1
EXHIBIT 10.3
January 14, 1999
Xxxxxxx X. Xxx
[Address]
[Address]
Dear Xxxxx:
I am pleased to offer you this employment agreement (the "Agreement") with GTE
Service Corporation ("Service Corp.") which will provide for employment
stability for you and long-term wealth creation opportunity for you and your
family. In return, GTE can expect your continued leadership for the foreseeable
future as well as your value-added advice and counsel on the broad array of
issues and challenges facing GTE today and in the future.
PURPOSE - Service Corp. enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market, which has
resulted from the Telecommunications Act of 1996, and the proposed merger
between GTE Corporation and Bell Atlantic Corporation ("Bell Atlantic") or a
subsidiary of Bell Atlantic (the "Merger") have required and will require GTE to
make critical strategic, marketing, and technical decisions. These decisions by
GTE 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 GTE and competing businesses, and
confidential or proprietary information regarding GTE's technology, resources,
and business opportunities or other confidential or proprietary information
relating to GTE's business. Service Corp. seeks by this Agreement to ensure that
you continue to lead this decision-making process.
For purposes of this Agreement, "GTE" means GTE Corporation, its successors, and
assigns and all of the GTE Companies; "GTE Companies" means all of, and "GTE
Company" means any one of, GTE Corporation, all corporate subsidiaries or other
companies affiliated with GTE Corporation, all companies in which GTE
Corporation directly or indirectly owns a substantial equity interest, and their
successors and assigns, including any company into which GTE Corporation is
merged and its subsidiaries and affiliates. In addition, in this Agreement, on
and after the date on which the Merger is consummated (the "Merger Date"), "GTE
Corporation" includes Bell Atlantic.
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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,
Service Corp. is providing you with the security of a fixed-term agreement, a
long-term performance incentive, participation in the GTE Merger Implementation
and Retention Incentive Program, and other benefits.
TERM - The term of this Agreement ("Term of Agreement") begins on January 1,
1999, and ends on June 30, 2004. The term of your employment under this
Agreement ("Term of Employment") begins on January 1, 1999. If the Merger Date
does not occur before June 30, 2004, the Term of Employment ends on June 30,
2004. If the Merger Date occurs before June 30, 2004, (i) the Term of Employment
ends on the later of the Merger Date or June 30, 2002; and (ii) you will serve
as a consultant under this Agreement during a term (the "Consulting Term") that
(a) begins immediately following the Term of Employment and (b) ends on June 30,
2004. If the Term of Employment ends on June 30, 2004, it is contemplated that
you and GTE will, shortly before that date, negotiate an extension of this
Agreement on mutually satisfactory terms.
GENERAL - You will continue to serve as Chairman of the Board of Directors of
GTE (the "Board") during the Term of Agreement. For purposes of this Agreement,
from and after the Merger Date, "Board" refers to the Board of Directors of Bell
Atlantic. In addition, you will continue to serve as the Chief Executive Officer
of GTE ("CEO") through the earlier of June 30, 2004, or the Merger Date. If the
Merger Date occurs before June 30, 2002, you will serve as Co-CEO from the
Merger Date through June 30, 2002. If the Merger Date occurs before June 30,
2004, you will serve as a consultant to GTE during the Consulting Term. During
the Term of Employment, you will continue to receive the same benefits as other
senior executives of GTE (except that you will not receive involuntary
separation program ("ISEP") or other separation and severance benefits). In
addition, the terms of your employment and the terms of your service as Chairman
of the Board and as consultant will be governed by the following:
DUTIES AND RESPONSIBILITIES - During the Term of Employment, you will continue
to perform your duties and responsibilities fully and faithfully as Chairman and
CEO of GTE, reporting only to the Board; provided that if the Merger occurs
before July 1, 2002, you will serve as Co-CEO from the Merger Date through
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June 30, 2002. During the Term of Employment, you will continue to devote your
entire business skill, time, and effort diligently to the affairs of GTE in
accordance with the duties assigned to you, and you will perform all such
duties, and otherwise conduct yourself, in a manner reasonably calculated in
good faith by you to promote the best interests of GTE. During the Term of
Employment, except to the extent specifically permitted in writing by the Board,
and except for memberships on boards of directors that you hold on the date of
this Agreement, you will not, directly or indirectly, render any services of a
business, commercial, or professional nature to any other person or organization
other than a GTE Company or a person or organization in which GTE has a
financial interest, whether or not the services are rendered for compensation.
During the Consulting Term, you will continue to serve as Chairman of the Board
and will make yourself available, at GTE's request, to provide consulting
services to GTE. During the Consulting Term, your relationship with GTE will be
that of an independent contractor, and not that of an employee.
LOCATION - During the Term of Employment, you will perform services for GTE at
your current location, at GTE's headquarters, or at any other location
designated by GTE as necessary or appropriate for the discharge of your
responsibilities under this Agreement. In the event of any change in your
principal work location during the Term of Employment, you will be eligible for
relocation assistance under the terms of any GTE relocation policy then
applicable to other senior executives of GTE.
During the Consulting Term, GTE will provide you, at GTE's expense, with
appropriate office space and related administrative support at a mutually
agreeable location. GTE will reimburse you for all reasonable expenses that you
incur in discharging your duties and responsibilities to GTE during the
Consulting Term. At your request, GTE will give you access during the Consulting
Term to GTE's airplane(s) in accordance with the GTE policy for a non-employee
Chairman in effect at the time you make such a request.
In addition, from July 1, 2004, through June 30, 2009, GTE will provide you, at
GTE's expense, with appropriate office space and related administrative support
at a mutually agreeable location.
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BASE SALARY - During the Term of Employment, your annual base salary will not be
less than $1,250,000 per year; provided that if you are granted a merit increase
in your base salary, your base salary will not thereafter be reduced below that
increased level during the Term of Employment. GTE's Executive Compensation and
Organizational Structure Committee or its successor (the "ECC") will review your
base salary annually to consider whether you should be awarded a merit increase
in your base salary. In considering whether to grant you a merit increase, the
ECC will take into account, among other factors, your performance, corporate
performance, and market data.
CONSULTING FEE - During the Consulting Term, you will receive a consulting fee
of $250,000 per calendar month, and you will not be entitled to receive, by
reason of your status as Chairman and consultant, any of the compensation or
benefits that GTE provides to employees or to non-employee members of the Board.
Of course, in accordance with this Agreement, you may, during the Consulting
Term, be entitled to certain compensation and benefits by reason of your status
as a former GTE employee.
EIP AND LTIP - During the Term of Employment, on an annual basis, GTE will
provide you with the opportunity to earn an annual bonus in accordance with the
terms and conditions of the GTE Executive Incentive Plan or any successor plan
("EIP"), and an annual grant of a long-term incentive opportunity (currently, a
stock option grant and a performance bonus award) in accordance with the terms
and conditions of the GTE Long-Term Incentive Plan or any successor plan
("LTIP"), at a level that is no less than the total opportunity offered to you
immediately before your execution of this Agreement.
LONG-TERM PERFORMANCE INCENTIVE - Upon your execution of this Agreement, GTE
will credit $10,000,000 to a deferred account (the "Account") for you. The value
of the Account will be adjusted (upward or downward as appropriate) to reflect
the value that the Account would have if the balance in the Account were
invested in a mutual fund designated by you. The Account will be credited with
interest at the "Corporate Average" yield of long-term, high-grade corporate
bonds as reported by Xxxxx'x Investors Service, or such other substantially
similar yield as may be designated under the LTIP deferral regulations, from
January 1, 1999, until the date on which your initial mutual fund designation
becomes effective. Quarterly (or more frequently, if permitted by the ECC or its
designee), you may change the designated mutual fund on a prospective basis. The
crediting of interest and investment performance and
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the designation, or change in designation, of a mutual fund pursuant to this
paragraph will be in accordance with any reasonable rules or requirements
imposed by the ECC or its designee.
You will become vested in the value of the Account (the "Account Balance") as
follows: You will become vested in 60% of the value of the Account (the "Account
Balance") if you are actively employed by GTE on December 31, 2001. You will
become 80% vested in the Account Balance if you are actively employed by GTE on
December 31, 2002. You will become 100% vested in the Account Balance if you are
actively employed by GTE on December 31, 2003. Notwithstanding the foregoing, if
the Merger becomes effective, you will become 100% vested in the Account Balance
if you are actively employed by GTE on the later of (i) the Merger Date or (ii)
June 30, 2002.
The Payable Amount, as defined below (if any) will be paid to you (or, in the
event of your death, your beneficiary) in cash as soon as practicable after the
vested percentage of the Account Balance increases in accordance with the
preceding provisions of this Section ("Long-Term Performance Incentive"), except
to the extent that you elect to defer payment in accordance with deferral rules
prescribed by GTE. The amounts to be paid, provided, or credited pursuant to
this Section will not be treated as compensation for purposes of computing or
determining any additional benefit to be paid, provided, or credited under any
savings plan, insurance plan, pension plan, or other employee benefit plan
maintained by GTE.
The Payable Amount will be calculated as follows:
o First, the value of the Account Balance, determined as of the date
on which the vested percentage increases, will be multiplied by
the then-current vested percentage to produce the Vested Balance.
o Second, the Vested Balance will be multiplied by the Performance
Percentage prescribed by the following table to determine the
Cumulative Vested Amount:
EPS Growth Performance Percentage
---------- ----------------------
At least 10%.........................70%
At least 14.4%......................100%
At least 17.3%......................130%
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If EPS Growth is less than 10%, the Performance Percentage
will be zero or such higher amount as may be determined by the
ECC. If EPS Growth is between 10% and 14.4% or between 14.4%
and 17.3%, the Performance Percentage will be determined by
linear interpolation. The ECC may adjust the EPS Growth goals
in the table above at any time, and will adjust these goals
after the Merger, as it deems equitable in its sole
discretion.
The ECC will have the sole discretion to determine EPS Growth.
The ECC's determination of EPS Growth, which will be final and
binding, will be made as follows: EPS Growth will measure the
percentage increase in GTE's annual earnings per share ("EPS")
over GTE's EPS for its 1998 fiscal year of $3.07 per share.
GTE's EPS will be determined on the basis of the fully diluted
earnings per share reported in GTE's annual consolidated
financial statements for each year (or, for a period of less
than a full fiscal year, as reported on GTE's Form 10-Q). In
determining EPS Growth, the ECC will have the discretion to
take into consideration any or all of the following: (1) the
effects of business combinations; (2) the effects of
discontinued operations (including loss on disposal of a line
of business or class of customer); (3) changes in accounting
principles; (4) extraordinary items; (5) restructuring
charges; and (6) changes in tax law. Items (1) and (2) will be
as defined in accordance with Generally Accepted Accounting
Principles ("GAAP"), and items (3) through (6) will be as
defined in accordance with GAAP and as defined and as
disclosed in GTE's financial statements. When the ECC
determines EPS Growth, the ECC will determine EPS Growth on
the basis of the compound annual rate of growth over the
entire period since December 31, 1998. If the vested
percentage of the Account Balance increases in accordance with
the preceding provisions of this Section ("Long-Term
Performance Incentive") on a date other than the last day of
GTE's fiscal year, the Performance Percentage will be
determined as of the end of the most recent GTE fiscal quarter
ending on or before such date.
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o Third, the Payable Amount will be calculated by subtracting all
amount(s) previously paid or deferred pursuant to this Section
("Long-Term Performance Incentive"), and the earnings that would
have accrued thereon if such amount(s) had not been paid or
deferred, from the Cumulative Vested Amount. If the Payable Amount
is zero or less, no amount will be paid to you (and you will not
be required to make any payment to GTE) pursuant to this Section.
Attachment A illustrates how the calculations will be made.
MERGER IMPLEMENTATION AND RETENTION INCENTIVE PROGRAM - You will participate in
the GTE Merger Implementation and Retention Incentive Program (the "Program") on
the same terms as other senior executives of GTE. The terms of the Program that
apply to you will be set forth in a separate agreement between you and GTE.
RETIREMENT -
ADDITIONAL PENSION CREDIT - Except as provided in the Section captioned
"Termination of Employment," GTE will provide you with the following pension
benefits if you remain employed by the GTE Companies until the end of the Term
of Employment:
(i) EXTRA SERVICE CREDIT. You will be credited with an extra year of
service for each year that you actually work or consult for the GTE
Companies during the Term of Agreement for purposes of determining your
pension benefits. An extra year of service will be prorated for the
partial year that is included in the Term of Agreement.
(ii) AVERAGE COMPENSATION. Your pension will be calculated on the basis of
the highest of (a) your final year of pensionable compensation as an
employee, (b) your final average three years of pensionable
compensation as an employee, or (c) your final average five years of
pensionable compensation as an employee.
