1
EXHIBIT 10a
[VERIZON LOGO]
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
November 2, 2000
Xxxxxxxx X. Xxxxxx, Xx.
[Address]
[Address]
Dear Xxxxx:
We are pleased to offer you this employment agreement (the "Agreement")
with Verizon Communications Inc. ("Verizon"). For purposes of this Agreement,
the term "Company" means Verizon, all corporate subsidiaries and other companies
affiliated with Verizon, all companies in which Verizon has an ownership or
other proprietary interest of more than 10 percent, and their successors and
assigns.
The opportunities and challenges facing the Company are enormous and
exciting. Both as a new organization and as a vigorous competitor in the most
dynamic and innovative industry in history, the Company needs extraordinarily
talented and committed leaders. This Agreement and the valuable array of
wealth-creation opportunities it provides reflect our view that you meet this
high standard.
We value you and the leadership, vision, and commitment you bring to
the Company. We are excited by the prospect of having you as a key member of our
leadership team. We look forward to working with you as we chart the course of
our new organization at the beginning of a new century.
The terms and conditions of this Agreement are set forth below.
1. PURPOSE - Verizon enters into this Agreement with you because the
rapidly-changing and increasingly global telecommunications market and the
recent Bell Atlantic - GTE merger (the "Merger") require the Company to make
critical strategic, marketing, and technical decisions. These decisions by the
Company will be based, in whole or in part, on confidential analyses of the
evolving telecommunications market, confidential assessments of the technical
capabilities and strategic plans of the Company and competing businesses, and
confidential or proprietary information regarding the Company's technology,
resources, and business opportunities or other confidential or proprietary
information relating to the Company's business. Verizon seeks by this Agreement
to ensure that you remain a
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Page 2
part of the executive management team that plays a central role in this
decision-making process.
In consideration for your entering into this Agreement, including the
restrictions on the disclosure and use of confidential or proprietary
information and the limitations on your engaging in competitive activities, the
Company is providing you with the security of an agreement with an initial term
of three years, short- and long-term award opportunities, and other benefits.
2. GENERAL - Under this Agreement, you shall continue as Vice-Chairman
- Verizon and President - Telecom. As Vice-Chairman and President, you shall
report to the Chief Executive Officers (or, if only one person holds that
position, the Chief Executive Officer) of Verizon (the "CEO(s)").
3. TERM - The term of employment under this Agreement ("Term of
Employment") shall commence on July 1, 2000, and end on June 30, 2003; provided
that commencing on July 1, 2001, and on each day thereafter, the remaining Term
of Employment shall be two years. For example, on August 1, 2001, the Term of
Employment shall end on July 31, 2003. Notwithstanding the preceding provisions
of this paragraph 3, the Company reserves the right to terminate your employment
and the Term of Employment at any time. Your employment and the Term of
Employment also may terminate for other reasons (such as your resignation,
retirement, death, or disability). The consequences of the termination of your
employment are specified in paragraph 13 ("Termination Of Employment").
4. DUTIES AND RESPONSIBILITIES - Subject to the provisions of paragraph
13(d) ("Termination For Good Reason"), you shall serve as Vice-Chairman -
Verizon and President - Telecom, and you shall perform all duties incidental to
such positions, shall cooperate fully with the CEO(s) or his/their successor,
and shall work cooperatively with the other officers of the Company. You shall
continue to devote your entire business skill, time, and effort diligently to
the affairs of the Company in accordance with the duties assigned to you, and
you shall perform all such duties, and otherwise conduct yourself, in a manner
reasonably calculated in good faith by you to promote the best interests of the
Company. During the Term of Employment, except to the extent specifically
permitted in writing by the CEO(s) or his/their successor, and except for
memberships on boards of directors that you hold on the date of this Agreement,
you shall not, directly or indirectly, render any services of a business,
commercial, or professional nature to any other person or organization other
than the Company or a person or organization in which the
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Company has a financial interest, whether or not the services are rendered for
compensation.
5. LOCATION - During the Term of Employment, you shall perform services
for the Company at its New York City headquarters, or at any other location
designated by the Company as necessary or appropriate for the discharge of your
responsibilities under this Agreement. In the event of any change in your
principal work location, you shall be eligible for relocation assistance under
the terms of any Company relocation policy applicable to other senior executives
of the Company at the time of such relocation. In addition, a change in your
principal work location could qualify as a "Good Reason" in accordance with
paragraph (3) of Exhibit D hereto.
6. BASE SALARY - During the Term of Employment, your annual base salary
shall not be less than $1,000,000 per year. After this Agreement has been in
effect for 18 months, the Human Resources Committee of Verizon's Board of
Directors or its designee shall review your base salary at least annually.
7. BONUS OPPORTUNITIES - During the Term of Employment, the Company
shall provide you with annual short-term and long-term bonus opportunities. Your
annual short-term bonus opportunity shall be prorated for the year 2000 to
reflect the six-month duration of the Agreement during 2000, and your annual
long-term bonus opportunity shall become effective beginning in 2001. Your
annual short-term bonus opportunity shall not be less than 100 percent of your
then-current base salary, and your annual maximum short-term bonus opportunity
shall not be less than 200 percent of your then-current base salary. The value
of your annual long-term bonus opportunity shall not be less than 500 percent of
your then-current base salary. In addition, if you remain in the continuous
employ of the Company until June 30, 2001, you shall be entitled to a retention
bonus equal to the sum of 100 percent of your base salary for 2001, 50 percent
of your maximum short-term bonus opportunity for 2001, and 100 percent of your
long-term bonus opportunity for 2001. If your long-term bonus opportunity is
subject to a performance target, it shall be assumed for purposes of the
retention bonus that the performance target is met. If you become entitled to
the retention bonus, the retention bonus shall be paid to you in July 2001
unless you elect to defer receipt of all or part of the retention bonus in
accordance with the provisions of paragraph 31 ("Deferrals").
8. FOUNDERS' GRANT - You shall receive a Founders' Grant of options to
purchase 450,000 shares of Verizon common stock. The Founders' Grant is
contingent on your timely execution of this Agreement. The terms of the
Founders' Grant are set forth in the instrument governing the Founders' Grant
attached hereto
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as Exhibit A, which is incorporated herein by reference. Your rights under the
Founders' Grant following the termination of your employment shall be governed
by paragraph 13 ("Termination Of Employment") and by said Exhibit A. If you do
not timely execute this Agreement, you shall not receive the Founders' Grant.
9. PERFORMANCE SHARE RETENTION UNIT GRANT - You shall receive a
Performance Share Retention Unit Grant with respect to 100,000 shares of Verizon
common stock. The Performance Share Retention Unit Grant is contingent on your
timely execution of this Agreement. The terms of the Performance Share Retention
Unit Grant are set forth in the Performance Share Retention Unit Grant Agreement
attached hereto as Exhibit B, which is incorporated herein by reference. Your
rights under the Performance Share Retention Grant following the termination of
your employment shall be governed by paragraph 13 ("Termination Of Employment")
and by the terms of such Performance Share Retention Unit Grant Agreement. If
you do not timely execute this Agreement, you shall not receive the Performance
Share Retention Unit Grant.
10. BENEFITS AND PERQUISITES - (a) IN GENERAL - For the immediate
future, you shall-
(1) participate in the tax-qualified and nonqualified
retirement plans in which you currently participate
(including but not limited to the Bell Atlantic
Senior Management Income Deferral Plan (the "IDP"));
(2) be eligible for the perquisites identified in
subparagraph (b), below; and
(3) participate in the other employee benefit plans,
programs, and policies in which you currently
participate, including medical, dental, and life
insurance plans;
provided that the Company retains the right to amend or terminate any benefit
plan, policy, program, or perquisite either as part of the process of providing
uniform retirement benefits to former Bell Atlantic and GTE employees or in the
normal course of business. In any event, with regard to the benefits described
in subparagraphs (b)(1) ("Flexible Spending Account") through (b)(9)
("Apartment"), below, you shall be eligible for such benefits on terms and
conditions that are (1) until June 30, 2003 (or, if earlier, until the end of
the Term of Employment), at least as favorable to you as the terms and
conditions on which you are eligible for each of those benefits at the time you
execute this Agreement, and (2) from July 1, 2003,
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through the end of the Term of Employment, at least as favorable to you as the
terms and conditions on which those benefits are provided to other senior
executives in your peer group.
(b) PERQUISITES - The perquisites referred to in subparagraph
(a), above, are the following:
(1) FLEXIBLE SPENDING ACCOUNT: A flexible
spending account of $31,000 per year shall
be available for such items as club
initiation fees, club memberships, and
automobile payments. The available balance
in the account shall be allocated to you in
monthly installments.
(2) FINANCIAL PLANNING: You shall be eligible
for the Company's financial planning and
services program. If you are already using a
vendor other than the vendor used by the
Company's financial planning and services
program, and you wish to continue using that
other vendor, your are eligible for
reimbursement of the cost of using that
other vendor up to an annual maximum of
$9,000.
(3) COMPANY AIRCRAFT: You shall be eligible to
use Company aircraft for business and
personal travel, subject to the availability
of the aircraft.
(4) FIRST-CLASS AIR TRAVEL: When Company
aircraft are not available for business
travel, you shall be eligible for
first-class commercial air travel.
(5) COMPANY AUTOMOBILE: You shall be eligible to
use a Company automobile and driver for
business and personal travel.
(6) HOME SECURITY: You shall be eligible for
home security on an as-needed basis,
consistent with Company policy as in effect
from time to time.
(7) HOME OFFICE EQUIPMENT: You shall be eligible
for home office equipment (e.g., computer,
fax machine, business line with long
distance, and internet access)
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on an as-needed basis, consistent with
Company policy as in effect from time to
time.
(8) CELLULAR TELEPHONE: You shall be provided
with cellular telephone equipment and
service.
(9) APARTMENT: You shall continue to be provided
with your current apartment (or a similar
apartment) in New York City.
(c) PRIOR AWARDS - You shall be entitled to vest in, and to
receive benefits under, all outstanding awards previously granted to you by the
Company in accordance with the terms of such awards; provided that the phantom
share award (for 140,000 phantom shares after adjustment to reflect the
two-for-one stock split in June of 1998) made to you in accordance with your
employment agreement with Bell Atlantic, dated June 1, 1998, including all gains
(and phantom dividends) thereon, shall be immediately vested and shall be paid
to you in cash or in shares of Verizon common stock in January 2001 unless you
elect to defer receipt of all or part of such phantom share award in accordance
with the provisions of paragraph 31 ("Deferrals"). In addition, if your
employment with the Company continues until December 31, 2001, the Company shall
credit, as of December 31, 2001, an amount equal to your Potential Interim
Amount ("PIA") as of December 31, 2001, to the retirement contribution
sub-account contained within your account under the IDP. This credit shall be in
addition to the amount credited pursuant to paragraph 4 ("IDP Credit") of your
employment agreement with Bell Atlantic, dated June 1, 1998, and shall be in
complete satisfaction of, and shall fully discharge, any right or entitlement
that you may have, now or in the future, to a PIA under the IDP or any other
benefit plan maintained by the Company.
