Exhibit 10x
[Verizon Logo]
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
December 5, 2000
Xxxxxxx X. Xxx
[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 leadership. 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 leader. We look
forward to your leadership 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
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Page 2
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
continue to play 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 a term of four
years, short- and long-term award opportunities, and other benefits.
2. Term - The term of this Agreement ("Term of Agreement") shall begin on
July 1, 2000, and end on June 30, 2004. The term of your employment under this
Agreement ("Term of Employment") shall begin on July 1, 2000, and end on June
30, 2002. During the period from July 1, 2002, through June 30, 2004 (the
"Consulting Term"), you shall serve as a consultant under this Agreement.
Notwithstanding the preceding provisions of this paragraph 2, the Company
reserves the right to terminate your employment and the Term of Employment, as
well as your consultancy and the Consulting Term, at any time. Your employment
and the Term of Employment (and your consultancy and the Consulting Term) also
may terminate for other reasons (such as your resignation, retirement, death, or
disability). The consequences of the termination of your service are specified
in paragraph 13 ("Termination Of Service").
3. General - Under this Agreement, you shall continue to serve as
Chairman of the Board of Directors of Verizon (the "Board") during the Term of
Agreement. In addition, you shall continue to serve as Co-Chief Executive
Officer of Verizon ("Co-CEO") until June 30, 2002.
4. Duties And Responsibilities - (a) Term Of Employment - During the Term
of Employment, and subject to the provisions of paragraph 13(d) ("Termination
For Good Reason"), you shall continue to perform your duties and
responsibilities fully and faithfully as Chairman and Co-CEO, reporting only to
the Board, and you shall cooperate fully with the other Co-CEO. During such
period you shall report solely to the Board, with such duties and
responsibilities as are customarily assigned to your position as Chairman and
Co-CEO, and such other duties not inconsistent therewith as may from time to
time be assigned to you by the Board. During the Term of Employment, 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
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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,
you shall have the same holidays per calendar year recognized by Verizon for its
management employees, and you shall have an aggregate of four management
personal days and five weeks of vacation per calendar year, provided that such
management personal days and vacation days shall be scheduled with due regard to
the needs of the business. During the Term of Employment, except to the extent
specifically permitted in writing by the Board, and except for memberships on
boards of directors that you hold on the date of this Agreement, you shall not,
directly or indirectly, render any services of a business, commercial, or
professional nature to any other person or organization other than the Company
or a person or organization in which the Company has a financial interest,
whether or not the services are rendered for compensation.
(b) Consulting Term - During the Consulting Term, you shall continue
to serve as Chairman of the Board and shall make yourself available, at
Verizon's request, to provide consulting services to the Company. The consulting
services requested of you shall be consistent with your status as Chairman of
the Board. During the Consulting Term, your relationship with Verizon shall be
that of an independent contractor, and not that of an employee.
5. Location - (a) Term Of Employment - During the Term of Employment, you
shall perform services for the Company primarily at its New York City
headquarters. In addition, a change in your principal work location qualifies as
a "Good Reason" in accordance with paragraph (5) of Exhibit E hereto.
(b) Consulting Term - During the Consulting Term, the Company shall
provide you, at the Company's expense, with appropriate office space and related
administrative support at a mutually agreeable location in the New York City
area. The Company shall reimburse you for all reasonable expenses that you incur
in discharging your duties and responsibilities to the Company during the
Consulting Term.
(c) After Consulting Term - If you continue to perform services for
the Company until June 30, 2004, in accordance with this Agreement, then from
July 1, 2004, through June 30, 2009, the Company shall provide you, at the
Company's expense, with appropriate office space and related administrative
support at a mutually agreeable location.
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6. Base Compensation - (a) Base Salary - During the Term of Employment,
your annual base salary shall not be less than $1,750,000 per year.
(b) Consulting Fee - During the Consulting Term, you shall receive a
consulting fee of $250,000 per calendar month, and you shall not be entitled to
receive, by reason of your status as Chairman and consultant, any of the
compensation or benefits that the Company provides to employees or to
non-employee members of the Board. Of course, in accordance with this Agreement,
you may, during the Consulting Term, be entitled to certain compensation and
benefits by reason of your status as a retired Company employee.
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 opportunities shall be prorated for the years 2000 and
2002 to reflect the six-month duration of the Agreement during 2000 and the end
of the Term of Employment on June 30, 2002, and your annual long-term bonus
opportunity shall become effective beginning in 2001. Your annual short-term
bonus opportunity shall not be less than 125 percent of your then-current base
salary, and your annual maximum short-term bonus opportunity shall not be less
than 250 percent of your then-current base salary. The value of your annual
long-term bonus opportunity shall not be less than 800 percent of your
then-current base salary.
