear Xxxx:
We are pleased to offer you this employment agreement (the "Agreement")
with Verizon Communications Inc. ("Verizon"). 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 opportunities and challenges facing the Company are enormous and
exciting. Both as a new organization and as a vigorous competitor in the most
dynamic and innovative industry in history, the Company needs extraordinarily
talented and committed leaders. This Agreement and the valuable array of
wealth-creation opportunities it provides reflect our view that you meet this
high standard.
We value you and the leadership, vision, and commitment you bring to the
Company. We are excited by the prospect of having you as a key member of our
leadership team. We look forward to working with you as we chart the course of
our new organization at the beginning of a new century.
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 and the
recent Bell Atlantic - GTE merger (the "Merger") require 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 proprietary
information relating to the
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Page 2
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 fixed-term 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
Officers (or, if only one person holds that position, the Chief Executive
Officer) of Verizon (the "CEO(s)").
3. Term - The term of employment under this Agreement ("Term of
Employment") shall commence on November 17, 2000, and end on June 30, 2002.
4. Duties And Responsibilities - You shall serve as a senior executive of
the Company in such capacities, with such titles and authorities, as the CEO(s)
or his/their successor may from time to time prescribe, and you shall perform
all duties incidental to such positions, shall cooperate fully with the CEO(s)
or his/their 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 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(s) or his/their successor,
and except for memberships on boards of directors that you hold on the date of
this Agreement, 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.
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6. Base Salary - During the Term of Employment, your annual base salary
shall not be less than $425,000 per year; 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. Beginning
January 1, 2002, 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. Your annual short-term bonus opportunity shall
be prorated for the year 2000 to reflect the duration of the Agreement during
2000, and your annual long-term bonus opportunity shall become effective
beginning in 2001. The value of your annual short-term bonus opportunity shall
not be less than 75 percent of your then-current base salary. The value of your
annual long-term bonus opportunity shall not be less than 425 percent of your
then-current base salary.
8. Founders' Grant - You shall receive a Founders' Grant of options to
purchase 130,000 shares of Verizon common stock. The Founders' Grant is
contingent on your timely execution of this Agreement and your election to
participate in the Special Retention Account Program described in paragraph 11
("Special Retention Account Program"). The terms of the Founders' Grant are set
forth in the instrument governing the Founders' Grant attached hereto as Exhibit
A, which is incorporated herein by reference. If you do not timely execute this
Agreement and timely elect to participate in such Special Retention Account
Program, you shall not receive the Founders' Grant.
9. Performance Share Retention Unit Grant - You shall receive a Performance
Share Retention Unit Grant with respect to 30,000 shares of Verizon common
stock. The Performance Share Retention Unit Grant is contingent on your timely
execution of this Agreement and your election to participate in the Special
Retention Account Program described in paragraph 11 ("Special Retention Account
Program"). The terms of the Performance Share Retention Unit Grant are set forth
in the Performance Share Retention Unit Grant Agreement attached hereto as
Exhibit B, which is incorporated herein by reference. Your rights under the
Performance Share Retention Grant following the termination of your employment
shall be governed by such Performance Share Retention Grant Agreement, rather
than by the terms of paragraph 13 ("Termination of Employment"). If you do not
timely execute this Agreement and timely elect to participate in such Special
Retention Account Program, you shall not receive the Performance Share Retention
Unit Grant.
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10. Benefits And Perquisites - (a) In General - For the immediate future,
you shall-
(1) participate in the tax-qualified and nonqualified retirement
plans in which you currently participate;
(2) be eligible for the perquisites identified in subparagraph
(b), below; and
(3) participate in the other employee benefit plans, programs,
and policies in which you currently participate, including
medical, dental, and life insurance plans;
provided that the Company retains the right to amend or terminate any benefit
plan, policy, program, or perquisite either as part of the process of providing
uniform retirement benefits to former Bell Atlantic and GTE employees or in the
normal course of business.
(b) Perquisites - The perquisites referred to in subparagraph (a),
above, are the following:
(1) Flexible Spending Account: A flexible spending account of
$26,000 per year shall be available for such items as club
initiation fees, club memberships, and automobile payments.
The available balance in the account shall be allocated to
you in monthly installments.
(2) Financial Planning: You shall be eligible for the Company's
financial planning and services program. If you are already
using a vendor other than the vendor used by the Company's
financial planning and services program, and you wish to
continue using that other vendor, you are eligible for
reimbursement of the cost of using that other vendor up to
an annual maximum of $9,000.
(3) Company Aircraft: You shall be eligible to use Company
aircraft for business travel, subject to the availability of
the aircraft.
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(4) First-Class Air Travel: When Company aircraft are not
available for business travel, you shall be eligible for
first-class commercial air travel.
(5) Car Service: You shall be eligible to use the Company's car
service for business travel.
(6) Home Office Equipment: You shall be eligible for home office
equipment (e.g., computer, fax machine, business line with
long distance, and internet access) on an as-needed basis,
consistent with Company policy as in effect from time to
time.
(7) Cellular Telephone: You shall be provided with cellular
telephone equipment and service.
(c) 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.
11. Special Retention Account Program - By executing this Agreement, you
waive all of your rights under your Executive Severance Agreement with GTE
Service Corporation, dated June 4, 1998 (the "ESA"). In lieu of the benefits
previously provided to you under your ESA, the Company shall establish a Special
Retention Account on your behalf under the GTE Executive Salary Deferral Plan.
The balance in your Special Retention Account as of July 1, 2000 is $894,667.
You shall also be eligible for such other benefits as are provided under the GTE
Executive Salary Deferral Plan to employees with Special Retention Accounts. A
copy of the applicable provisions of the GTE Executive Salary Deferral Plan
relating to the Special Retention Account is attached hereto as Exhibit C, which
is incorporated herein by reference. Your rights to the balance in your Special
Retention Account following the termination of your employment shall be governed
by the applicable provisions of the GTE Executive Salary Deferral Plan, rather
than by the terms of paragraphs 13 ("Termination of Employment") and 14
("Release").
12. 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 D, which is incorporated herein by reference.
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13. 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) at any time by giving the
Chief Executive Officers (or, if only one person holds that position, the Chief
Executive Officer) of the Company (the "CEO(s)") written notice of intent to
terminate, delivered at least 30 calendar days before the effective date of such
termination (such period not to include vacation). The termination shall
automatically become effective upon the expiration of the 30-day 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 your base salary and short-term bonus (at 100% of
target) for the remaining Term of Employment, reduced by any amounts payable to
you during the Term of Employment under Company-sponsored disability plans, you
shall 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 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 - If, during the Term of Employment, you terminate
employment by reason of Retirement (as defined below), 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 retirement under the terms of the Verizon
Communications 2000 Broad-Based Incentive 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
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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(s), 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.
(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 14 ("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 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
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benefit otherwise provided pursuant to paragraphs 6 ("Base Salary") through 10
("Benefits And Perquisites"):
(1) The Company shall make a lump-sum cash severance payment to
you equal to the excess of (i) 200% of the sum of your
then-current annual base salary and your then-current target
short-term bonus, over (ii) the sum of your then-current
balance in your Special Retention Account, as determined
under the GTE Executive Salary Deferral Plan, and any
amounts paid or payable to you under any Company-sponsored
severance plan, program, policy, contract, account, or
arrangement during the remaining Term of Employment;
(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 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 14 ("Release").
(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
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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 15 ("Covenants"), as determined by the
CEO(s) in his/their 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.
14. Release - You shall not be entitled to any benefits under this
Agreement following the termination of your 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).
This paragraph 14 shall not apply if your employment is terminated by reason of
your Retirement, disability, or death.
15. Covenants - In consideration for the benefits and agreements described
above, you agree to comply with the covenants set forth in Exhibit E hereto,
which is incorporated herein by reference.
16. 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(s), in his/their sole discretion, waive in writing the
Company's rights to enforce some or all of the provisions incorporated in
paragraph 15 ("Covenants").
17. Other Agreements And Policies - The obligations imposed on you by
paragraph 15 ("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.
18. 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.
19. Other Company Plans - Except to the extent otherwise explicitly
provided by this Agreement, any awards made to you under any Company
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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.
20. Forfeiture - (a) If you breach any of the obligations incorporated in
paragraph 15 ("Covenants"), or engage in serious misconduct during the Term of
Employment that is contrary to written policies of the Company and is harmful to
the Company or its reputation, you shall forfeit (1) all interest and other
gains on compensation deferred under any Company-sponsored deferred compensation
arrangement (other than the Special Retention Account Program) to the extent
that such deferred compensation accrues after you execute this Agreement, and
(2) any unpaid incentive compensation (such as performance bonus awards under
the GTE 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 27 ("Additional
Remedies").