(iii) PENSION COMMENCEMENT DATE. Your pension (calculated in accordance with
the provisions of this Section ("Additional Pension Credit") may
commence immediately following the end of the Term of Employment, or
later, taking into account any service credit to be granted for the
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subsequent Consulting Term (if any) in accordance with the provisions
of paragraph (i), above.
(iv) PLAN AMENDMENT. If any GTE tax-qualified defined benefit plan in which
you participate (the "Qualified Plan") is amended after the date of
this Agreement, your benefits under the GTE Supplemental Executive
Retirement Plan or any successor thereto (the "SERP") will be equal to
the greater of the benefits determined under the terms of the Qualified
Plan in effect on the date of this Agreement or the benefits determined
under the terms of the Qualified Plan and the SERP in effect on the
date as of which your benefits are determined (taking into account in
each case the extra service credit provided by paragraph (i), above,
and the compensation adjustment prescribed by paragraph (ii), above),
offset by any benefits due to you from the Qualified Plan. There will
be no duplication of benefits between the pension benefits prescribed
by the preceding provisions of this paragraph (iv) and the pension
payable from the Qualified Plan or the SERP.
If your employment terminates before the end of the Term of Employment by reason
of involuntary termination for Cause (as defined below) or by reason of your
voluntary termination of employment without Good Reason (as defined below), you
will not be entitled to the benefits provided by the provisions of this Section
("Additional Pension Credit").
If your employment terminates before the end of the Term of Employment by reason
of your death or Disability (as defined below), you will be credited with an
extra year of service for each year for which you actually worked for the GTE
Companies during the Term of Employment for purposes of determining your pension
benefits, but you will not be entitled to any other benefits under the preceding
provisions of this Section ("Additional Pension Credit").
Notwithstanding the preceding provisions of this Section ("Additional Pension
Credit"), if you have a Qualifying Termination following a Change in Control (as
those terms are defined in the Executive Severance Agreement between you and GTE
Service Corp., dated June 4, 1998 (the "ESA")), you will be entitled to the
benefits provided by the preceding provisions of this Section as though your
employment continued until June 30, 2004, including the service credit provided
in accordance with this Section, in lieu of the service credit provided by your
ESA; provided that your pension will be payable immediately following
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the Qualifying Termination; provided further that your pensionable compensation
will be deemed equal to 100% of your Base Amount (as defined in your ESA) if
that produces a greater benefit than if your pensionable compensation were
calculated in accordance with paragraph (ii) of this Section; provided, however,
that the foregoing benefits are contingent upon your execution of the release
prescribed by the Section captioned "Release" and your compliance with the
Sections captioned "Covenants" and Confidentiality. However, the other
provisions of your ESA will not be adversely affected by this Agreement.
Notwithstanding the preceding provisions of this Section ("Additional Pension
Credit"), if GTE terminates your employment under this Agreement for any reason
other than death, Disability (as defined below), or Cause (as defined below),
and you do not have a Qualifying Termination following a Change in Control (as
those terms are defined your ESA), you will be entitled to the benefits provided
by the preceding provisions of this Section as though your employment continued
until June 30, 2004, including the service credit provided in accordance with
this Section; provided that your pension will not begin before the Term of
Employment ends; provided further that your pension will be calculated on the
basis of the highest of (a) your final year of pensionable compensation, (b)
your final average three years of pensionable compensation, (c) your final
average five years of pensionable compensation, or (d) your final average five
years of pensionable compensation while you are employed; provided, however,
that the foregoing benefits are contingent upon your execution of the release
prescribed by the Section captioned "Release" and your compliance with the
Sections captioned "Covenants" and "Confidentiality."
For purposes of the preceding provisions of this Section ("Additional Pension
Credit"), "pensionable compensation" means compensation as defined by the
applicable pension plan, and any pensionable compensation paid pursuant to the
Section captioned "Termination Provisions" after your employment terminates will
be treated as paid when it would have been paid if your employment had not
terminated.
The benefits provided by the preceding provisions of this Section ("Additional
Pension Credit") will be paid out of GTE's funded plans, out of GTE's general
assets, or both, at GTE's discretion.
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FINANCIAL COUNSELING - If you continue as an employee of (or consultant to) GTE
until June 30, 2004, in accordance with this Agreement, then from July 1, 2004,
through June 30, 2006, GTE will provide you with financial counseling assistance
consistent with the GTE policy then in effect for other senior executives,
subject, however, to your execution of the release prescribed by the Section
captioned "Release" and your compliance with the covenants set forth in the
Sections captioned "Covenants" and "Confidentiality."
TERMINATION PROVISIONS -
o CHANGE IN CONTROL - Upon the occurrence of a Qualifying Termination
following a Change in Control (as those terms are defined in your ESA)
during the Term of Employment, you will be entitled to receive additional
pension benefits in accordance with the Section captioned "Additional
Pension Credit." Upon the occurrence of a Qualifying Termination following
a Change in Control during the Term of Employment, you also will become
entitled to receive (1) two years of financial counseling assistance
consistent with the GTE policy then in effect for other senior executives,
and (2) the Long-Term Performance Incentive, payable in accordance with
(and on the date(s) prescribed by) the Section captioned "Long-Term
Performance Incentive" (or, if greater, the amount that would have been
payable in accordance with such Section if the Performance Percentage were
100%), subject in each case to your execution of the release prescribed by
the Section captioned "Release" and your compliance with the covenants set
forth in the Sections captioned "Covenants" and "Confidentiality." Although
you will not be entitled to any additional payments, benefits, or grants
under this Agreement following the Qualifying Termination, you also will
receive any other benefits to which you are entitled under your ESA.
If you incur a Qualifying Termination after a Change in Control (as those
terms are defined in your ESA) during the Term of Employment, except as
provided above in this Section ("Change in Control"), your entitlement to
benefits will be determined solely by your ESA and any relevant GTE
compensation and benefit plans and award agreements. If the preceding
provisions of this Section ("Change in Control") apply, you will not be
entitled to payments or benefits under the following Sections that address
termination of employment under other circumstances.
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o VOLUNTARY TERMINATION BY YOU - You may terminate your employment under this
Agreement at any time by giving the Board 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
will 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 GTE benefits will cease to accrue, you will forfeit
all unvested stock options and the then-unvested portion of your Account
Balance (as defined in the Section captioned "Long-Term Performance
Incentive"), you will forfeit all rights under this Agreement which as of
the relevant date have not yet been earned under this Agreement, and you
will not receive any consulting fees. A termination of employment in
accordance with this Section ("Voluntary Termination by You"), including
retirement, will be deemed a "Voluntary Termination."
During the Consulting Term, you may terminate your service as Chairman of
the Board and as consultant to GTE under this Agreement at any time by
giving the Board written notice of intent to terminate, delivered at least
30 calendar days before the effective date of such termination. The
termination will automatically become effective upon the expiration of the
30-day notice period. Upon the effective date of such termination, your
consulting fee will cease to accrue, and your rights to office space,
administrative support, and access to GTE airplane(s) will terminate. For
purposes of this Agreement, if you terminate your service as either
Chairman of the Board or consultant to GTE under this Agreement, you will
be deemed to terminate your service in both capacities.
o TERMINATION DUE TO DEATH OR DISABILITY - If, during the Term of Employment,
you terminate employment because of your death or Disability (as defined
below), you will immediately become 100% vested in your Account Balance,
and your Account Balance will be distributed immediately to you (or, in the
event of your death, your beneficiary), based on EPS Growth as of the end
of the most recent GTE fiscal quarter ending on or before the date your
employment terminates. Except as provided by the preceding sentence, if,
during the Term of Employment, you terminate employment on account of death
or Disability (as defined below), your base salary and other GTE benefits
will cease to accrue, you will not receive any consulting fees, and GTE
will pay you or your beneficiary, as appropriate, all benefits to
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which you or your beneficiary has a right pursuant to GTE's compensation
and benefit plans. For purposes of this Agreement, you will be considered
to have a Disability if an illness or injury prevents you from performing
your duties (as they existed immediately before the illness or injury) on a
full-time basis for six consecutive months.
If, during the Consulting Term, you terminate your service as Chairman of
the Board and as consultant to GTE under this Agreement because of your
death or disability, your consulting fee will cease to accrue, and your
right to office space, administrative support, and access to GTE
airplane(s) will terminate.
o INVOLUNTARY TERMINATION BY GTE - GTE may terminate your employment under
this Agreement at any time, for any reason. However, if GTE terminates your
employment for any reason other than death, Disability (as defined above),
or Cause (as defined below), such termination will be deemed an Involuntary
Termination by GTE, and, subject to your signing and delivering the release
required by the Section captioned "Release" and your compliance with the
covenants set forth in the Sections captioned "Covenants" and
"Confidentiality," you will be entitled to receive the following payments,
credits, and benefits, in lieu of any payment, credit, or benefit otherwise
provided pursuant to the Sections captioned "General," "Base Salary,"
"Consulting Fee," "EIP and LTIP," "Long-Term Performance Incentive," and
"Retirement," provided that each payment, credit, and benefit will be
contingent upon the absence, at the time such payment, credit, or benefit
is due, of any act that would constitute a breach of this Agreement by you,
and provided further that each such payment, credit, or benefit will be
paid or provided at the same time that the payment, credit, or benefit that
it replaces otherwise would have been paid or provided:
o Salary. An amount equal to the salary that would have been paid to
you under the Section captioned "Base Salary" through the
remaining Term of Employment, based on the rate of salary in
effect under such Section immediately prior to your separation
from service with the GTE Companies.
o Consulting Fee. An amount equal to the consulting fees that would
have been paid to you under the Section captioned "Consulting Fee"
through the remainder of the Consulting Term.
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o EIP. An amount equal to the value of the awards that you would
have been entitled to receive under the EIP for the remaining Term
of Employment, equal to 115% of norm (or its equivalent) at your
salary level for each year (but not more than the actual corporate
rating for that year) multiplied by the percentage of the year
that occurs before the end of the Term of Employment. The amounts
determined pursuant to this paragraph will be paid to you in
accordance with the provisions of the EIP that apply from time to
time to other senior executives of GTE.
o Stock Options. Stock appreciation rights ("SARs") with respect to
the same number of shares that are subject to stock options
granted, after the date of your separation from service, pursuant
to the LTIP to the CEO during the Term of Employment. Such SARs
will be subject to the same terms and conditions (including the
date of grant) that apply to such stock options, except that (1)
the SARs will be fully vested at the end of the Term of
Employment, and (2) you will have a period of at least 90 days
following the Term of Employment within which to exercise the
SARs. In addition, with respect to any and all GTE stock options
that are outstanding on the date of your separation from service,
you will be deemed, for purposes of determining the duration of
your right to exercise any and all such stock options, to have
remained in active service with the GTE Companies continuously
through the Term of Employment, and then to have separated from
service with whatever rights would then be applicable to a holder
of such options under the LTIP; provided that at the end of the
Term of Employment, all then-nonvested options will be immediately
vested, and you will have a minimum of 90 days from the end of the
Term of Employment to exercise all then-outstanding GTE stock
options (but not exceeding the maximum exercise period permitted
by the LTIP).
o LTIP Awards. The value of your then-outstanding and future
performance-bonus awards (that is, the cash bonus awards under the
LTIP), if any, which will be deemed equal to 75% of target (or its
equivalent) for your salary level for each award cycle (but not
more than the actual corporate rating for the award cycle)
multiplied by the percentage of the award cycle that occurs before
the end of the Term of Employment; provided that, for purposes of
this paragraph, any target award that has not been established at
your separation from
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service will be deemed to be equal to the target award
established at the time of each award cycle for the CEO. The
amounts determined pursuant to this paragraph ("LTIP Awards")
will be paid to you in accordance with the provisions of the LTIP
that apply from time to time to other senior executives of GTE.
o Long-Term Performance Incentive. The Long-Term Performance
Incentive payments prescribed by the Section captioned "Long-Term
Performance Incentive," paid in accordance with the provisions of
such Section as though you had not separated from service before
the end of the Term of Employment (or, if greater, the amount that
would have been payable in accordance with such Section if the
Performance Percentage were 100%), subject to your execution of
the release prescribed by the Section captioned "Release" and your
compliance with the covenants set forth in the Sections captioned
"Covenants" and "Confidentiality."
o Retirement Benefits. The retirement benefits prescribed by the
next-to-last paragraph of the Section captioned "Additional
Pension Credit," paid in accordance with the terms of that
paragraph.
o Financial Counseling and Outplacement. Financial planning services
for two years, and outplacement services, consistent with GTE
policy then in effect for other senior executives.
o Other Benefits. All other payments, benefits, and grants due you
under this Agreement (but excluding all perquisites, e.g., club
memberships, credit cards, air travel rights, car allowance, and
car service (which will cease)) until the end of the Term of
Employment, as and when such payments, benefits, and grants would
have been provided if your employment under this Agreement had not
been terminated.
