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Exhibit 10.11
January 22, 1999 (Revised)
Xxxxx Der Xxxxxxxxxxx
[Address]
[Address]
Dear Xxxxx:
I want to personally let you know how much your many contributions to
GTE and your valued leadership have been appreciated. In light of those
accomplishments and your agreement to take on the role of assisting GTE in
connection with the divestiture of Government Systems (the "Galaxy
Transaction"), I want to provide you with an appropriate transition arrangement
in connection with your departure from GTE. This letter (the "Letter Agreement")
sets out the terms of that arrangement.
A. CONTINUED EMPLOYMENT AND SEPARATION
1. SPECIAL ASSIGNMENT PERIOD. From the effective date of this Letter
Agreement through the later of (a) successful completion of a divestiture of all
or substantially all of the assets of Government Systems ("Transaction
Completion") or the decision of the Board of Directors of GTE Corporation to
terminate divestiture efforts, or (b) shareholder approval or termination of the
proposed merger between Bell Atlantic Corporation and GTE (the "Merger"), you
will have primary responsibility for the Galaxy Transaction and will perform
such other duties as directed by me. During this period, referred to as the
"Special Assignment Period," you will remain at your current salary level. In
the event that neither Transaction Completion nor shareholder approval of the
Merger occurs, GTE will provide you with a transition arrangement, the terms of
which will be decided at that time but which will provide benefits which are, at
a minimum, equivalent to those otherwise available to you under GTE's
Involuntary Separation Program ("ISEP") as then in effect.
2. SEPARATION BENEFITS. You will irrevocably terminate your employment
with GTE upon conclusion of the Special Assignment Period. If shareholder
approval of the Merger has occurred at that time, you will receive separation
benefits as set forth in, and in accordance with the terms of, your Executive
Severance Agreement. If shareholder approval has not occurred and you do not
become a "Transferred Employee" (as such term is defined in ISEP) after
completion of the Galaxy Transaction, you will be eligible to receive separation
benefits in accordance with the terms of ISEP or any successor plan which may
exist. Of course, if shareholder approval has not occurred and you become a
Transferred Employee, you will not be eligible for ISEP benefits. You will also
receive a lump sum payment for all accrued, unused (but unpaid) vacation upon
the termination of your employment with GTE, but you will not receive service
credit for same.
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January 22, 1999 (Revised)
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3. EIP. You will continue to participate in GTE's Executive Incentive
Plan ("EIP"), or any successor plan which may exist, during the Special
Assignment Period on the same basis as other executives at your level, subject
to the terms of that plan. If your EIP payment for the year in which you
separate from employment has not been paid out as a result of shareholder
approval of the Merger, your award for that year will be prorated based on the
number of calendar months of service you completed in that year. Any amount to
which you are entitled under EIP will be payable at the same time payments are
made to other EIP participants. The Executive Compensation and Organizational
Structure Committee of the Board of Directors of GTE, its designee, its
successor or its successor's designee (the "ECC") will determine the amount of
your actual awards. You will be eligible to defer your EIP award, but you will
not receive a match for those amounts under the company's Equity Participation
Program ("EPP").
4. LTIP. You will continue to participate in GTE's Long Term Incentive
Plan ("LTIP"), or any successor plan that may exist, on the same terms as other
executives at your level during the Special Assignment Period. In the event of
shareholder approval of the Merger, outstanding options will vest and
Performance Bonus Awards will be paid out in accordance with the terms of your
Award Agreements. Following, or in the absence of, shareholder approval, any
outstanding stock options under LTIP will vest immediately upon your separation
from employment, and you will have two years or longer to exercise those
options, subject to the terms of and any restrictions established by the option
agreements. Outstanding LTIP cash awards that have not been paid out as a result
of the shareholder approval of the Merger will be prorated to reflect the number
of actual full months of service you completed in the outstanding cycles. All
payments under LTIP will be paid at the same time payments are made to other
participants. The ECC will determine the amount of your actual awards. You will
be eligible to defer your award, but you will not receive a match under the
company's EPP.
5. TERMINATION OF EMPLOYMENT. In accordance with company policy, GTE
reserves the right to terminate your employment prior to the end of the Special
Assignment Period for Cause, which, for purposes of this Letter Agreement, will
be as determined by your supervisor at the time with the concurrence of the
Executive Vice President - Human Resources and Administration or his successor.
