(VERIZON LOGO)
EXHIBIT 10z
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
April 8, 2003
Xxxxxxx X. Xxxx
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Dear Xxxx:
I am pleased to offer you this new 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.
As set forth in paragraphs 3 ("Term") and 28 ("Entire Agreement"),
below, this Agreement shall not become effective before July 1, 2003, and your
current employment agreement with the Company, dated November 2, 2000 (the
"Prior Agreement"), shall remain in effect until that date. Should your
employment with Verizon end for any reason before July 1, 2003, the terms of the
Prior Agreement shall control your and the Company's rights and obligations in
connection with your termination of employment, and this Agreement shall be null
and void.
The many opportunities and challenges facing the Company are enormous
and exciting. As a leader in our industry, we will be constantly challenged with
sustaining our market growth and presence. We will meet these challenges by
leveraging the strength of our talented and committed leaders. This Agreement
demonstrates my continued confidence in you.
I value you and the leadership, vision, and commitment you bring to the
Company. I am excited by the prospect of you continuing as a key member of the
Company's leadership team.
The terms and conditions of this Agreement are set forth below.
1. PURPOSE - Verizon enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market requires the
Company to make critical strategic, marketing, and technical decisions. These
decisions by the Company will be based, in whole or in part, on confidential
analyses of the evolving telecommunications market, confidential assessments of
Xxxxxxx X. Xxxx
April 8, 2003
Page 2
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 Company's business. Verizon seeks by
this Agreement to ensure that you remain a part of the executive management team
that plays a central role in this decision-making process.
In consideration for your entering into this Agreement, including the
restrictions on the disclosure and use of confidential or proprietary
information and the limitations on your engaging in competitive activities, the
Company is providing you with the security of a written agreement with a term
that will always be two years, short- and long-term award opportunities, and
other benefits.
2. GENERAL - Under this Agreement, you shall continue as Executive Vice
President and General Counsel of Verizon. As Executive Vice President and
General Counsel, you shall report to the Chief Executive Officer of Verizon (the
"CEO").
3. TERM - The term of employment under this Agreement ("Term of
Employment") shall commence on July 1, 2003, and end on June 30, 2005; provided
that, commencing on July 1, 2003, and on each day thereafter, the remaining Term
of Employment shall at all times be two years. For example, on August 1, 2003,
the Term of Employment shall end on July 31, 2005. Notwithstanding the preceding
provisions of this paragraph 3, (a) as provided in paragraph 28 ("Entire
Agreement"), should your employment with Verizon end before July 1, 2003, the
Term of Employment shall not commence, and this Agreement shall be null and
void, and (b) the Company reserves the right to terminate your employment and
the Term of Employment at any time. Your employment and the Term of Employment
also may terminate for other reasons (such as your resignation, retirement,
death, or disability). The consequences of the termination of your employment
are specified in paragraph 11 ("Termination Of Employment").
4. DUTIES AND RESPONSIBILITIES - Subject to the provisions of paragraph
11(d) ("Termination For Good Reason"), you shall continue to serve as Executive
Vice President and General Counsel of Verizon, and you shall perform all duties
incidental to such positions, shall cooperate fully with the CEO or his
successor, and shall work cooperatively with the other officers of the Company.
You shall continue to devote your entire business skill, time, and effort
diligently to the affairs of the Company in accordance with the duties assigned
to you, and you shall perform all such duties, and otherwise conduct yourself,
in a manner reasonably
Xxxxxxx X. Xxxx
April 8, 2003
Page 3
calculated in good faith by you to promote the best interests of the Company.
During the Term of Employment, except to the extent specifically permitted in
writing by the CEO or his successor, and except for memberships on boards of
directors that you hold on July 1, 2003 (the effective 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 in both Washington, D.C., and at Verizon's 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 at the time of such
relocation. In addition, a change in your principal work location could qualify
as a "Good Reason" in accordance with paragraph (3) of Exhibit B hereto.