21. 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.
22. 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 provided to you pursuant to paragraph 10(b)
("Perquisites"), regardless of whether withholding is required.
23. 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 paragraph 23 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
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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.
24. 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.
25. 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.
26. Severability - The agreements contained herein and within the release
prescribed by paragraph 14 ("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.
27. 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 15 ("Covenants") are
essential to the continued good will and profitability of
the Company;
(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 15 ("Covenants");
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January 26, 2001
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(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 15
("Covenants") are not specifically enforced and that
monetary damages will not adequately protect the Company
from a breach of these paragraphs of the Agreement;
(e) If any dispute arises concerning the violation by you of the
covenants incorporated in paragraph 15 ("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.
28. Survival - The provisions of paragraphs 15 ("Covenants") through 30
("Entire Agreement") shall survive the Term of Employment. In addition, if your
employment continues after 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 13(c) ("Retirement")) shall likewise
survive the Term of Employment. Except as provided by the preceding provisions
of this paragraph 28, the terms of your employment after the end of the Term of
Employment shall not be governed by this Agreement.
29. Arbitration - Any dispute arising out of or relating to this Agreement
(except any dispute arising out of or relating to paragraph 15 ("Covenants")),
and any dispute arising out of or relating to your employment, shall be settled
by final 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 15 ("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 27
("Additional Remedies"). The arbitration shall be expedited and conducted in the
State of New York pursuant to the Center for Public
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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 29, 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 29. 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 29.
30. Entire Agreement - Except for the terms of the compensation and benefit
plans in which you participate, 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 GTE or Bell Atlantic or any of their respective subsidiaries) and
you regarding the subject matter of this Agreement, including your ESA and any
severance arrangement provided under a merger agreement. This Agreement shall
not be modified except by written agreement of you and Verizon.
Xxxx, we believe that this Agreement provides you and your family with both
financial security and great opportunity as our industry and the Company evolve.
We recognize that the challenges facing us are formidable and that you will be
assuming very substantial responsibilities in meeting those challenges. It is
our hope that this Agreement provides you with opportunities commensurate with
the commitment that we expect from you. Please indicate your acceptance by
signing below and returning the signed Agreement to us within ten business days
after your receipt of this Agreement.
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January 26, 2001
Page 14
Sincerely yours,
Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
I agree to the terms described above.
-----------------------------------------------
Xxxx X. Xxxxxx
Attachments: Exhibit A - Founders' Grant
Exhibit B - Performance Share Retention Unit Grant
Exhibit C - Special Retention Account Program
Exhibit D - Excise Tax Gross-Up
Exhibit E - Covenants
EXHIBIT A
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VERIZON COMMUNICATIONS INC.
FOUNDERS' GRANT STOCK OPTION AGREEMENT
AGREEMENT between Verizon Communications Inc. ("Verizon") and the
participant identified on the attached signature page (the "Participant").
1. Purpose of Agreement. The purpose of this Agreement is to provide a
one-time grant of a stock option to the Participant in light of the merger of
Bell Atlantic Corporation and GTE Corporation and the creation of Verizon
Communications Inc. This grant shall be known as the "Founders' Grant."
2. Agreement. This Agreement is entered into pursuant to the terms of the plan
identified on the attached signature page (the "Plan") and evidences the grant
of a nonqualified stock option (the "Option") to the Participant to purchase
shares of Verizon's Common Stock ("Common Stock") pursuant to the Plan. This
Option is not an incentive stock option. The Option and this Agreement are
subject to the terms and provisions of the Plan. (The Participant may request a
copy of the Plan from the Verizon Communications Inc. Executive Compensation and
Benefits Department.) By executing this Agreement, the Participant agrees to be
bound by the terms and provisions of the Plan, by the actions of the Plan
Administrator, by the actions of the Human Resources Committee of Verizon's
Board of Directors or any successor thereto (the "Committee") or any designee of
the Committee, and by the actions of Xxxxxxx's Board of Directors pursuant to
the Plan.
3. Contingency. The Founders' Grant is contingent on the Participant's timely
execution of this Agreement and the agreement to which this Agreement is an
exhibit. If the Participant does not timely execute this Agreement and the
agreement to which this Agreement is an exhibit, the Participant shall not
receive the Founders' Grant.
4. Date. The date of the grant of the Option is specified on the attached
signature page.
5. Number of Shares. The number of shares of Common Stock as to which the
option is granted is specified on the attached signature page.
6. Option Price. The option price per share is specified on the attached
signature page.
7. (a) Option Period and Vesting Schedule. The period for which the Option is
granted is until the earlier of June 30, 2010, or five years from the
Participant's separation from employment with the Company under the
circumstances described in subsections (b)(1) through (b)(6) (the
"Option Period"). In no event shall the Option be exercisable after
the Option Period, and the Option may expire earlier as set forth in
Section 7(b) ("Separation from Employment"). Except as set forth in
Section 7(b), the Option may not be exercised until June 30, 2003,
when the Option shall become exercisable in full; provided that upon
the occurrence of a Change in Control (as defined in the Plan), the
Option shall be exercisable in full.
(b) Separation from Employment. The Option may be terminated prior to the
expiration of the Option Period, and the date when the Option may
first be exercised may be modified, in accordance with the following
terms and conditions:
(1) Voluntary Separation and Discharge for Cause. If the Participant
quits or otherwise separates from the Company under circumstances
not described in Section 7(b)(2) ("Retirement") through (b)(6)
("Death") below, or if the Participant is discharged from
employment with the Company for Cause (as defined below) and
subsection (b)(2) below does not apply, this subsection (b)(1)
shall apply. If the Participant separates from the Company before
the date on which the Option becomes exercisable under Section
7(a), the Option shall be forfeited. If the Participant separates
from the Company on or after the date on which the Option becomes
exercisable under Section 7(a), the Option may be exercisable in
full during the Option Period, i.e., until the earlier of June
30, 2010, or five years from the Participant's separation from
employment with the Company.
(2) Retirement. If the Participant Retires (as defined below) and
subsections (b)(3) through (b)(6) below do not apply, this
subsection (b)(2) shall apply. If the Participant Retires before
the date on which the Option becomes exercisable under Section
7(a), the Option shall be forfeited. If the Participant Retires
on or after the date on which the Option becomes exercisable
under Section 7(a), the Option may be exercisable in full during
the Option Period, i.e., until the earlier of June 30, 2010, or
five years from the Participant's separation from employment with
the Company.
(3) Involuntary Discharge Without Cause. If the Company discharges
the Participant without Cause (as defined below),
Exhibit A-2
such as by reason of a Company-initiated, voluntary or
involuntary, force management or force reduction program or
initiative, the Option shall be immediately exercisable in full.
In no event shall the Option be exercisable after the Option
Period, i.e., after the earlier of June 30, 2010, or five years
from the Participant's separation from employment with the
Company. For purposes of this subsection (b)(3), a Participant's
separation from employment with the Company occurs on the last
day the Participant is on the payroll of the Company. This
subsection (b)(3) shall not apply to a Participant whose
employment is terminated for refusal to accept a reassignment
that involves no relocation or downgrade.
(4) Termination for Good Reason. If the Participant terminates
employment for Good Reason (as defined in the employment
agreement to which this Agreement is an exhibit), the Option
shall be immediately exercisable in full. In no event shall the
Option be exercisable after the Option Period, i.e., after the
earlier of June 30, 2010, or five years from the Participant's
separation from employment with the Company. For purposes of this
subsection (b)(4), a Participant's separation from employment
with the Company occurs on the last day the Participant is on the
payroll of the Company.
(5) Disability. If the Participant's separation from employment with
the Company occurs as a result of total and permanent disability,
as defined under the Company-sponsored long-term disability plan
that applies to the Participant (or, if the Participant is not
covered by a long-term disability plan, as defined in such plan
or in such manner as the Plan Administrator determines), the
Option shall be immediately exercisable in full. In no event
shall the Option be exercisable after the Option Period, i.e.,
after the earlier of June 30, 2010, or five years from the
Participant's separation from employment with the Company. For
purposes of this subsection (b)(5), a Participant's separation
from employment with the Company occurs on the later of the last
day the Participant is (i) on the payroll of the Company or (ii)
on short-term disability.
(6) Death. If the Participant's separation from employment with the
Company occurs as a result of death, the Option shall be
immediately exercisable in full by the Participant's beneficiary.
