1
Exhibit 10
PERSONAL & CONFIDENTIAL
February 14, 2000
Xx. Xxxxx Xxxxxxx
[Address]
[Address]
Dear Xxx:
On behalf of the entire senior management team at GTE, I am pleased to offer you
this special compensation agreement (the "Agreement") with GTE Service
Corporation ("Service Corp.") in recognition of the critical nature of your
ongoing role with GTE.
SPECIAL ACCOUNT - Service Corp. will establish a special phantom account (the
"Special Account") on your behalf, credited, as of June 1, 1998, with $782,000.
The Special Account will be credited with interest, beginning June 1, 1998, at
an interest rate equal to the Moody's Rate (as defined in the Payment Deferral
Regulations for GTE Corporation's 1997 Executive Incentive Plan). So long as you
remain employed by Service Corp., you will vest in the balance of this Special
Account 10% per year at the conclusion of each of the first four years following
June 1, 1998 (e.g., you became 10% vested on May 31, 1999), and the remaining
60% will vest at the end of the fifth year (in other words, on May 31, 2003).
Notwithstanding the foregoing schedule, if a Change in Control occurs while you
are employed by GTE, you will be immediately 100% vested in the balance in the
Special Account. For this purpose, "Change in Control" is defined in accordance
with your Executive Severance Agreement, dated June 4, 1998, except that neither
the proposed merger between GTE and Bell Atlantic Corporation (the "Merger") nor
any event associated with the Merger (including the approval of the Merger by
GTE's shareholders) will be treated as a Change in Control. As the balance of
the Special Account becomes vested, the vested amount shall become payable to
you; provided, however, that you may elect to defer receipt of any payment due
to you with respect to your vested interest in the Special Account in accordance
with GTE's deferral regulations so long as you are actively employed by GTE at
the time such payment is due to be made
2
Xx. Xxxxx Xxxxxxx
February 14, 2000
Page 2
under this Agreement. The portion of the account which vested on May 31, 1999
will be treated as deferred with interest accruing at the Moody's Rate. You will
not, however, be eligible for a match under the GTE Equity Participation Program
for any such deferral. Neither the amounts credited to, nor the amounts paid in
respect of, the Special Account will be treated as compensation for purposes of
GTE's compensation and benefit programs.
ADDITIONAL PENSION AND BENEFIT CREDIT - Commencing as of June 1, 1998, you will
receive an extra year of service for each year for which you actually work for
GTE up to May 31, 2003, for purposes of determining (1) your pension benefits,
(2) your right to pension, post-retirement medical, and Executive Retirement
Life Insurance Plan ("ERLIP") benefits, and (3) whether you are a retiree for
purposes of determining the exercisability of stock options. The benefits
provided by this paragraph are referred to in this Agreement as "Special Service
Credit."
TERMINATION PROVISIONS -
If you incur a Qualifying Termination under the terms of your Executive
Severance Agreement you will be eligible for severance benefits pursuant to your
Executive Severance Agreement, except that, in lieu of the special pension
credit provided for by your Executive Severance Agreement, you will receive the
Special Service Credit provided for in this Agreement as if your employment had
continued through May 31, 2003, and you will become fully vested in and receive
the balance of the Special Account.
If you voluntarily terminate employment with GTE for any reason (other than a
Good Reason as defined in your Executive Severance Agreement), you will be
entitled to the previously vested portion of the Special Account. You will not
receive the unvested balance in the Special Account, and you will not receive
the Special Service Credit.
If you terminate employment with GTE by reason of your death or disability (as
determined by GTE), you (or, in the event of your death, your beneficiary) will
be entitled to the previously vested portion of the Special Account and the
Special Service Credit that has accrued as of your termination date. You will
not receive
3
Xx. Xxxxx Xxxxxxx
February 14, 2000
Page 3
the unvested balance in the Special Account, and you will not be entitled to any
benefits under your Executive Severance Agreement.