Notwithstanding the foregoing provisions of this Section ("Involuntary
Termination by GTE"), all cash compensation (e.g., base salary and annual
and long-term cash bonus awards) otherwise payable to you following the
termination of your employment will be reduced by any cash compensation
(e.g., hiring bonus, base salary, or annual or long-term cash bonus award)
that you earn or become entitled to that is attributable to the same period
of
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time as a result of your subsequent employment or self-employment,
disregarding for this purpose any pension benefits to which you are
entitled under this Section.
For as long as GTE has obligations to you under this Section ("Involuntary
Termination by GTE"), you will keep GTE informed regarding the terms and
conditions of any subsequent employment or self-employment and the
corresponding compensation and benefits earned from such employment or
self-employment, and you will provide or cause to be provided to GTE, in
writing, correct, complete, and timely information concerning the same.
If, during the Consulting Term, GTE terminates your service as Chairman of
the Board and consultant for any reason other than death, disability, or
Cause, you will be entitled to receive an amount equal to the consulting
fees that would have been paid to you during the remainder of the
Consulting Term as and when such fees otherwise would have been paid to
you, subject to your signing and delivering the release required by the
Section captioned "Release" and your compliance with the covenants set
forth in the Sections captioned "Covenants" and "Confidentiality."
o TERMINATION FOR GOOD REASON - You may terminate your employment under this
Agreement for Good Reason by giving the Board 30 calendar days' written
notice of your intent to so terminate which sets 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
GTE of the terms and conditions of this Agreement.
Notwithstanding the foregoing, GTE will 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 GTE within the 15-day period, the action in question
will not constitute Good Reason.
Except as provided in the preceding paragraph, upon the lapse of the 30
calendar days' notice period, the Good Reason termination will take effect,
and your obligation to serve GTE, and GTE's obligation to employ you, under
the terms of this Agreement will terminate simultaneously, and you will be
deemed to have incurred an Involuntary Termination, with the consequences
described above.
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If you do not fulfill the notice and explanation requirements imposed by
this Section ("Termination for Good Reason"), the resulting termination of
employment will be deemed a Voluntary Termination.
During the Consulting Term, you may terminate your service as Chairman of
the Board and as a consultant to GTE for Good Reason in accordance with the
procedures that apply to the termination of your employment for Good
Reason, described above in this Section ("Termination for Good Reason"). If
you so terminate your service for Good Reason, you will be entitled to
receive an amount equal to the consulting fees that would have been paid to
you during the remainder of the Consulting Term as and when such fees
otherwise would have been paid to you, subject to your signing and
delivering the release required by the Section captioned "Release" and your
compliance with the covenants set forth in the Sections captioned
"Covenants" and "Confidentiality."
o TERMINATION FOR CAUSE - Nothing in this Agreement prevents GTE from
terminating your employment under this Agreement for Cause. In the event of
your termination for Cause, you will forfeit the then-unvested portion of
your Account Balance, and GTE will pay you your full accrued base salary
and accrued vacation time through the date of your termination, and GTE
will have no further obligations under this Agreement.
For purposes of this Agreement, "Cause" is defined as a good faith
determination by the Board, 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. Notwithstanding the foregoing, you will not
be deemed to have been terminated for Cause unless and until you are
furnished with a notice, consisting of a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the entire
membership of the Board at a duly held meeting of the Board (with
reasonable notice to you and an opportunity for you, together with counsel,
to be heard before the Board) finding that you have engaged in the conduct
described in this paragraph and specifying the particulars thereof in
detail. The Board may not delegate or assign its duties under this
paragraph.
Nothing in this Agreement prevents GTE from terminating your service as
Chairman of the Board and consultant under this Agreement for Cause (as
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Page 17
defined above) during the Consulting Term. In the event of such a
termination for Cause, your consulting fees will cease to accrue, your
rights to office space, administrative support, and access to GTE
airplane(s) will terminate, and GTE will have no further obligations under
this Agreement.
RESCISSION - If the ECC determines in its sole discretion that (i) consummation
of a transaction may be contingent upon the parties' ability to use pooling of
interest accounting and (ii) a 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. If the Long-Term Performance Incentive is rescinded
pursuant to this Section ("Rescission"), the covenants appearing in paragraphs
(a), (b), and (c) of the Section captioned "Covenants" will no longer apply to
you.
RELEASE - You will not be entitled to any benefits under this Agreement
following the termination of your employment and/or consulting relationship
unless, at the time you terminate your employment or consulting relationship,
you execute a release satisfactory to GTE releasing GTE, its affiliates,
shareholders, directors, officers, employees, representatives, and agents and
their successors and assigns from any and all employment-related,
consulting-related, or service-related claims you or your successors and
beneficiaries might then have against them (excluding any claims you might then
have under this Agreement, your ESA, 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,
you agree that:
(a) PROHIBITED CONDUCT - During your employment and/or consulting relationship
with GTE, and for a period ending with the later of (i) 24 months following the
termination of such employment or consulting relationship for any reason or (ii)
June 30, 2004, you, without the prior approval of the Board (provided by a
resolution duly adopted by the affirmative vote of not less than three quarters
of the entire membership of the Board at a duly held meeting of the Board), will
not:
o personally engage in Competitive Activities (as defined below); or
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Page 18
o 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.
(b) COMPETITIVE ACTIVITIES - For purposes of this Agreement, "Competitive
Activities" means business activities relating to products or services of the
same or similar type as the products or services (i) which are sold (or,
pursuant to an existing business plan, will be sold) to paying customers of one
or more GTE Companies, and (ii) 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 and/or other service with the GTE Companies.
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 GTE
Companies.
(c) INTERFERENCE WITH BUSINESS RELATIONS - During the period of your employment
and/or consulting relationship with any GTE Company, and for a period ending
with the later of (i) 24 months following the termination of such employment
and/or consulting relationship for any reason or (ii) June 30, 2004, you will
not, without the written approval of the Board (provided by a resolution duly
adopted by the affirmative vote of not less than three quarters of the entire
membership of the Board at a duly held meeting of the Board):
o recruit or solicit any employee of any GTE Company for employment or
for retention as a consultant or service provider;
o hire or participate (with another company or third party) in the
process of hiring (other than for a GTE Company) any person who is then
an employee of any GTE Company, or provide names or other information
about GTE employees to any person or business (other than a GTE
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January 14, 1999
Page 19
Company) under circumstances which could lead to the use of that
information for purposes of recruiting or hiring;
o interfere with the relationship of any GTE Company with any of its
employees, agents, or representatives;
o solicit or induce, or in any manner attempt to solicit or induce, any
client, customer, or prospect of a GTE Company (1) to cease being, or
not to become, a customer of a GTE Company or (2) to divert any
business of such customer or prospect from a GTE Company; or
o otherwise interfere with, disrupt, or attempt to interfere with or
disrupt, the relationship, contractual or otherwise, between any GTE
Company and any of its customers clients, prospects, suppliers,
consultants, or employees.
(d) RETURN OF PROPERTY; INTELLECTUAL PROPERTY RIGHTS - You agree that on or
before your termination of employment and/or consulting relationship with all
GTE Companies for any reason, you will return to the appropriate GTE Company all
property owned by each such company or in which any such 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 GTE or an applicable GTE
Company is the rightful owner of any programs, ideas, inventions, discoveries,
copyright material, or trademarks that you may have originated or developed, or
assisted in originating or developing, during your period of employment and/or
consulting with any GTE 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 any such company. You will at all times,
both before and after termination of your employment and/or consulting
relationship, cooperate with GTE in executing and delivering documents requested
by any GTE Company, and taking any other actions, that are necessary or
requested by GTE to assist any GTE Company in patenting, copyrighting, or
registering any programs, ideas, inventions, discoveries, copyright material, or
trademarks, and to vest title thereto in the applicable company.
(e) PROPRIETARY AND CONFIDENTIAL INFORMATION - You will at all times preserve
the confidentiality of all proprietary information and trade secrets of any and
all
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Page 20
GTE Companies, 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 any GTE 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 which are contemplated or
planned; research data; personnel information and data; identities of users and
purchasers of any GTE Company's products or services; and other confidential
matters pertaining to or known by one or more GTE Companies, including
confidential information of a third party which you know or should know a GTE
Company is bound to protect.
(f) WAIVER - Nothing in this Agreement will bar you from requesting, at the time
of your termination of your employment and/or consulting relationship or at any
time thereafter, that the Board, in its sole discretion, waive in writing GTE's
rights to enforce some or all of this Section ("Covenants"). Any such waiver
must be effected by a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board at a duly held
meeting of the Board.
(g) OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by this
Section ("Covenants") are in addition to, and not in lieu of, any and all other
policies and agreements of GTE regarding the subject matter of the foregoing
obligations.
MISCELLANEOUS -
NONDUPLICATION OF BENEFITS/NO SEVERANCE - The payment of any benefits hereunder
will be in lieu of any GTE Involuntary Separation Program ("ISEP") or other
separation or severance benefits and will fulfill all GTE obligations under
associated plans and programs, except to the extent that you become entitled to
such benefits after a Qualifying Termination following a Change in Control (as
those terms are defined in you ESA). 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 the ESA or
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January 14, 1999
Page 21
under any GTE compensation or benefit plan, award agreement, or other
arrangement.
OTHER GTE PLANS - Except to the extent otherwise explicitly provided by this
Agreement, any awards made to you under any GTE compensation or benefit plan or
program will be governed by the terms of that plan or program and any applicable
award agreement thereunder. Notwithstanding the foregoing, you will not be
entitled to participate in any GTE compensation or benefit plan that is
established after your employment with Service Corp. terminates, and except as
specifically provided in this Agreement, you will not be entitled to any
additional grants or awards under any GTE compensation or benefit plan after
your employment with Service Corp. terminates.
FORFEITURE OF DEFERRED AMOUNTS - If you breach any of the obligations set forth
in the Section captioned "Covenants" or engage in serious misconduct that is
contrary to written policies of GTE or is harmful to any GTE Company or its
reputation, you may forfeit all or part of any amounts that you defer or accrue
under any GTE-sponsored deferred compensation program after your execution of
this Agreement and any interest or earnings thereon.
PAYMENTS SUBJECT TO EXCISE TAX - Your ESA provides for the payment of an
additional amount if you receive any amount that is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended.
EFFECT ON EXECUTIVE SEVERANCE AGREEMENT - The execution of this Agreement will
not alter or amend your ESA; provided that the execution of this Agreement, the
provision of compensation and benefits pursuant to this Agreement, and the
assignment to you of duties and responsibilities in accordance with this
Agreement will not create a "Good Reason" for purposes of your ESA.
WAIVER - Failure to insist upon strict compliance with any of the terms,
covenants, or conditions of this Agreement will not be deemed a waiver of such
term, covenant, or condition, nor will 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.
TAXES - GTE may withhold from any benefits payable under this Agreement all
taxes that GTE reasonably determines to be required pursuant to any law,
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January 14, 1999
Page 22
regulation, or ruling. However, it is your obligation to pay all required taxes
on any amounts provided under this Agreement, regardless of whether withholding
is required.
CONFIDENTIALITY - Except to the extent otherwise required by law, you will not
disclose, in whole or in part any of the terms of this Agreement. This Section
("Confidentiality") does not prevent you from disclosing the terms of this
Agreement to your spouse or to your legal 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.
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.
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 his Agreement to
"Service Corp." will be deemed to refer to the assignee. However, you may not
assign your rights and obligations under this Agreement.
SEVERABILITY - The agreements contained herein and within the release prescribed
by the Section captioned "Release" will each constitute a separate agreement
independently supported by good and adequate consideration, and will 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 will remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable will
either be limited so that they will remain in effect to the extent permissible
by law, or such arbitrator or court will substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to GTE, to the
fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
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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 (i) the covenants in the Sections captioned
"Covenants" and "Confidentiality" are essential to the continued good will and
profitability of GTE; (ii) you have broad-based skills that will serve as the
basis for employment opportunities that are not prohibited by the covenants in
the Sections captioned "Covenants" and "Confidentiality;" (iii) when your
employment and/or consulting relationship with GTE terminates, you will be able
to earn a livelihood without violating any of the terms of this Agreement; (iv)
irreparable damage to GTE will result in the event that the foregoing sections
of this Agreement are not specifically enforced and that monetary damages will
not adequately protect GTE from a breach of these sections of the Agreement; (v)
if any dispute arises concerning the violation by you of these provisions of the
Agreement, an injunction may be issued restraining such violation pending the
determination of such controversy, and no bond or other security may be required
in connection therewith; (vi) such covenants will continue to apply after any
expiration, termination, or cancellation of this Agreement; (vii) your breach of
any of such covenants will result in your immediate forfeiture of all rights
under this Agreement; and (viii) in the event of any such breach by you, you
will, at GTE's request, return all payments made pursuant to this Agreement. You
further agree that you 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.