6. BASE SALARY - During the Term of Employment, your annual base salary
shall not be less than your annual base salary on June 30, 2003. Beginning
January 1, 2004, the Human Resources Committee of Verizon's Board of Directors
or its designee shall review your base salary at least annually.
7. BONUS OPPORTUNITIES - During the Term of Employment, the Company
shall provide you with annual short-term and long-term bonus opportunities.
While you are not guaranteed an annual short-term or long-term bonus in any
amount, (a) the value of your annual short-term bonus opportunity shall not be
less than 75 percent of your then-current base salary, and (b) the value of your
annual long-term bonus opportunity shall not be less than 425 percent of your
then-current base salary.
8. BENEFITS AND PERQUISITES - (a) IN GENERAL - For the immediate
future, you shall-
(1) participate in the tax-qualified and nonqualified
retirement plans in which you currently participate
(including, but not limited to, the Verizon Income
Deferral Plan (the "IDP"));
Xxxxxxx X. Xxxx
April 8, 2003
Page 4
(2) be eligible for the perquisites available to other
senior executives in your peer group; 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 at any time. In any event, during the Term
of Employment, you shall be eligible for the same flexible spending account and
financial planning benefits that are provided to other senior executives in your
peer group.
(b) 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.
(c) ADDITIONAL BENEFIT CREDIT - Consistent with the terms of
your Prior Agreement, you shall start the Term of Employment credited with
eighteen years of service, for purposes of receiving benefits and for vesting,
retirement eligibility, benefit accrual, and all other purposes under all of the
Company's benefit and compensation plans, programs, and policies (including, but
not limited to, health, life insurance, and stock plans, but excluding the
Company's pension and short-term and long-term disability plans) in which you
participated on June 30, 2003, or any successors thereto. The additional benefit
credit described in the preceding sentence is not provided under the Company's
pension plans (both qualified and non-qualified) because additional pension
benefit credit pursuant to paragraph 10(c) of the Prior Agreement was included
in the calculation of the GTE Supplemental Executive Retirement Plan conversion
credit added to your Retirement Contribution Sub-Account in the IDP as of
January 1, 2002 (the "SERP Conversion Credit"), therefore, this benefit will not
be duplicated in any future calculation. Your credit for service after June 30,
2003, shall be determined in accordance with the Company's applicable
service-crediting rules for all purposes under all Company benefit and
compensation plans, programs, and policies. In addition, consistent with the
terms of your Prior Agreement, you shall start the Term of Employment deemed to
have satisfied the Rule of 75 for purposes of determining your right to benefits
under all of the Company's benefit and compensation plans, programs, and
policies (including, but not limited to, the Company's Long-Term
Xxxxxxx X. Xxxx
April 8, 2003
Page 5
Incentive Plan, the Company's Retiree Medical Plan, the IDP and the Company's
Executive Life Insurance Plan) in which you participated on June 30, 2003, or
any successors thereto. For purposes of the preceding sentence, you and the
Company agree and acknowledge that your pension benefit under the Company's
management pension plan will be calculated pursuant to the cash-balance formula.
(d) POST-TERMINATION LIFE AND MEDICAL INSURANCE - The Company
shall provide you, at the Company's expense, for a period beginning on the date
of your termination of employment with the Company, the same medical, dental,
and life insurance coverage as was in effect on the date of your termination
from employment. Such coverage shall end upon the expiration of 24 months after
your termination of employment. For purposes of this paragraph 8(d), "at the
Company's expense" means that the Company shall make all contributions or
premium payments required to obtain coverage, and that you shall not make any
such contributions or premium payments, but that you shall be subject to any
deductibles and co-payment provisions in effect immediately before the
termination of employment.
9. SPECIAL RETENTION ACCOUNT PROGRAM - Pursuant to the Prior Agreement,
the Company established a Special Retention Account on your behalf under the GTE
Executive Salary Deferral Plan, which was subsequently transferred to the IDP.