If your employment with GTE is terminated by GTE for Cause, you will be entitled
to the previously vested portion of the Special Account. You will not receive
the unvested balance in your Special Account, and you will not receive the
Special Service Credit. For purposes of this paragraph, "Cause" is defined as a
good faith determination by the Chief Executive Officer of GTE Corporation (or
its successor) ("CEO"), after consultation with outside legal counsel, that you
have committed an act or omission that is materially contrary to GTE's best
interests or that you materially breached any of the terms and conditions of
this Agreement.
RESCISSION - If GTE's Executive Compensation and Organizational Structure
Committee or its designee (the "ECC") determines in its sole discretion that any
provision of this Agreement would preclude the use of pooling of interest
accounting, the ECC may, in its sole discretion, eliminate or modify that
provision to the extent required to allow pooling of interest accounting.
RELEASE - You will not be entitled to any benefits under this Agreement
following the termination of your employment unless, at the time you terminate
your employment, you execute a release satisfactory to Service Corp. releasing
GTE, 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).
COVENANTS - In consideration for the benefits and agreements described above,
your continued access to highly confidential and proprietary information, and
your access to strategic confidential information related to the Merger, you
agree that you will execute and comply with the covenants set forth in Exhibit A
hereto, which are an integral part of this Agreement and subject to all of the
terms and conditions in this Agreement.
4
Xx. Xxxxx Xxxxxxx
February 14, 2000
Page 4
GTE - For purposes of this Agreement, including Exhibit A, "GTE" refers not only
to Service Corp., but also to GTE Corporation and all of its affiliates,
subsidiaries, related entities, lines of business and corporate successors
(including, following the Merger, Bell Atlantic Corporation and its
subsidiaries, affiliates, and related entities) and all business enterprises,
including joint ventures, in which it is a partner or has an ownership interest.
EFFECT ON EXECUTIVE SEVERANCE AGREEMENT - Nothing in this Agreement extends the
term of, or the protections afforded to you by, your Executive Severance
Agreement.
NONDUPLICATION OF BENEFITS/NO SEVERANCE - The payment of any severance or
separation benefits under this Agreement will fulfill all GTE obligations under
associated plans and programs. No provision of this Agreement will require GTE
to provide you with any payment, benefit, or grant that duplicates any payment,
benefit, or grant that you are entitled to receive under your Executive
Severance Agreement or under any GTE compensation or benefit plan, award
agreement, or other arrangement.
ASSIGNMENT - Service Corp. may, without your consent, assign its rights and
obligations under this Agreement to any other entity that is a part of GTE, and
if Service Corp. makes such an assignment, all references in this Agreement to
"Service Corp." shall be deemed to refer to the assignee. However, you may not
assign your rights and obligations under this Agreement.
GOVERNING LAW - To the extent not preempted by federal law, the provisions of
this Agreement will 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, and any dispute shall be brought in
a court sitting in New York City, New York.
SEVERABILITY - Should any part of this Agreement be held to be enforceable only
if modified, a court of competent jurisdiction is empowered to reform this
Agreement accordingly. In addition, any such modification or reformation of a
clause contained in this Agreement will not affect the validity of the remainder
of
5
Xx. Xxxxx Xxxxxxx
February 14, 2000
Page 5
this Agreement, the balance of which will continue to be binding upon the
parties hereto with any such modification to become a part hereof and treated as
though contained in this Agreement.
Xxx, I believe this arrangement provides you and your family with financial
security as our industry and GTE evolve. We recognize the requirements that have
been and will be placed on you are significant. It is my hope that this
compensation arrangement provides you with a level of comfort to allow you to
continue to perform your responsibilities in an exemplary manner. Please
indicate your acceptance by signing below.
Sincerely yours,
X. Xxxxxxx XxxXxxxxx
Executive Vice President -
Human Resources & Administration
c: X. X. Xxx
I agree to the terms described above.