If the Participant dies after separation from employment with the
Company, but while the Option is exercisable in
Exhibit A-3
accordance with subsections (b)(1) ("Voluntary Separation and
Discharge for Cause") through (b)(5) ("Disability") above, the
Participant's beneficiary may exercise the Option to the extent
that the Option has become exercisable in accordance with such
subsections. In no event shall the Option be exercisable after
the Option Period, i.e., after the earlier of June 30, 2010, or
five years from the Participant's separation from employment with
the Company.
(7) Termination of Option. Upon the expiration of any period during
which the Option is exercisable in accordance with the preceding
provisions of this Section 7(b), the Option shall terminate and
shall not thereafter be exercisable.
(8) Transfer. Transfer of employment from Verizon to a Related
Company, from a Related Company to Verizon, or from one Related
Company to another Related Company shall not constitute a
separation from employment with the Company hereunder.
(9) Retirement. For purposes of this Section 7(b), "Retire" means (A)
to retire with a right to an immediate normal retirement, early
retirement or service pension under the Company-sponsored
tax-qualified final average pay defined benefit pension plan
(excluding from this definition any cash balance plan) in which
the Participant actively participates, (B) if the Participant
does not actively participate in such a tax-qualified final
average pay defined benefit pension plan, to retire (i) after
attaining normal retirement age under the Company-sponsored cash
balance plan or nonqualified defined benefit pension plan in
which the Participant actively participates, or (ii) with a
combination of age and years of service (as calculated for
retirement-eligibility purposes) that equals or exceeds any of
the following combinations:
Age equal to or Service equal to or
---------------- -------------------
greater than: greater than:
------------ ------------
Any age 30 years
50 25 years
55 20 years
60 15 years
65 10 years
Exhibit A-4
or (C) retirement under any other circumstances determined in
writing by the Plan Administrator.
(10) Cause. For purposes of this Section 7(b), "Cause" is defined as
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities
assigned to the Participant; fraud, misappropriation or
embezzlement involving the Company or a material breach of any
provision incorporated in paragraph 15 ("Covenants") of the
agreement to which this Agreement is an exhibit, as determined by
the CEO(s) in his/their discretion, or (ii) commission of any
felony of which the Participant is finally adjudged guilty by a
court of competent jurisdiction.
8. (a) Exercise. The Option may be exercised, in whole or in part, as
permitted under this Agreement, by making payment in accordance with
subsection (b), below, and by delivering to the Executive VP - Human
Resources (the "EVP HR") or to any delegate of the EVP HR ("Delegate")
a notice of exercise in the form approved by the EVP HR or in any
other manner approved by the EVP HR. The Participant shall be informed
in writing of the appointment, if any, of a Delegate.
(b) Payment of Option Price. To exercise the Option, the Participant must
pay the Option Price by one of the following methods:
(1) (i) check or wire transfer, (ii) surrender of Common Stock that
has been held by the Participant for at least six months, or
(iii) a combination of both (i) and (ii);
(2) subject to the prior written approval of the Committee, a
recourse promissory note; or
(3) subject to the prior written approval of the EVP HR, the
administrator of the stock option program may pay the Option
Price on behalf of the Participant subject to such terms and
conditions as the administrator may impose.
For purposes of an exchange of Common Stock in subsection (b)(1),
above, the value of a share of Common Stock used to pay the Option
Price shall be equal to the average of the high and low sales prices
of shares of Common Stock traded on the New York Stock Exchange (or
any other exchange or reporting system selected by the Committee) on
the date the Option is exercised, or if there are no sales of Common
Stock reported for that date, on the date or dates that the Committee
determines, in its sole discretion, to be appropriate for purposes of
valuation.
Exhibit A-5
The Participant may be charged an administrative fee or fees
in connection with the exercise of the Option.
9. Notice and Date of Exercise. The notice of exercise shall indicate the
number of shares with respect to which the Option is being exercised. The Option
may not be exercised with respect to fractional shares. In addition, the Option
may not be exercised if the administrator of the stock option program determines
that, at the time of an attempted exercise, the fair market value of the shares
with respect to which the Option is being exercised is either below the Option
Price with respect to such shares or not sufficiently above such Option Price to
cover any applicable taxes and administrative fees. Subject to the conditions
and restrictions set forth in this Agreement, the date of exercise of the Option
shall be the later of (a) the date on which the notice of exercise in the
approved form is received in the office of the EVP HR or in the office of the
Delegate or (b) the date on which either (i) full payment of the Option Price
and any required tax withholding is received by the EVP HR or the Delegate or
(ii) the administrator of the stock option program is irrevocably committed to
make such payment. Notwithstanding the preceding sentence, no shares shall be
issued until full payment is received by the EVP HR or the Delegate. Upon the
exercise of the Option and receipt of full payment, Verizon shall, as soon as
practicable, issue or deliver certificates for the number of shares acquired
thereby, subject to the conditions and restrictions set forth in this Agreement.
If the Participant dies following the exercise of all or part of the Option, but
before issuance or delivery of the shares, such shares shall be issued or
delivered to the Participant's beneficiary.
10. Shareholder Rights. The Participant shall have no rights as a shareholder
with respect to shares of Common Stock to which the Option relates until the
date on which the Participant becomes the holder of record of such shares.
Except as provided by the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to such date.
11. Amendment of Option. The Committee may not, without the written consent of
the Participant, revoke this Agreement insofar as it relates to the Option
granted hereunder, and may not without such written consent make or change any
determination or change any term, condition or provision affecting the Option if
the determination or change would materially and adversely affect the Option or
the Participant's rights thereto.
12. Assignment. The Option shall not be assignable or transferable except by
will or by the laws of descent and distribution. During the Participant's
lifetime, the Option may be exercised only by the Participant or by the
Participant's guardian or legal representative.
13. Beneficiary. The Participant shall designate a beneficiary in writing and
in such manner as is acceptable to the EVP HR or the Delegate. If the
Participant
Exhibit A-6
fails to so designate a beneficiary, or if no such designated beneficiary
survives the Participant, the Participant's beneficiary shall be the
Participant's estate.
14. Other Plans and Agreements. Any gain realized by the Participant pursuant
to this Agreement shall not be taken into account as compensation in the
determination of the Participant's benefits under any pension, savings, group
insurance, or other benefit plan maintained by the Company, except as determined
by the board of directors of Verizon or, in the case of a plan not maintained by
Verizon, the Related Company that maintains the plan. The Participant
acknowledges that receipt of this Agreement or any prior stock option agreement
shall not entitle the Participant to any other benefits under the Plan or any
other plans maintained by the Company.
15. Company and Related Company. For purposes of this Agreement, "Company"
means Verizon and Related Companies. "Related Company" means (i) any
corporation, partnership, joint venture or other entity in which Verizon holds a
direct or indirect ownership or proprietary interest of 50 percent or more, or
(ii) any corporation, partnership, joint venture or other entity in which
Verizon holds an ownership or proprietary interest of less than 50 percent but
which, in the discretion of the Committee, is treated as a Related Company for
purposes of this Agreement.
16. Employment Status. The grant of the Option shall not be deemed to
constitute a contract of employment between the Company and the Participant, nor
shall it constitute a right to remain in the employ of the Company.
17. Withholding. It shall be a condition to the issuance or delivery of shares
of Common Stock as to which the Option shall have been exercised that provisions
satisfactory to the Company shall have been made for payment of any taxes
reasonably determined by the Company or the Delegate to be required to be paid
or withheld pursuant to any applicable law or regulation. The Participant may
irrevocably elect to have the minimum required amount of any withholding tax
obligation satisfied by (a) having shares withheld that are otherwise to be
issued or delivered to the Participant with respect to the exercise of the
Option, (b) delivering to the Company or the Delegate other shares of Common
Stock that have been held by the Participant for at least six months, or (c) any
other method approved by the EVP HR of which the Participant may be informed in
writing.
18. Securities Laws. If at the time of any exercise of the Option in whole or
in part, the Company deems it to be a violation of any federal or state
securities law or regulation to issue or deliver its shares pursuant to such
exercise, the Company, at its sole option, may reject such exercise and return
the tender or make application for such qualification or registration as the
Company deems advisable. The Company shall not be required to issue or deliver
any shares of Common Stock prior to the admission of such shares to listing on
any stock exchange on which the stock may then be listed and the completion of
any registration or qualification of
Exhibit A-7
such shares under any federal or state law or rulings or regulations of any
government body that the Company, in its sole discretion, determines to be
necessary or advisable.
19. Committee Authority. The Committee shall have complete discretion in the
exercise of its rights, powers, and duties under this Agreement. Any
interpretation or construction of any provision of, and the determination of any
question arising under, this Agreement shall be made by the Committee in its
sole discretion and shall be final, conclusive, and binding. The Committee may
designate any individual or individuals to perform any of its functions
hereunder.