8. Founders' Grant - You shall receive a Founders' Grant of options to
purchase 650,000 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 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 Service") and by said Exhibit
A.
9. Performance Share Retention Unit Grant - You shall receive a Performance
Share Retention Unit Grant with respect to 150,000 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 Unit Grant following the
termination of your employment shall be governed by paragraph 13 ("Termination
Of Service") and by the terms of such Performance Share Retention Unit Grant
Agreement.
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10. Benefits And Perquisites - (a) In General - During the Term of
Employment, you shall-
(1) participate in the tax-qualified and nonqualified retirement
plans in which you currently participate (including, but not
limited to, the GTE Executive Salary Deferral Plan (the
"ESDP"));
(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)(8)
("Apartment"), below, you shall be eligible for such benefits on terms and
conditions that are until June 30, 2002 (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.
(b) Perquisites - The perquisites referred to in subparagraph (a),
above, are the following:
(1) Flexible Spending Account: A flexible spending account of
$36,000 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.
(3) Company Aircraft: You shall be required to use Company
aircraft for business and personal travel.
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(4) Company Automobile: You shall be eligible to use a Company
automobile and driver for business and personal travel.
(5) 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.
(6) Home Office Equipment: You shall be eligible for home office
equipment (e.g., computer, fax machine, business line with
long distance, and internet access) on an as-needed basis,
consistent with Company policy as in effect from time to
time.
(7) Cellular Telephone: You shall be provided with cellular
telephone equipment and service.
(8) Apartment: You shall be provided with access to a Company
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.
(d) Long-Term Performance Incentive - (1) Account - The Company shall
continue to maintain the deferred account (the "Account") previously maintained
pursuant to the Long-Term Performance Incentive provisions of your agreement
with GTE Service Corporation, dated January 14, 1999 (the "Prior Agreement").
The Account shall continue to be maintained and administered in accordance with
the Company's written understandings regarding the Account under the Prior
Agreement. As of June 30, 2000, the balance in the Account was $11,183,313.26.
The balance in the Account (the "Account Balance") shall be adjusted (upward or
downward as appropriate) to reflect the value that the Account would have if the
Account Balance were invested in a mutual fund designated by you. Until the date
on which your initial mutual fund designation becomes effective, however, the
Account shall continue to be credited with interest at the "Corporate Average"
yield of long-term, high-grade corporate bonds as reported by Xxxxx'x Investors
Service, or such other substantially similar yield as may be designated in
accordance with the deferral regulations under the GTE Long-Term Incentive Plan
or its successor ("LTIP"). Quarterly (or more frequently, if permitted by
Verizon's Human Resources Committee or its successor (the "HRC") or its
designee), you
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may change any designated mutual fund on a prospective basis. The crediting of
interest and investment performance and the designation, or change in
designation, of a mutual fund pursuant to this paragraph shall be in accordance
with any reasonable rules or requirements imposed by the HRC or its designee.
(2) Vesting - You shall become vested in 60 percent of the
Account Balance if you continue as an employee of the Company until December 31,
2001, and you shall become vested in 100 percent of the Account Balance if you
continue as an employee of the Company until June 30, 2002. Except as otherwise
provided by paragraph 13 ("Termination Of Service"), you shall not become vested
in the Account Balance and you shall not be entitled to receive any payment
pursuant to this paragraph if you are not employed by the Company on December
31, 2001.
(3) Payment - The Payable Amount (as defined below), if any,
shall be paid to you or, in the event of your death, to a beneficiary that you
have designated in writing (and in a form and manner acceptable to the Company)
before your death (or to your estate if you did not designate a beneficiary or
if no designated beneficiary survives you) in cash as soon as practicable after
the vested percentage of the Account Balance increases in accordance with the
preceding provisions of this subparagraph (d) ("Long-Term Performance
Incentive"), except to the extent that you elect to defer payment in accordance
with paragraph 31 ("Deferrals").
(4) Payable Amount - The Payable Amount shall be determined by
multiplying the Vested Balance by the Performance Percentage (as such terms are
defined below) and by subtracting therefrom the sum of (i) any amount previously
paid or deferred pursuant to this subparagraph (d) ("Long-Term Performance
Incentive") and (ii) the earnings that would have accrued thereon if such amount
had not been paid or deferred. If the Payable Amount is zero or less, no amount
shall be paid to you (and you shall not be required to make any payment to the
Company) pursuant to this subparagraph (d). Attachment A illustrates how the
calculations shall be made.
(5) Vested Balance - The Vested Balance shall be equal to the
Account Balance determined as of the date on which the vested percentage
increases, multiplied by the then-current vested percentage.