------------------------
Xxxxx Xxxxxxx
------------------------
Date
6
EXHIBIT A
COVENANTS
In consideration of the benefits described in the foregoing Agreement, continued
access to highly confidential and proprietary information, and access to
strategic confidential information related to the Disposition (as defined in the
foregoing Agreement), I, Xxxxx Xxxxxxx, agree as follows:
(a) DISCLOSURE AND USE OF INFORMATION - I will not, directly or indirectly,
without the prior written consent of GTE, use, attempt to use, disclose, or
otherwise make known to any person or entity (other than GTE or otherwise as
authorized by GTE in the performance of services for GTE) any of the following,
in whole or in part:
(i) any and all knowledge, materials, or information of GTE which is
not generally made available to the public by GTE relating to, without
limitation, its business; properties; accounting; books and records;
trade secrets; reports; memoranda; correspondence; business,
regulatory, or marketing strategies; salaries; customers; suppliers;
know-how; inventions; products; discoveries; processes; or formulae;
as well as any other knowledge, materials, or information not
generally made available to the public by GTE that I may acquire or
may have acquired in the course of my employment with GTE; or
(ii) any knowledge or information of a confidential or proprietary
nature of third parties that I may acquire or may have acquired in the
course of my employment with GTE.
Upon termination of my employment with Service Corp. for any reason, and
thereafter, if any information specified in paragraph (i) or (ii) (hereinafter
collectively referred to as "Information") comes into or is discovered in my
possession, I shall immediately return to GTE all tangible and electronic
versions, in whole or in part, of such Information.
If I am required to disclose any Information pursuant to applicable laws,
regulations, or court order, I will immediately inform GTE thereof and afford
GTE the opportunity to limit such disclosure and/or to secure protective orders
before making such disclosure.
(b) INTERFERENCE WITH BUSINESS RELATIONS - I will not, without the prior written
consent of GTE, directly or indirectly and including, by way of example only, by
virtue of my role as an executive or employee of another company, during my
employment by Service Corp. and for the Designated Period (as defined below):
(i) solicit, influence, or induce any employee of GTE to engage in
any activity that paragraph (c), below, prohibits me from engaging in
or solicit, influence, or induce any employee of GTE to terminate his
or her
7
employment with GTE (provided that the foregoing will not prohibit me
from providing references for former employees of GTE upon request
without using Information);
(ii) employ, retain, or offer to employ or retain any person who is
or was employed by GTE, unless such person has ceased to be employed
by GTE for a period of at least 2 years;
(iii) solicit, influence, or induce, or in any manner attempt to
solicit, influence, or induce, any client, customer or prospect of GTE
(1) to cease being, or not to become, a customer of GTE or (2) to
divert any business of such customer or prospect from GTE; or
(iv) otherwise interfere with, disrupt, or attempt to interfere with
or to disrupt the relationship, contractual or otherwise, between GTE
and any of its customers, clients, prospects, suppliers, consultants,
or employees.
(c) NONCOMPETITION - Because I will be given access to Information relating to
high-level decision-making (including, but not limited to, confidential analyses
of the evolving telecommunications market, confidential assessments of the
technical capabilities and strategic plans of GTE and Competing Businesses (as
defined below), and continued access to confidential and proprietary information
relating to GTE's businesses), which I agree to maintain in confidence and trust
for the benefit of GTE and which I will use only for the benefit of GTE, and
because the disclosure and/or use of such Information would be inevitable if I
am employed by or associated with a Competing Business (as defined below), I
agree as follows: During my employment with Service Corp. and for the Designated
Period (as defined below), except as specifically permitted in writing by the
CEO or after a Qualifying Termination following a Change in Control (as those
terms are defined in my Executive Severance Agreement, as modified by this
Agreement), I will not, directly or indirectly, engage in or provide services as
a partner, officer, director, trustee, proprietor, manager, supervisor,
executive, employee, paid or voluntary consultant, independent contractor, agent
or associate, shareholder of or member in, or participate in the ownership,
management, operation, or control of, any Competing Business.