20. Successors. This Agreement shall be binding upon, and inure to the benefit
of, any successor or successors of Xxxxxxx and the person or entity to whom the
Option may have been transferred by will, the laws of descent and distribution,
or beneficiary designation. All terms and conditions of this Agreement imposed
upon the Participant shall, unless the context clearly indicates otherwise, be
deemed, in the event of the Participant's death, to refer to and be binding upon
such last-mentioned person or entity.
21. Construction. This Agreement is intended to grant the Option upon the terms
and conditions authorized by the Plan. Any provisions of this Agreement that
cannot be so administered, interpreted, or construed shall be disregarded. In
the event that any provision of this Agreement is held invalid or unenforceable
by a court of competent jurisdiction, such provision shall be considered
separate and apart from the remainder of this Agreement, which shall remain in
full force and effect. In the event that any provision is held to be
unenforceable for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.
22. Defined Terms. Except where the context clearly indicates otherwise, all
capitalized terms used herein shall have the definitions ascribed to them by the
Plan, and the terms of the Plan shall apply where appropriate.
23. Execution of Agreement. The Participant shall indicate consent to the terms
of this Agreement and the Plan by executing the attached signature page which is
made a part of this Agreement.
24. Confidentiality. Except to the extent otherwise required by law, the
Participant shall not disclose, in whole or in part any of the terms of this
Agreement. This Section 24 does not prevent the Participant from disclosing the
terms of this Agreement to the Participant's spouse or to the Participant's
legal, tax, or financial adviser, provided that the Participant 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.
Exhibit A-8
SIGNATURE PAGE
By executing this page, the undersigned Participant agrees to be bound by the
terms of the Plan and the Founders' Grant Stock Option Agreement, the terms of
which are incorporated herein by reference, in connection with the following
grant to the Participant under the Plan:
--------------------------------------------------------------------------------
NAME OF PARTICIPANT: Xxxx X. Xxxxxx
--------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: [Social Security Number]
--------------------------------------------------------------------------------
DATE OF GRANT: Sept. 7, 2000
--------------------------------------------------------------------------------
NUMBER OF SHARES: 130,000
--------------------------------------------------------------------------------
OPTION PRICE: $43.34
--------------------------------------------------------------------------------
PLAN FROM WHICH OPTIONS ARE AWARDED: 1997 GTE Long-Term Incentive Plan
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, Verizon Communications Inc., by its duly authorized Officer,
and the Participant have executed this Agreement.
VERIZON COMMUNICATIONS INC.
--------------------------------- -------------------------------------
By: Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
-------------------------
Participant
-------------------------
Date
Please indicate your acceptance by signing above and returning the signed
Agreement to us within ten business days after your receipt of this Agreement.
Please complete the Beneficiary Designation form on the back side.
EXHIBIT B
---------
VERIZON COMMUNICATIONS INC.
PERFORMANCE SHARE RETENTION UNIT AGREEMENT
AGREEMENT between Verizon Communications Inc. ("Verizon") and the
participant identified on the attached signature page (the "Participant").
1. Purpose of Agreement. The purpose of this Agreement is to provide a
one-time grant of restricted stock units to the Participant, as a senior
management employee of Verizon, in light of the merger of GTE Corporation and
Bell Atlantic Corporation and the creation of Verizon Communications Inc. The
restricted stock units that are the subject of this grant shall be known as
"Performance Share Retention Units."
2. Agreement. This Agreement is entered into pursuant to the terms of the
plan or plans specified on the attached signature page (the "Plan"), and
evidences the grant of a stock-based award in the form of restricted stock units
("RSUs") pursuant to the Plan. The Agreement is subject to the terms and
provisions of the Plan. By execution of this Agreement, the Participant
acknowledges receipt of a copy of the Plan and further agrees to be bound
thereby and by the actions of the Human Resources Committee of Verizon's Board
of Directors or any successor thereto (the "Committee") and Xxxxxxx's Board of
Directors pursuant to the Plan.
3. Contingency. The grant of Performance Share Retention Units is
contingent on the Participant's timely execution of this Agreement and the
agreement to which this Agreement is an exhibit. If the Participant does not
timely execute this Agreement and the agreement to which this Agreement is an
exhibit, the Participant shall not receive the grant of Performance Share
Retention Units.
4. Number of Units. The Participant is granted the number of RSUs
specified on the attached signature page as of July 1, 2000. An RSU is a
hypothetical share of Verizon's Common Stock. The value of an RSU on any given
date shall be equal to the closing price of Verizon's Common Stock as of such
date. An RSU does not represent an equity interest in Verizon and carries no
voting rights. A Dividend Equivalent Unit ("DEU") or fraction thereof shall be
added to each RSU each time that a dividend is paid on Verizon's Common Stock.
The amount of each DEU shall be equal to the dividend paid on a share of
Verizon's Common Stock. The DEU shall be converted into RSUs or fractions
thereof based upon the average of the high and low sales prices of Verizon's
Common Stock traded on the New York Stock Exchange on the dividend payment date
of each declared dividend on Verizon's Common Stock, and such RSUs or fractions
thereof shall be added to the Participant's RSU balance.
Exhibit B-1
5. Grant Date. The Grant Date for this RSU grant shall be the Grant Date
specified on the attached signature page.
6. Vesting.
(a) For purposes of vesting, this RSU grant shall be divided into
three tranches, each of which shall include the following percentage of the
total number of RSUs granted pursuant to paragraph 4, above, and any
additional RSUs that are attributable to DEUs on RSUs in that tranche:
----------------------------------------------------------------------
Tranche Percentage of Initial RSUs
----------------------------------------------------------------------
1 50%
----------------------------------------------------------------------
2 25%
----------------------------------------------------------------------
3 25%
----------------------------------------------------------------------
(b) Tranche 1.
(1) Tranche 1 shall vest on the basis of the Participant's
continued employment with Verizon after the Grant Date. The vesting
schedule for Tranche 1 shall be as set forth in the following table:
----------------------------------------------------------------------
Years of Service Percentage to Aggregate Percentage
Vest Vested
----------------------------------------------------------------------
less than 3 0% 0%
----------------------------------------------------------------------
3 50% 50%
----------------------------------------------------------------------
4 25% 75%
----------------------------------------------------------------------
5 or more 25% 100%
----------------------------------------------------------------------
(2) For purposes for the table set forth in subparagraph (1),
above--
(i) "Years of Service" shall mean full years of continuous
employment with Verizon following June 30, 2000. There shall be
no proration or interpolation for partial years of service.
(ii) "Percentage to Vest" shall mean the percentage of
Tranche 1 that first vests upon attainment of the applicable
period of service. It does not mean the aggregate percentage of
Tranche 1 that is vested at that time.
Exhibit B-2
(iii) "Aggregate Percentage Vested" shall mean the aggregate
percentage of Tranche 1 that is vested upon completion of the
specified period of service. It does not mean the percentage of
Tranche 1 that first becomes vested upon completion of the
specified period of service.
(c) Tranche 2. Subject to continuous employment requirement set forth
in paragraph 6(e), below, Tranche 2 shall vest based on the growth of
Verizon's annual revenues as follows--
(1) As set forth in the following table, if Xxxxxxx's annual
revenues in the "Target Year" exceed Xxxxxxx's revenues in the
"Baseline Year" by the "Revenue Growth Goal" or more, the applicable
percentage of Tranche 2 shall vest:
--------------------------------------------------------------------------------------------------
Target Baseline Revenue Percentage Aggregate
Year Year Growth to Vest Percentage
Goal Vested
--------------------------------------------------------------------------------------------------
2002 2000 15.5% 50% N/A
--------------------------------------------------------------------------------------------------
2003 2002 7.5% 25% N/A
--------------------------------------------------------------------------------------------------
2004 2003 7.5% 25% N/A
--------------------------------------------------------------------------------------------------
(2) For purposes of the table set forth in subparagraph (c)(1),
above--
(i) Revenues shall be determined by the Plan Administrator.
(ii) "Percentage to Vest" shall mean the percentage of
Tranche 2 that first vests upon attainment of the applicable
Revenue Growth Goal. It does not mean the aggregate percentage of
Tranche 2 that is vested at that time.
(iii) The "Aggregate Percentage Vested" column is not
applicable to Tranche 2 because the vesting of each portion of
Tranche 2 is independent of the vesting of any other portion of
Tranche 2. If Xxxxxxx meets the Revenue Growth Goal for Target
Year 2003 or 2004, and the Participant satisfies the continuous
employment requirement of paragraph 6(e), below, the applicable
percentage of Tranche 2 shall vest whether or not the portion of
Tranche 2 related to an earlier Target Year has vested.