As of the effective date of this Agreement, you are entitled to the entire
balance in your Special Retention Account and it shall not be subject to offset
or forfeiture. Your rights to the balance in your Special Retention Account
following your termination of employment or otherwise shall be governed by the
provisions of the IDP that apply to your "Employee Balance" (as that term is
defined in Section 2.01(p) of the IDP) in the IDP, except that you shall not be
entitled to receive payments of your Special Retention Account until after your
separation from service from the Company (for any reason) and provided that upon
your voluntary termination of employment with the Company (including your
retirement) you have given the CEO at least 30 calendar days' (exclusive of
vacation days) advanced written notice of your intent to terminate employment
with the Company. Your rights to the balance in your Special Retention Account
following the termination of your employment shall not be governed by the terms
of paragraphs 11 ("Termination of Employment") and 12 ("Release"), the terms of
the IDP applicable to other employees with Special Retention Accounts, or the
terms of Exhibit C to the Prior Agreement.
10. EXCISE TAX GROSS-UP - Under certain circumstances you may become
entitled to a gross-up payment with respect to the excise tax imposed by section
Xxxxxxx X. Xxxx
April 8, 2003
Page 6
4999 of the Internal Revenue Code (the "Code"). The terms governing the gross-up
payment are set forth in Exhibit A, which is incorporated herein by reference.
11. TERMINATION OF EMPLOYMENT - (a) VOLUNTARY TERMINATION BY YOU -
Since you are currently eligible to retire, the consequences of any voluntary
termination of employment by you shall be governed by paragraph 11(c)
("Retirement"), except as otherwise provided in paragraph 11(d) ("Termination
For Good Reason").
(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),
(1) The Company shall make a lump-sum cash payment
to you equal to the excess of (i) 100 percent of
your base salary, 50 percent of your maximum
short-term bonus opportunity, and 100 percent of
your long-term bonus opportunity for two years,
over (ii) any amounts payable to you under any
Company-sponsored disability plan (excluding any
amounts payable to you under any Company-sponsored
deferred compensation plan, such as the IDP) during
the two years following your termination of
employment. For this purpose, your base salary
shall be based on your base salary rate in effect
immediately before your employment terminated; your
annual maximum short-term bonus opportunity shall
be equal to 150 percent of your annual base salary
in effect immediately before your employment
terminated; and your annual long-term bonus
opportunity shall be equal to 425 percent of your
annual base salary in effect immediately before
your employment terminated. If your long-term bonus
is subject to a performance target, it shall be
assumed that the target is met;
(2) Your unvested stock options shall immediately vest,
and you may exercise all then-outstanding stock
options at any time up to the earlier of (i) the
fifth anniversary of the date your employment
terminates
Xxxxxxx X. Xxxx
April 8, 2003
Page 7
(or any later date prescribed by the terms of
the option relating to termination of
employment) or (ii) the expiration of the
option;
(3) Your unvested Performance Share Retention Units
shall vest to the extent prescribed by the
provisions of paragraph 8(d) of Exhibit B to the
Prior Agreement; and
(4) Any unvested performance stock units shall vest
to the extent prescribed by the provisions of
any applicable performance stock unit agreement
that you may enter into with the Company on and
after January 1, 2003.
provided that if you terminate employment because of death, your rights under
this subparagraph (b) shall pass to your estate or to a beneficiary that you
have designated in writing (and in a form and manner acceptable to the Company)
before your death.
(c) RETIREMENT - If, during the Term of Employment, you
terminate employment by reason of Retirement (as defined below) you shall be
entitled to accelerated vesting of all outstanding stock options (other than the
Founders' Grant), and 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 Management Pension Plan. Except as
provided by the preceding provisions of this subparagraph (c), upon the
effective date of your Retirement, your base salary and any other Company
benefits and perquisites shall cease to accrue; provided that you shall
otherwise be eligible to receive any and all compensation and benefits for which
a similarly situated senior executive would be eligible under the applicable
provisions of the compensation and benefit plans in which he is then eligible to
participate, as those plans may be amended from time to time.