11. ANNUAL PHYSICAL - You are encouraged to take an annual physical
examination from a physician at the Company's expense and to certify in writing
to the Company's designee each year (a) that you have had the examination and
(b) the nature and extent of any medical impairments that prevent you from
currently performing the essential functions of your position.
12. EXCISE TAX GROSS-UP - Under certain circumstances you may become
entitled to a gross-up payment with respect to the excise tax imposed by section
4999 of the Internal Revenue Code (the "Code"). The terms governing the gross-up
payment are set forth in Exhibit C, which is incorporated herein by reference.
13. TERMINATION OF EMPLOYMENT - (a) VOLUNTARY TERMINATION BY YOU -
Since you are currently eligible to retire, the consequences of any voluntary
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termination of employment by you shall be governed by paragraph 13(c)
("Retirement"), except as otherwise provided in paragraph 13(d) ("Termination
For Good Reason").
(b) TERMINATION DUE TO DEATH OR DISABILITY - If, during the
Term of Employment, you terminate employment because of death or disability (as
defined under the Company-sponsored long-term disability plan or plans that
apply to you at the time your employment is so terminated),
(1) The Company shall make a lump-sum cash
payment to you equal to your base salary, 50
percent (or, if greater, the percentage of
your maximum short-term bonus opportunity
awarded for the year immediately preceding
the year in which your employment
terminates) of your maximum short-term bonus
opportunity, and 100 percent of your
long-term bonus opportunity for the
remaining Term of Employment (as the Term of
Employment is determined as of the date
immediately preceding the date your
employment terminates), reduced by any
amounts payable to you under any
Company-sponsored disability plan (excluding
any amounts payable to you under any
Company-sponsored deferred compensation
plan, such as the IDP) during the remaining
Term of Employment (as the Term of
Employment is determined as of the date
immediately preceding the date your
employment terminates). For this purpose,
your base salary shall be based on your base
salary rate in effect immediately before
your employment terminated; your annual
maximum short-term bonus opportunity shall
be equal to 200 percent of your annual base
salary in effect immediately before your
employment terminated; and your annual
long-term bonus opportunity shall be equal
to 500 percent of your annual base salary in
effect immediately before your employment
terminated. If your long-term bonus is
subject to a performance target, it shall be
assumed that the target is met;
(2) Unless the retention bonus prescribed by
paragraph 7 ("Bonus Opportunities") has
already been paid to you (or deferred
pursuant to your election to defer such
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payment), you shall receive a lump-sum
payment equal to such retention bonus;
(3) Your unvested stock options shall
immediately vest, and you may exercise all
then-outstanding stock options at any time
up to the earlier of (i) the latest of (A)
the fifth anniversary of the date your
employment terminates, (B) June 1, 2008, or
(C) any later date prescribed by the terms
of the option relating to termination of
employment or (ii) the expiration of the
option;
(4) Your unvested Performance Share Retention
Units shall vest to the extent prescribed by
the provisions of paragraph 8(d) of Exhibit
B hereto;
(5) If your employment is terminated before
December 31, 2001, the amount to be credited
to the retirement contribution sub-account
within your account under the IDP in
accordance with paragraph 10(c) ("Prior
Awards") shall be credited on December 31,
2001, as though your employment had not
terminated;
(6) If your employment is terminated before June
1, 2003, then until June 1, 2003, (i)
retirement contribution credits shall
continue to be made to your retirement
contribution sub-account within your account
under the IDP in accordance with Section
5(b) of the IDP, which credits shall be
based on your base salary for the period
following the termination of your employment
and up to June 1, 2003, and on 50 percent
(or, if greater, the percentage of your
maximum short-term bonus opportunity awarded
for the year preceding the year in which
your employment terminates) of your maximum
short-term bonus opportunity for such
period, and (ii) to the extent permitted by
the IDP, matching contribution credits shall
continue to be made to your matching
contribution sub-account for such period in
accordance with Section 5(a) of the IDP,
based on your eligible deferrals (if any)
under the IDP; and
(7) If your employment is terminated before June
1, 2003, the Company shall credit to your
retirement contribution
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sub-account within your account under the IDP an
amount equal to the sum of the credits that you
otherwise would have been eligible to receive during
the period following the termination of your
employment and up to June 1, 2003, as (i) Company
matching contributions under the Bell Atlantic
Savings Plan or any successor to that plan (if you
had fully participated in contributions to that plan)
and (ii) pay credits under the Bell Atlantic Cash
Balance Plan or any successor to that plan;
provided that if you terminate employment because of death, your rights under
this subparagraph (b) shall pass to your estate or a beneficiary that you have
designated in writing (and in a form and manner acceptable to the Company)
before your death.
(c) RETIREMENT - If, during the Term of Employment, you
terminate employment by reason of Retirement (as defined below), except as
otherwise provided in subparagraph (g) ("Mandatory Retirement"), you shall be
entitled to accelerated vesting of all outstanding stock options (other than the
Founders' Grant), and to exercise all then-outstanding stock options (excluding
nonvested Founders' Grant options) until the earlier of (1) the fifth
anniversary of the date your employment terminates (or any later date prescribed
by the terms of the option relating to termination of employment) or (2) the
expiration of the option. For purposes of this Agreement, "Retirement" means
retirement under the terms of the Verizon Communications 2000 Broad-Based
Incentive Plan. Except as provided by the preceding provisions of this
subparagraph (c), upon the effective date of your Retirement, your base salary
and any other Company benefits and perquisites shall cease to accrue; provided
that you shall otherwise be eligible to receive any and all compensation and
benefits for which a similarly situated senior executive would be eligible under
the applicable provisions of the compensation and benefit plans in which he is
then eligible to participate, as those plans may be amended from time to time.
(d) TERMINATION FOR GOOD REASON - (1) Subject to the
provisions of subparagraph (d)(4), below, you may terminate your employment
under this Agreement for Good Reason by giving the CEO(s) 30 calendar days'
(exclusive of vacation days) written notice of your intent to so terminate,
setting forth in reasonable detail the facts and circumstances deemed to provide
a basis for such termination. For purposes of this Agreement, "Good Reason" has
the meaning prescribed by Exhibit D, which is incorporated herein by reference.
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(2) Notwithstanding the foregoing, and subject to the
provisions of subparagraph (d)(4), below, the Company shall have 15 calendar
days from its receipt of such notice to cure the action specified in the notice.
In the event of a cure by the Company within the 15-day period, the action in
question shall not constitute Good Reason.
(3) Except as provided in subparagraph (d)(2), above,
and (d)(4), below, upon the lapse of the 30 calendar days' notice period, the
Good Reason termination shall take effect, and your obligation to serve the
Company, and the Company's obligation to employ you, under the terms of this
Agreement shall terminate simultaneously, and you shall be deemed to have
incurred an Involuntary Termination Without Cause, with the consequences
described in subparagraph (e), below; provided that your rights under this
subparagraph (d) (other than those specified in paragraph 13(e)(3) and (4)) are
contingent on your execution of a release in accordance with paragraph 14
("Release").
(4) If you do not fulfill the notice and explanation
requirements imposed by this subparagraph (d), the resulting termination of
employment shall be deemed a Retirement; provided that if the Good Reason occurs
by reason of paragraph (7) of Exhibit D, (i) you shall not be required to
fulfill such notice and explanation requirements, (ii) subparagraph (d)(2),
above, shall not apply to you, and (iii) notwithstanding subparagraph (d)(3),
above, Good Reason shall occur immediately (and your obligation to serve the
Company and the Company's obligation to employ you shall terminate
simultaneously) and without regard to the expiration of the 30 calendar days'
notice period.
(e) INVOLUNTARY TERMINATION WITHOUT CAUSE - The Company may
terminate your employment under this Agreement at any time and for any reason.
However, if the Company terminates your employment for any reason other than
Cause (as defined in subparagraph (f), below), such termination shall be deemed
an Involuntary Termination by the Company, and you shall be entitled to receive
the following payments and benefits in lieu of any payment or benefit otherwise
provided pursuant to paragraphs 6 ("Base Salary") through 11 ("Annual
Physical"):
(1) The Company shall make a lump-sum cash
payment to you equal to your base salary, 50
percent (or, if greater, the percentage of
your maximum short-term bonus opportunity
awarded for the year immediately preceding
the year in which your employment
terminates) of your maximum short-term bonus
opportunity, and 100 percent of your
long-term bonus opportunity for the
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remaining Term of Employment (as the Term of
Employment is determined as of the date
immediately preceding the date your
employment terminates), reduced by any
amounts payable to you under any
Company-sponsored severance plan, program,
policy, contract, account, or arrangement
(excluding any amounts payable to you under
any Company-sponsored deferred compensation
plan, such as the IDP) during the remaining
Term of Employment (as the Term of
Employment is determined as of the date
immediately preceding the date your
employment terminates). For this purpose,
your base salary shall be based on your base
salary rate in effect immediately before
your employment terminated; your annual
maximum short-term bonus opportunity shall
be equal to 200 percent of your annual base
salary in effect immediately before your
employment terminated; and your annual
long-term bonus opportunity shall be equal
to 500 percent of your annual base salary in
effect immediately before your employment
terminated. If your long-term bonus is
subject to a performance target, it shall be
assumed for this purpose that the target is
met;
(2) Unless the retention bonus prescribed by
paragraph 7 ("Bonus Opportunities") has
already been paid to you (or deferred
pursuant to your election to defer such
payment), you shall receive a lump-sum
payment equal to such retention bonus;
(3) Your unvested stock options, including the
Founders' Grant, shall immediately vest, and
you may exercise all of your
then-outstanding stock options at any time
up to the earlier of (i) the latest of (A)
the fifth anniversary of the date your
employment terminates, (B) June 1, 2008, or
(C) any later date prescribed by the terms
of the option relating to termination of
employment) or (ii) the expiration of the
option;
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(4) Your Performance Share Retention Units shall
vest to the extent prescribed by the
provisions of paragraph 8(b) of Exhibit B
hereto;
(5) If your employment is terminated before
December 31, 2001, the amount to be credited
to the retirement contribution sub-account
within your account under the IDP in
accordance with paragraph 10(c) ("Prior
Awards") shall be credited on December 31,
2001, as though your employment had not
terminated;
(6) If your employment is terminated before June
1, 2003, then until June 1, 2003, (i)
retirement contribution credits shall
continue to be made to your retirement
contribution sub-account within your account
under the IDP in accordance with Section
5(b) of the IDP, which credits shall be
based on your base salary for the period
following the termination of your employment
and up to June 1, 2003, and on 50 percent
(or, if greater, the percentage of your
maximum short-term bonus opportunity awarded
for the year preceding the year in which
your employment terminates) of your maximum
short-term bonus opportunity for such
period, and (ii) to the extent permitted by
the IDP, matching contribution credits shall
continue to be made to your matching
contribution sub-account for such period in
accordance with Section 5(a) of the IDP,
based on your eligible deferrals (if any)
under the IDP;
(7) If your employment is terminated before June
1, 2003, the Company shall credit to your
retirement contribution sub-account within
your account under the IDP an amount equal
to the sum of the credits that you otherwise
would have been eligible to receive during
the period following the termination of your
employment and up to June 1, 2003, as (i)
Company matching contributions under the
Bell Atlantic Savings Plan or any successor
to that plan (if you had fully participated
in contributions to that plan) and (ii) pay
credits under the Bell Atlantic Cash Balance
Plan or any successor to that plan;
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(8) You shall be eligible for outplacement
services to the extent that such services
are then available to senior executives of
the Company;
(9) The Company shall provide continued benefits
under the Bell Atlantic Senior Management
Estate Management Program (the
"split-dollar" insurance program) applicable
to a retiring participating senior manager;
and
(10) For the remaining Term of Employment
(determined as of the date immediately
preceding the date your employment
terminates), you shall be eligible to use
Company aircraft for personal travel,
subject to the availability of the aircraft,
and you shall continue to be provided with
your current apartment in New York City (and
any related tax gross-up) in accordance with
paragraph 10(b)(3) ("Company Aircraft") and
(b)(9) ("Apartment") and paragraph 22
("Taxes");
provided that your rights under this subparagraph (e) (other than those
specified in clauses (3) and (4), above) are contingent on your execution of a
release in accordance with paragraph 14 ("Release").