Exhibit B-3
(d) Tranche 3. Subject to continuous employment requirement set forth
in paragraph 6(e), below, Tranche 3 shall vest based on growth of earnings
per share of Verizon's common stock ("EPS") as follows--
(1) As set forth in the following table, if the EPS in the
"Target Year" exceeds the EPS in the "Baseline Year" by the "EPS
Growth Goal" or more, the applicable percentage of Tranche 3 shall be
vested:
------------------------------------------------------------------------------------------
Aggregate
Target Baseline EPS Growth Percentage Percentage
Year Year Goal to Vest* Vested
------------------------------------------------------------------------------------------
2002 2000 17% 50% 50%
------------------------------------------------------------------------------------------
2003 2000 31% 25% or 75% 75%
------------------------------------------------------------------------------------------
2004 2000 46.5% 25%, 50%, or 100% 100%
------------------------------------------------------------------------------------------
*This column is explained in paragraph 6(d)(2)(ii), below.
(2) For purposes of the table set forth in subparagraph (d)(1),
above--
(i) EPS shall be determined by the Plan Administrator.
(ii) "Percentage to Vest" shall mean percentage of Tranche 3
that first vests upon attainment of the applicable EPS Growth
Goal. It is stated in the alternative due to the cumulative
nature of the EPS Growth Goals for Tranche 3, all of which use
Baseline Year 2000. Subject to the continuous employment
requirement set forth in paragraph 6(e), the "Percentage to Vest"
of Tranche 3 shall be as follows--
(A) Target Year 2002. If the EPS Growth Goal for
----------------
Target Year 2002 is attained, 50% of Tranche 3 shall vest.
(B) Target Year 2003. If the EPS Growth Goal for
----------------
Target Year 2003 is attained: (1) 25% of Tranche 3 shall
vest, and, (2) an additional 50% of Tranche 3 shall also
vest if the EPS Goal for Target Year 2002 was not attained
at the end of Target Year 2002.
(C) Target Year 2004. If the EPS Growth Goal for
----------------
Target Year 2004 is attained: (1) 25% of Tranche 3 shall
vest, (2) an additional 25% of Tranche 3 shall also
Exhibit B-4
vest if the EPS Goal for Target Year 2003 was not attained
at the end of Target Year 2003, and (3) an additional 50% of
Tranche 3 shall also vest if the EPS Goal for Target Year
2002 was not attained at the end of Target Year 2002 and the
EPS Goal for Target Year 2003 was not attained at the end of
Target Year 2003.
(iii) "Aggregate Percentage Vested" shall mean the aggregate
percentage of Tranche 3 that is vested upon attainment of the
applicable EPS Goal. It does not mean the percentage of Tranche 3
that first becomes vested at that time.
(e) Continuous Employment Requirement.
(1) The percentage of Tranches 2 or 3 related to a Target Year
shall vest only if the Participant is continuously employed by Verizon
from the Grant Date until June 30th of the year after the applicable
Target Year.
(2) There shall be no proration or interpolation for partial
years of service--if the Participant does not satisfy the requirements
of this paragraph 6(e), the Participant shall not vest in any RSUs
related to a Target Year, notwithstanding any period of service during
or after the Target Year or the attainment of the applicable Revenue
Growth Goal or EPS Growth Goal.
(f) Transfer. Transfer of employment from Verizon to a Related
Company, from a Related Company to Verizon, or from one Related Company to
another Related Company shall not constitute a separation from employment
hereunder.
(g) Vested RSUs shall not be forfeited.
7. Payment. All payments under this Agreement shall be made in shares of
Verizon's Common Stock, except for any fractional shares, which shall be paid in
the form of cash. As soon as practicable after the Participant has become vested
in all or a portion of a tranche of RSUs, the value of RSUs in that tranche or
portion of the tranche shall be paid to the Participant (subject, however, to
any deferral application that the Participant has made under the deferral plan
then available to the Participant and procedures adopted by the Plan
Administrator). If the Participant dies before any payment due hereunder is
made, such payment shall be made to the Participant's beneficiary. Once a
payment has been made with respect to an RSU, the RSU shall be canceled.
8. Early Cancellation/Accelerated Vesting of RSUs. Subject to the
provisions of paragraph 8(e) hereof, RSUs may vest or be forfeited before
vesting in accordance with paragraph 6 hereof as follows:
Exhibit B-5
(a) Retirement, Voluntary Separation, or Termination for Cause. If
the Participant retires, quits, or otherwise separates from employment
under circumstances not described in subparagraphs (b) through (d), below,
or is terminated for Cause, all then-unvested RSUs shall be canceled
immediately, and shall not be payable, except to the extent the Committee
decides otherwise. 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
the Participant; fraud, misappropriation or embezzlement involving the
Company or a material breach of any provision incorporated in paragraph 15
("Covenants") of the employment agreement to which this Agreement is an
exhibit, as determined by the CEO(s) in his/their discretion, or (ii)
commission of any felony of which the Participant is finally adjudged
guilty by a court of competent jurisdiction.
(b) Involuntary Termination Without Cause. Notwithstanding the
preceding provisions of this paragraph 8 or the continuous employment
requirement set forth in paragraph 6(e), if the Participant is
involuntarily terminated from employment other than for Cause--
(1) all then-unvested RSUs in Tranche 1 shall vest immediately;
(2) the then-unvested RSUs in Tranche 2 shall be subject to the
vesting provisions set forth in paragraph 6(c), except that the
continuous employment requirement set forth in paragraph 6(e) shall
not apply; and
(3) the then-unvested RSUs in Tranche 3 shall be subject to the
vesting provisions set forth in paragraph 6(d), except that the
continuous employment requirement set forth in paragraph 6(e) shall
not apply.
All RSUs that vest pursuant to paragraphs 8(b)(1), 8(b)(2), or 8(b)(3)
shall be payable at the time the RSUs would have been payable had the
Participant been subject to and satisfied the continuous employment
requirement set forth in paragraph 6(e).
For purposes of this Agreement, the Participant shall not be considered to
have been involuntarily terminated without Cause if his employment is
terminated for refusal to accept a reassignment that involves no relocation
or downgrade and paragraph 8(c) does not apply.
(c) Termination for Good Reason. If, before all RSUs in a tranche
have vested, the Participant terminates employment for Good Reason (as
defined in the employment agreement to which this Agreement is an exhibit),
the then-unvested RSUs in each tranche shall be subject to the vesting
Exhibit B-6
provisions set forth in paragraph 8(b) (Involuntary Termination Without
Cause), above.
(d) Disability or Death. If, before all RSUs in a tranche have
vested, the Participant separates from employment by reason of death or
disability (as determined by the Committee), the then-unvested RSUs in each
tranche shall be subject to the vesting provisions set forth in paragraph
8(b) (Involuntary Termination Without Cause), above.
(e) Change in Control. Upon the occurrence of a Change in Control (as
defined in the 2000 Verizon Communications Broad-Based Incentive Plan), all
then-unvested RSUs shall vest and be payable immediately without regard to
the Revenue Growth Goals or EPS Growth Goals that otherwise would apply to
RSUs in Tranches 2 and 3, except that no portion of Tranche 2 shall vest if
the Change in Control occurs after the end of a Target Year and the
applicable Revenue Growth Goal was not attained for that Target Year.
(f) Vesting Schedule. Except as provided in subparagraphs (b) or (c),
above, nothing in this paragraph 8 shall accelerate the vesting schedule of
RSUs prescribed by the provisions of paragraph 6 hereof.
9. Shareholder Rights. The Participant shall have no rights as a
shareholder with respect to shares of Common Stock to which this grant relates
until the date on which the Participant becomes the holder of record of such
shares. Except as provided in the Plan or in this Agreement, no adjustment shall
be made for dividends or other rights for which the record date is prior to such
date.
10. Extraordinary Events. In determining EPS or Revenue Growth, and for
other appropriate purposes under this Agreement, the Plan Administrator will
have the discretion to take into consideration any or all of the following: (a)
the effects of business combinations; (b) the effects of discontinued operations
(including loss on disposal of a line of business or class of customer); (c)
changes in accounting principles; (d) extraordinary items; (e) restructuring
charges; and (f) changes in tax law. Items (a) and (b) will be as defined in
accordance with Generally Accepted Accounting Principles ("GAAP"), and items (c)
through (f) will be as defined in accordance with GAAP and as defined and as
disclosed in the Company's financial statements.