(d) TERMINATION FOR GOOD REASON - (1) You may terminate your
employment under this Agreement for Good Reason by giving the CEO 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.
Xxxxxxx X. Xxxx
April 8, 2003
Page 8
For purposes of this Agreement, "Good Reason" has the meaning prescribed by
Exhibit B, which is incorporated herein by reference.
(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) (other than those specified in subparagraph (e)(2)
and (3)) are contingent on your execution of a release in accordance with
paragraph 12 ("Release").
(4) If you do not fulfill the notice and explanation
requirements imposed by this subparagraph (d), the resulting termination of
employment shall be deemed a Retirement.
(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 benefit otherwise provided pursuant to paragraphs 6 ("Base Salary")
through 8(c) ("Prior Awards"):
(1) The Company shall make a lump-sum cash payment to you
equal to the excess of (i) 100 percent of your base
salary, 50 percent of your maximum short-term bonus
opportunity, and 100 percent of your long-term bonus
opportunity for two years, over (ii) any amounts
payable to you under any Company-sponsored severance
plan, program, policy, contract, account, or
arrangement (excluding any amounts payable to you
under Company-sponsored deferred compensation plans,
such as the IDP) during the two years following your
termination of employment. For this purpose, your
Xxxxxxx X. Xxxx
April 8, 2003
Page 9
base salary shall be based on your base salary rate
in effect immediately before your employment
terminated; your annual maximum short-term bonus
opportunity shall be equal to 150 percent of your
annual base salary in effect immediately before your
employment terminated; and your annual long-term
bonus opportunity shall be equal to 425 percent of
your annual base salary in effect immediately before
your employment terminated. If your long-term bonus
is subject to a performance target, it shall be
assumed for this purpose that the target is met;
(2) Your unvested stock options, including the Founders'
Grant, 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;
(3) Your Performance Share Retention Units shall vest to
the extent prescribed by the provisions of paragraph
8(b) of Exhibit B to the Prior Agreement;
(4) Any unvested performance stock units shall vest to
the extent prescribed by the provisions of any
applicable performance stock unit agreement that you
may enter into with the Company on or after January
1, 2003; and
(5) You shall be eligible for outplacement services to
the extent that such services are then available to
senior executives of the Company;
provided that your rights under this subparagraph (e) (other than those
specified in clauses (2) and (3), above) are contingent on your execution of a
release in accordance with paragraph 12 ("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, and the Company shall have no further obligations
under
Xxxxxxx X. Xxxx
April 8, 2003
Page 10
this Agreement; provided that you shall otherwise be eligible to receive
any and all compensation and benefits for which a similarly situated senior
executive would be eligible under the applicable provisions of the compensation
and benefit plans in which he is then eligible to participate, as those plans
may be amended from time to time.
(2) For purposes of this Agreement, "Cause" is defined as
(i) grossly incompetent performance or substantial or continuing inattention to
or neglect of the duties and responsibilities assigned to you; fraud,
misappropriation or embezzlement involving the Company or a material breach of
any provision incorporated in paragraph 13 ("Covenants"), as determined by the
CEO in his reasonable discretion, or (ii) commission of any felony of which you
are finally adjudged guilty by a court of competent jurisdiction.
(3) If the Company terminates your employment for Cause, the
Company shall provide you with a written statement of the grounds for such
termination within 10 business days after the date of termination.
12. RELEASE - You shall not be entitled to any benefits under this
Agreement following the termination of your employment unless, at the time your
employment terminates and to the extent required by this Agreement, 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 (including the Exhibits hereto),
the IDP, 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 12 shall not apply if your employment is terminated by reason of
your death, disability, or Retirement.