(f) INVOLUNTARY TERMINATION FOR CAUSE - (1) Nothing in this
Agreement prevents the Company from terminating your employment under this
Agreement for Cause. In the event of your termination for Cause, the Company
shall pay you your full accrued base salary and accrued vacation time through
the date of your termination, and the Company shall have no further obligations
under this Agreement; provided that you shall otherwise be eligible to receive
any and all compensation and benefits for which a similarly situated senior
executive would be eligible under the applicable provisions of the compensation
and benefit plans in which he is then eligible to participate, as those plans
may be amended from time to time.
(2) For purposes of this Agreement, "Cause" is
defined as (i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to you;
fraud, misappropriation or embezzlement involving the Company or a material
breach of any provision incorporated in paragraph 15 ("Covenants"), as
determined by the CEO(s) in his/their reasonable discretion, or (ii) commission
of any felony of which you are finally adjudged guilty by a court of competent
jurisdiction.
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(3) If the Company terminates your employment for
Cause, the Company shall provide you with a written statement of the grounds for
such termination within 10 business days after the date of termination.
(g) MANDATORY RETIREMENT - If you retire at or after age 65
because you are required to do so by the Company's mandatory retirement policy,
your retirement shall not be deemed an Involuntary Termination by the Company
for purposes of this Agreement, your unvested stock options shall immediately
vest, and you may exercise all of your then-outstanding stock options at any
time up to the earlier of (i) the fifth anniversary of the date your employment
terminates (or any later date prescribed by the terms of the option relating to
termination of employment) or (ii) the expiration of the option.
14. RELEASE - You shall not be entitled to any benefits under this
Agreement following the termination of your employment unless, at the time your
employment terminates and to the extent required by this Agreement, you execute
a release satisfactory to the Company releasing the Company, its affiliates,
shareholders, directors, officers, employees, representatives, and agents and
their successors and assigns from any and all employment-related claims you or
your successors and beneficiaries might then have against them (excluding any
claims you might then have under this Agreement (including the Exhibits hereto),
the IDP, or any employee benefit plan that is subject to the vesting standards
imposed by the Employee Retirement Income Security Act of 1974, as amended).
This paragraph 14 shall not apply if your employment is terminated by reason of
your death, disability, or Retirement.
15. COVENANTS - In consideration for the benefits and agreements
described above, you agree to comply with the covenants set forth in Exhibit E
hereto, which is incorporated herein by reference.
16. REQUEST FOR WAIVER - Nothing in this Agreement bars you from
requesting, at the time of your termination of employment or at any time
thereafter, that the CEO(s), in his/their sole discretion, waive in writing the
Company's rights to enforce some or all of the provisions incorporated in
paragraph 15 ("Covenants").
17. OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by
paragraph 15 ("Covenants") are in addition to, and not in lieu of, any and all
other policies and agreements of the Company regarding the subject matter of the
foregoing obligations.
18. NONDUPLICATION OF BENEFITS - No provision of this Agreement shall
require the Company to provide you with any payment, benefit, or grant that
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duplicates any payment, benefit, or grant that you are entitled to receive under
any Company compensation or benefit plan, award agreement, or other arrangement.
19. OTHER COMPANY PLANS - Except to the extent otherwise explicitly
provided by this Agreement, any awards made to you under any Company
compensation or benefit plan or program shall be governed by the terms of that
plan or program and any applicable award agreement thereunder as in effect from
time to time. Notwithstanding the foregoing, you shall not be entitled to
participate in any Company compensation or benefit plan that is established
after your employment with the Company terminates, and except as specifically
provided in this Agreement, you shall not be entitled to any additional grants
or awards under any Company compensation or benefit plan after your employment
with the Company terminates. The amounts paid, provided, or credited under this
Agreement shall not be treated as compensation for purposes of determining any
benefits payable under any Company-sponsored pension, savings, life insurance,
or other employee benefit plan except to the extent provided by the terms of
such plan.
20. FORFEITURE - (a) If you breach any of the obligations incorporated
in paragraph 15 ("Covenants"), or engage in serious misconduct during the Term
of Employment that is contrary to written policies of the Company and is harmful
to the Company or its reputation, you shall forfeit (1) any balance in the
retirement contribution sub-account contained within your account in the IDP or
any successor thereto and (2) any unpaid incentive compensation that you are
otherwise entitled to receive.
(b) The remedies available under this paragraph are in
addition to, and not in lieu of, the remedies available under paragraph 27
("Additional Remedies").
21. NO DEEMED WAIVER - Failure to insist upon strict compliance with
any of the terms, covenants, or conditions of this Agreement shall not be deemed
a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
22. TAXES - The Company may withhold from any benefits payable under
this Agreement all taxes that the Company reasonably determines to be required
pursuant to any law, regulation, or ruling. However, it is your obligation to
pay all required taxes on any amounts and benefits provided under this
Agreement, including the benefits provided to you pursuant to paragraph 10(b)
("Perquisites"), regardless of whether withholding is required; provided that if
you recognize income for income tax purposes as a result of the use of an
apartment in accordance with
16
Xxxxxxxx X. Xxxxxx, Xx.
November 2, 2000
Page 16
paragraph 10(b)(9) ("Apartment"), regardless of whether you recognize such
income before or after your employment terminates, the Company shall make a tax
gross-up payment to you based on the additional tax liability that you incur by
reason of your recognition of such income.
23. CONFIDENTIALITY - You shall not disclose, in whole or in part, any
of the terms of this Agreement except to the extent (a) otherwise required by
law or (b) the Company has publicly disclosed the terms of this Agreement. This
paragraph 23 does not prevent you from disclosing the terms of this Agreement to
any future spouse or to your legal, tax, or financial adviser, provided that you
take all reasonable measures to assure that he or she does not disclose the
terms of this Agreement to a third party except as otherwise required by law.
24. GOVERNING LAW - To the extent not preempted by federal law, the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the State of New York, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of this
provision to the substantive law of another jurisdiction.
25. ASSIGNMENT - The obligations of Verizon hereunder shall be the
obligations of any and all successors and assigns of Verizon. Verizon may assign
this Agreement without your consent to any company that acquires all or
substantially all of the stock or assets of Verizon, or into which or with which
Verizon is merged or consolidated. You may not assign this Agreement, and no
person other than you (or your estate) may assert your rights under this
Agreement.
26. SEVERABILITY - The agreements contained herein and within the
release prescribed by paragraph 14 ("Release") shall each constitute a separate
agreement independently supported by good and adequate consideration, and shall
each be severable from the other provisions of the Agreement and such release.
If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Agreement or such release is void, illegal, or
unenforceable, the other terms, provisions, and portions of this Agreement or
such release shall remain in full force and effect, and the terms, provisions,
and portions that are determined to be void, illegal, or unenforceable shall
either be limited so that they shall remain in effect to the extent permissible
by law, or such arbitrator or court shall substitute, to the extent enforceable,
provisions similar thereto or other provisions, so as to provide to the Company,
to the fullest extent permitted by applicable law, the benefits intended by this
Agreement and such release.
17
Xxxxxxxx X. Xxxxxx, Xx.
November 2, 2000
Page 17
27. ADDITIONAL REMEDIES - In addition to any other rights or remedies,
whether legal, equitable, or otherwise, that each of the parties to this
Agreement may have, you acknowledge that
(a) The covenants incorporated in paragraph 15
("Covenants") are essential to the continued good
will and profitability of the Company;
(b) You have broad-based skills that will serve as the
basis for employment opportunities that are not
prohibited by the covenants incorporated in paragraph
15 ("Covenants");
(c) When your employment with the Company terminates, you
shall be able to earn a livelihood without violating
any of the terms of this Agreement;
(d) Irreparable damage to the Company shall result in the
event that the covenants incorporated in paragraph 15
("Covenants") are not specifically enforced and that
monetary damages will not adequately protect the
Company from a breach of these paragraphs of the
Agreement;
(e) If any dispute arises concerning the violation by you
of the covenants incorporated in paragraph 15
("Covenants"), an injunction may be issued
restraining such violation pending the determination
of such controversy, and no bond or other security
shall be required in connection therewith;
(f) Such covenants shall continue to apply after any
expiration, termination, or cancellation of this
Agreement; and
(g) Your material breach of any of such covenants shall
result in your immediate forfeiture of all rights
under this Agreement to the extent provided herein.
28. SURVIVAL - The provisions of paragraphs 15 ("Covenants") through 30
("Entire Agreement") shall survive the Term of Employment. Any obligations that
the Company has incurred under this Agreement to provide benefits that have
vested under the terms of this Agreement shall likewise survive the Term of
Employment.
18
Xxxxxxxx X. Xxxxxx, Xx.
