EXHIBIT (E)(2)
Related Party Transactions
In 1992, the Company and GTE Service Corporation entered into an
Agreement for Services pursuant to which GTE Service Corporation has agreed to
provide the Company with certain administrative, financial, strategic planning,
marketing, procurement, audit, network, systems, regulatory and legal support
services. Under this agreement, as amended in 2001, the Company has agreed to
pay GTE Service Corporation US$4,500,000 per year for such services. Services
rendered prior to 2001 and services outside the scope of the specific services
provided for under the agreement were or are billed on a time and materials
basis. In 1998, 1999 and 2000, GTE Service Corporation invoiced the Company
US$1,145,201, US$1,927,361 and US$2,028,047, respectively, for services provided
under the agreement, including pass through billing of services rendered by
third parties.
From time to time, the Company purchases supplies and equipment from
Verizon. For the years 1998, 1999 and 2000, Verizon invoiced the Company
US$17,054,657, US$1,973,433 and US$6,923,926, respectively, for supplies and
equipment ordered by the Company on a purchase order basis. The substantial
majority of these purchases involve orders of supplies and equipment from third
prices from whom Verizon can obtain significantly better pricing.
Verizon and certain of its international affiliates, including,
without limitation, Compania Dominicana de Telefonos, C. por A. ("CODETEL") and
Puerto Rico Telephone Company, transmit international long distance traffic to
the Company or receive international long distance traffic from the Company,
paying or receiving, as the case may be, established international settlement
payments.
The Company and GTE Laboratories Inc. have entered into an agreement
pursuant to which the Company has licensed GTE Laboratories' proprietary TONICS
network management software at no cost.
In 2001, Xxxxxxx provided advances to VenWorld Telecom C.A.
("VenWorld") to pay legal fees in the amount of US$56,678.17. VenWorld
subsequently repaid this amount to Verizon out of the dividend payments received
from the Company in June 2001.
GTE Service Corporation sublicensed the base customer care and
billing system developed by AMDOCS (UK) Limited to Telecomunicaciones Movilnet,
C.A. ("Movilnet") and provided or arranged for implementation and integration
services to Movilnet for such system in 1998 and 1999, billing Movilnet
US$19,468,069 in 1998 and US$12,408,466 in 1999. Substantially all of these
license and service fees were paid by GTE Service Corporation to third party
subcontractors, including AMDOCS (UK) Limited.
GTE Service Corporation and Movilnet entered into a Technical
Assistance Agreement in June 2001 relating to the provision of additional
know-how as well as maintenance and operational support services in connection
with the AMDOCS customer care and billing system. The agreement has a term of
five years. Movilnet paid GTE Service Corporation US$8,866,500 in consideration
of the grant of a license or sublicense for the proprietary and third party
know-how provided and to be provided by GTE Service Corporation to Movilnet
relating to the AMDOCS system. Movilnet also agreed to pay Verizon a quarterly
fee for operational support and maintenance services relating to the AMDOCS
system: for each of the third and fourth quarters of 2001, US$1,375,000; and for
each of the four quarters in 2002, US$750,000. Fees for operational support and
maintenance services relating to the AMDOCS system for future quarters will be
determined by mutual agreement of the parties. Over 90% of these fees were paid
by GTE Service Corporation to third party subcontractors, including AMDOCS (UK)
Limited.
From time to time, Movilnet purchases supplies and equipment from
Verizon. For the years 1998, 1999 and 2000, Verizon invoiced the Company
US$6,465,966, US$5,569,647 and US$5,135,682, respectively, for supplies and
equipment ordered by the Company on a purchase order basis. The substantial
(E)(2)-1
majority of these purchases involve orders of supplies and equipment from third
prices from whom Verizon can obtain significantly better pricing.
Certain Verizon wireless affiliates have roaming agreements with
Movilnet at customary roaming rates.
GTE Overseas Corporation currently employs 22 expatriates at the
Company. These expatriates include three executive officers of the Company:
Xxxxxxx Xxxxxx, President and Chairman of the Board of Directors of the Company;
Xxxxxxx Xxxxxx, Chief Operating Officer of the Company; and Xxxxxxx Xxxxxx,
Chief Financial Officer of the Company.
Xx. Xxxxxx'x initial contract with GTE Overseas Corporation was
executed in June 1995. This agreement was most recently amended, by letter
agreement, in December 2000. Xx. Xxxxxx'x current base salary is US$305,000 and,
apart from customary benefits, he is also entitled to an annual bonus in an
amount up to his base salary as well as a long term incentive target of 175% of
his base salary amount [(for which he has been granted options to acquire
Verizon stock)]. In the event that Xx. Xxxxxx'x employment is terminated
involuntarily without cause, he is entitled to one year's base salary.
Xx. Xxxxxx' initial contract with GTE Overseas Corporation was
executed in April 1998. Xx. Xxxxxx' current base salary is US$242,000 and, apart
from customary benefits, he is also entitled to an annual bonus in an amount up
to $193,600 as well as a long term incentive target of 100% of his base salary
amount.
Xx. Xxxxx' initial contract with GTE Service Corporation was executed
in May 2000. Xx. Xxxxx' current base salary is US$173,000 and, apart from
customary expatriate employee benefits, he is also entitled to an annual bonus
as well as an annual grant of options to acquire Verizon stock.
GTE Overseas Corporation pays the salaries and certain expenses of
these expatriates, which amounts are invoiced to the Company without markup. In
1998, 1999 and 2000, GTE Overseas Corporation invoiced the Company approximately
US$7,746,000, US$7,809,000 and US$6,800,000, respectively.
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