SURVIVAL - The provisions in the Sections captioned "Covenants" and
"Miscellaneous" will survive the Term of Agreement. If your employment and/or
consulting relationship with GTE continues after the Term of Agreement, you will
be subject to the obligations imposed by each of such Sections with respect to
such employment and/or consulting relationship. Any obligations that GTE has
incurred under this Agreement to provide benefits that have vested under the
terms of this Agreement (including GTE's obligations in the Section captioned
"Retirement") will likewise survive the Term of Agreement. Except as provided by
the preceding provisions of this Section ("Survival"), the terms of your
employment (if any) after the end of the Term of Employment will not be governed
by this Agreement.
ARBITRATION - Any dispute arising out of or relating to this Agreement, except
any dispute arising out of or relating to the Sections captioned "Covenants" and
"Confidentiality," and any dispute arising out of or relating to your
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January 14, 1999
Page 24
employment, except a dispute arising solely out of, or relating solely to, your
ESA, will be settled by final and binding arbitration, which will 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 GTE arising out of or relating to the Sections captioned
"Covenants" and "Confidentiality," GTE has retained all its rights to legal and
equitable recourse and relief, including but not limited to injunctive relief,
as referred to in Section captioned "Additional Remedies". The arbitration will
be expedited and conducted in the State of New York pursuant to the Center for
Public Resources ("CPR") Rules for Non-Administered Arbitration of Employment
Disputes 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 will be governed by the Federal Arbitration Act, 9 U.S.C. Sections
1-16, and judgment upon the award rendered by the arbitration 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 will 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 the State of New York is the proper venue for any litigation seeking
to enforce any provision of this Agreement or to enforce any arbitration award
under this Section, 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 the State of New York to enforce any provision of this Agreement or to
enforce any arbitration award under this Section. Each party also waives any
right it might otherwise have to seek to transfer from a federal or state court
in the State of New York a suit filed by the other party to enforce any
provision of this Agreement or to enforce any arbitration award under this
Section.
ENTIRE AGREEMENT - Except for the terms of the ESA and the other compensation
and benefit plans in which you participate, this Agreement sets forth the entire
understanding of you and GTE, and supersedes all prior agreements and
communications, whether oral or written, between GTE and you. This Agreement
will not be modified except by written agreement of you and GTE.
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Xxxxx, I believe that this generous offer provides you and your family with
financial security as our industry and GTE evolve. We recognize that 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 and returning this Agreement to
me by January 29, 1999.
Sincerely yours,
Xxxxxxx X. Xxxxxx,
on behalf of the Executive Compensation
and Organizational Structure Committee
of the Board of Directors of GTE Corporation
X. Xxxxxxx XxxXxxxxx,
on behalf of GTE Corporation
I agree to the terms described above.
--------------------------------------------
Xxxxxxx X. Xxx
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January 14, 1999
Attachment
ATTACHMENT A
----------------------------------------------------------------------------------------------
Year(1) Threshold Target Maximum
(10%) (14.4%) (17.3%)
2001
- Cumulative EPS $11.19 $12.13 $12.77
- Bonus(2) $4.2 $6.0 $7.8
2002
- Cumulative EPS $15.69 $17.39 $18.58
- Bonus(2) $1.4 $2.0 $2.6
2003
- Cumulative EPS $20.64 $23.41 $25.40
- Bonus(2) $1.4 $2.0 $2.6
==============================================================================================
Targets upon Merger
Effective Time
June 30, 2002
- Cumulative EPS $13.44 $14.76 $15.68
- Bonus(2) $2.8 $4.0 $5.2
----------------------------------------------------------------------------------------------
(1) Performance reflects results for the fiscal year noted
(2) Bonus amounts are before any additional earnings have been calculated
Note: Interpolation would be used for performance in between the points shown on
the chart. Earnings shown assume consistent performance from year to year. The
ECC may adjust the EPS Growth goals at any time, and will adjust these goals
after the Merger, as it deems equitable in its sole discretion.
27
EXHIBIT 10.3
January 7, 1999
Xxxx X. Xxxxxx
[Address]
[Address]
Dear Xxxx:
I am pleased to offer you this employment agreement (the "Agreement") with GTE
Service Corporation ("Service Corp.") which will provide for employment
stability for you and long-term wealth creation opportunity for you and your
family. In return, GTE can expect your continued leadership for the foreseeable
future as well as your value-added advice and counsel on the broad array of
issues and challenges facing GTE today and in the future.
PURPOSE - Service Corp. enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market, which has
resulted from the Telecommunications Act of 1996, and the proposed merger
between GTE Corporation and Bell Atlantic Corporation ("Bell Atlantic") or a
subsidiary of Bell Atlantic (the "Merger") have required and will require GTE to
make critical strategic, marketing, and technical decisions. These decisions by
GTE 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 GTE and competing businesses, and
confidential or proprietary information regarding GTE's technology, resources,
and business opportunities or other confidential or proprietary information
relating to GTE's business. Service Corp. 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,
Service Corp. is providing you with the security of a fixed-term agreement, a
long-term retention incentive, participation in the GTE Merger Implementation
and Retention Incentive Program, and other benefits.
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January 7, 1999
Page 2
GENERAL - Under this Agreement, you will continue as a Corporate Officer and
Senior Executive of GTE. During the Term of Employment (as defined below), you
will continue to receive the same benefits as other senior executives of GTE at
your salary level (except that you will not receive involuntary separation
program ("ISEP") or other separation and severance benefits). In addition, the
terms of your employment will be governed by the following:
TERM - The term of employment under this Agreement ("Term of Employment") will
commence on October 1, 1998, and end on September 30, 2002.
DUTIES AND RESPONSIBILITIES - You will continue to perform your duties and
responsibilities fully and faithfully (i) as a director, so long as you are
elected and serving, and (ii) as an officer, reporting only to the Board of
Directors of GTE Corporation ("Board") and/or the Chief Executive Officer(s) of
GTE Corporation ("CEO(s)"). You will serve in such executive capacities, with
such titles and authorities, as the Board or the CEO(s) of GTE may from time to
time prescribe, and you will perform all duties incidental to such positions,
shall cooperate fully with the Board and the CEO(s) and will work cooperatively
with the other officers of GTE. You will continue to devote your entire business
skill, time, and effort diligently to the affairs of GTE in accordance with the
duties assigned to you, and you will perform all such duties, and otherwise
conduct yourself, in a manner reasonably calculated in good faith by you to
promote the best interests of GTE. During the Term of Employment, except to the
extent specifically permitted in writing by the Board or the CEO(s), and except
for memberships on boards of directors that you hold on the date of this
Agreement, you will not, directly or indirectly, render any services of a
business, commercial, or professional nature to any other person or organization
other than a GTE Company or a person or organization in which GTE has a
financial interest, whether or not the services are rendered for compensation.
LOCATION - During the Term of Employment, you will perform services for GTE at
your current location, at GTE's headquarters, or at any other location
designated by GTE 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 will be eligible for relocation assistance under
the
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January 7, 1999
Page 3
terms of any GTE relocation policy then applicable to other senior executives of
GTE at your salary level.
BASE SALARY - During the Term of Employment, your annual base salary will not be
less than $899,000 per year; provided that if you are granted a merit increase
in your base salary, your base salary will not thereafter be reduced below that
increased level during the Term of Employment.
EIP AND LTIP - During the Term of Employment, on an annual basis, GTE will
provide you with the opportunity to earn an annual bonus in accordance with the
terms and conditions of the GTE Executive Incentive Plan or any successor plan
("EIP"), and an annual grant of a long-term incentive opportunity (currently a
stock option grant and a cash award) in accordance with the terms and conditions
of the GTE Long-Term Incentive Plan or any successor plan ("LTIP"), in each case
at a level commensurate with the opportunity offered to other GTE senior
executives at your salary level.
LONG-TERM RETENTION INCENTIVE - Upon your execution of this Agreement, GTE will
credit $4,500,000 to a deferred account (the "Account") for you. The value of
the Account will be adjusted (upward or downward as appropriate) to reflect the
value that the Account would have if the balance in the Account were invested in
a mutual fund designated by you. The Account will be credited with interest at
the "Corporate Average" yield of long-term, high-grade corporate bonds as
reported by Xxxxx'x Investors Service, or such substantially similar yield as
may be designated under the LTIP deferral regulations, from October 1, 1998,
until the date on which your initial mutual fund designation becomes effective.
Quarterly (or more frequently, if permitted by GTE's Executive Vice President -
Human Resources and Administration or his successor (the "EVP")), you may change
the designated mutual fund on a prospective basis. The crediting of interest and
investment performance and the designation, or change in designation, of a
mutual fund pursuant to this paragraph will be in accordance with any reasonable
rules or requirements imposed by the EVP. You will become vested in 60% of the
value of the Account (the "Account Balance") if you are actively employed by GTE
on September 30, 2001. You will become 100% vested in the Account Balance if you
are actively employed by GTE on September 30, 2002. The vested portion of the
Account Balance will be paid to you (or, in the event of your death, your
beneficiary) in cash as soon as practicable after it becomes vested, except to
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January 7, 1999
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the extent that you elect to defer payment in accordance with deferral rules
prescribed by GTE. The amounts to be paid, provided, or credited pursuant to
this Section will not be treated as compensation for purposes of computing or
determining any additional benefit to be paid, provided, or credited under any
savings plan, insurance plan, pension plan, or other employee benefit plan
maintained by any GTE Company.
MERGER IMPLEMENTATION AND RETENTION INCENTIVE PROGRAM - You will participate in
the GTE Merger Implementation and Retention Incentive Program (the "Program") on
the same terms as other senior executives of GTE at your salary level. The terms
of the Program that apply to you will be set forth in a separate agreement
between you and GTE.
BOARD OF DIRECTORS - After the execution of this Agreement, you will continue to
serve as a member of the Board, and you will be nominated for election to the
Board at the annual meeting of shareowners that occurs upon the expiration of
your current term as a member of the Board after the date of this Agreement. If
you are elected to serve as a member of the Board at such annual meeting, you
also will be nominated for election to the Board at each subsequent meeting of
shareowners that occurs when your then-current term as a member of the Board
expires during the Term of Employment.
RETIREMENT -
ADDITIONAL PENSION AND BENEFIT CREDIT - Except as provided in the Section
captioned "Termination of Employment," GTE will provide you with the following
pension benefits:
(v) EXTRA SERVICE CREDIT. If you remain employed by the GTE Companies until
September 30, 2002, you will be credited with an extra year of service
for each year that you actually work for the GTE Companies during the
Term of Employment for purposes of determining your pension benefits.
(vi) PLAN AMENDMENT. If you remain employed by the GTE Companies until
September 30, 2002, and if any GTE tax-qualified defined benefit plan
in which you participate (the "Qualified Plan") is amended after the
date of this Agreement, your benefits under the GTE Supplemental
Executive
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Page 5
Retirement Plan or any successor thereto (the "SERP") will be equal to
the greater of the benefits determined under the terms of the
Qualified Plan in effect on the date of this Agreement or the benefits
determined under the terms of the Qualified Plan and the SERP in
effect on the date as of which your benefits are determined (taking
into account in each case the extra service credit provided by
paragraph (i), above), offset by any benefits due to you from the
Qualified Plan. There will be no duplication of benefits between the
pension benefits prescribed by the preceding provisions of this
paragraph (ii) and the pension payable from the Qualified Plan or the
SERP.
If your employment terminates before September 30, 2002, by reason of
involuntary termination for Cause (as defined below) or by reason of your
voluntary termination of employment without Good Reason (as defined below), you
will not be entitled to the benefits provided by the provisions of paragraphs
(i) and (ii) of this Section ("Additional Pension and Benefit Credit").
If your employment terminates before September 30, 2002, by reason of your death
or Disability (as defined below), you will be credited with an extra year of
service for each year for which you actually worked for Service Corp. during the
Term of Employment for purposes of determining your pension benefits as well as
the benefits provided by the provisions of paragraph (ii) of this Section
("Additional Pension and Benefit Credit"), but you will not be entitled to any
other benefits under the preceding provisions of this Section.
Notwithstanding the preceding provisions of this Section ("Additional Pension
and Benefit Credit"), if you have a Qualifying Termination following a Change in
Control (as those terms are defined in the Executive Severance Agreement between
you and GTE Service Corp., dated June 4, 1998 (the "ESA")), you will be entitled
to the benefits provided by the preceding provisions of this Section as though
your employment continued until the end of the Term of Employment, including the
service credit provided in accordance with this Section, in lieu of the service
credit provided by your ESA, subject to your execution of the release prescribed
by the Section captioned "Release" and your compliance with the Sections
captioned "Covenants" and Confidentiality; however, the other provisions of your
ESA will not be adversely affected by this Agreement.