November 2, 2000
Page 18
29. ARBITRATION - Any dispute arising out of or relating to this
Agreement (except any dispute arising out of or relating to paragraph 15
("Covenants")), and any dispute arising out of or relating to your employment,
shall be settled by final and binding arbitration, which shall be the exclusive
means of resolving any such dispute, and the parties specifically waive all
rights to pursue any other remedy, recourse, or relief. With respect to disputes
by the Company arising out of or relating to paragraph 15 ("Covenants"), the
Company has retained all its rights to legal and equitable recourse and relief,
including but not limited to injunctive relief, as referred to in paragraph 27
("Additional Remedies"). The arbitration shall be expedited and conducted in the
State of New York pursuant to the Center for Public Resources ("CPR") Rules for
Non-Administered Arbitration in effect at the time of notice of the dispute
before one neutral arbitrator appointed by CPR from the CPR Panel of neutrals
unless the parties mutually agree to the appointment of a different neutral
arbitrator. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. sections 1-16, and judgment upon the award rendered by the arbitrator may
be entered by any court having jurisdiction. The finding of the arbitrator may
not change the express terms of this Agreement and shall be consistent with the
arbitrator's understanding of the findings a court of proper jurisdiction would
make in applying the applicable law to the facts underlying the dispute. In no
event whatsoever shall such an arbitration award include any award of damages
other than the amounts in controversy under this Agreement. The parties waive
the right to recover, in such arbitration, punitive damages. Each party hereby
agrees that New York City is the proper venue for any litigation seeking to
enforce any provision of this Agreement or to enforce any arbitration award
under this paragraph 29, 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 New York City to enforce any provision of this Agreement or to enforce
any arbitration award under this paragraph 29. Each party also waives any right
it might otherwise have to seek to transfer from a federal or state court in New
York City a suit filed by the other party to enforce any provision of this
Agreement or to enforce any arbitration award under this paragraph 29.
30. ENTIRE AGREEMENT - Except for the terms of the compensation and
benefit plans in which you participate, this Agreement, including the Exhibits
hereto, sets forth the entire understanding of you and the Company, and
supersedes all prior agreements and communications, whether oral or written,
between the Company (or Bell Atlantic or GTE or any of their respective
subsidiaries) and you regarding the subject matter of this Agreement, including
your employment agreement with Bell Atlantic, dated June 1, 1998, as
subsequently amended as of October 27, 1998, and any severance arrangement
provided under a merger
19
Xxxxxxxx X. Xxxxxx, Xx.
November 2, 2000
Page 19
agreement. This Agreement shall not be modified except by written agreement of
you and Verizon.
31. DEFERRALS - Amounts otherwise payable to you under this Agreement
(including but not limited to any retention bonus payable to you pursuant to
paragraph 7 ("Bonus Opportunities")) may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
Xxxxx, we believe that this Agreement provides you and your family with both
financial security and great opportunity as our industry and the Company evolve.
We recognize that the challenges facing us are formidable and that you will be
assuming very substantial responsibilities in meeting those challenges. It is
our hope that this Agreement provides you with opportunities commensurate with
the commitment that we expect from you. Please indicate your acceptance by
signing below and returning the signed Agreement to us within ten business days
after your receipt of this Agreement.
Sincerely yours,
Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
cc: X. Xxxxxx
I agree to the terms described above.
-----------------------------------------------
Xxxxxxxx X. Xxxxxx, Xx.
Attachments: Exhibit A - Founders' Grant
Exhibit B - Performance Share Retention Unit Grant
Exhibit C - Excise Tax Gross-Up
Exhibit D - Good Reason
Exhibit E - Covenants
20
EXHIBIT A
VERIZON COMMUNICATIONS INC.
FOUNDERS' GRANT STOCK OPTION AGREEMENT
AGREEMENT between Verizon Communications Inc. ("Verizon") and the
participant identified on the attached signature page (the "Participant").
1. Purpose of Agreement. The purpose of this Agreement is to provide a one-time
grant of a stock option to the Participant in light of the merger of Bell
Atlantic Corporation and GTE Corporation and the creation of Verizon
Communications Inc. This grant shall be known as the "Founders' Grant."
2. Agreement. This Agreement is entered into pursuant to the terms of the plan
identified on the attached signature page (the "Plan") and evidences the grant
of a nonqualified stock option (the "Option") to the Participant to purchase
shares of Verizon's Common Stock ("Common Stock") pursuant to the Plan. This
Option is not an incentive stock option. The Option and this Agreement are
subject to the terms and provisions of the Plan. (The Participant may request a
copy of the Plan from the Verizon Communications Inc. Executive Compensation and
Benefits Department.) By executing this Agreement, the Participant agrees to be
bound by the terms and provisions of the Plan, by the actions of the Plan
Administrator, by the actions of the Human Resources Committee of Verizon's
Board of Directors or any successor thereto (the "Committee") or any designee of
the Committee, and by the actions of Xxxxxxx's Board of Directors pursuant to
the Plan.
3. Contingency. The Founders' Grant is contingent on the Participant's timely
execution of this Agreement and the agreement to which this Agreement is an
exhibit. If the Participant does not timely execute this Agreement and the
agreement to which this Agreement is an exhibit, the Participant shall not
receive the Founders' Grant.
4. Date. The date of the grant of the Option is specified on the attached
signature page.
5. Number of Shares. The number of shares of Common Stock as to which the option
is granted is specified on the attached signature page.
6. Option Price. The option price per share is specified on the attached
signature page.
Exhibit A-1
21
7. (a) Option Period and Vesting Schedule. The period for which the
Option is granted is until the earlier of (i) June 30, 2010,
or (ii) the later of (A) the fifth anniversary of the date of
such separation from employment or (B) if the Participant
separates from employment with the Company under the
circumstances described in subsections (b)(3) through (b)(6),
June 1, 2008 (the "Option Period"). In no event shall the
Option be exercisable after the Option Period, and the Option
may expire earlier as set forth in Section 7(b) ("Separation
from Employment"). Except as set forth in Section 7(b), the
Option may not be exercised until June 30, 2003, when the
Option shall become exercisable in full; provided that upon
the occurrence of a Change in Control (as defined in the
Plan), the Option shall be exercisable in full.
(b) Separation from Employment. The Option may be terminated prior
to the expiration of the Option Period, and the date when the
Option may first be exercised may be modified, in accordance
with the following terms and conditions:
(1) Voluntary Separation and Discharge for Cause. If the
Participant quits or otherwise separates from the
Company under circumstances not described in Section
7(b)(2) ("Retirement") through (b)(6) ("Death")
below, or if the Participant is discharged from
employment with the Company for Cause (as defined
below) and subsection (b)(2) below does not apply,
this subsection (b)(1) shall apply. If the
Participant separates from the Company before the
date on which the Option becomes exercisable under
Section 7(a), the Option shall be forfeited. If the
Participant separates from the Company on or after
the date on which the Option becomes exercisable
under Section 7(a), the Option may be exercisable in
full during the Option Period, i.e., until the
earlier of (i) June 30, 2010, or (ii) the fifth
anniversary of the date the Participant separates
from employment with the Company.
(2) Retirement. If the Participant Retires (as defined
below) and subsections (b)(3) through (b)(6) below do
not apply, this subsection (b)(2) shall apply. If the
Participant Retires before the date on which the
Option becomes exercisable under Section 7(a), the
Option shall be forfeited. If the Participant Retires
on or after the date on which the Option becomes
exercisable under Section 7(a), the Option may be
exercisable in full during the Option Period, i.e.,
until the earlier of (i) June 30, 2010, or (ii) the
fifth anniversary of the date the Participant
separates from employment with the Company.
Exhibit A-2
22
(3) Involuntary Discharge Without Cause. If the Company
discharges the Participant without Cause (as defined
below), such as by reason of a Company-initiated,
voluntary or involuntary, force management or force
reduction program or initiative, the Option shall be
immediately exercisable in full. In no event shall
the Option be exercisable after the Option Period,
i.e., after the earlier of (i) June 30, 2010, or (ii)
the later of (A) the fifth anniversary of the date
the Participant separates from employment with the
Company or (B) June 1, 2008. For purposes of this
subsection (b)(3), a Participant's separation from
employment with the Company occurs on the last day
the Participant is on the payroll of the Company.
This subsection (b)(3) shall not apply to a
Participant whose employment is terminated for
refusal to accept a reassignment that involves no
relocation or downgrade.
(4) Termination for Good Reason. If the Participant
terminates employment for Good Reason (as defined in
the employment agreement to which this Agreement is
an exhibit), the Option shall be immediately
exercisable in full. In no event shall the Option be
exercisable after the Option Period, i.e., after the
earlier of (i) June 30, 2010, or (ii) the later of
(A) the fifth anniversary of the date the Participant
separates from employment with the Company or (B)
June 1, 2008. For purposes of this subsection (b)(4),
a Participant's separation from employment with the
Company occurs on the last day the Participant is on
the payroll of the Company.
(5) Disability. If the Participant's separation from
employment with the Company occurs as a result of
total and permanent disability, as defined under the
Company-sponsored long-term disability plan that
applies to the Participant (or, if the Participant is
not covered by a long-term disability plan, as
defined in such plan or in such manner as the Plan
Administrator determines), the Option shall be
immediately exercisable in full. In no event shall
the Option be exercisable after the Option Period,
i.e., after the earlier of (i) June 30, 2010, or (ii)
the later of (A) the fifth anniversary of the date
the Participant separates from employment with the
Company or (B) June 1, 2008. For purposes of this
subsection (b)(5), a Participant's separation from
employment with the Company occurs on the later of
the last day the Participant is (i) on the payroll of
the Company or (ii) on short-term disability.
(6) Death. If the Participant's separation from
employment with the Company occurs as a result of
death, the Option shall be
Exhibit A-3
23
immediately exercisable in full by the Participant's
beneficiary. If the Participant dies after separation
from employment with the Company, but while the
Option is exercisable in accordance with subsections
(b)(1) ("Voluntary Separation and Discharge for
Cause") through (b)(5) ("Disability") above, the
Participant's beneficiary may exercise the Option to
the extent that the Option has become exercisable in
accordance with such subsections. In no event shall
the Option be exercisable after the Option Period,
i.e., after the earlier of (i) June 30, 2010, or (ii)
the later of (A) the fifth anniversary of the date
the Participant separates from employment with the
Company or (B) June 1, 2008.
(7) Termination of Option. Upon the expiration of any
period during which the Option is exercisable in
accordance with the preceding provisions of this
Section 7(b), the Option shall terminate and shall
not thereafter be exercisable.
(8) Transfer. Transfer of employment from Verizon to a
Related Company, from a Related Company to Verizon,
or from one Related Company to another Related
Company shall not constitute a separation from
employment with the Company hereunder.
(9) Retirement. For purposes of this Section 7(b),
"Retire" means (A) to retire with a right to an
immediate normal retirement, early retirement or
service pension under the Company-sponsored
tax-qualified final average pay defined benefit
pension plan (excluding from this definition any cash
balance plan) in which the Participant actively
participates, (B) if the Participant does not
actively participate in such a tax-qualified final
average pay defined benefit pension plan, to retire
(i) after attaining normal retirement age under the
Company-sponsored cash balance plan or nonqualified
defined benefit pension plan in which the Participant
actively participates, or (ii) with a combination of
age and years of service (as calculated for
retirement-eligibility purposes) that equals or
exceeds any of the following combinations:
Exhibit A-4
24
AGE EQUAL TO OR SERVICE EQUAL TO OR
---------------- -------------------
GREATER THAN: GREATER THAN:
------------ ------------
Any age 30 years
50 25 years
55 20 years
60 15 years
65 10 years
or (C) retirement under any other circumstances
determined in writing by the Plan Administrator.