11. Revocation or Amendment of Agreement. The Committee may not, without
the written consent of the Participant, revoke this Agreement insofar as it
relates to the RSUs granted hereunder, and may not without such written consent
make or change any determination or change any term, condition or provision
affecting the RSUs if the determination or change would materially and adversely
affect the Performance Share Retention Units or the Participant's rights
thereto.
12. Assignment. The RSUs shall not be assignable or transferable except by
Exhibit B-7
will or by the laws of descent and distribution. During the Participant's
lifetime, the RSUs may be deferred only by the Participant or by the
Participant's guardian or legal representative.
13. Beneficiary. The Participant shall designate a beneficiary in writing
and in such manner as is acceptable to the Executive VP - Human Resources (the
"EVP HR") or to any delegate of the EVP HR. If the Participant fails to so
designate a beneficiary, or if no such designated beneficiary survives the
Participant, the Participant's beneficiary shall be the Participant's estate.
14. Other Plans and Agreements. Any gain realized by the Participant
pursuant to this Agreement shall not be taken into account as compensation in
the determination of the Participant's benefits under any pension, savings,
group insurance, or other benefit plan maintained by Verizon or a Related
Company, except as determined by the board of directors of such company. The
Participant acknowledges that receipt of this Agreement or any prior RSU
agreement shall not entitle the Participant to any other benefits under the Plan
or any other plans maintained by the Company.
15. Company and Related Company. For purposes of this Agreement, "Company"
means Verizon and Related Companies. "Related Company" means (i) any
corporation, partnership, joint venture, or other entity in which Verizon hold a
direct or indirect ownership or proprietary interest of 50 percent or more, or
(ii) any corporation, partnership, joint venture, or other entity in which
Verizon holds an ownership or other proprietary interest of less than 50 percent
but which, in the discretion of the Committee, is treated as a Related Company
for purposes of this Agreement.
16. Employment Status. The grant of the RSUs shall not be deemed to
constitute a contract of employment between the Company and the Participant, nor
shall it constitute a right to remain in the employ of any such company.
17. Withholding. It shall be a condition to the issuance or delivery of
shares of Common Stock as to which the RSUs relate that provisions satisfactory
to the Company shall have been made for payment of any taxes determined by the
Company to be required to be paid or withheld pursuant to any applicable law or
regulation. The Participant may irrevocably elect to have the minimum required
amount of any withholding tax obligation satisfied by (a) having shares withheld
that are otherwise to be issued or delivered to the Participant with respect to
the RSUs, or (b) delivering to the Company either shares of Common Stock
received with respect to the RSUs or other shares of Common Stock that have been
held by Participant for at least six months, or (c) any other method approved by
the EVP HR of which the Participant may be informed in writing.
18. Securities Laws. The Company shall not be required to issue or deliver
any shares of Common Stock prior to the admission of such shares to listing on
any
Exhibit B-8
stock exchange on which the stock may then be listed and the completion of any
registration or qualification of such shares under any federal or state law or
rulings or regulations of any government body that the Company, in its sole
discretion, determines to be necessary or advisable.
19. Committee Authority. The Committee shall have complete discretion in
the exercise of its rights, powers, and duties under this Agreement. Any
interpretation or construction of any provision of, and the determination of any
question arising under, this Agreement shall be made by the Committee in its
sole discretion and shall be final, conclusive, and binding. The Committee may
designate any individual or individuals to perform any of its functions
hereunder.
20. Successors. This Agreement shall be binding upon, and inure to the
benefit of, any successor or successors of the Company and the person or entity
to whom the RSUs may have been transferred by will, the laws of descent and
distribution, or beneficiary designation. All terms and conditions of this
Agreement imposed upon the Participant shall, unless the context clearly
indicates otherwise, be deemed, in the event of the Participant's death, to
refer to and be binding upon such last-mentioned person or entity.
21. Construction. This Agreement is intended to grant the RSUs upon the
terms and conditions authorized by the Plan. Any provisions of this Agreement
that cannot be so administered, interpreted, or construed shall be disregarded.
In the event that any provision of this Agreement is held invalid or
unenforceable by a court of competent jurisdiction, such provision shall be
considered separate and apart from the remainder of this Agreement, which shall
remain in full force and effect. In the event that any provision is held to be
unenforceable for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.
22. Defined Terms. Except where the context clearly indicates otherwise,
all capitalized terms used herein shall have the definitions ascribed to them by
the Plan, and the terms of the Plan shall apply where appropriate.
23. Execution of Agreement. The Participant shall indicate consent to the
terms of this Agreement and the Plan by executing the attached signature page
which is made a part of this Agreement.
24. Confidentiality. Except to the extent otherwise required by law, the
Participant shall not disclose, in whole or in part any of the terms of this
Agreement. This paragraph 24 does not prevent the Participant from disclosing
the terms of this Agreement to the Participant's spouse or to the Participant's
legal, tax, or financial adviser, provided that the Participant 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.
Exhibit B-9
SIGNATURE PAGE
By executing this page, the undersigned Participant agrees to be bound by the
terms of the plan(s) listed below and the Performance Share Retention Unit
Agreement, the terms of which are incorporated herein by reference, in
connection with the following grant to the Participant under the Plan:
--------------------------------------------------------------------------------
NAME OF PARTICIPANT: Xxxx X. Xxxxxx
--------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: [Social Security Number]
--------------------------------------------------------------------------------
GRANT DATE: Sept. 7, 2000
--------------------------------------------------------------------------------
NUMBER OF RSUs: 30,000
--------------------------------------------------------------------------------
PLAN(S) FROM WHICH RSUs AWARDED: Tranche 1- Verizon Communications
2000 Broad-Based Incentive Plan
Tranches 2 and 3- 1997 GTE Long-Term
Incentive Plan
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, Verizon Communications Inc., by its duly authorized Officer,
and the Participant have executed this Agreement.
VERIZON COMMUNICATIONS INC.
By:
---------------------- -------------------------
Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
-------------------------
Participant
-------------------------
Date
Please indicate your acceptance by signing above and returning the signed
Agreement to us within ten business days of your receipt of this Agreement.
Please complete the Beneficiary Designation form on the back side.
EXHIBIT C
---------
================================================================================
SPECIAL RETENTION ACCOUNT
AND OTHER BENEFITS PROGRAM
---------------
Part of the
GTE Executive Salary Deferral Plan
---------------
Effective July 1, 2000
================================================================================
SPECIAL RETENTION ACCOUNT
AND OTHER BENEFITS PROGRAM
Table of Contents
Article 1. Introduction.......................................................1
1.01. Nature of Program...........................................1
1.02. Purpose of Program..........................................1
1.03. Effective Date..............................................1
Article 2. Definitions and Construction.......................................2
2.01. Definitions.................................................2
2.02. Part of the Plan............................................3
2.03. Gender and Number...........................................3
Article 3. Eligibility and Account Balance....................................4
3.01. Eligibility.................................................4
3.02. Initial Account Balance.....................................4
3.03. Election to Defer...........................................4
Article 4. Accounts...........................................................5
4.01. Accounts....................................................5
Article 5. Payments...........................................................6
5.01. Exclusive Entitlement to Payment............................6
5.02. Xxxxxx and Sources of Payment...............................6
5.03. Limitations on Rights to Payment............................7
Article 6. Other Benefits.....................................................8
6.01. Other Benefits..............................................8
6.02. Certain Additional Payments by the Company.................11
6.03. Nonduplication.............................................11
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Table of Contents
Article 1. Introduction
1.01. Nature of Program.
This Program shall become a part of the GTE Executive Salary Deferral Plan
and any successors to that plan. By its terms, this Program shall apply only to
those participants in the GTE Executive Salary Deferral Plan who have waived any
entitlement they might otherwise have to certain payments and/or other benefits
as a result of the merger involving GTE Corporation and Bell Atlantic
Corporation.
1.02. Purpose of Program.
The Program is designed to provide incentives for the Company's key
executives to remain with the Company as it charts its course both as a new
company and a competitor in the most dynamic and innovative industry in history.
The Special Retention Account established under this Program is intended to
provide such an incentive: it allows these employees (if they remain with the
Company for at least one year) to defer certain payments that are not otherwise
eligible for deferral under other Company-sponsored deferred compensation
arrangements and to receive other benefits. The Program is expected to play an
important role in the Company's efforts to retain employees with the leadership,
vision, and commitment necessary for the Company to flourish during this
enormously exciting and challenging time.
1.03. Effective Date.
The Program is effective as of July 1, 2000, except to the extent
specifically provided herein.
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Special Retention Account and Other Benefits Program Page 1
Article 2. Definitions and Construction
2.01. Definitions.
Unless the context clearly indicates otherwise, the following terms, when
used in capitalized form in this Program, shall have the meanings set forth
below.