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The benefits provided by the preceding provisions of this Section ("Additional
Pension and Benefit Credit") will be paid out of GTE's funded plans, out of
GTE's general assets, or both, at GTE's discretion.
TERMINATION PROVISIONS -
o CHANGE IN CONTROL - Upon the occurrence of a Qualifying Termination
following a Change in Control (as those terms are defined in your ESA)
during the Term of Employment, you will be entitled to receive a pension
commencing immediately, and you will receive service credit in accordance
with the Section captioned "Additional Pension and Benefit Credit" in lieu
of the service credit provided under your ESA. Upon the occurrence of a
Qualifying Termination following a Change in Control during the Term of
Employment, you also will become entitled to receive the Long-Term
Retention Incentive, payable in accordance with (and on the date(s)
prescribed by) the Section captioned "Long-Term Retention Incentive,"
subject, however, to your execution of the release prescribed by the
Section captioned "Release" and your compliance with the covenants set
forth in the Sections captioned "Covenants" and "Confidentiality." Although
you will not be entitled to any additional payments, benefits, or grants
under this Agreement following the Qualifying Termination, you also will
receive any other benefits to which you are entitled under your ESA.
If you incur a Qualifying Termination after a Change in Control (as those
terms are defined in your ESA) during the Term of Employment, except as
provided above in this Section ("Change in Control"), your entitlement to
benefits will be determined solely by your ESA and any relevant GTE
compensation and benefit plans and award agreements. By way of example, if
a Qualifying Termination occurs as a result of your failure to be nominated
to the Board in accordance with the Section captioned "Board of Directors"
or other Good Reason (as that term is defined in your ESA), except as
provided above in this Section, your entitlement to benefits will be
determined solely by your ESA and any relevant GTE compensation and benefit
plans and award agreements. If the preceding provisions of this Section
("Change in Control") apply, you will not be entitled to payments or
benefits under the following Sections that address termination of
employment under other circumstances.
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Page 7
o VOLUNTARY TERMINATION BY YOU - You may terminate your employment under this
Agreement at any time by giving 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
will 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 GTE benefits will cease to accrue, you will forfeit
all unvested stock options and the then-unvested portion of your Account
Balance (as defined in the Section captioned "Long-Term Retention
Incentive"), and you will forfeit all rights under this Agreement which as
of the relevant date have not yet been earned under this Agreement. A
termination of employment in accordance with this Section ("Voluntary
Termination by You"), including retirement, will be deemed a "Voluntary
Termination."
o TERMINATION DUE TO DEATH OR DISABILITY - If, during the Term of Employment,
you terminate employment because of your death or Disability (as defined
below), you will immediately become 100% vested in your Account Balance,
and your Account Balance will be distributed immediately to you (or, in the
event of your death, your beneficiary). Except as provided by the preceding
sentence, if, during the Term of Employment, you terminate employment on
account of death or Disability (as defined below), your base salary and
other GTE benefits will cease to accrue, and GTE will pay you or your
beneficiary, as appropriate, all benefits to which you or your beneficiary
has a right pursuant to GTE's compensation and benefit plans. For purposes
of this Agreement, you will be considered to have a Disability if an
illness or injury prevents you from performing your duties (as they existed
immediately before the illness or injury) on a full-time basis for six
consecutive months.
o INVOLUNTARY TERMINATION BY GTE - GTE may terminate your employment under
this Agreement at any time, for any reason. However, if GTE terminates your
employment for any reason other than death, Disability (as defined above),
or Cause (as defined below), such termination will be deemed an Involuntary
Termination by GTE, and, subject to signing and delivering the release
required by the Section captioned "Release" and your compliance with the
covenants set forth in the Sections captioned "Covenants" and
Confidentiality," you will be entitled to receive the following payments,
credits, and benefits, in lieu of any payment, credit, or
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January 7, 1999
Page 8
benefit otherwise provided pursuant to the Sections captioned "General,"
"Base Salary," "EIP and LTIP," "Long-Term Retention Incentive," and
"Retirement," provided that each payment, credit, and benefit will be
contingent upon the absence, at the time such payment, credit, or benefit
is due, of any act that would constitute a breach of this Agreement by you,
and provided further that each such payment, credit, or benefit will be
paid or provided at the same time that the payment, credit, or benefit that
it replaces otherwise would have been paid or provided:
o Salary. An amount equal to the salary that would have been paid to
you under the Section captioned "Base Salary" through the
remaining Term of Employment, based on the rate of salary in
effect under such Section immediately prior to your separation
from service with the GTE Companies.
o EIP. An amount equal to the value of the awards that you would
have been entitled to receive under the EIP for the remaining Term
of Employment, equal to 115% of norm (or its equivalent) at your
salary level for each year (but not more than the actual corporate
rating for that year) multiplied by the percentage of the year
that occurs before September 30, 2002. The amounts determined
pursuant to this paragraph will be paid to you in accordance with
the provisions of the EIP that apply from time to time to other
senior executives of GTE at your salary level.
o Stock Options. Stock appreciation rights ("SARs") with respect to
the same number of shares that are subject to stock options
granted, after the date of your separation from service, pursuant
to the LTIP to senior executives of GTE at your salary level
during the Term of Employment. Such SARs will be subject to the
same terms and conditions that apply to such stock options, except
that (1) the SARs will be fully vested on September 30, 2002, and
(2) you will have a period of at least 90 days following September
30, 2002, within which to exercise the SARs. In addition, with
respect to any and all GTE stock options that are outstanding on
the date of your separation from service, you will be deemed, for
purposes of determining the duration of your right to exercise any
and all such stock options, to have remained in active service
with the GTE Companies continuously through the Term of
Employment, and then to have separated from
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Page 9
service with whatever rights would then be applicable to a holder
of such options under the LTIP; provided that on September 30,
2002, all then-nonvested options will be immediately vested, and
you will have a minimum of 90 days from September 30, 2002, to
exercise all then-outstanding GTE stock options (but not
exceeding the maximum exercise period permitted by the LTIP).
o LTIP Awards. The value of your then-outstanding and future
performance-bonus awards (that is, the cash bonus awards under the
LTIP), if any, which will be deemed equal to 75% of target (or its
equivalent) for your salary level for each award cycle (but not
more than the actual corporate rating for the award cycle)
multiplied by the percentage of the award cycle that occurs before
September 30, 2002; provided that, for purposes of this paragraph,
any target award that has not been established at your separation
from service will be deemed to be equal to the target award
established at the time of each award cycle for other senior
executives of GTE at your salary level (as that salary level was
established immediately before your separation from service). The
amounts determined pursuant to this paragraph ("LTIP Awards") will
be paid to you in accordance with the provisions of the LTIP that
apply from time to time to other senior executives of GTE at your
salary level.
o Long-Term Retention Incentive. The Long-Term Retention Incentive
payments prescribed by the Section captioned "Long-Term Retention
Incentive," paid in accordance with the provisions of such Section
as though you had not separated from service before September 30,
2002.
o Financial Counseling and Outplacement. Financial planning services
until September 30, 2002, and outplacement services, consistent
with GTE policy then in effect for other senior executives at your
salary level.
o Other Benefits. All other payments, benefits, and grants due you
under this Agreement (but excluding all perquisites, e.g., club
memberships, credit cards, air travel rights, car allowance, and
car service (which will cease)) until September 30, 2002, as and
when
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January 7, 1999
Page 10
such payments, benefits, and grants would have been provided if
your employment under this Agreement had not been terminated.
Notwithstanding the foregoing provisions of this Section ("Involuntary
Termination by GTE"), all cash compensation (e.g., base salary and
annual and long-term cash bonus awards) otherwise payable to you
following the termination of your employment will be reduced by any
cash compensation (e.g., hiring bonus, base salary, or annual or
long-term cash bonus award) that you earn or become entitled to that is
attributable to the same period of time as a result of your subsequent
employment or self-employment, disregarding for this purpose any
pension benefits to which you are entitled under this Section.
For as long as GTE has obligations to you under this Section
("Involuntary Termination by GTE"), you will keep GTE informed
regarding the terms and conditions of any subsequent employment or
self-employment and the corresponding compensation and benefits earned
from such employment or self-employment, and you will provide or cause
to be provided to GTE, in writing, correct, complete, and timely
information concerning the same.
o TERMINATION FOR GOOD REASON - You may terminate your employment under this
Agreement for Good Reason by giving the CEO(s) 30 calendar days' written
notice of your intent to so terminate which sets 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
GTE of the terms and conditions of this Agreement.
Notwithstanding the foregoing, GTE will 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 GTE within the 15-day period, the action in question
will not constitute Good Reason.
Except as provided in the preceding paragraph, upon the lapse of the 30
calendar days' notice period, the Good Reason termination will take effect,
and your obligation to serve GTE, and GTE's obligation to employ you, under
the terms of this Agreement will terminate simultaneously, and you will be
deemed to have incurred an Involuntary Termination, with the consequences
described above.
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January 7, 1999
Page 11
If you do not fulfill the notice and explanation requirements imposed by
this Section ("Termination for Good Reason"), the resulting termination of
employment will be deemed a Voluntary Termination.
o TERMINATION FOR CAUSE - Nothing in this Agreement prevents GTE from
terminating your employment under this Agreement for Cause. In the event of
your termination for Cause, you will forfeit the then-unvested portion of
your Account Balance, and GTE will pay you your full accrued base salary
and accrued vacation time through the date of your termination, and GTE
will have no further obligations under this Agreement, except as otherwise
provided in the Section captioned "Replacement for Pension Entitlements."
For purposes of this Agreement, "Cause" is defined as a good faith
determination by the CEO(s), 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 (the "ECC") determines in its sole discretion that (i) consummation of
a transaction may be contingent upon the parties' ability to use pooling of
interest accounting and (ii) a 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. If the Long-Term Retention Incentive is rescinded pursuant
to this Section ("Rescission"), the covenants appearing in paragraphs (a), (b),
and (c) of the Section captioned "Covenants" will no longer apply to you.
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 GTE 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, your ESA, or any
employee benefit plan that is subject to the vesting standards imposed by the
Employee Retirement Income Security Act of 1974, as amended).
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January 7, 1999
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COVENANTS - In consideration for the benefits and agreements described above,
you agree that:
(a) PROHIBITED CONDUCT - During the period of your employment with any GTE
Company, and for a period ending with the later of (i) 24 months following your
termination of employment for any reason from all GTE Companies or (ii)
September 30, 2002, you, without the prior written consent of the CEO(s), will
not:
o personally engage in Competitive Activities (as defined below); or
o 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.
(b) COMPETITIVE ACTIVITIES - For purposes of this Agreement, "Competitive
Activities" means business activities relating to products or services of the
same or similar type as the products or services (i) which are sold (or,
pursuant to an existing business plan, will be sold) to paying customers of one
or more GTE Companies, and (ii) 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 GTE Companies. 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 GTE Companies.
(c) INTERFERENCE WITH BUSINESS RELATIONS - During the period of your employment
with any GTE Company, and for a period ending with the later of (i) 24 months
following your termination of employment for any reason from all
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January 7, 1999
Page 13
GTE Companies or (ii) September 30, 2002, you will not, without the written
consent of the CEO(s):
o recruit or solicit any employee of any GTE Company for employment or
for retention as a consultant or service provider;
o hire or participate (with another company or third party) in the
process of hiring (other than for a GTE Company) any person who is then
an employee of any GTE Company, or provide names or other information
about GTE employees to any person or business (other than a GTE
Company) under circumstances which could lead to the use of that
information for purposes of recruiting or hiring;
o interfere with the relationship of any GTE Company with any of its
employees, agents, or representatives;
o solicit or induce, or in any manner attempt to solicit or induce, any
client, customer, or prospect of a GTE Company (1) to cease being, or
not to become, a customer of a GTE Company or (2) to divert any
business of such customer or prospect from a GTE Company; or
o otherwise interfere with, disrupt, or attempt to interfere with or
disrupt, the relationship, contractual or otherwise, between any GTE
Company and any of its customers clients, prospects, suppliers,
consultants, or employees.
(d) RETURN OF PROPERTY; INTELLECTUAL PROPERTY RIGHTS - You agree that on or
before your termination of employment for any reason with all GTE Companies, you
will return to the appropriate GTE Company all property owned by each such
company or in which any such 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 GTE or an applicable GTE Company is
the rightful owner of any programs, ideas, inventions, discoveries, copyright
material, or trademarks that you may have originated or developed, or assisted
in originating or developing, during your period of employment with any GTE
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
any such company. You will at all times, both before and after
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January 7, 1999
Page 14
termination of employment, cooperate with GTE in executing and delivering
documents requested by any GTE Company, and taking any other actions, that are
necessary or requested by GTE to assist any GTE Company in patenting,
copyrighting, or registering any programs, ideas, inventions, discoveries,
copyright material, or trademarks, and to vest title thereto in the applicable
company.