(10) Cause. For purposes of this Section 7(b), "Cause" is
defined as (i) grossly incompetent performance or
substantial or continuing inattention to or neglect
of the duties and responsibilities assigned to the
Participant; fraud, misappropriation or embezzlement
involving the Company or a material breach of any
provision incorporated in paragraph 15 ("Covenants")
of the agreement to which this Agreement is an
exhibit, as determined by the CEO(s) in his/their
discretion, or (ii) commission of any felony of which
the Participant is finally adjudged guilty by a court
of competent jurisdiction.
8. (a) Exercise. The Option may be exercised, in whole or in part, as
permitted under this Agreement, by making payment in
accordance with subsection (b), below, and by delivering to
the Executive VP - Human Resources (the "EVP HR") or to any
delegate of the EVP HR ("Delegate") a notice of exercise in
the form approved by the EVP HR or in any other manner
approved by the EVP HR. The Participant shall be informed in
writing of the appointment, if any, of a Delegate.
(b) Payment of Option Price. To exercise the Option, the
Participant must pay the Option Price by one of the following
methods:
(1) (i) check or wire transfer, (ii) surrender of Common
Stock that has been held by the Participant for at
least six months, or (iii) a combination of both (i)
and (ii);
(2) subject to the prior written approval of the
Committee, a recourse promissory note; or
(3) subject to the prior written approval of the EVP HR,
the administrator of the stock option program may pay
the Option
Exhibit A-5
25
Price on behalf of the Participant subject to such
terms and conditions as the administrator may impose.
For purposes of an exchange of Common Stock in subsection
(b)(1), above, the value of a share of Common Stock used to
pay the Option Price shall be equal to the average of the high
and low sales prices of shares of Common Stock traded on the
New York Stock Exchange (or any other exchange or reporting
system selected by the Committee) on the date the Option is
exercised, or if there are no sales of Common Stock reported
for that date, on the date or dates that the Committee
determines, in its sole discretion, to be appropriate for
purposes of valuation.
The Participant may be charged an administrative fee or fees
in connection with the exercise of the Option.
9. Notice and Date of Exercise. The notice of exercise shall indicate the number
of shares with respect to which the Option is being exercised. The Option may
not be exercised with respect to fractional shares. In addition, the Option may
not be exercised if the administrator of the stock option program determines
that, at the time of an attempted exercise, the fair market value of the shares
with respect to which the Option is being exercised is either below the Option
Price with respect to such shares or not sufficiently above such Option Price to
cover any applicable taxes and administrative fees. Subject to the conditions
and restrictions set forth in this Agreement, the date of exercise of the Option
shall be the later of (a) the date on which the notice of exercise in the
approved form is received in the office of the EVP HR or in the office of the
Delegate or (b) the date on which either (i) full payment of the Option Price
and any required tax withholding is received by the EVP HR or the Delegate or
(ii) the administrator of the stock option program is irrevocably committed to
make such payment. Notwithstanding the preceding sentence, no shares shall be
issued until full payment is received by the EVP HR or the Delegate. Upon the
exercise of the Option and receipt of full payment, Verizon shall, as soon as
practicable, issue or deliver certificates for the number of shares acquired
thereby, subject to the conditions and restrictions set forth in this Agreement.
If the Participant dies following the exercise of all or part of the Option, but
before issuance or delivery of the shares, such shares shall be issued or
delivered to the Participant's beneficiary.
10. Shareholder Rights. The Participant shall have no rights as a shareholder
with respect to shares of Common Stock to which the Option relates until the
date on which the Participant becomes the holder of record of such shares.
Except as provided by the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to such date.
11. Amendment of Option. The Committee may not, without the written consent of
the Participant, revoke this Agreement insofar as it relates to the Option
granted
Exhibit A-6
26
hereunder, and may not without such written consent make or change any
determination or change any term, condition or provision affecting the Option if
the determination or change would materially and adversely affect the Option or
the Participant's rights thereto.
12. Assignment. The Option shall not be assignable or transferable except by
will or by the laws of descent and distribution. During the Participant's
lifetime, the Option may be exercised only by the Participant or by the
Participant's guardian or legal representative.
13. Beneficiary. The Participant shall designate a beneficiary in writing and in
such manner as is acceptable to the EVP HR or the Delegate. If the Participant
fails to so designate a beneficiary, or if no such designated beneficiary
survives the Participant, the Participant's beneficiary shall be the
Participant's beneficiary under the Company-paid group life insurance plan in
which the Participant participates at the time of the Participant's death. If
the Participant does not participate in a Company-paid group life insurance plan
at the time of the Participant's death, the Participant's beneficiary shall be
the Participant's estate.
14. Other Plans and Agreements. Any gain realized by the Participant pursuant to
this Agreement shall not be taken into account as compensation in the
determination of the Participant's benefits under any pension, savings, group
insurance, or other benefit plan maintained by the Company, except as determined
by the board of directors of Verizon or, in the case of a plan not maintained by
Verizon, the Related Company that maintains the plan. The Participant
acknowledges that receipt of this Agreement or any prior stock option agreement
shall not entitle the Participant to any other benefits under the Plan or any
other plans maintained by the Company.
15. Company and Related Company. For purposes of this Agreement, "Company" means
Verizon and Related Companies. "Related Company" means (i) any corporation,
partnership, joint venture or other entity in which Verizon holds a direct or
indirect ownership or proprietary interest of 50 percent or more, or (ii) any
corporation, partnership, joint venture or other entity in which Verizon holds
an ownership or proprietary interest of less than 50 percent but which, in the
discretion of the Committee, is treated as a Related Company for purposes of
this Agreement.
16. Employment Status. The grant of the Option shall not be deemed to constitute
a contract of employment between the Company and the Participant, nor shall it
constitute a right to remain in the employ of the Company.
17. Withholding. It shall be a condition to the issuance or delivery of shares
of Common Stock as to which the Option shall have been exercised that provisions
satisfactory to the Company shall have been made for payment of any taxes
reasonably determined by the Company or the Delegate to be required to be paid
Exhibit A-7
27
or withheld pursuant to any applicable law or regulation. The Participant may
irrevocably elect to have the minimum required amount of any withholding tax
obligation satisfied by (a) having shares withheld that are otherwise to be
issued or delivered to the Participant with respect to the exercise of the
Option, (b) delivering to the Company or the Delegate other shares of Common
Stock that have been held by the Participant for at least six months, or (c) any
other method approved by the EVP HR of which the Participant may be informed in
writing.
18. Securities Laws. If at the time of any exercise of the Option in whole or in
part, the Company deems it to be a violation of any federal or state securities
law or regulation to issue or deliver its shares pursuant to such exercise, the
Company, at its sole option, may reject such exercise and return the tender or
make application for such qualification or registration as the Company deems
advisable. The Company shall not be required to issue or deliver any shares of
Common Stock prior to the admission of such shares to listing on any stock
exchange on which the stock may then be listed and the completion of any
registration or qualification of such shares under any federal or state law or
rulings or regulations of any government body that the Company, in its sole
discretion, determines to be necessary or advisable.
19. Committee Authority. The Committee shall have complete discretion in the
exercise of its rights, powers, and duties under this Agreement. Any
interpretation or construction of any provision of, and the determination of any
question arising under, this Agreement shall be made by the Committee in its
sole discretion and shall be final, conclusive, and binding. The Committee may
designate any individual or individuals to perform any of its functions
hereunder.
20. Successors. This Agreement shall be binding upon, and inure to the benefit
of, any successor or successors of Xxxxxxx and the person or entity to whom the
Option may have been transferred by will, the laws of descent and distribution,
or beneficiary designation. All terms and conditions of this Agreement imposed
upon the Participant shall, unless the context clearly indicates otherwise, be
deemed, in the event of the Participant's death, to refer to and be binding upon
such last-mentioned person or entity.
21. Construction. This Agreement is intended to grant the Option upon the terms
and conditions authorized by the Plan. Any provisions of this Agreement that
cannot be so administered, interpreted, or construed shall be disregarded. In
the event that any provision of this Agreement is held invalid or unenforceable
by a court of competent jurisdiction, such provision shall be considered
separate and apart from the remainder of this Agreement, which shall remain in
full force and effect. In the event that any provision is held to be
unenforceable for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.
Exhibit A-8
28
22. Defined Terms. Except where the context clearly indicates otherwise, all
capitalized terms used herein shall have the definitions ascribed to them by the
Plan, and the terms of the Plan shall apply where appropriate.
23. Execution of Agreement. The Participant shall indicate consent to the terms
of this Agreement and the Plan by executing the attached signature page which is
made a part of this Agreement.
24. Confidentiality. The Participant shall not disclose, in whole or in part any
of the terms of this Agreement, except to the extent (a) otherwise required by
law or (b) the Company has publicly disclosed the terms of this Agreement. This
Section 24 does not prevent the Participant from disclosing the terms of this
Agreement to any future spouse of the Participant or to the Participant's legal,
tax, or financial adviser, provided that the Participant 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.
Exhibit A-9
29
SIGNATURE PAGE
By executing this page, the undersigned Participant agrees to be bound by the
terms of the Plan and the Founders' Grant Stock Option Agreement, the terms of
which are incorporated herein by reference, in connection with the following
grant to the Participant under the Plan:
NAME OF PARTICIPANT: Xxxxxxxx X. Xxxxxx, Xx.
SOCIAL SECURITY NUMBER: [Social Security Number]
DATE OF GRANT: Sept. 7, 2000
NUMBER OF SHARES: 450,000
OPTION PRICE: $43.34
PLAN FROM WHICH OPTIONS ARE AWARDED: Bell Atlantic 1985 Incentive
Stock Option Plan
IN WITNESS WHEREOF, Verizon Communications Inc., by its duly authorized Officer,
and the Participant have executed this Agreement.
VERIZON COMMUNICATIONS INC.
--------------------------- -------------------------------
By: Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
-------------------------------
Participant
-------------------------------
Date
Please indicate your acceptance by signing above and returning the signed
Agreement to us within ten business days after your receipt of this Agreement.
Please complete the Beneficiary Designation form on the back side.
30
EXHIBIT B
VERIZON COMMUNICATIONS INC.
PERFORMANCE SHARE RETENTION UNIT AGREEMENT
AGREEMENT between Verizon Communications Inc. ("Verizon") and the
participant identified on the attached signature page (the "Participant").