Committee. "Committee" shall mean the Human Resources Committee of the
Board of Directors of the Company.
Company. "Company" shall mean Verizon Communications Inc. and its
affiliates.
Covered Employee. "Covered Employee" shall mean an employee of the Company
who is designated as a Covered Employee by the Plan Administrator.
Merger. "Merger" shall mean the merger of the businesses of GTE Corporation
and Bell Atlantic Corporation pursuant to the terms of an Agreement and Plan of
Merger dated as of July 27, 1998, among Bell Atlantic, GTE, and Beta Gamma
Corporation.
Other Benefits. "Other Benefits" shall mean the benefits described in
Article 6 of this Program.
Other Plans. "Other Plans" shall mean all employee benefit plans, programs,
awards, arrangements, policies, and practices of the Company, whether or not
qualified under the Code or subject to the Employee Retirement Income Security
Act of 1974, as amended, including any employment agreement the Participant may
have with the Company or its predecessors.
Participant. "Participant" shall mean each Covered Employee who makes an
election pursuant to Section 3.03 and whose Special Retention Account has a
positive balance.
Plan. "Plan" shall mean the GTE Executive Salary Deferral Plan, on the date
of its adoption and as it may be amended from time to time and any successor
thereto.
Plan Administrator. "Plan Administrator" shall mean the chief human
resources officer of the Company or any other Person designated by the Committee
to serve as Plan Administrator of the Plan.
Program. "Program" shall mean this Special Retention Account and Other
Benefits program.
Special Retention Amount. "Special Retention Amount" shall mean the amount
determined by the Plan Administrator.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 2
Special Retention Account. "Special Retention Account" shall mean the
subaccount established under the Plan pursuant to the terms of this Program.
2.02. Part of the Plan.
The provisions of this Program are a part of the Plan. The terms of the
Plan shall apply to the benefits provided by this Program to Participants,
except to the extent a provision of this Program is contrary to a provision of
the Plan, in which case the provisions of this Program shall control.
2.03. Gender and Number.
Masculine pronouns shall refer to both males and females. The singular form
shall include the plural, where appropriate.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 3
Article 3. Eligibility and Account Balance
3.01. Eligibility.
Covered Employees who are Participants shall be eligible to have a Special
Retention Account established under the Plan and to receive certain Other
Benefits as provided in Article 6, below.
3.02. Initial Account Balance.
Each Participant shall defer receipt of 100% of his Special Retention
Amount, and the initial balance in the Participant's Special Retention Account
shall be equal to the amount so deferred.
3.03. Election to Defer.
(a) A Participant shall elect to defer the Special Retention Amount in
accordance with Section 3.03 of the Plan, except that 100% of the Special
Retention Amount shall be treated as if invested in cash, or such other
hypothetical investment vehicle as the Plan Administrator may allow in its
discretion.
(b) Any election under this Section 3.03 shall be effective July 1, 2000,
or such earlier date as the Plan Administrator may determine in its discretion.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 4
Article 4. Accounts
4.01. Accounts.
(a) The Special Retention Account shall be maintained as a separate
subaccount for each Participant pursuant to Section 4.01(b) of the Plan.
(b) The Special Retention Account of each Participant shall be credited
with hypothetical investment returns and/or interest determined in accordance
with Section 3.03, above, unless the Plan Administrator determines in its
discretion that a different hypothetical investment vehicle is appropriate for
the Special Retention Account.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 5
Article 5. Payments
5.01. Exclusive Entitlement to Payment.
To participate in the Program, a Participant shall waive his right to
receive change in control benefits under any prior agreement with the Company or
its predecessors (including his executive severance agreement) as a result of
the Merger and shall agree to receive in lieu thereof the amount payable to him
at the times and in the amounts specified in this Article 5 and in Article V of
the Plan, as well as the Other Benefits set forth in Article 6, below. No other
amounts shall be due under the Plan or otherwise as a result of the
Participant's deferral election pursuant to Section 3.03.
5.02. Amount and Sources of Payment.
(a) Upon termination of employment, a Participant shall be entitled to
receive the greater of (1) the balance in his Special Retention Account at
termination of employment, or (2) the cash component of any severance benefits
that the Participant receives or is entitled to receive in the aggregate under
all Other Plans. For purposes of this Section 5.02(a)--
(1) the "cash component" of any severance benefits shall include
monetary benefits payable in all forms, whether payable in a lump sum or
otherwise; and
(2) a Participant shall be treated as "entitled to receive" any
benefits under a Company-sponsored employee benefit plan to which the
Participant would be entitled based on compensation and service, even if
the Participant does not receive the benefit for any other reason.
(b) The amount payable under the Program after application of Section
5.02(a) shall be payable to the Participant from the following sources in the
following order until the entire amount is paid--
(1) any of the Other Plans that is qualified (or intended to be
qualified) under Section 401(a) of the Code;
(2) the Special Retention Account;
(3) any of the Other Plans that is not qualified (or intended to be
qualified) under Section 401(a) of the Code; and
(4) the general assets of the Company.
(c) Any amount not paid from the Special Retention Account as a result of
application of this Section 5.02 shall be forfeited.
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Special Retention Account and Other Benefits Program Page 6
5.03. Limitations on Rights to Payment.
(a) Period of Service, Notice. A Participant shall not be entitled to
receive any amount from his Special Retention Account if he (1) voluntarily
terminates from the Company (including a retirement) effective before July 1,
2001, (2) voluntarily terminates from the Company (including a retirement)
without providing 30 days' written notice of his intent to terminate, or (3) is
terminated for Cause (as defined in Section 5.03(b), below). Nothing in this
Section 5.03(a) shall affect the right of a Participant to receive any amount
from his Special Retention Account if he is involuntarily terminated without
Cause or terminates employment due to his death or disability (as defined in the
applicable long-term disability plan).
(b) Cause. For purposes of this Program, "Cause" shall mean (i) grossly
incompetent performance or substantial or continuing inattention to or neglect
of the duties and responsibilities assigned to the Participant; fraud,
misappropriation or embezzlement involving the Company or a material breach of
any provision incorporated in paragraph 15 ("Covenants") of the employment
agreement to which this Program is an exhibit, as determined by the CEO(s) in
his/their discretion, or (ii) commission of any felony of which the participant
are finally adjudged guilty by a court of competent jurisdiction.
(c) Other Benefits. The Other Benefits provided in Article 6, below, shall
not be subject to the requirements of Section 5.03(a), above, except to the
extent specifically provided in Article 6, below.
(d) Other Limitations on Rights to Payment. The provisions of Section 5.05
of the Plan (regarding of Forfeiture of Rights and Competitive Conduct) shall
not apply to the Special Retention Account or the Other Benefits provided in
Article 6, below.
(e) In-Service Withdrawals. The provisions of Section 5.04 of the Plan
shall not apply to the Special Retention Account to the extent they permit
withdrawals or distributions before a Participant terminates employment with the
Company, except that a Participant may apply to the Committee for such a
withdrawal or distribution after July 1, 2001.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 7
Article 6. Other Benefits
6.01. Other Benefits.
In addition to the benefits provided in the Plan or otherwise in this
Program, Participants shall be entitled to the benefits set forth in paragraphs
(a) through (c) of this Section 6.01.
(a) Insurance. The Company shall provide each Participant, at the
---------
Company's expense, for a period beginning on the date of the Participant's
termination of employment with the Company, the same medical, dental, and life
insurance coverage as was in effect on June 30, 2000, or, if greater, coverage
under any other Company-sponsored medical, dental, or life insurance coverage
available on the date of the Participant's termination of employment. Such
coverage shall end upon the expiration of 24 months after the Participant's
termination of employment. For purposes of this paragraph (a), "at the Company's
expense" means that the Company shall make all contributions or premium payments
required to obtain coverage, and that the Participant shall not make any such
contributions or premium payments, but that the Participant shall be subject to
any deductibles and co-payment provisions in effect on June 30, 2000 (or, if
applicable, immediately before the termination of employment). Except to the
extent otherwise required by law, the period of coverage for any health care
continuation coverage required by the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, shall begin on the date of the Participant's
termination of employment.
(b) Benefit Credit.
--------------
(1) Each Participant shall receive service credit, for the purpose of
receiving benefits and for vesting, retirement eligibility, benefit
accrual, and all other purposes, under all employee benefit plans sponsored
by the Company (including, but not limited to, health, life insurance,
pension, savings, stock, and stock ownership plans, but excluding the
Company's short-term and long-term disability plans) in which he
participated on June 30, 2000, for 24 months.