13. COVENANTS - In consideration for the benefits and agreements
described above, you agree to comply with the covenants set forth in Exhibit C
hereto, which is incorporated herein by reference.
14. REQUEST FOR WAIVER - Nothing in this Agreement bars you from
requesting, at the time of your termination of employment or at any time
thereafter, that the CEO, in his sole discretion, waive in writing the Company's
rights to enforce some or all of the provisions incorporated in paragraph 13
("Covenants").
Xxxxxxx X. Xxxx
April 8, 2003
Page 11
15. OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by
paragraph 13 ("Covenants") are in addition to, and not in lieu of, any and all
other policies and agreements of the Company regarding the subject matter of the
foregoing obligations.
16. NONDUPLICATION OF BENEFITS - No provision of this Agreement shall
require the Company to provide you with any payment, benefit, or grant that
duplicates any payment, benefit, or grant that you are entitled to receive under
any Company compensation or benefit plan, award agreement, or other arrangement.
17. OTHER COMPANY PLANS - Except to the extent otherwise explicitly
provided by this Agreement, any awards made to you under any Company
compensation or benefit plan or program shall be governed by the terms of that
plan or program and any applicable award agreement thereunder as in effect from
time to time. Notwithstanding the foregoing, you shall not be entitled to
participate in any Company compensation or benefit plan that is established
after your employment with the Company terminates, and except as specifically
provided in this Agreement, you shall not be entitled to any additional grants
or awards under any Company compensation or benefit plan after your employment
with the Company terminates. The amounts paid, provided, or credited under this
Agreement shall not be treated as compensation for purposes of determining any
benefits payable under any Company-sponsored pension, savings, life insurance,
or other employee benefit plan except to the extent provided by the terms of
such plan.
18. FORFEITURE - (a) If you breach any of the obligations incorporated
in paragraph 13 ("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 credits that are added to your Retirement Contribution
Sub-Account in the IDP (or to any successor account in
that plan or a successor plan) ("Retirement Contribution
Sub-Account"), on or after January 1, 2002, other than the
SERP Conversion Credit;
(2) any interest or other earnings or gains on or after
January 1, 2002, with respect to any credits in your
Retirement Contribution Sub-Account (including any
interest, or other earnings or gains attributable to the
Conversion Credit or any interest or other earnings or
gains attributable to any other credit regardless of when
the credit was added to your Retirement Contribution
Sub-Account); and
Xxxxxxx X. Xxxx
April 8, 2003
Page 12
(3) any unpaid incentive compensation (such as performance
bonus awards or other awards under the Verizon
Communications Inc. Long-Term Incentive Plan) that you are
otherwise entitled to receive.
(b) The remedies available under this paragraph are in
addition to, and not in lieu of, the remedies available under paragraph 25
("Additional Remedies").
19. NO DEEMED WAIVER - Failure to insist upon strict compliance with
any of the terms, covenants, or conditions of this Agreement shall not be deemed
a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
20. TAXES - The Company may withhold from any benefits payable under
this Agreement all taxes that the Company reasonably determines to be required
pursuant to any law, regulation, or ruling. However, it is your obligation to
pay all required taxes on any amounts and benefits provided under this
Agreement, including the benefits provided to you pursuant to paragraph 8
("Benefits and Perquisites"), regardless of whether withholding is required.
21. CONFIDENTIALITY - You shall not disclose, in whole or in part, any
of the terms of this Agreement, except to the extent (a) otherwise required by
law or (b) the Company has publicly disclosed the terms of this Agreement. This
paragraph 21 does not prevent you from disclosing the terms of this Agreement to
your spouse or to your legal, tax, or financial adviser, provided that you take
all reasonable measures to assure that he or she does not disclose the terms of
this Agreement to a third party except as otherwise required by law.
22. GOVERNING LAW - To the extent not preempted by federal law, the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the State of New York, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of this
provision to the substantive law of another jurisdiction.