1. Purpose of Agreement. The purpose of this Agreement is to provide a
one-time grant of restricted stock units to the Participant, as a senior
management employee of Verizon, in light of the merger of GTE Corporation and
Bell Atlantic Corporation and the creation of Verizon Communications Inc. The
restricted stock units that are the subject of this grant shall be known as
"Performance Share Retention Units."
2. Agreement. This Agreement is entered into pursuant to the terms of
the plan or plans specified on the attached signature page (the "Plan"), and
evidences the grant of a stock-based award in the form of restricted stock units
("RSUs") pursuant to the Plan. The Agreement is subject to the terms and
provisions of the Plan. By execution of this Agreement, the Participant
acknowledges receipt of a copy of the Plan and further agrees to be bound
thereby and by the actions of the Human Resources Committee of Verizon's Board
of Directors or any successor thereto (the "Committee") and Xxxxxxx's Board of
Directors pursuant to the Plan.
3. Contingency. The grant of Performance Share Retention Units is
contingent on the Participant's timely execution of this Agreement and the
agreement to which this Agreement is an exhibit. If the Participant does not
timely execute this Agreement and the agreement to which this Agreement is an
exhibit, the Participant shall not receive the grant of Performance Share
Retention Units.
4. Number of Units. The Participant is granted the number of RSUs
specified on the attached signature page as of July 1, 2000. An RSU is a
hypothetical share of Verizon's Common Stock. The value of an RSU on any given
date shall be equal to the closing price of Verizon's Common Stock as of such
date. An RSU does not represent an equity interest in Verizon and carries no
voting rights. A Dividend Equivalent Unit ("DEU") or fraction thereof shall be
added to each RSU each time that a dividend is paid on Verizon's Common Stock.
The amount of each DEU shall be equal to the dividend paid on a share of
Verizon's Common Stock. The DEU shall be converted into RSUs or fractions
thereof based upon the average of the high and low sales prices of Verizon's
Common Stock traded on the New York Stock Exchange on the dividend payment date
of each declared dividend on Verizon's Common Stock, and such RSUs or fractions
thereof shall be added to the Participant's RSU balance.
Exhibit B-1
31
5. Grant Date. The Grant Date for this RSU grant shall be the Grant
Date specified on the attached signature page.
6. Vesting.
(a) For purposes of vesting, this RSU grant shall be divided
into three tranches, each of which shall include the following
percentage of the total number of RSUs granted pursuant to paragraph 4,
above, and any additional RSUs that are attributable to DEUs on RSUs in
that tranche:
Tranche Percentage of Initial RSUs
------- --------------------------
1 50%
2 25%
3 25%
(b) Tranche 1.
(1) Tranche 1 shall vest on the basis of the
Participant's continued employment with Verizon after the
Grant Date. The vesting schedule for Tranche 1 shall be as set
forth in the following table:
Percentage to Aggregate Percentage
Years of Service Vest Vested
------------------------------- ----------------------------- -----------------------------
less than 3 0% 0%
3 50% 50%
4 25% 75%
5 or more 25% 100%
(2) For purposes for the table set forth in
subparagraph (1), above--
(i) "Years of Service" shall mean full years
of continuous employment with Verizon following June
30, 2000. There shall be no proration or
interpolation for partial years of service.
(ii) "Percentage to Vest" shall mean the
percentage of Tranche 1 that first vests upon
attainment of the applicable period of service. It
does not mean the aggregate percentage of Tranche 1
that is vested at that time.
Exhibit B-2
32
(iii) "Aggregate Percentage Vested" shall
mean the aggregate percentage of Tranche 1 that is
vested upon completion of the specified period of
service. It does not mean the percentage of Tranche 1
that first becomes vested upon completion of the
specified period of service.
(c) Tranche 2. Subject to continuous employment requirement
set forth in paragraph 6(e), below, Tranche 2 shall vest based on the
growth of Verizon's annual revenues as follows--
(1) As set forth in the following table, if Xxxxxxx's
annual revenues in the "Target Year" exceed Xxxxxxx's revenues
in the "Baseline Year" by the "Revenue Growth Goal" or more,
the applicable percentage of Tranche 2 shall vest:
Revenue Aggregate
Target Baseline Growth Percentage Percentage
Year Year Goal to Vest Vested
--------------- --------------- ---------------- ------------------- ---------------------
2002 2000 15.5% 50% N/A
2003 2002 7.5% 25% N/A
2004 2003 7.5% 25% N/A
(2) For purposes of the table set forth in
subparagraph (c)(1), above--
(i) Revenues shall be determined by the Plan
Administrator.
(ii) "Percentage to Vest" shall mean the
percentage of Tranche 2 that first vests upon
attainment of the applicable Revenue Growth Goal. It
does not mean the aggregate percentage of Tranche 2
that is vested at that time.
(iii) The "Aggregate Percentage Vested"
column is not applicable to Tranche 2 because the
vesting of each portion of Tranche 2 is independent
of the vesting of any other portion of Tranche 2. If
Xxxxxxx meets the Revenue Growth Goal for Target Year
2003 or 2004, and the Participant satisfies the
continuous employment requirement of paragraph 6(e),
below, the applicable percentage of Tranche 2 shall
vest whether or not the portion of Tranche 2 related
to an earlier Target Year has vested.
Exhibit B-3
33
(d) Tranche 3. Subject to continuous employment requirement
set forth in paragraph 6(e), below, Tranche 3 shall vest based on
growth of earnings per share of Verizon's common stock ("EPS") as
follows--
(1) As set forth in the following table, if the EPS
in the "Target Year" exceeds the EPS in the "Baseline Year" by
the "EPS Growth Goal" or more, the applicable percentage of
Tranche 3 shall be vested:
Revenue Aggregate
Target Baseline Growth Percentage Percentage
Year Year Goal to Vest Vested
--------------- --------------- ---------------- ------------------- ---------------------
2002 2000 17% 50% 50%
2003 2000 31% 25% or 75% 75%
2004 2000 46.5% 25%, 50%, or 100% 100%
*This column is explained in paragraph 6(d)(2)(ii), below.
(2) For purposes of the table set forth in
subparagraph (d)(1), above--
(i) EPS shall be determined by the Plan
Administrator.
(ii) "Percentage to Vest" shall mean
percentage of Tranche 3 that first vests upon
attainment of the applicable EPS Growth Goal. It is
stated in the alternative due to the cumulative
nature of the EPS Growth Goals for Tranche 3, all of
which use Baseline Year 2000. Subject to the
continuous employment requirement set forth in
paragraph 6(e), the "Percentage to Vest" of Tranche 3
shall be as follows--
(A) Target Year 2002. If the EPS
Growth Goal for Target Year 2002 is
attained, 50% of Tranche 3 shall vest.
(B) Target Year 2003. If the EPS
Growth Goal for Target Year 2003 is
attained: (1) 25% of Tranche 3 shall vest,
and, (2) an additional 50% of Tranche 3
shall also vest if the EPS Goal for Target
Year 2002 was not attained at the end of
Target Year 2002.
(C) Target Year 2004. If the EPS
Growth Goal for Target Year 2004 is
attained: (1) 25% of Tranche 3 shall vest,
(2) an additional 25% of Tranche 3 shall
also
Exhibit B-4
34
vest if the EPS Goal for Target Year 2003
was not attained at the end of Target Year
2003, and (3) an additional 50% of Tranche 3
shall also vest if the EPS Goal for Target
Year 2002 was not attained at the end of
Target Year 2002 and the EPS Goal for Target
Year 2003 was not attained at the end of
Target Year 2003.
(iii) "Aggregate Percentage Vested" shall
mean the aggregate percentage of Tranche 3 that is
vested upon attainment of the applicable EPS Goal. It
does not mean the percentage of Tranche 3 that first
becomes vested at that time.
(e) Continuous Employment Requirement.
(1) The percentage of Tranches 2 or 3 related to a
Target Year shall vest only if the Participant is continuously
employed by Verizon from the Grant Date until June 30th of the
year after the applicable Target Year.
(2) There shall be no proration or interpolation for
partial years of service--if the Participant does not satisfy
the requirements of this paragraph 6(e), the Participant shall
not vest in any RSUs related to a Target Year, notwithstanding
any period of service during or after the Target Year or the
attainment of the applicable Revenue Growth Goal or EPS Growth
Goal.
(f) Transfer. Transfer of employment from Verizon to a Related
Company, from a Related Company to Verizon, or from one Related Company
to another Related Company shall not constitute a separation from
employment hereunder.
(g) Vested RSUs shall not be forfeited.
7. Payment. All payments under this Agreement shall be made in shares
of Verizon's Common Stock, except for any fractional shares, which shall be paid
in the form of cash. As soon as practicable after the Participant has become
vested in all or a portion of a tranche of RSUs, the value of RSUs in that
tranche or portion of the tranche shall be paid to the Participant (subject,
however, to any deferral application that the Participant has made under the
deferral plan then available to the Participant and procedures adopted by the
Plan Administrator). If the Participant dies before any payment due hereunder is
made, such payment shall be made to the Participant's beneficiary. Once a
payment has been made with respect to an RSU, the RSU shall be canceled.
8. Early Cancellation/Accelerated Vesting of RSUs. Subject to the
provisions of paragraph 8(e) hereof, RSUs may vest or be forfeited before
vesting in accordance with paragraph 6 hereof as follows:
Exhibit B-5
35
(a) Retirement, Voluntary Separation, or Termination for
Cause. If the Participant retires, quits, or otherwise separates from
employment under circumstances not described in subparagraphs (b)
through (d), below, or is terminated for Cause, all then-unvested RSUs
shall be canceled immediately, and shall not be payable, except to the
extent the Committee decides otherwise. For purposes of this Agreement,
"Cause" is defined as (i) grossly incompetent performance or
substantial or continuing inattention to or neglect of the duties and
responsibilities assigned to the Participant; fraud, misappropriation
or embezzlement involving the Company or a material breach of any
provision incorporated in paragraph 15 ("Covenants") of the employment
agreement to which this Agreement is an exhibit, as determined by the
CEO(s) in his/their discretion, or (ii) commission of any felony of
which the Participant is finally adjudged guilty by a court of
competent jurisdiction.
(b) Involuntary Termination Without Cause. Notwithstanding the
preceding provisions of this paragraph 8 or the continuous employment
requirement set forth in paragraph 6(e), if the Participant is
involuntarily terminated from employment other than for Cause--
(1) all then-unvested RSUs in Tranche 1 shall vest
immediately;
(2) the then-unvested RSUs in Tranche 2 shall be
subject to the vesting provisions set forth in paragraph 6(c),
except that the continuous employment requirement set forth in
paragraph 6(e) shall not apply; and
(3) the then-unvested RSUs in Tranche 3 shall be
subject to the vesting provisions set forth in paragraph 6(d),
except that the continuous employment requirement set forth in
paragraph 6(e) shall not apply.