(2) For purposes of determining the Participant's benefits under all
defined benefit pension plans maintained by the Company, including the GTE
Excess Pension Plan and the GTE Supplemental Executive Retirement Plan
(collectively "SERP")--
(A) The Participant's compensation shall include the greater
of--
(i) the initial balance in his Special Retention Account as
determined under Section 3.02, above (without any earnings), and
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 8
(ii) 100 percent of the Participant's base salary and the
Average Percentage (as defined in Section 6.01(b)(4), below) of
his maximum short-term bonus opportunity (both base salary and
maximum short-term bonus as in effect immediately before his
employment is terminated), for two years;
provided that, for purposes of this Section 6.01(b)(2)(A), the
Participant shall be deemed to have received the greater of the
amounts set forth in Section 6.01(b)(2)(A)(i) or Section
6.01(b)(2)(A)(ii) in monthly installments over the 24 months
following the Participant's termination of employment, each equal
to 1/24th of the amount payable pursuant to this Section
6.01(b)(2)(A);
(B) The Participant's compensation in his final year of service
shall be equal to the greater of (i) one-half of the initial balance
in his Special Retention Account (as determined under Section 3.02,
above), or (ii) the Participant's actual compensation in his final
year of service.
(3) The Participant shall be considered to have not less than 76
points and 15 years of Accredited Service for purposes of determining (i) his
eligibility for early retirement benefits under the Company's defined benefit
pension plans (including, but not limited to, the SERP), and (ii) his
eligibility for benefits under the GTE Executive Retired Life Insurance Plan (or
any predecessor or successor thereto).
(4) For purposes of Section 6.01(b)(2)(A)(ii), the following
definitions shall apply--
(A) A Participant's "Average Percentage" shall mean the average
of the Participant's Annual Percentage for each of the Determination
Years.
(B) The "Determination Years" shall mean the last three
short-term bonus plan years ending before the date on which the
Participant's employment is terminated (or, if less, the number of
those three plan years during which the Participant participated in
the short-term bonus plan).
(C) The "Annual Percentage" for each Determination Year means--
(i) for Determination Years before 2000, one-half of a
fraction (expressed as a percentage), the numerator of which is
the GTE Executive Income Plan ("EIP") award earned by the
Participant for such Determination Year, and the denominator of
which is the annual value of the normal payment under the EIP for
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 9
the Participant's salary level (such annual value and normal
payment being those that were in effect under the EIP for such
Determination Year for the Participant's salary level for such
Determination Year);
(ii) for Determination Years after 2000, a fraction
(expressed as a percentage), the numerator of which is the actual
short-term bonus earned by the Participant for such Determination
Year, and the denominator of which is the maximum short-term
bonus opportunity for the Participant's salary level for such
Determination Year; or
(iii) for the 2000 Determination Year, a percentage equal to
one-half of the sum of--
(a) one-half of a fraction (expressed as a
percentage), the numerator of which is the EIP award earned
by the Participant for the first six months of the 2000
Determination Year, and the denominator of which is the
value of the normal payment under the EIP for the
Participant's salary level (such value and normal payment
being those that were in effect under the EIP for the first
six months of the 2000 Determination Year for the
Participant's salary level for the first six months of the
2000 Determination Year); and
(b) a fraction (expressed as a percentage), the
numerator of which is the actual short-term bonus earned by
the Participant for the portion of the 2000 Determination
Year occurring after June 30, 2000, and the denominator of
which is the maximum short-term bonus opportunity for the
Participant's salary level for the portion of the 2000
Determination Year occurring after June 30, 2000.
Notwithstanding the service credit granted under paragraph (1) of this
Section 6.01(b) and the compensation recognized under paragraph (2) of this
Section 6.01(b), nothing in this Section 6.01(b) shall prevent the
Participant from receiving any benefits to which the Participant is
entitled under any defined benefit or defined contribution pension plan
maintained by the Company, including the SERP (as such benefits are
modified by this Section 6.01(b)) in any form permitted by such plans
(including but not limited to a lump-sum distribution) immediately
following the Participant's termination of employment. To the extent that
the Company's tax-qualified retirement plans cannot provide the benefits
specified by this Section 6.01(b) without jeopardizing the tax
qualification of such plans, the Company shall provide such benefits under
the SERP or its successor.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 10
(c) Stock Options. Annual stock options granted in 1999 and 2000 (except
-------------
for the Founder's Grant) under the GTE Long-Term Incentive Plan (or any
successor thereto) shall be immediately vested and exercisable for a period of
at least five years following the date of Participant's termination of
employment (but not beyond the maximum term of the option specified by the terms
of the stock option). Notwithstanding the preceding sentence, if the Participant
is terminated for Cause, annual stock options granted in 1999 and 2000 shall be
forfeited.
6.02. Certain Additional Payments by the Company.
Participants shall be entitled to a tax gross-up payment in accordance with
Addendum A to the Program.
6.03. Nonduplication.
No provision of this Program shall require the Company to provide the
Participant with any payment, benefit, or grant that duplicates any payment,
benefit, or grant that the Participant is entitled to receive under any Company
compensation or benefit plan, award agreement, or other arrangement.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Page 11
Special Retention Account and Other Benefits Program
Addendum A
Additional Payments by the Company
A Participant in the Program shall be entitled to a tax gross-up payment in
accordance with the following provisions:
(a) Gross-Up Payment. If any payment or benefit received or to be received
----------------
by the Participant from the Company pursuant to the Plan (the "Payments") would
be subject to the excise tax (the "Excise Tax") imposed by section 4999 of the
Code as determined in accordance with this Addendum A, the Company shall pay the
Participant, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount that the Participant retains, 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 the Participant 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.
(b) Calculations. For purposes of determining whether any of the Payments
------------
shall be subject to the Excise Tax and the amount of such excise tax,
(1) 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 the Company
and reasonably acceptable to the Participant ("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;
(2) 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 (1), above); and
(3) 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.
(c) Tax Rates. For purposes of determining the amount of the Gross-Up
---------
Payment, the Participant 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 the Participant's
residence in the calendar year in which the Gross-Up
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Addendum A-1
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.
(d) Time of Gross-Up Payments. The Gross-Up Payments provided for in this
-------------------------
paragraph 12 shall be made upon the earlier of (i) the payment to the
Participant of any Payment or (ii) the imposition upon the Participant, or any
payment by the Participant, of any Excise Tax.
(e) 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, the Participant shall repay the
Company, within 30 days of the Participant's 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 the Participant if such repayment results in a reduction
in Excise Tax or a federal, state, and local income tax deduction) plus any
interest received by the Participant on the amount of such repayment, provided
that if any such amount has been paid by the Participant as an Excise Tax or
other tax, the Participant shall cooperate with the Company in seeking a refund
of any tax overpayments, and the Participant shall not be required to make
repayments to the Company until the overpaid taxes and interest thereon are
refunded to the Participant.
(f) 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.
(g) 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, the Participant shall be entitled, by written notice to
the Company, to request a written opinion of Independent Counsel regarding the
application of such change to any of the foregoing, and the Company shall use
its best efforts to cause such opinion to be rendered as promptly as
practicable.
(h) Fees And Expenses. All fees and expenses of Independent Counsel
-----------------
incurred in connection with this Addendum A shall be borne by the Company.
(i) Survival. The Company's obligation to make a Gross-Up Payment with
--------
respect to Payments made or accrued before the Participant's termination of
employment with the Company shall survive the termination of the Participant's
with the Company unless (1) the Participant's employment is terminated for
Cause, or (2) the
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Addendum A-2
Participant fails to execute a release, in which event the
Company's obligation under this Addendum A shall terminate immediately.
--------------------------------------------------------------------------------
Special Retention Account and Other Benefits Program Addendum A-3
EXHIBIT D
---------
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 D 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 D, 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
-2-
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 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 D 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 D shall be borne by Verizon.
-3-
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
shall survive the Term of Employment unless (a) your employment is terminated
for Cause pursuant to paragraph 13(f) of the Agreement to which this Exhibit D
is attached ("Involuntary Termination For Cause"), (b) you fail to execute a
release in accordance with paragraph 14 of such Agreement ("Release"), or (c)
you fail to comply with the covenants incorporated in paragraph 15 of such
Agreement ("Covenants"), in which event the Company's obligation under this
Exhibit D shall terminate immediately.
10. Defined Terms - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit D shall have the definitions given to
those terms in the Agreement to which this Exhibit D is attached.
EXHIBIT E
---------
Covenants
1. Noncompetition - In consideration for the benefits and agreements
described in the Agreement to which this Exhibit E 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 E 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,
-2-
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 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
-3-
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 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 E shall have the definitions given to
those terms in the Agreement to which this Exhibit E is attached.