(e) PROPRIETARY AND CONFIDENTIAL INFORMATION - You will at all times preserve
the confidentiality of all proprietary information and trade secrets of any and
all GTE Companies, 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 any GTE 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 which are contemplated or
planned; research data; personnel information and data; identities of users and
purchasers of any GTE Company's products or services; and other confidential
matters pertaining to or known by one or more GTE Companies, including
confidential information of a third party which you know or should know a GTE
Company is bound to protect.
(f) WAIVER - Nothing in this Agreement will bar 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 GTE's rights to enforce some or all
of this Section ("Covenants").
(g) OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by this
Section ("Covenants") are in addition to, and not in lieu of, any and all other
policies and agreements of GTE regarding the subject matter of the foregoing
obligations.
MISCELLANEOUS -
GTE - For purposes of this Agreement, "GTE" means GTE Corporation, its
successors, and assigns and all of the GTE Companies; "GTE Companies"
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January 7, 1999
Page 15
means all of, and "GTE Company" means any one of, GTE Corporation, all corporate
subsidiaries or other companies affiliated with GTE Corporation, all companies
in which GTE Corporation directly or indirectly owns a substantial equity
interest, and their successors and assigns, including any company into which GTE
Corporation is merged and its subsidiaries and affiliates. In addition, in this
Agreement, after the consummation of the Merger, "GTE Corporation" includes Bell
Atlantic. Similarly, after the consummation of the Merger, "Board" refers to the
Board of Directors of Bell Atlantic.
NONDUPLICATION OF BENEFITS/NO SEVERANCE - The payment of any benefits hereunder
will be in lieu of any GTE Involuntary Separation Program ("ISEP") or other
separation or severance benefits and will fulfill all GTE obligations under
associated plans and programs, except to the extent that you become entitled to
such benefits after a Qualifying Termination following a Change in Control (as
those terms are defined in you ESA). 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 the ESA or
under any GTE compensation or benefit plan, award agreement, or other
arrangement.
OTHER GTE PLANS - Except to the extent otherwise explicitly provided by this
Agreement, any awards made to you under any GTE compensation or benefit plan or
program will be governed by the terms of that plan or program and any applicable
award agreement thereunder. Notwithstanding the foregoing, you will not be
entitled to participate in any GTE compensation or benefit plan that is
established after your employment with Service Corp. terminates, and except as
specifically provided in this Agreement, you will not be entitled to any
additional grants or awards under any GTE compensation or benefit plan after
your employment with Service Corp. terminates.
FORFEITURE OF DEFERRED AMOUNTS - If you breach any of the obligations set forth
in the Section captioned "Covenants" or engage in serious misconduct that is
contrary to written policies of GTE or is harmful to any GTE Company or its
reputation, you may forfeit all or part of any amounts that you defer or accrue
under any GTE-sponsored deferred compensation program after your execution of
this Agreement and any interest or earnings thereon.
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January 7, 1999
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PAYMENTS SUBJECT TO EXCISE TAX - Your ESA provides for the payment of an
additional amount if you receive any amount that is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended.
EFFECT ON EXECUTIVE SEVERANCE AGREEMENT - The execution of this Agreement will
not alter or amend your ESA, provided that the execution of this Agreement, and
the provision of compensation and benefits pursuant to this Agreement, will not
create a "Good Reason" for purposes of your ESA.
WAIVER - Failure to insist upon strict compliance with any of the terms,
covenants, or conditions of this Agreement will not be deemed a waiver of such
term, covenant, or condition, nor will 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.
TAXES - GTE may withhold from any benefits payable under this Agreement all
taxes that GTE 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 provided under this Agreement, regardless of whether withholding
is required.
CONFIDENTIALITY - Except to the extent otherwise required by law, you will not
disclose, in whole or in part any of the terms of this Agreement. This Section
("Confidentiality") does not prevent you from disclosing the terms of this
Agreement to your spouse or to your legal 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.
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.
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 his Agreement to
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January 7, 1999
Page 17
"Service Corp." will be deemed to refer to the assignee. However, you may not
assign your rights and obligations under this Agreement.
SEVERABILITY - The agreements contained herein and within the release prescribed
by the Section captioned "Release" will each constitute a separate agreement
independently supported by good and adequate consideration, and will 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 will remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable will
either be limited so that they will remain in effect to the extent permissible
by law, or such arbitrator or court will substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to GTE, to the
fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
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 (i) the covenants in the Sections captioned
"Covenants" and "Confidentiality" are essential to the continued good will and
profitability of GTE; (ii) you have broad-based skills that will serve as the
basis for employment opportunities that are not prohibited by the covenants in
the Sections captioned "Covenants" and "Confidentiality;" (iii) when your
employment with GTE terminates, you will be able to earn a livelihood without
violating any of the terms of this Agreement; (iv) irreparable damage to GTE
will result in the event that the foregoing sections of this Agreement are not
specifically enforced and that monetary damages will not adequately protect GTE
from a breach of these sections of the Agreement; (v) if any dispute arises
concerning the violation by you of these provisions of the Agreement, an
injunction may be issued restraining such violation pending the determination of
such controversy, and no bond or other security may be required in connection
therewith; (vi) such covenants will continue to apply after any expiration,
termination, or cancellation of this Agreement; (vii) your breach of any of such
covenants will result in your immediate forfeiture of all rights under this
Agreement; and (viii) in the event of any such breach by you, you will, at GTE's
request, return all payments made pursuant to this Agreement. You further
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January 7, 1999
Page 18
agree that you 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.
SURVIVAL - The provisions in the Sections captioned "Covenants" and
"Miscellaneous" will survive the Term of Employment. If your employment
continues after the Term of Employment, you will be subject to the obligations
imposed by each of such Sections with respect to such employment. Any
obligations that GTE has incurred under this Agreement to provide benefits that
have vested under the terms of this Agreement (including GTE's obligations in
the Section captioned "Retirement") will likewise survive the Term of
Employment. Except as provided by the preceding provisions of this Section
("Survival"), the terms of your employment after the end of the Term of
Employment will not be governed by this Agreement.
ARBITRATION - Any dispute arising out of or relating to this Agreement, except
any dispute arising out of or relating to the Sections captioned "Covenants" and
"Confidentiality," and any dispute arising out of or relating to your
employment, except a dispute arising solely out of, or relating solely to, your
ESA, will be settled by final and binding arbitration, which will 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 GTE arising out of or relating to the Sections captioned
"Covenants" and "Confidentiality," GTE has retained all its rights to legal and
equitable recourse and relief, including but not limited to injunctive relief,
as referred to in Section captioned "Additional Remedies." The arbitration will
be expedited and conducted in the State of New York pursuant to the Center for
Public Resources ("CPR") Rules for Non-Administered Arbitration of Employment
Disputes 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 will be governed by the Federal Arbitration Act, 9 U.S.C. Sections
1-16, and judgment upon the award rendered by the arbitration 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 will such an arbitration award include any award of damages
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Page 19
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 the State of New York is the proper venue for any litigation seeking
to enforce any provision of this Agreement or to enforce any arbitration award
under this Section, 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 the State of New York to enforce any provision of this Agreement or to
enforce any arbitration award under this Section. Each party also waives any
right it might otherwise have to seek to transfer from a federal or state court
in the State of New York a suit filed by the other party to enforce any
provision of this Agreement or to enforce any arbitration award under this
Section.
ENTIRE AGREEMENT - Except for the terms of the ESA and the other compensation
and benefit plans in which you participate, this Agreement sets forth the entire
understanding of you and GTE, and supersedes all prior agreements and
communications, whether oral or written, between GTE and you. This Agreement
will not be modified except by written agreement of you and GTE.
Xxxx, I believe that this generous offer provides you and your family with
financial security as our industry and GTE evolve. We recognize that 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 and returning to me by January
29, 1999.
Sincerely yours,
Xxxxxxx X. Xxx
cc: J.R. XxxXxxxxx
I agree to the terms described above.
-------------------------------------
Xxxx X. Xxxxxx
46
EXHIBIT 10.3
January 15, 1999
Xxxxxxx X. Xxxxx
[Address]
[Address]
Dear Xxxx:
I am pleased to offer you this employment agreement (the "Agreement") with GTE
Service Corporation ("Service Corp.") which will provide for employment
stability for you and long-term wealth creation opportunity for you and your
family. In return, GTE can expect your continued leadership for the foreseeable
future as well as your value-added advice and counsel on the broad array of
issues and challenges facing GTE today and in the future.
PURPOSE - Service Corp. enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market, which has
resulted from the Telecommunications Act of 1996, and the proposed merger
between GTE Corporation and Bell Atlantic Corporation ("Bell Atlantic") or a
subsidiary of Bell Atlantic (the "Merger") have required and will require GTE to
make critical strategic, marketing, and technical decisions. These decisions by
GTE 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 GTE and competing businesses, and
confidential or proprietary information regarding GTE's technology, resources,
and business opportunities or other confidential or proprietary information
relating to GTE's business. Service Corp. 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,
Service Corp. is providing you with the security of a fixed-term agreement, a
long-term retention
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January 15, 1999
Page 2
incentive, participation in the GTE Merger Implementation and Retention
Incentive Program, and other benefits.
GENERAL - Under this Agreement, you will continue as a Corporate Officer and
Senior Executive of GTE. During the Term of Employment (as defined below), you
will continue to receive the same benefits as other senior executives of GTE at
your salary level (except that you will not receive involuntary separation
program ("ISEP") or other separation and severance benefits). In addition, the
terms of your employment will be governed by the following:
TERM - The term of employment under this Agreement ("Term of Employment") will
commence on October 1, 1998, and end on September 30, 2002.
DUTIES AND RESPONSIBILITIES - You will continue to perform your duties and
responsibilities fully and faithfully (i) as a director, so long as you are
elected and serving, and (ii) as an officer, reporting only to the Board of
Directors of GTE Corporation ("Board") and/or the Chief Executive Officer(s) of
GTE Corporation ("CEO(s)"). You will serve in such executive capacities, with
such titles and authorities, as the Board or the CEO(s) of GTE may from time to
time prescribe, and you will perform all duties incidental to such positions,
shall cooperate fully with the Board and the CEO(s) and will work cooperatively
with the other officers of GTE. You will continue to devote your entire business
skill, time, and effort diligently to the affairs of GTE in accordance with the
duties assigned to you, and you will perform all such duties, and otherwise
conduct yourself, in a manner reasonably calculated in good faith by you to
promote the best interests of GTE. During the Term of Employment, except to the
extent specifically permitted in writing by the Board or the CEO(s), and except
for memberships on boards of directors that you hold on the date of this
Agreement, you will not, directly or indirectly, render any services of a
business, commercial, or professional nature to any other person or organization
other than a GTE Company or a person or organization in which GTE has a
financial interest, whether or not the services are rendered for compensation.
LOCATION - During the Term of Employment, you will perform services for GTE at
your current location, at GTE's headquarters, or at any other location
designated by GTE as necessary or appropriate for the discharge of your
responsibilities under this Agreement. In the event of any change in your
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Page 3
principal work location, you will be eligible for relocation assistance under
the terms of any GTE relocation policy then applicable to other senior
executives of GTE at your salary level.
BASE SALARY - During the Term of Employment, your annual base salary will not be
less than $756,000 per year; provided that if you are granted a merit increase
in your base salary, your base salary will not thereafter be reduced below that
increased level during the Term of Employment.
EIP AND LTIP - During the Term of Employment, on an annual basis, GTE will
provide you with the opportunity to earn an annual bonus in accordance with the
terms and conditions of the GTE Executive Incentive Plan or any successor plan
("EIP") and an annual grant of a long-term incentive opportunity (currently a
stock option grant and a cash incentive award) in accordance with the terms and
conditions of the GTE Long-Term Incentive Plan or any successor plan ("LTIP"),
in each case at a level commensurate with the opportunity offered to other GTE
senior executives at your salary level.
LONG-TERM RETENTION INCENTIVE - Upon your execution of this Agreement, GTE will
credit $3,500,000 to a deferred account (the "Account") for you. The value of
the Account will be adjusted (upward or downward as appropriate) to reflect the
value that the Account would have if the balance in the Account were invested in
a mutual fund designated by you. The Account will be credited with interest at
the "Corporate Average" yield of long-term, high-grade corporate bonds as
reported by Xxxxx'x Investors Service, or such other substantially similar yield
as may be designated under the LTIP deferral regulations, from October 1, 1998,
until the date on which your initial mutual fund designation becomes effective.