All RSUs that vest pursuant to paragraphs 8(b)(1), 8(b)(2), or 8(b)(3)
shall be payable at the time the RSUs would have been payable had the
Participant been subject to and satisfied the continuous employment
requirement set forth in paragraph 6(e).
(c) Termination for Good Reason. If, before all RSUs in a
tranche have vested, the Participant terminates employment for Good
Reason (as defined in the employment agreement to which this Agreement
is an exhibit), the then-unvested RSUs in each tranche shall be subject
to the vesting provisions set forth in paragraph 8(b) (Involuntary
Termination Without Cause), above.
Exhibit B-6
36
(d) Disability or Death. If, before all RSUs in a tranche have
vested, the Participant separates from employment by reason of death or
disability (as determined by the Committee), the then-unvested RSUs in
each tranche shall be subject to the vesting provisions set forth in
paragraph 8(b) (Involuntary Termination Without Cause), above.
(e) Change in Control. Upon the occurrence of a Change in
Control (as defined in the 2000 Verizon Communications Broad-Based
Incentive Plan), all then-unvested RSUs shall vest and be payable
immediately without regard to the Revenue Growth Goals or EPS Growth
Goals that otherwise would apply to RSUs in Tranches 2 and 3, except
that no portion of Tranche 2 shall vest if the Change in Control occurs
after the end of a Target Year and the applicable Revenue Growth Goal
was not attained for that Target Year.
(f) Vesting Schedule. Except as provided in subparagraphs (b)
or (c), above, nothing in this paragraph 8 shall accelerate the vesting
schedule of RSUs prescribed by the provisions of paragraph 6 hereof.
9. Shareholder Rights. The Participant shall have no rights as a
shareholder with respect to shares of Common Stock to which this grant relates
until the date on which the Participant becomes the holder of record of such
shares. Except as provided in the Plan or in this Agreement, no adjustment shall
be made for dividends or other rights for which the record date is prior to such
date.
10. Extraordinary Events. In determining EPS or Revenue Growth, and for
other appropriate purposes under this Agreement, the Plan Administrator will
have the discretion to take into consideration any or all of the following: (a)
the effects of business combinations; (b) the effects of discontinued operations
(including loss on disposal of a line of business or class of customer); (c)
changes in accounting principles; (d) extraordinary items; (e) restructuring
charges; and (f) changes in tax law. Items (a) and (b) will be as defined in
accordance with Generally Accepted Accounting Principles ("GAAP"), and items (c)
through (f) will be as defined in accordance with GAAP and as defined and as
disclosed in the Company's financial statements.
11. Revocation or Amendment of Agreement. The Committee may not,
without the written consent of the Participant, revoke this Agreement insofar as
it relates to the RSUs granted hereunder, and may not without such written
consent make or change any determination or change any term, condition or
provision affecting the RSUs if the determination or change would materially and
adversely affect the Performance Share Retention Units or the Participant's
rights thereto.
12. Assignment. The RSUs shall not be assignable or transferable except
by will or by the laws of descent and distribution. During the Participant's
lifetime, the RSUs may be deferred only by the Participant or by the
Participant's guardian or legal representative.
Exhibit B-7
37
13. Beneficiary. The Participant shall designate a beneficiary in
writing and in such manner as is acceptable to the Executive VP - Human
Resources (the "EVP HR") or to any delegate of the EVP HR. If the Participant
fails to so designate a beneficiary, or if no such designated beneficiary
survives the Participant, the Participant's beneficiary shall be the
Participant's beneficiary under the Company-paid group life insurance plan in
which the Participant participates at the time of the Participant's death. If
the Participant does not participate in a Company-paid group life insurance plan
at the time of the Participant's death, the Participant's beneficiary shall be
the Participant's estate.
14. Other Plans and Agreements. Any gain realized by the Participant
pursuant to this Agreement shall not be taken into account as compensation in
the determination of the Participant's benefits under any pension, savings,
group insurance, or other benefit plan maintained by Verizon or a Related
Company, except as determined by the board of directors of such company. The
Participant acknowledges that receipt of this Agreement or any prior RSU
agreement shall not entitle the Participant to any other benefits under the Plan
or any other plans maintained by the Company.
15. Company and Related Company. For purposes of this Agreement,
"Company" means Verizon and Related Companies. "Related Company" means (i) any
corporation, partnership, joint venture, or other entity in which Verizon hold a
direct or indirect ownership or proprietary interest of 50 percent or more, or
(ii) any corporation, partnership, joint venture, or other entity in which
Verizon holds an ownership or other proprietary interest of less than 50 percent
but which, in the discretion of the Committee, is treated as a Related Company
for purposes of this Agreement.
16. Employment Status. The grant of the RSUs shall not be deemed to
constitute a contract of employment between the Company and the Participant, nor
shall it constitute a right to remain in the employ of any such company.
17. Withholding. It shall be a condition to the issuance or delivery of
shares of Common Stock as to which the RSUs relate that provisions satisfactory
to the Company shall have been made for payment of any taxes determined by the
Company to be required to be paid or withheld pursuant to any applicable law or
regulation. The Participant may irrevocably elect to have the minimum required
amount of any withholding tax obligation satisfied by (a) having shares withheld
that are otherwise to be issued or delivered to the Participant with respect to
the RSUs, or (b) delivering to the Company either shares of Common Stock
received with respect to the RSUs or other shares of Common Stock that have been
held by Participant for at least six months, or (c) any other method approved by
the EVP HR of which the Participant may be informed in writing.
Exhibit B-8
38
18. Securities Laws. The Company shall not be required to issue or
deliver any shares of Common Stock prior to the admission of such shares to
listing on any stock exchange on which the stock may then be listed and the
completion of any registration or qualification of such shares under any federal
or state law or rulings or regulations of any government body that the Company,
in its sole discretion, determines to be necessary or advisable.
19. Committee Authority. The Committee shall have complete discretion
in the exercise of its rights, powers, and duties under this Agreement. Any
interpretation or construction of any provision of, and the determination of any
question arising under, this Agreement shall be made by the Committee in its
sole discretion and shall be final, conclusive, and binding. The Committee may
designate any individual or individuals to perform any of its functions
hereunder.
20. Successors. This Agreement shall be binding upon, and inure to the
benefit of, any successor or successors of the Company and the person or entity
to whom the RSUs may have been transferred by will, the laws of descent and
distribution, or beneficiary designation. All terms and conditions of this
Agreement imposed upon the Participant shall, unless the context clearly
indicates otherwise, be deemed, in the event of the Participant's death, to
refer to and be binding upon such last-mentioned person or entity.
21. Construction. This Agreement is intended to grant the RSUs upon the
terms and conditions authorized by the Plan. Any provisions of this Agreement
that cannot be so administered, interpreted, or construed shall be disregarded.
In the event that any provision of this Agreement is held invalid or
unenforceable by a court of competent jurisdiction, such provision shall be
considered separate and apart from the remainder of this Agreement, which shall
remain in full force and effect. In the event that any provision is held to be
unenforceable for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.
22. Defined Terms. Except where the context clearly indicates
otherwise, all capitalized terms used herein shall have the definitions ascribed
to them by the Plan, and the terms of the Plan shall apply where appropriate.
23. Execution of Agreement. The Participant shall indicate consent to
the terms of this Agreement and the Plan by executing the attached signature
page which is made a part of this Agreement.
24. Confidentiality. Except to the extent otherwise required by law or
publicly disclosed by the Company, the Participant shall not disclose, in whole
or in part any of the terms of this Agreement. This paragraph 24 does not
prevent the Participant from disclosing the terms of this Agreement to any
future spouse of the Participant or to the Participant's legal, tax, or
financial adviser, provided that the Participant
Exhibit B-9
39
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.
Exhibit B-10
40
SIGNATURE PAGE
By executing this page, the undersigned Participant agrees to be bound by the
terms of the plan(s) listed below and the Performance Share Retention Unit
Agreement, the terms of which are incorporated herein by reference, in
connection with the following grant to the Participant under the Plan:
NAME OF PARTICIPANT: Xxxxxxxx X. Xxxxxx, Xx.
SOCIAL SECURITY NUMBER: [Social Security Number]
GRANT DATE: September 7, 2000
NUMBER OF RSUS: 100,000
PLAN(S) FROM WHICH RSUS AWARDED: Tranche 1--Verizon Communications
2000 Broad-Based Incentive Plan
Tranches 2 and 3--1997 GTE
Long-Term Incentive Plan
IN WITNESS WHEREOF, Verizon Communications Inc., by its duly authorized Officer,
and the Participant have executed this Agreement.
VERIZON COMMUNICATIONS INC.
----------------------------- --------------------------------
By: Xxxxxxx X. Xxx Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officers
--------------------------------
Participant
--------------------------------
Date
Please indicate your acceptance by signing above and returning the signed
Agreement to us within ten business days of your receipt of this Agreement.
Please complete the Beneficiary Designation form on the back side.
41
EXHIBIT C
EXCISE TAX GROSS-UP
1. GROSS-UP PAYMENT - If any payment or benefit received or to be
received by you from the Company pursuant to the terms of the Agreement to which
this Exhibit C is attached or otherwise (the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed by section 4999 of the Internal Revenue
Code (the "Code") as determined in accordance with this Exhibit C, the Company
shall pay you, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount that you retain, after deduction of the
Excise Tax on the Payments and any federal, state, and local income tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties, or additions
to tax payable by you with respect thereto, shall be equal to the total present
value (using the applicable federal rate (as defined in section 1274(d) of the
Code) in such calculation) of the Payments at the time such Payments are to be
made.
2. CALCULATIONS - For purposes of determining whether any of the
Payments shall be subject to the Excise Tax and the amount of such excise tax,
(a) The total amount of the Payments shall be treated as
"parachute payments" within the meaning of section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code shall be treated as
subject to the excise tax, except to the extent that, in the
written opinion of independent counsel selected by Verizon and
reasonably acceptable to you ("Independent Counsel"), a
Payment (in whole or in part) does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code,
or such "excess parachute payments" (in whole or in part) are
not subject to the Excise Tax;
(b) The amount of the Payments that shall be subject to the Excise
Tax shall be equal to the lesser of (i) the total amount of
the Payments or (ii) the amount of "excess parachute payments
" within the meaning of section 280G(b)(1) of the Code (after
applying clause (a), above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in
accordance with the principles of section 280G(d)(3) and (4)
of the Code.
3. TAX RATES - For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income taxes at the highest marginal
rates of federal income taxation applicable to individuals in the calendar year
in which the Gross-Up Payment is to be made and state and local income taxes at
the
Exhibit C-1
42
highest marginal rates of taxation applicable to individuals as are in effect in
the state and locality of your residence in the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes that can be obtained from deduction of such state and local taxes, taking
into account any limitations applicable to individuals subject to federal income
tax at the highest marginal rates.