If you are discharged for Cause, elect to resign or retire, or die or become
disabled (within the meaning of GTE's Long Term Disability Plan) prior to the
expiration of the Special Assignment Period, all further obligations under this
Letter Agreement shall cease (except for, in the case of termination due to
death or disability, your right to any prorated Transaction Completion Bonus or
Partial Bonus as provided for below), and you will not be entitled to separation
benefits under this Letter Agreement.
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January 22, 1999 (Revised)
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B. TRANSACTION COMPLETION BONUS
1. TRANSACTION COMPLETION BONUS. Subject to the conditions set out
herein, on or about 45 days following the Transaction Completion, you will
receive a special "Transaction Completion Bonus" equal (before withholding of
applicable taxes) to an amount as set forth in either paragraph (a) or (b)
below.
(a) One and one-half times the sum of (i) your base annual
salary as of Transaction Completion and (ii) the prior three-year average
corporate rating under EIP (as of Transaction Completion) for your grade level
multiplied by an amount equal to 100% of norm for that grade level; or
(b) As set out in the chart below, a bonus based on the
established minimum, target, and maximum sales price for Government Systems (as
determined by the Galaxy Transaction documents). If the sales price falls
between minimum and target or target and maximum, the bonus will be calculated
using linear interpolation (see Attachment A).
Estimated
Sales Price Bonus Formula Bonus*
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Minimum ($980,000,000 One times base pay $ 390,000
or less)
Target ($1.3 Billion) 1.5 times base and bonus $1,044,196
Maximum ($1.6 Billion 2.5 times base and bonus $1,673,660
or greater)
*Actual based on prior three-year average corporate rating (currently
estimated at 146.7) times norm in place upon Transaction Completion.
At the time you execute this Letter Agreement, you must make an
irrevocable election as to which formula you want to be used to calculate your
potential bonus. If you do not make an election at the time you execute this
Letter Agreement, you will be eligible solely for the bonus set forth in
paragraph B(1)(a) above.
2. PARTIAL BONUS. In the event that the Board of Directors of GTE
Corporation decides to terminate efforts to divest all or substantially all of
the assets of Government Systems, on or about 45 days from the date of that
decision (the "Termination Date"), you will receive a special bonus (a "Partial
Bonus") equal, before withholding of applicable taxes, to 25% of the Transaction
Completion Bonus you would have received under option B(1)(a), above, if the
Transaction Completion had occurred on the Termination Date.
3. INVOLUNTARY TERMINATION WITHOUT CAUSE. If, prior to Transaction
Completion or, if applicable, the Termination Date, your employment is
terminated
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involuntarily without Cause and for reasons other than your death or disability,
you will receive a payment equal to the Transaction Completion Bonus, or, as the
case may be, Partial Bonus, to which you would have been entitled under the
terms of this Letter Agreement had your employment continued through Transaction
Completion or, if applicable, the Termination Date. Payment will be made at the
same time the bonus would have been paid had you remained employed through
Transaction Completion or, if applicable, the Termination Date. Under no
circumstances will your resignation from employment or retirement for any reason
constitute an involuntary termination without Cause for purposes of the
incentive provided for by this Letter Agreement.
4. DEATH OR DISABILITY. If the Galaxy Transaction is completed and you
die or become disabled (within the meaning of GTE's Long Term Disability Plan)
prior to the Transaction Completion, you, or, in the event of your death, your
estate, will receive a prorated Transaction Completion Bonus based on the ratio
of (i) the number of days you remained actively employed between the date of
this Letter Agreement and Transaction Completion to (ii) the number of days
between the date of this Letter Agreement and Transaction Completion. If efforts
to divest all or substantially all of the assets of Government Systems are
terminated, and should you die or become disabled (within the meaning of GTE's
Long Term Disability Plan) prior to the Termination Date, you or, in the event
of your death, your estate, will receive a Partial Bonus equal to the Partial
Bonus you would have received had you remained actively employed through the
Termination Date. The prorated Transaction Completion Bonus or the Partial Bonus
payable under this paragraph shall be paid at the same time such bonus would
have been paid had you remained actively employed through the Transaction
Completion or, if applicable, the Termination Date.
5. CIRCUMSTANCES WHEN NO BONUS WILL BE PAID. Should you resign or
retire for any reason prior to Transaction Completion or, if applicable, the
Termination Date, or should you at any time engage in conduct that would
constitute Cause for your discharge, you will not be eligible to receive any
portion of the Transaction Completion Bonus or Partial Bonus.