(i) The foregoing provisions of this paragraph ("Noncompetition") will
not prohibit me from directly or indirectly owning, as a passive
investment, up to 2% of the outstanding shares of any Competing
Business (as defined above) that is listed or traded on a national
securities exchange or in an over-the-counter securities market,
provided that I am not involved, directly or indirectly, in the
management of or provide any services or consulting to such Competing
Business.
(ii) I recognize that GTE provides services to customers throughout
the United States and North America, as well as Latin America, Europe,
and many other parts of the world. GTE's business is international in
scope
8
and continues to develop worldwide. I also recognize that, with the
passage of the Telecommunications Act of 1996, GTE's business and
business strategies are constantly evolving in a fiercely competitive,
worldwide market. Further, I acknowledge that my job responsibilities
and/or the Information that I will receive extend throughout the
entire geographic area in which GTE provides products or services.
(iii) I also acknowledge that the inevitable use and disclosure of
Information would result if I were to breach these Covenants.
The "Designated Period" means the period beginning on the date my employment
with Service Corp. terminates, and ending on the second anniversary of the date
my employment with Service Corp. terminates.
A "Competing Business" is defined as the following entities and their
affiliates, subsidiaries, related entities, lines of business and corporate
successors and all business enterprises, including joint ventures, in which any
of them is a partner or has an ownership interest: Sprint Corporation, AT&T
Corp., MCI WorldCom, Inc., LCI International, Inc., Cable & Wireless PLC, Bell
Atlantic Corp., SBC Communications Inc., U S West Inc., BellSouth Corp.,
Telefonica de Espana S.A., British Telecommunications PLC, DIGEX, Incorporated,
Qwest Communications International Inc., Cisco Systems, Inc., Ascend
Communications, Inc., Vodafone Airtouch, NEXTEL Communications, Inc., Teleport
Communications Group, Inc., PSINet Inc., Earthlink Network Inc., Yahoo Inc.,
Cylink Corporation, Microsoft Corporation and America Online, Inc.; provided
that Bell Atlantic Corp. shall be eliminated from the foregoing list on and
after the effective date of the Merger.
I acknowledge that the limitations and restrictions imposed by these Covenants
are reasonable in scope, duration, and geographic territory, and are designed to
provide GTE with limited, legitimate, and reasonable protection against
subsequent diminution of the value of its business attributable to any
disclosure or use of Information by me for the benefit of any Competing Business
(as defined above).
I further acknowledge that these Covenants are supported by sufficient
consideration, particularly in light of the Information to which I have been and
will be given access, as well as the professional and economic benefits,
including compensation and pension benefits, provided to me as a direct result
of my entering into this Agreement with Service Corp.
I also acknowledge that I have broad-based skills that will serve as the basis
for opportunities of employment with other businesses that are not Competing
Businesses (as defined above). I acknowledge that when my employment with
Service Corp. terminates, I will be able to earn a livelihood without violating
any of the terms of this Agreement.
9
These Covenants will continue to apply after any expiration, termination, or
cancellation of this Agreement. My breach of any provision of these Covenants
will result in my immediate forfeiture of all rights under this Agreement, and I
will immediately return to Service Corp. any payment I have previously received
under this Agreement.
I agree that my breach of any of these Covenants will result in irreparable harm
and injury to GTE, that money damages alone will be insufficient or
undeterminable, and that such breach will entitle GTE, as a matter of right and
without limitation of any other remedy available to it, including the recovery
of damages, to immediate injunctive relief in any court of competent
jurisdiction, it being intended that all rights and remedies of GTE under this
Agreement are cumulative and nonexclusive of such other rights or remedies. I
further agree that I will pay for any applicable attorneys' fees and court costs
incurred by GTE if GTE is required to seek the enforcement of or to defend the
terms of this Agreement, including these Covenants.
The obligations imposed on me by these Covenants are in addition to, and not in
lieu of, any and all other policies and agreements of GTE regarding the
foregoing Covenants.
---------------------------
Xxxxx Xxxxxxx
---------------------------
Date