23. ASSIGNMENT - Verizon may, without your consent, assign its rights
and obligations under this Agreement to any entity that is a part of the
Company, and if Verizon makes such an assignment, all references in this
Agreement to Verizon (except for references to Verizon common stock) shall be
deemed to refer to the
Xxxxxxx X. Xxxx
April 8, 2003
Page 13
assignee. However, you may not assign your rights and obligations under this
Agreement.
24. SEVERABILITY - The agreements contained herein and within the
release prescribed by paragraph 12 ("Release") shall each constitute a separate
agreement independently supported by good and adequate consideration, and shall
each be severable from the other provisions of the Agreement and such release.
If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Agreement or such release is void, illegal, or
unenforceable, the other terms, provisions, and portions of this Agreement or
such release shall remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable shall
either be limited so that they shall remain in effect to the extent permissible
by law, or such arbitrator or court shall substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to the Company,
to the fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
25. ADDITIONAL REMEDIES - In addition to any other rights or remedies,
whether legal, equitable, or otherwise, that each of the parties to this
Agreement may have, you acknowledge that
(a) The covenants incorporated in paragraph 13 ("Covenants")
are essential to the continued good will and profitability
of the Company;
(b) You have broad-based skills that will serve as the basis
for employment opportunities that are not prohibited by
the covenants incorporated in paragraph 13 ("Covenants");
(c) When your employment with the Company terminates, you
shall be able to earn a livelihood without violating any
of the terms of this Agreement;
(d) Irreparable damage to the Company shall result in the
event that the covenants incorporated in paragraph 13
("Covenants") are not specifically enforced and that
monetary damages will not adequately protect the Company
from a breach of such covenants;
(e) If any dispute arises concerning the violation by you of
the covenants incorporated in paragraph 13 ("Covenants"),
an injunction may be issued restraining such violation
pending the
Xxxxxxx X. Xxxx
April 8, 2003
Page 14
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 material breach of any of such covenants shall result
in your immediate forfeiture of all rights under this
Agreement to the extent provided herein.
26. SURVIVAL - The provisions of paragraphs 13 ("Covenants") through 28
("Entire Agreement") shall survive the Term of Employment. Any obligations that
the Company has incurred under this Agreement to provide benefits that have
vested under the terms of this Agreement shall likewise survive the Term of
Employment.
27. ARBITRATION - Any dispute arising out of or relating to this
Agreement (except any dispute arising out of or relating to paragraph 13
("Covenants")), and any dispute arising out of or relating to your employment,
shall be settled by final and binding arbitration, which shall be the exclusive
means of resolving any such dispute, and the parties specifically waive all
rights to pursue any other remedy, recourse, or relief. With respect to disputes
by the Company arising out of or relating to paragraph 13 ("Covenants"), the
Company has retained all its rights to legal and equitable recourse and relief,
including but not limited to injunctive relief, as referred to in paragraph 25
("Additional Remedies"). The arbitration shall be expedited and conducted in the
State of New York pursuant to the Center for Public Resources ("CPR") Rules for
Non-Administered Arbitration in effect at the time of notice of the dispute
before one neutral arbitrator appointed by CPR from the CPR Panel of neutrals
unless the parties mutually agree to the appointment of a different neutral
arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. sections 1-16, and judgment upon the award rendered by the arbitrator may
be entered by any court having jurisdiction. The finding of the arbitrator may
not change the express terms of this Agreement and shall be consistent with the
arbitrator's understanding of the findings a court of proper jurisdiction would
make in applying the applicable law to the facts underlying the dispute. In no
event whatsoever shall such an arbitration award include any award of damages
other than the amounts in controversy under this Agreement. The parties waive
the right to recover, in such arbitration, punitive damages. Each party hereby
agrees that New York City is the proper venue for any litigation seeking to
enforce any provision of this Agreement or to enforce any arbitration award
under this paragraph 27, and each party hereby waives any right it otherwise
might have to defend, oppose, or
Xxxxxxx X. Xxxx
April 8, 2003
Page 15
object to, on the basis of jurisdiction, venue, or forum nonconveniens, a suit
filed by the other party in any federal or state court in New York City to
enforce any provision of this Agreement or to enforce any arbitration award
under this paragraph 27. Each party also waives any right it might otherwise
have to seek to transfer from a federal or state court in New York City a suit
filed by the other party to enforce any provision of this Agreement or to
enforce any arbitration award under this paragraph 27.