6. DEFERRAL. The Transaction Completion Bonus or Partial Bonus, as the
case may be, may be deferred under the EIP deferral regulations, or any
successor arrangement, in accordance with the terms of those regulations.
Amounts deferred under this Letter Agreement shall not, however, be eligible for
match under EPP.
7. PAYMENT TAXABLE/NOT BENEFIT BEARING. Applicable taxes will be
withheld from any bonus payment made pursuant to this Letter Agreement. Neither
the Transaction Completion Bonus nor the Partial Bonus shall be treated as
compensation for purposes of computing or determining any benefit under any
pension, savings, insurance, or other employee compensation or benefit plan
maintained by GTE.
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8. NO DUPLICATION OF BENEFITS. Except for grants and agreements
specifically approved by the ECC, there shall be no duplication between any
retention incentive payment provided for by this Letter Agreement and any other
retention incentive program that provides for payment of a retention bonus for
continued employment during any part of the same period covered by this Letter
Agreement. As a result, any bonus payment otherwise due under this Letter
Agreement shall be reduced by any amounts due under any such retention incentive
program.
9. RELEASE REQUIREMENT. Payment of any Transaction Completion Bonus or
Partial Bonus under this Letter Agreement is contingent upon your executing a
release of claims against GTE in a form acceptable to GTE.
C. GENERAL PROVISIONS
1. PROHIBITION AGAINST RECRUITING OR HIRING. Commencing on the date of
this Letter Agreement and through the first anniversary of the termination of
your employment for any reason from GTE (which, for purposes of this Letter
Agreement, includes GTE Corporation, any corporate subsidiary or other company
affiliated with GTE Corporation, any company in which GTE Corporation owns
directly or indirectly an equity interest of at least ten percent, and the
successors and assigns of any such company, including, following the Merger,
Bell Atlantic Corporation, its subsidiaries, affiliates, and other related
entities and their successors and assigns) you agree that you will not, without
the prior written consent of the ECC:
(i) Recruit or solicit any employee of GTE for employment or for
retention as a consultant or provider of services;
(ii) Hire, or participate with another company or third party in
the process of hiring, any employee of GTE;
(iii) Provide names or other information about GTE employees to any
person or business under circumstances that you know or should
know could lead to the use of that information for purposes of
recruiting or hiring; or
(iv) Interfere with the relationship between GTE and any of its
employees, agents, or representatives.
Provided, however, that the provisions of this paragraph will not apply in the
event that you become employed by any entity to which all or substantially all
of the assets of Government Systems are sold.
2. PROHIBITION AGAINST SOLICITING GTE CUSTOMERS. Commencing on the date
of this Letter Agreement and through the first anniversary of the termination of
your employment for any reason from GTE, you agree that you will not solicit or
contact, directly or indirectly, any customer, client, or prospect of GTE with
whom you or any of the GTE employees reporting to you had any contact at any
time during the year preceding your termination for the purpose of inducing such
customer, client, or prospect to cease being, or
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to not become, a customer or client of GTE or to divert business from GTE.
Provided, however, that the provisions of this paragraph will not apply in the
event that you become employed by any entity to which all or substantially all
of the assets of Government Systems are sold.
3. CONFIDENTIALITY. You agree that you will not disclose or discuss the
existence or terms of this Letter Agreement under any circumstances where it
reasonably could be expected that such information would, directly or
indirectly, come to the attention of any present or past GTE employee,
consultant, or contractor. You further agree that you will require any person
with whom you share information about this Letter Agreement to adhere to the
same standard of confidentiality.
4. PROPRIETARY INFORMATION. You agree that you will at all times comply
with your obligations under the Employee Agreement Relating to Intellectual
Property (Policy 412) or its equivalent and preserve the confidentiality of all
Proprietary Information and trade secrets of GTE, and the Proprietary
Information and trade secrets of third parties, including customers, that are in
the possession of GTE, by not disclosing the same to any third party or using
the same, or any portion thereof, for the benefit of anyone other than GTE.
"Proprietary Information" means information obtained or developed by you or to
which you had access during your employment with GTE, including, but not limited
to, customer information and trade secrets and proprietary information of GTE
and third parties that has not been fully disclosed in a writing generally
circulated by GTE to the public at large without any restrictions on use or
disclosure. You agree that you will return all copies, in whole or in part, in
any form, of trade secrets or Proprietary Information in your possession or
control upon any termination of employment or upon request by GTE, whichever
occurs earlier, without making or retaining a copy.