Quarterly (or more frequently, if permitted by GTE's Executive Vice President -
Human Resources and Administration or his successor (the "EVP")), you may change
the designated mutual fund on a prospective basis. The crediting of interest and
investment performance and the designation, or change in designation, of a
mutual fund pursuant to this paragraph will be in accordance with any reasonable
rules or requirements imposed by the EVP. You will become vested in 60% of the
value of the Account (the "Account Balance") if you are actively employed by GTE
on September 30, 2001. You will become 100% vested in the Account Balance if you
are actively employed by GTE on September 30, 2002. The vested portion of the
Account Balance will be paid to you (or, in the event of your death, your
beneficiary) in cash as soon as practicable after it becomes vested, except to
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January 15, 1999
Page 4
the extent that you elect to defer payment in accordance with deferral rules
prescribed by GTE. The amounts to be paid, provided, or credited pursuant to
this Section will not be treated as compensation for purposes of computing or
determining any additional benefit to be paid, provided, or credited under any
savings plan, insurance plan, pension plan, or other employee benefit plan
maintained by any GTE Company.
MERGER IMPLEMENTATION AND RETENTION INCENTIVE PROGRAM - You will participate in
the GTE Merger Implementation and Retention Incentive Program (the "Program") on
the same terms as other senior executives of GTE at your salary level. The terms
of the Program that apply to you will be set forth in a separate agreement
between you and GTE.
BOARD OF DIRECTORS - After the execution of this Agreement, you will continue to
serve as a member of the Board, and you will be nominated for election to the
Board at the annual meeting of shareowners that occurs upon the expiration of
your current term as a member of the Board after the date of this Agreement. If
you are elected to serve as a member of the Board at such annual meeting, you
also will be nominated for election to the Board at each subsequent meeting of
shareowners that occurs when your then-current term as a member of the Board
expires during the Term of Employment.
RETIREMENT -
ADDITIONAL PENSION AND BENEFIT CREDIT - Except as provided in the Section
captioned "Termination of Employment," GTE will provide you with the following
pension benefits:
(vii) EXTRA SERVICE CREDIT. If you remain employed by the GTE Companies until
September 30, 2002, you will be credited with an extra year of service
for each year that you actually work for the GTE Companies during the
Term of Employment for purposes of determining your pension benefits.
(viii) REPLACEMENT FOR PENSION ENTITLEMENTS. In order to replace certain
pension entitlements that would be payable to you had you remained with
your former employer, if you remain employed by the GTE Companies at
least until age 55 (or are involuntarily terminated without Cause (as
defined below) before age 55), you will receive a single life
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January 15, 1999
Page 5
annuity pension of $200,000 per year (or the actuarial equivalent
thereof pursuant to an optional form of payment) when you leave the
GTE Companies. In the event of your death, and if you have not
received a lump-sum pension payment, your then-surviving spouse will
receive this benefit unreduced for the remainder of her life.
(ix) EARLY RETIREMENT BENEFIT. If you remain employed by the GTE Companies
until September 30, 2002, you will be considered to have not less than
76 points and 15 years of Accredited Service for purposes of
determining (a) your eligibility for early retirement benefits under
the GTE Supplemental Executive Retirement Plan or any successor thereto
(the "SERP"), (b) your eligibility for Executive Retirement Life
Insurance Plan ("ERLIP"), retiree medical, and other post-retirement
benefits, as in effect from time to time, and (c) for purposes of
determining the exercisability of stock options.
(x) PLAN AMENDMENT. If you remain employed by the GTE Companies until
September 30, 2002, and if any GTE tax-qualified defined benefit plan
in which you participate (the "Qualified Plan") is amended after the
date of this Agreement, your benefits under the SERP will be equal to
the greater of the benefits determined under the terms of the Qualified
Plan and the SERP in effect on the date of this Agreement or the
benefits determined under the terms of the Qualified Plan in effect on
the date as of which your benefits are determined (taking into account
in each case the extra service credit provided by paragraph (i),
above), offset by any benefits due to you from the Qualified Plan.
There will be no duplication of benefits between the pension benefits
prescribed by the preceding provisions of this paragraph (iv) and the
pension payable from the Qualified Plan or the SERP.
If your employment terminates before September 30, 2002, by reason of
involuntary termination for Cause (as defined below) or by reason of your
voluntary termination of employment without Good Reason (as defined below), you
will not be entitled to the benefits provided by the provisions of paragraphs
(i), (iii), and (iv) of this Section ("Additional Pension and Benefit Credit").
If your employment terminates before September 30, 2002, by reason of your death
or Disability (as defined below), you will be credited with an extra year of
service for each year for which you actually worked for Service Corp. during
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January 15, 1999
Page 6
the Term of Employment for purposes of determining your pension benefits as well
as the benefits provided by the provisions of paragraph (ii) of this Section
("Additional Pension and Benefit Credit"), but you will not be entitled to any
other benefits under the preceding provisions of this Section.
Notwithstanding the preceding provisions of this Section ("Additional Pension
and Benefit Credit"), if you have a Qualifying Termination following a Change in
Control (as those terms are defined in the Executive Severance Agreement between
you and GTE Service Corp., dated June 4, 1998 (the "ESA")), you will be entitled
to the benefits provided by the preceding provisions of this Section as though
your employment continued until the end of the Term of Employment, including the
service credit provided in accordance with this Section, in lieu of the service
credit provided by your ESA, subject to your execution of the release prescribed
by the Section captioned "Release" and your compliance with the Sections
captioned "Covenants" and Confidentiality; however, the other provisions of your
ESA will not be adversely affected by this Agreement.
The benefits provided by the preceding provisions of this Section ("Additional
Pension and Benefit Credit") will be paid out of GTE's funded plans, out of
GTE's general assets, or both, at GTE's discretion.
TERMINATION PROVISIONS -
o CHANGE IN CONTROL - Upon the occurrence of a Qualifying Termination
following a Change in Control (as those terms are defined in your ESA)
during the Term of Employment, you will be entitled to receive a pension
commencing immediately, and you will receive service credit in accordance
with the Section captioned "Additional Pension and Benefit Credit" in lieu
of the service credit provided under your ESA. Upon the occurrence of a
Qualifying Termination following a Change in Control during the Term of
Employment, you also will become entitled to receive the Long-Term
Retention Incentive, payable in accordance with (and on the date(s)
prescribed by) the Section captioned "Long-Term Retention Incentive,"
subject, however, to your execution of the release prescribed by the
Section captioned "Release" and your compliance with the covenants set
forth in the Sections captioned "Covenants" and "Confidentiality." Although
you will not be entitled to any additional payments, benefits, or grants
under this
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January 15, 1999
Page 7
Agreement following the Qualifying Termination, you also will receive any
other benefits to which you are entitled under your ESA.
If you incur a Qualifying Termination after a Change in Control (as those
terms are defined in your ESA) during the Term of Employment, except as
provided above in this Section ("Change in Control"), your entitlement to
benefits will be determined solely by your ESA and any relevant GTE
compensation and benefit plans and award agreements. By way of example, if
a Qualifying Termination occurs as a result of your failure to be nominated
to the Board in accordance with the Section captioned "Board of Directors"
or other Good Reason (as that term is defined in your ESA), except as
provided above in this Section, your entitlement to benefits will be
determined solely by your ESA and any relevant GTE compensation and benefit
plans and award agreements. If the preceding provisions of this Section
("Change in Control") apply, you will not be entitled to payments or
benefits under the following Sections that address termination of
employment under other circumstances.
o VOLUNTARY TERMINATION BY YOU - You may terminate your employment under this
Agreement at any time by giving 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
will 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 GTE benefits will cease to accrue, you will forfeit
all unvested stock options and the then-unvested portion of your Account
Balance (as defined in the Section captioned "Long-Term Retention
Incentive"), and you will forfeit all rights under this Agreement which as
of the relevant date have not yet been earned under this Agreement. A
termination of employment in accordance with this Section ("Voluntary
Termination by You"), including retirement, will be deemed a "Voluntary
Termination."
o TERMINATION DUE TO DEATH OR DISABILITY - If, during the Term of Employment,
you terminate employment because of your death or Disability (as defined
below), you will immediately become 100% vested in your Account Balance,
and your Account Balance will be distributed immediately to you (or, in the
event of your death, your beneficiary). Except as provided by the preceding
sentence, if, during the Term of Employment, you terminate
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January 15, 1999
Page 8
employment on account of death or Disability (as defined below), your base
salary and other GTE benefits will cease to accrue, and GTE will pay you or
your beneficiary, as appropriate, all benefits to which you or your
beneficiary has a right pursuant to GTE's compensation and benefit plans.
For purposes of this Agreement, you will be considered to have a Disability
if an illness or injury prevents you from performing your duties (as they
existed immediately before the illness or injury) on a full-time basis for
six consecutive months.
o INVOLUNTARY TERMINATION BY GTE - GTE may terminate your employment under
this Agreement at any time, for any reason. However, if GTE terminates your
employment for any reason other than death, Disability (as defined above),
or Cause (as defined below), such termination will be deemed an Involuntary
Termination by GTE, and, subject to signing and delivering the release
required by the Section captioned "Release" and your compliance with the
covenants set forth in the Sections captioned "Covenants" and
"Confidentiality," you will be entitled to receive the following payments,
credits, and benefits, in lieu of any payment, credit, or benefit otherwise
provided pursuant to the Sections captioned "General," "Base Salary," "EIP
and LTIP," "Long-Term Retention Incentive," and "Retirement," provided that
each payment, credit, and benefit will be contingent upon the absence, at
the time such payment, credit, or benefit is due, of any act that would
constitute a breach of this Agreement by you, and provided further that
each such payment, credit, or benefit will be paid or provided at the same
time that the payment, credit, or benefit that it replaces otherwise would
have been paid or provided:
o Salary. An amount equal to the salary that would have been paid to
you under the Section captioned "Base Salary" through the
remaining Term of Employment, based on the rate of salary in
effect under such Section immediately prior to your separation
from service with the GTE Companies.
o EIP. An amount equal to the value of the awards that you would
have been entitled to receive under the EIP for the remaining Term
of Employment, equal to 115% of norm (or its equivalent) at your
salary level for each year (but not more than the actual corporate
rating for that year) multiplied by the percentage of the year
that occurs before September 30, 2002. The amounts determined
pursuant to this
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January 15, 1999
Page 9
paragraph will be paid to you in accordance with the provisions
of the EIP that apply from time to time to other senior
executives of GTE at your salary level.
o Stock Options. Stock appreciation rights ("SARs") with respect to
the same number of shares that are subject to stock options
granted, after the date of your separation from service, pursuant
to the LTIP to senior executives of GTE at your salary level
during the Term of Employment. Such SARs will be subject to the
same terms and conditions that apply to such stock options, except
that (1) the SARs will be fully vested on September 30, 2002, and
(2) you will have a period of at least 90 days following September
30, 2002, within which to exercise the SARs. In addition, with
respect to any and all GTE stock options that are outstanding on
the date of your separation from service, you will be deemed, for
purposes of determining the duration of your right to exercise any
and all such stock options, to have remained in active service
with the GTE Companies continuously through the Term of
Employment, and then to have separated from service with whatever
rights would then be applicable to a holder of such options under
the LTIP; provided that on September 30, 2002, all then-nonvested
options will be immediately vested, and you will have a minimum of
90 days from September 30, 2002, to exercise all then-outstanding
GTE stock options (but not exceeding the maximum exercise period
permitted by the LTIP).
o LTIP Awards. The value of your then-outstanding and future
performance-bonus awards (that is, the cash bonus awards under the
LTIP), if any, which will be deemed equal to 75% of target (or its
equivalent) for your salary level for each award cycle (but not
more than the actual corporate rating for the award cycle)
multiplied by the percentage of the award cycle that occurs before
September 30, 2002; provided that, for purposes of this paragraph,
any target award that has not been established at your separation
from service will be deemed to be equal to the target award
established at the time of each award cycle for other senior
executives of GTE at your salary level (as that salary level was
established immediately before your separation from service). The
amounts determined pursuant to this paragraph ("LTIP Awards") will
be paid to you in accordance with the
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January 15, 1999
Page 10
provisions of the LTIP that apply from time to time to other
senior executives of GTE at your salary level.
o Long-Term Retention Incentive. The Long-Term Retention Incentive
payments prescribed by the Section captioned "Long-Term Retention
Incentive," paid in accordance with the provisions of such Section
as though you had not separated from service before September 30,
2002.
o Financial Counseling and Outplacement. Financial planning services
until September 30, 2002, and outplacement services, consistent
with GTE policy then in effect for other senior executives at your
salary level.
o Other Benefits. All other payments, benefits, and grants due you
under this Agreement (but excluding all perquisites, e.g., club
memberships, credit cards, air travel rights, car allowance, and
car service (which will cease)) until September 30, 2002, as and
when such payments, benefits, and grants would have been provided
if your employment under this Agreement had not been terminated.