28. ENTIRE AGREEMENT - Except for the terms of the compensation and
benefit plans in which you participate (including any award agreements issued
thereunder), this Agreement, including the Exhibits hereto, sets forth the
entire understanding of you and the Company, and, beginning July 1, 2003,
supersedes all prior agreements and communications, whether oral or written,
between the Company (or Bell Atlantic or GTE or any of their respective
subsidiaries) and you regarding the subject matter of this Agreement, including,
the Prior Agreement, your employment agreement with GTE Service Corporation,
dated January 20, 1998, your Executive Severance Agreement with GTE Service
Corporation dated June 4, 1998, and any severance arrangement provided under a
merger agreement. Should your employment with Verizon end for any reason before
July 1, 2003, the terms of the Prior Agreement shall control your and the
Company's rights and obligations in connection with your termination of
employment, and this Agreement shall be null and void. This Agreement shall not
be modified except by written agreement of you and Verizon.
29. DEFERRALS - Amounts otherwise payable to you under this Agreement
may be deferred under the IDP or any successor plan, but only if and to the
extent that a valid deferral election is in place and deferral of such amounts
is permitted under the terms of the IDP or successor plan.
Xxxxxxx X. Xxxx
April 8, 2003
Page 16
Xxxx, I believe that this Agreement continues to provide you and your family
with both financial security and great opportunity as our industry and the
Company evolve. I recognize that the challenges facing us are formidable. It is
my hope that this Agreement continues to provide you with opportunities
commensurate with the commitment that I expect from you. Please indicate your
acceptance by signing below and returning the signed Agreement to me within ten
business days after your receipt of this Agreement.
Sincerely yours,
/s/ Xxxx X. Xxxxxxxxxx
-------------------------------------------------
Xxxx X. Xxxxxxxxxx
Chief Executive Officer
cc: X. Xxxxxx
I agree to the terms described above.
/s/ Xxxxxxx X. Xxxx
-------------------------------------------------
Xxxxxxx X. Xxxx
Attachments: Exhibit A - Excise Tax Gross-Up
Exhibit B - Good Reason
Exhibit C - Covenants
EXHIBIT A
EXCISE TAX GROSS-UP
1. GROSS-UP PAYMENT - If any payment or benefit received or to be
received by you from the Company pursuant to the terms of the Agreement to which
this Exhibit A is attached or otherwise (the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed by section 4999 of the Internal Revenue
Code (the "Code") as determined in accordance with this Exhibit A, the Company
shall pay you, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount that you retain, after deduction of the
Excise Tax on the Payments and any federal, state, and local income tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties, or additions
to tax payable by you with respect thereto, shall be equal to the total present
value (using the applicable federal rate (as defined in section 1274(d) of the
Code) in such calculation) of the Payments at the time such Payments are to be
made.
2. CALCULATIONS - For purposes of determining whether any of the
Payments shall be subject to the Excise Tax and the amount of such excise tax,
(a) The total amount of the Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the excise
tax, except to the extent that, in the written opinion of
independent counsel selected by Verizon and reasonably acceptable
to you ("Independent Counsel"), a Payment (in whole or in part)
does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, or such "excess parachute payments"
(in whole or in part) are not subject to the Excise Tax;
(b) The amount of the Payments that shall be subject to the Excise Tax
shall be equal to the lesser of (i) the total amount of the
Payments or (ii) the amount of "excess parachute payments " within
the meaning of section 280G(b)(1) of the Code (after applying
clause (a), above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance
with the principles of section 280G(d)(3) and (4) of the Code.