5. SURVIVAL OF AND CONSIDERATION FOR COVENANTS. You acknowledge and
agree that the compensation and benefits provided for pursuant to this Letter
Agreement include consideration for the covenants contained in paragraphs 1, 2,
3 and 4 of Section C of this Letter Agreement and that, except as specifically
provided by the terms of this Letter Agreement, the obligations set out in
paragraphs 1, 2, 3 and 4 of Section C of this Letter Agreement survive any
cancellation, termination, or expiration of this Letter Agreement or the
termination of your employment with GTE.
6. BUSINESS DISCRETION OF GTE. Nothing in this Letter Agreement is
intended to limit the discretion of GTE to take any action with regard to the
sale that GTE may consider appropriate, including, without limitation,
postponing Transaction Completion or terminating sales efforts. This Letter
Agreement does not entitle you to remain in the employ of GTE for any minimum or
prescribed period or term and does not modify the at-will status of your
employment.
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7. ASSIGNMENT BY GTE. GTE may assign this Letter Agreement without your
consent. You may not assign this Letter Agreement, and no person other than you
(or your estate) may assert your rights under this Letter Agreement.
8. DISPUTE RESOLUTION. You agree that the ECC shall have sole
discretion to interpret this Letter Agreement and to resolve any and all
disputes under this Letter Agreement. You further agree that the ECC's
determination shall be final and binding.
9. WAIVER. The waiver by GTE of any breach of this Letter Agreement
shall not be construed as a waiver of any subsequent breach.
10. GOVERNING LAW. This Letter Agreement shall be interpreted and
enforced in accordance with the laws of the State of New York, disregarding its
choice of law rules.
11. REMEDIES. You acknowledge that irreparable injury to GTE will
result in the event of any breach by you of any of the covenants or obligations
under this Letter Agreement, including other obligations referenced herein. In
the event of a breach of any of your covenants and commitments under this Letter
Agreement, including any other obligations referenced herein, GTE shall not be
obligated to make any payment otherwise required under this Letter Agreement and
may, at GTE's discretion, require you to repay any amounts already paid to you,
including amounts that may have been deferred. In addition, GTE reserves all
rights to seek any and all remedies and damages permitted under law, including,
but not limited to, injunctive relief, equitable relief, and compensatory and
punitive damages.
12. DEFINITIONS/RELATIONSHIP TO OTHER AGREEMENTS. The definitions
contained in this Letter Agreement, including, but not limited to, the
definition of Cause, shall be controlling for purposes of this Letter Agreement.
These definitions shall not be modified by, nor shall they modify, definitions
for terms in any other agreement to which you may be a party.
13. ENTIRE AGREEMENT. You acknowledge and agree that, except for your
Executive Severance Agreement, this Letter Agreement, including the required
release, sets forth the entire understanding of the parties with regard to the
subject matter addressed herein and that this Letter Agreement supersedes all
prior agreements (other than your Executive Severance Agreement) and
communications, whether written or oral, pertaining to the subject matter
described herein. The Letter Agreement shall not be modified except by written
agreement duly executed by you and GTE.
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Again, Xxxxx, we appreciate your leadership and valuable contributions
to the company. I hope that the terms of this Letter Agreement and the incentive
just described will provide you with a level of comfort as you continue your
important role at GTE and our efforts to make the transaction a success. If this
Letter Agreement meets with your satisfaction, please sign below, fax a copy to
me no later than 8:00 a.m. EST on Monday, January 25, 1999, and return the
original to me by overnight mail, to be received no later than Tuesday, January
26, 1999.
Sincerely,
Xxxxxx Xxxxx
TW:jls
I have read, understand, and agree to the terms of this Letter Agreement.
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Xxxxx Der Xxxxxxxxxxx
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Date
I irrevocably elect the following bonus calculation formula for purposes of
determining the amount of any Transaction Completion Bonus, or, in the event of
my death or disability prior to Transaction Completion, any portion thereof, to
which I am entitled under this Letter Agreement.
_______ (a) bonus based on annual salary and average EIP as described in
paragraph B(1)(a) of this Letter Agreement.
or
_______ (b) bonus based on price obtained at Transaction Completion and as
described in paragraph B(1)(b) of this Letter Agreement.
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Xxxxx Der Xxxxxxxxxxx
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Date