4. TIME OF GROSS-UP PAYMENTS - The Gross-Up Payments provided for in
this Exhibit C shall be made upon the earlier of (a) the payment to you of any
Payment or (b) the imposition upon you, or any payment by you, of any Excise
Tax.
5. ADJUSTMENTS TO GROSS-UP PAYMENTS - If it is established pursuant to
a final determination of a court or an Internal Revenue Service proceeding or
the written opinion of Independent Counsel that the Excise Tax is less than the
amount previously taken into account hereunder, you shall repay the Company,
within 30 days of your receipt of notice of such final determination or opinion,
the portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state, and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax or a federal, state, and
local income tax deduction) plus any interest received by you on the amount of
such repayment, provided that if any such amount has been paid by you as an
Excise Tax or other tax, you shall cooperate with the Company in seeking a
refund of any tax overpayments, and you shall not be required to make repayments
to the Company until the overpaid taxes and interest thereon are refunded to
you.
6. ADDITIONAL GROSS-UP PAYMENT - If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax exceeds the amount
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
within 30 days of the Company's receipt of notice of such final determination or
opinion.
7. CHANGE IN LAW OR INTERPRETATION - In the event of any change in or
further interpretation of section 280G or 4999 of the Code and the regulations
promulgated thereunder, you shall be entitled, by written notice to Verizon, to
request a written opinion of Independent Counsel regarding the application of
such change or further interpretation to any of the foregoing, and Verizon shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable.
8. FEES AND EXPENSES - All fees and expenses of Independent Counsel
incurred in connection with this Exhibit C shall be borne by Verizon.
Exhibit C-2
43
9. SURVIVAL - The Company's obligation to make a Gross-Up Payment with
respect to Payments made or accrued before the end of the Term of Employment
shall survive the Term of Employment unless (a) you fail to execute a release in
accordance with paragraph 14 ("Release") of the Agreement to which this Exhibit
C is attached or (b) you fail to comply with the covenants incorporated in
paragraph 15 ("Covenants") of such Agreement, in which event the Company's
obligation under this Exhibit C shall terminate immediately.
10. DEFINED TERMS - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit C shall have the definitions given to
those terms in the Agreement to which this Exhibit C is attached.
Exhibit C-3
44
EXHIBIT D
GOOD REASON
For purposes of the Agreement to which this Exhibit D is attached (the
"Agreement"), "Good Reason" means any of the following events:
(1) The Company materially breaches a term or condition of the Agreement.
(2) (a) Your overall compensation opportunities (as contrasted with overall
compensation actually paid or awarded) are significantly reduced, (b) your
salary is reduced by 10% or more, or (c) there is a negative individual
performance adjustment (as contrasted with a generally applicable negative
performance adjustment) that results in your short-term bonus for a year
being no more than 90% of your short-term bonus for the immediately
preceding year.
(3) You are assigned to a new principal work location that is more than 50
miles from your previous principal work location.
(4) (a) Your key responsibilities as Vice-Chairman - Verizon, and President -
Telecom (as defined by the present organization structure), including your
responsibility to attend meetings of the Verizon Board of Directors and to
serve as a member of the Corporate Leadership Council, are significantly
diminished, or (b) there is a significant alteration of the Company's
business as a result of a merger or other business combination, a
divestiture of significant businesses or assets, a significant joint
venture, or similar transaction.
(5) You fail to maintain your rank with regard to pay and position relative to
the CEO(s); provided that you shall not have Good Reason pursuant to this
paragraph (5) merely because (a) other executives achieve parity with you
on the basis of pay and/or position and/or (b) pay increases and/or
position upgrades are awarded to other executives if the pay increases do
not cause any executive (other than the CEO(s)) to be paid more than you
and if the position upgrades do not elevate any executive (other than the
CEO(s)) to a position superior to yours; and provided further that you
shall not have Good Reason pursuant to this paragraph (5) merely because
pay increases and/or position upgrades are awarded to one or both CEO(s).
For purposes of this paragraph (5), whether another executive is more
highly paid than you shall be determined by comparing the sum of the
annual base salary and the annual short-term and long-term bonus
opportunities (as contrasted with compensation actually paid or awarded)
provided to the other executive and to you.
(6) You do not report to either of the current CEO(s).
Exhibit D-1
45
(7) Verizon fails to implement the CEO/Chairman succession plan set forth in
the Agreement and Plan of Merger Dated as of July 27, 1998, among Bell
Atlantic Corporation, Beta Gamma Corporation and GTE Corporation (the
"Succession Plan") by reason of
(a) the retirement, death, disability, or termination for cause of
either of the current Co-CEOs, and the other Co-CEO becomes
the sole CEO, provided that you continue to fulfill your
duties under this Agreement until June 30, 2002;
(b) the termination without cause, termination for good reason, or
constructive discharge of either of the current Co-CEOs (as
determined under their respective employment agreements),
provided that you continue to fulfill your duties under this
Agreement until the earlier of (i) June 30, 2002, or (ii) the
expiration of six months after such constructive discharge; or
(c) the appointment of anyone other than the current Co-CEOs as
sole CEO or Co-CEO, provided that you continue to fulfill your
duties under this Agreement until the earlier of (i) June 30,
2002, or (ii) the expiration of six months after such
appointment.
Notwithstanding anything in this paragraph (7) to the contrary,
implementation of the Succession Plan by itself shall not be a Good
Reason.
(8) A Change in Control (within the meaning of the Verizon Communications 2000
Broad-Based Incentive Plan) occurs.
Except where clearly provided to the contrary, all capitalized terms used in
this Exhibit D shall have the definitions given to those terms in the Agreement.
Exhibit D-2
46
EXHIBIT E
COVENANTS
1. NONCOMPETITION - In consideration for the benefits and agreements
described in the Agreement to which this Exhibit E is attached, you agree that:
(a) PROHIBITED CONDUCT - During the period of your employment
with the Company, and for the period ending 12 months after your termination of
employment for any reason from the Company, you shall not, without the prior
written consent of the CEO(s):
(1) personally engage in Competitive Activities
(as defined below); or
(2) work for, own, manage, operate, control, or
participate in the ownership, management,
operation, or control of, or provide
consulting or advisory services to, any
individual, partnership, firm, corporation,
or institution engaged in Competitive
Activities, or any company or person
affiliated with such person or entity
engaged in Competitive Activities; provided
that your purchase or holding, for
investment purposes, of securities of a
publicly-traded company shall not constitute
"ownership" or "participation in ownership"
for purposes of this paragraph so long as
your equity interest in any such company is
less than a controlling interest;
provided that this paragraph (a) shall not prohibit you from (i) being employed
by, or providing services to, a consulting firm, provided that you do not
personally engage in Competitive Activities or provide consulting or advisory
services to any individual, partnership, firm, corporation, or institution
engaged in Competitive Activities, or any company or person affiliated with such
person or entity engaged in Competitive Activities, or (ii) engaging in the
private practice of law as a sole practitioner or as a partner in (or as an
employee of or counsel to) a law firm in accordance with applicable legal and
professional standards.
(b) COMPETITIVE ACTIVITIES - For purposes of the Agreement to
which this Exhibit E is attached, "Competitive Activities" means business
activities relating to products or services of the same or similar type as the
products or services (1) which are sold (or, pursuant to an existing business
plan, will be sold) to paying customers of the Company, and (2) for which you
then have responsibility to plan, develop, manage, market, or oversee, or had
any such responsibility within your most recent 24 months of employment with the
Company. Notwithstanding the
Exhibit E-1
47
previous sentence, a business activity shall not be treated as a Competitive
Activity if the geographic marketing area of the relevant products or services
sold by you or a third party does not overlap with the geographic marketing area
for the applicable products and services of the Company.
2. INTERFERENCE WITH BUSINESS RELATIONS - During the period of your
employment with the Company, and for a period ending with the expiration of 12
months following your termination of employment for any reason from the Company,
you shall not, without the written consent of the CEO(s):
(a) recruit or solicit any employee of the
Company for employment or for retention as a
consultant or service provider;
(b) hire or participate (with another company or
third party) in the process of hiring (other
than for the Company) any person who is then
an employee of the Company, or provide names
or other information about Company employees
to any person or business (other than the
Company) under circumstances that could lead
to the use of that information for purposes
of recruiting or hiring;
(c) interfere with the relationship of the
Company with any of its employees, agents,
or representatives;
(d) solicit or induce, or in any manner attempt
to solicit or induce, any client, customer,
or prospect of the Company (1) to cease
being, or not to become, a customer of the
Company or (2) to divert any business of
such customer or prospect from the Company;
or
(e) otherwise interfere with, disrupt, or
attempt to interfere with or disrupt, the
relationship, contractual or otherwise,
between the Company and any of its
customers, clients, prospects, suppliers,
consultants, or employees.
3. RETURN OF PROPERTY; INTELLECTUAL PROPERTY RIGHTS - You agree that on
or before your termination of employment for any reason with the Company, you
shall return to the Company all property owned by the Company or in which the
Company has an interest, including files, documents, data and records (whether
on paper or in tapes, disks, or other machine-readable form), office equipment,
credit cards, and employee identification cards. You acknowledge that the
Company is the rightful owner of any programs, ideas, inventions, discoveries,
patented or copyrighted material, or trademarks that you may have originated or
developed, or assisted in originating or developing, during your period of
employment with the Company, where any such origination or development involved
the use of Company time or resources, or the exercise of your responsibilities
for or on behalf of the
Exhibit E-2
48
Company. You shall at all times, both before and after termination of
employment, cooperate with the Company in executing and delivering documents
requested by the Company, and taking any other actions, that are necessary or
requested by the Company to assist the Company in patenting, copyrighting, or
registering any programs, ideas, inventions, discoveries, patented or
copyrighted material, or trademarks, and to vest title thereto in the Company.
4. PROPRIETARY AND CONFIDENTIAL INFORMATION - You shall at all times
preserve the confidentiality of all proprietary information and trade secrets of
the Company, except to the extent that disclosure of such information is legally
required. "Proprietary information" means information that has not been
disclosed to the public and that is treated as confidential within the business
of the Company, such as strategic or tactical business plans; undisclosed
financial data; ideas, processes, methods, techniques, systems, patented or
copyrighted information, models, devices, programs, computer software, or
related information; documents relating to regulatory matters and correspondence
with governmental entities; undisclosed information concerning any past,
pending, or threatened legal dispute; pricing and cost data; reports and
analyses of business prospects; business transactions that are contemplated or
planned; research data; personnel information and data; identities of users and
purchasers of the Company's products or services; and other confidential matters
pertaining to or known by the Company, including confidential information of a
third party that you know or should know the Company is bound to protect.
5. DEFINITIONS - Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit E shall have the definitions given to
those terms in the Agreement to which this Exhibit E is attached.
Exhibit E-3