3. TAX RATES - For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income taxes at the highest marginal
rates of federal income taxation applicable to individuals in the calendar year
in which the Gross-Up Payment is to be made and state and local income taxes at
the
Exhibit A-1
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 A shall be made upon the earlier of (a) the payment to you of any
Payment or (b) the imposition upon you, or any payment by you, of any Excise
Tax.
5. ADJUSTMENTS TO GROSS-UP PAYMENTS - If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding or
the written opinion of Independent Counsel that the Excise Tax is less than the
amount previously taken into account hereunder, you shall repay the Company,
within 30 days of your receipt of notice of such final determination or opinion,
the portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state, and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax or a federal, state, and
local income tax deduction) plus any interest received by you on the amount of
such repayment, provided that if any such amount has been paid by you as an
Excise Tax or other tax, you shall cooperate with the Company in seeking a
refund of any tax overpayments, and you shall not be required to make repayments
to the Company until the overpaid taxes and interest thereon are refunded to
you.
6. ADDITIONAL GROSS-UP PAYMENT - If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax exceeds the amount
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
within 30 days of the Company's receipt of notice of such final determination or
opinion.
7. CHANGE IN LAW OR INTERPRETATION - In the event of any change in or
further interpretation of section 280G or 4999 of the Code and the regulations
promulgated thereunder, you shall be entitled, by written notice to Verizon, to
request a written opinion of Independent Counsel regarding the application of
such change or further interpretation to any of the foregoing, and Verizon shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable.
8. FEES AND EXPENSES - All fees and expenses of Independent Counsel
incurred in connection with this Exhibit A shall be borne by Verizon.
Exhibit A-2
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) you fail to execute a release
in accordance with paragraph 12 ("Release") of the Agreement to which this
Exhibit A is attached or (b) you fail to comply with the covenants incorporated
in paragraph 13 ("Covenants") of such Agreement, in which event the Company's
obligation under this Exhibit A shall terminate immediately.
10. DEFINED TERMS - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit A shall have the definitions given to
those terms in the Agreement to which this Exhibit A is attached.
Exhibit A-3
EXHIBIT B
GOOD REASON
For purposes of the Agreement to which this Exhibit B is attached (the
"Agreement"), "Good Reason" means any of the following events:
(1) The Company materially breaches a term or condition of the Agreement.
(2) Your overall compensation opportunities (as contrasted with overall
compensation actually paid or awarded) are significantly reduced.
(3) You are assigned to a new principal work location if such assignment
results in your failing to have two principal work locations, one of which
is located within 50 miles of Washington, D.C., and one of which is located
within 50 miles of New York City.
(4) Your key responsibilities as Executive Vice President and General Counsel
are significantly diminished.
(5) You do not report to the CEO.
(6) A Change in Control (within the meaning of the Verizon Communications 2000
Broad-Based Incentive Plan) occurs.
Except where clearly provided to the contrary, all capitalized terms used in
this Exhibit B shall have the definitions given to those terms in the Agreement.
Exhibit B-1
EXHIBIT C
COVENANTS
1. NONCOMPETITION - In consideration for the benefits and agreements
described in the Agreement to which this Exhibit C is attached, you agree that:
(a) PROHIBITED CONDUCT - During the period of your employment
with the Company, and for the period ending 12 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 C is attached, "Competitive Activities" means business
activities relating to products or services of the same or similar type as the
products or services (1) which are sold (or, pursuant to an existing business
plan, will be sold) to paying customers of the Company, and (2) for which you
then have responsibility to plan, develop, manage, market, or oversee, or had
any such responsibility within your most recent 24 months of employment with the
Company. Notwithstanding the
Exhibit C-1
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 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
Exhibit C-2
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 C shall have the definitions given to
those terms in the Agreement to which this Exhibit C is attached.
Exhibit C-3