Notwithstanding the foregoing provisions of this Section ("Involuntary
Termination by GTE"), all cash compensation (e.g., base salary and
annual and long-term cash bonus awards) otherwise payable to you
following the termination of your employment will be reduced by any
cash compensation (e.g., hiring bonus, base salary, or annual or
long-term cash bonus award) that you earn or become entitled to that is
attributable to the same period of time as a result of your subsequent
employment or self-employment, disregarding for this purpose any
pension benefits to which you are entitled under this Section.
For as long as GTE has obligations to you under this Section
("Involuntary Termination by GTE"), you will keep GTE informed
regarding the terms and conditions of any subsequent employment or
self-employment and the corresponding compensation and benefits earned
from such employment or self-employment, and you will provide or cause
to be provided to GTE, in writing, correct, complete, and timely
information concerning the same.
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o TERMINATION FOR GOOD REASON - You may terminate your employment under this
Agreement for Good Reason by giving the CEO(s) 30 calendar days' written
notice of your intent to so terminate which sets 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
GTE of the terms and conditions of this Agreement.
Notwithstanding the foregoing, GTE will 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 GTE within the 15-day period, the action in question
will not constitute Good Reason.
Except as provided in the preceding paragraph, upon the lapse of the 30
calendar days' notice period, the Good Reason termination will take effect,
and your obligation to serve GTE, and GTE's obligation to employ you, under
the terms of this Agreement will terminate simultaneously, and you will be
deemed to have incurred an Involuntary Termination, with the consequences
described above.
If you do not fulfill the notice and explanation requirements imposed by
this Section ("Termination for Good Reason"), the resulting termination of
employment will be deemed a Voluntary Termination.
o TERMINATION FOR CAUSE - Nothing in this Agreement prevents GTE from
terminating your employment under this Agreement for Cause. In the event of
your termination for Cause, you will forfeit the then-unvested portion of
your Account Balance, and GTE will pay you your full accrued base salary
and accrued vacation time through the date of your termination, and GTE
will have no further obligations under this Agreement, except as otherwise
provided in the Section captioned "Replacement for Pension Entitlements."
For purposes of this Agreement, "Cause" is defined as a good faith
determination by the CEO(s), 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 (the "ECC") determines in its sole discretion that (i) consummation
57
of a transaction may be contingent upon the parties' ability to use pooling of
interest accounting and (ii) a 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. If the Long-Term Retention Incentive is rescinded pursuant
to this Section ("Rescission"), the covenants appearing in paragraphs (a), (b),
and (c) of the Section captioned "Covenants" will no longer apply to you.
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 GTE 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, your ESA, 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,
you agree that:
(a) PROHIBITED CONDUCT - During the period of your employment with any GTE
Company, and for a period ending with the later of (i) 24 months following your
termination of employment for any reason from all GTE Companies or (ii)
September 30, 2002, you, without the prior written consent of the CEO(s), will
not:
o personally engage in Competitive Activities (as defined below); or
o 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.
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(b) COMPETITIVE ACTIVITIES - For purposes of this Agreement, "Competitive
Activities" means business activities relating to products or services of the
same or similar type as the products or services (i) which are sold (or,
pursuant to an existing business plan, will be sold) to paying customers of one
or more GTE Companies, and (ii) 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 GTE Companies. 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 GTE Companies.
(c) INTERFERENCE WITH BUSINESS RELATIONS - During the period of your employment
with any GTE Company, and for a period ending with the later of (i) 24 months
following your termination of employment for any reason from all GTE Companies
or (ii) September 30, 2002, you will not, without the written consent of the
CEO(s):
o recruit or solicit any employee of any GTE Company for employment or
for retention as a consultant or service provider;
o hire or participate (with another company or third party) in the
process of hiring (other than for a GTE Company) any person who is then
an employee of any GTE Company, or provide names or other information
about GTE employees to any person or business (other than a GTE
Company) under circumstances which could lead to the use of that
information for purposes of recruiting or hiring;
o interfere with the relationship of any GTE Company with any of its
employees, agents, or representatives;
o solicit or induce, or in any manner attempt to solicit or induce, any
client, customer, or prospect of a GTE Company (1) to cease being, or
not to become, a customer of a GTE Company or (2) to divert any
business of such customer or prospect from a GTE Company; or
o otherwise interfere with, disrupt, or attempt to interfere with or
disrupt, the relationship, contractual or otherwise, between any GTE
Company
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and any of its customers clients, prospects, suppliers, consultants,
or employees.
(d) RETURN OF PROPERTY; INTELLECTUAL PROPERTY RIGHTS - You agree that on or
before your termination of employment for any reason with all GTE Companies, you
will return to the appropriate GTE Company all property owned by each such
company or in which any such 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 GTE or an applicable GTE Company is
the rightful owner of any programs, ideas, inventions, discoveries, copyright
material, or trademarks that you may have originated or developed, or assisted
in originating or developing, during your period of employment with any GTE
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
any such company. You will at all times, both before and after termination of
employment, cooperate with GTE in executing and delivering documents requested
by any GTE Company, and taking any other actions, that are necessary or
requested by GTE to assist any GTE Company in patenting, copyrighting, or
registering any programs, ideas, inventions, discoveries, copyright material, or
trademarks, and to vest title thereto in the applicable company.
(e) PROPRIETARY AND CONFIDENTIAL INFORMATION - You will at all times preserve
the confidentiality of all proprietary information and trade secrets of any and
all GTE Companies, 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 any GTE 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 which are contemplated or
planned; research data; personnel information and data; identities of users and
purchasers of any GTE Company's products or services; and other confidential
matters pertaining to or known by one or more GTE
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Companies, including confidential information of a third party which you know or
should know a GTE Company is bound to protect.
(f) WAIVER - Nothing in this Agreement will bar 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 GTE's rights to enforce some or all
of this Section ("Covenants").
(g) OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by this
Section ("Covenants") are in addition to, and not in lieu of, any and all other
policies and agreements of GTE regarding the subject matter of the foregoing
obligations.
MISCELLANEOUS -
GTE - For purposes of this Agreement, "GTE" means GTE Corporation, its
successors, and assigns and all of the GTE Companies; "GTE Companies" means all
of, and "GTE Company" means any one of, GTE Corporation, all corporate
subsidiaries or other companies affiliated with GTE Corporation, all companies
in which GTE Corporation directly or indirectly owns a substantial equity
interest, and their successors and assigns, including any company into which GTE
Corporation is merged and its subsidiaries and affiliates. In addition, in this
Agreement, after the consummation of the Merger, "GTE Corporation" includes Bell
Atlantic. Similarly, after the consummation of the Merger, "Board" refers to the
Board of Directors of Bell Atlantic.
NONDUPLICATION OF BENEFITS/NO SEVERANCE - The payment of any benefits hereunder
will be in lieu of any GTE Involuntary Separation Program ("ISEP") or other
separation or severance benefits and will fulfill all GTE obligations under
associated plans and programs, except to the extent that you become entitled to
such benefits after a Qualifying Termination following a Change in Control (as
those terms are defined in you ESA). 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 the ESA or
under any GTE compensation or benefit plan, award agreement, or other
arrangement.
OTHER GTE PLANS - Except to the extent otherwise explicitly provided by this
Agreement, any awards made to you under any GTE compensation or benefit
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plan or program will be governed by the terms of that plan or program and any
applicable award agreement thereunder. Notwithstanding the foregoing, you will
not be entitled to participate in any GTE compensation or benefit plan that is
established after your employment with Service Corp. terminates, and except as
specifically provided in this Agreement, you will not be entitled to any
additional grants or awards under any GTE compensation or benefit plan after
your employment with Service Corp. terminates.
FORFEITURE OF DEFERRED AMOUNTS - If you breach any of the obligations set forth
in the Section captioned "Covenants" or engage in serious misconduct that is
contrary to written policies of GTE or is harmful to any GTE Company or its
reputation, you may forfeit all or part of any amounts that you defer or accrue
under any GTE-sponsored deferred compensation program after your execution of
this Agreement and any interest or earnings thereon.
PAYMENTS SUBJECT TO EXCISE TAX - Your ESA provides for the payment of an
additional amount if you receive any amount that is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended.
EFFECT ON EXECUTIVE SEVERANCE AGREEMENT - The execution of this Agreement will
not alter or amend your ESA, provided that the execution of this Agreement, and
the provision of compensation and benefits pursuant to this Agreement, will not
create a "Good Reason" for purposes of your ESA.
WAIVER - Failure to insist upon strict compliance with any of the terms,
covenants, or conditions of this Agreement will not be deemed a waiver of such
term, covenant, or condition, nor will 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.
TAXES - GTE may withhold from any benefits payable under this Agreement all
taxes that GTE 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 provided under this Agreement, regardless of whether withholding
is required.
CONFIDENTIALITY - Except to the extent otherwise required by law, you will not
disclose, in whole or in part any of the terms of this Agreement. This Section
("Confidentiality") does not prevent you from disclosing the terms of this
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Agreement to your spouse or to your legal 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.
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.
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 his Agreement to
"Service Corp." will be deemed to refer to the assignee. However, you may not
assign your rights and obligations under this Agreement.
SEVERABILITY - The agreements contained herein and within the release prescribed
by the Section captioned "Release" will each constitute a separate agreement
independently supported by good and adequate consideration, and will 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 will remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable will
either be limited so that they will remain in effect to the extent permissible
by law, or such arbitrator or court will substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to GTE, to the
fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
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 (i) the covenants in the Sections captioned
"Covenants" and "Confidentiality" are essential to the continued good will and
profitability of GTE; (ii) you have broad-based skills that will serve as the
basis for employment opportunities that are not prohibited by the covenants in
the Sections captioned "Covenants" and "Confidentiality;" (iii) when your
employment with GTE terminates, you will be able to earn a livelihood without
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violating any of the terms of this Agreement; (iv) irreparable damage to GTE
will result in the event that the foregoing sections of this Agreement are not
specifically enforced and that monetary damages will not adequately protect GTE
from a breach of these sections of the Agreement; (v) if any dispute arises
concerning the violation by you of these provisions of the Agreement, an
injunction may be issued restraining such violation pending the determination of
such controversy, and no bond or other security may be required in connection
therewith; (vi) such covenants will continue to apply after any expiration,
termination, or cancellation of this Agreement; (vii) your breach of any of such
covenants will result in your immediate forfeiture of all rights under this
Agreement; and (viii) in the event of any such breach by you, you will, at GTE's
request, return all payments made pursuant to this Agreement. You further agree
that you 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.
SURVIVAL - The provisions in the Sections captioned "Covenants" and
"Miscellaneous" will survive the Term of Employment. If your employment
continues after the Term of Employment, you will be subject to the obligations
imposed by each of such Sections with respect to such employment. Any
obligations that GTE has incurred under this Agreement to provide benefits that
have vested under the terms of this Agreement (including GTE's obligations in
the Section captioned "Retirement") will likewise survive the Term of
Employment. Except as provided by the preceding provisions of this Section
("Survival"), the terms of your employment after the end of the Term of
Employment will not be governed by this Agreement.
ARBITRATION - Any dispute arising out of or relating to this Agreement, except
any dispute arising out of or relating to the Sections captioned "Covenants" and
"Confidentiality," and any dispute arising out of or relating to your
employment, except a dispute arising solely out of, or relating solely to, your
ESA, will be settled by final and binding arbitration, which will 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 GTE arising out of or relating to the Sections captioned
"Covenants" and "Confidentiality," GTE has retained all its rights to legal and
equitable recourse and relief, including but not limited to injunctive relief,
as referred to in Section captioned "Additional Remedies." The arbitration will
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 of Employment Disputes
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 will
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16, and judgment
upon the award rendered by the arbitration 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 will
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 the State of
New York is the proper venue for any litigation seeking to enforce any provision
of this Agreement or to enforce any arbitration award under this Section, 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 the State of New York
to enforce any provision of this Agreement or to enforce any arbitration award
under this Section. Each party also waives any right it might otherwise have to
seek to transfer from a federal or state court in the State of New York a suit
filed by the other party to enforce any provision of this Agreement or to
enforce any arbitration award under this Section.
ENTIRE AGREEMENT - Except for the terms of the ESA and the other compensation
and benefit plans in which you participate, this Agreement sets forth the entire
understanding of you and GTE, and supersedes all prior agreements and
communications, whether oral or written, between GTE and you including, without
limitation, my letter to you dated October 20, 1994. This Agreement will not be
modified except by written agreement of you and GTE.
Xxxx, I believe that this generous offer provides you and your family with
financial security as our industry and GTE evolve. We recognize that 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 and returning to me by January
29, 1999.
Sincerely yours,
Xxxxxxx X. Xxx
cc: J.R. XxxXxxxxx
I agree to the terms described above.
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Xxxxxxx X. Xxxxx