(6) Performance Percentage - The Performance Percentage shall be
prescribed by the following table, determined as of the date on which the vested
percentage increases:
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EPS Growth Performance Percentage
---------- ----------------------
At least 10%...............................70%
At least 14.4%............................100%
At least 17.3%............................130%
If EPS Growth is less than 10%, the Performance Percentage shall be zero or such
higher amount as may be determined by the HRC. If EPS Growth is between 10% and
14.4% or between 14.4% and 17.3%, the Performance Percentage shall be determined
by linear interpolation. The HRC may adjust the EPS Growth goals in the table
above at any time as it deems equitable in its discretion. In addition, because
the EPS Growth goals in the table were established before the Merger, the HRC
shall adjust these goals to reflect the Merger as it deems equitable in its sole
discretion.
The HRC shall have the sole discretion to determine EPS Growth. The HRC's
determination of EPS Growth, which shall be final and binding, shall be made as
follows: EPS Growth shall measure the compound annual rate of growth in the
Company's annual earnings per share ("EPS") over GTE's EPS for its 1998 fiscal
year of $3.07 per share. The Company's EPS shall be determined on the basis of
the fully diluted earnings per share reported in the Company's annual
consolidated financial statements for each year (or, for a period of less than a
full fiscal year, as reported on the Company's Form 10-Q). In determining EPS
Growth, the HRC shall have the discretion to take into consideration any or all
of the following: (1) the effects of business combinations; (2) the effects of
discontinued operations (including loss on disposal of a line of business or
class of customer); (3) changes in accounting principles; (4) extraordinary
items; (5) restructuring charges; and (6) changes in tax law. Items (1) and (2)
shall be as defined in accordance with Generally Accepted Accounting Principles
("GAAP"), and items (3) through (6) shall be as defined in accordance with GAAP
and as defined and as disclosed in the Company's financial statements. When the
HRC determines EPS Growth, the HRC shall determine EPS Growth on the basis of
the compound annual rate of growth over the entire period since December 31,
1998.
(e) Additional Benefits - By executing this Agreement, you waive all
of your rights under your Executive Severance Agreement with GTE Service
Corporation, dated June 4, 1998 (the "ESA"). In lieu of the benefits previously
provided to you under your ESA, you shall be entitled to the benefits provided
under this Agreement and to certain additional benefits (including pension and
Executive
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Retired Life Insurance Plan benefits) as set forth in Exhibit C to this
Agreement, which is incorporated herein by reference.
(f) Consultancy - During the Consulting Term, you shall be eligible to
use Company aircraft for business and personal use, subject to the availability
of the aircraft, and the Company shall provide you with financial planning
assistance consistent with the Company policy then in effect for senior
executives.
(g) Financial Planning - If you continue as an employee of (or
consultant to) the Company until June 30, 2004, in accordance with this
Agreement, then from July 1, 2004, through June 30, 2006, the Company shall
provide you with financial planning assistance consistent with the Company
policy then in effect for other active senior executives, subject, however, to
your execution of the release prescribed by paragraph 14 ("Release") and your
compliance with the covenants incorporated in paragraph 15 ("Covenants").
11. Indemnification - Upon your Retirement, you shall be entitled to
indemnification in accordance with Verizon's by-laws and Board of Directors
resolutions and continued coverage under Verizon's directors and officers
liability policy for acts and omissions during and in the scope of your
employment and your service as a director. The terms of such indemnification and
coverage shall be specified in an agreement that you and Verizon shall enter
into in connection with your Retirement.
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 D, which is incorporated herein by reference.
13. Termination Of Service- (a) Voluntary Termination By You - (1)
Employment - Since you are currently eligible to retire, the consequences of any
voluntary 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").
(2) Consultancy -- During the Consulting Term, you may terminate
your service as Chairman of the Board and as consultant to the Company under
this Agreement at any time by giving the Board written notice of intent to
terminate, delivered at least 30 calendar days before the effective date of such
termination. The termination shall automatically become effective upon the
expiration of the 30-day notice period. Upon the effective date of such
termination,
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Page 10
your consulting fee shall cease to accrue, your access to Company aircraft shall
terminate, and you shall be eligible for the financial planning services
described in paragraph 10(b)(2) ("Financial Planning") for two years from the
date of such termination and for the office space and administrative support
described in paragraph 5(c) ("After Consulting Term") for five years from the
date of such termination. For purposes of this Agreement, if you terminate your
service as either Chairman of the Board or consultant to the Company under this
Agreement, you shall be deemed to terminate your service in both capacities.
(b) Termination Due To Death Or Disability - (1) Employment - If,
during the Term of Employment, you terminate employment because of death or
disability (as defined under the Company-sponsored long-term disability plan
that applies to you at the time your employment is so terminated),
(i) You shall immediately become 100 percent vested in your
Account Balance, and your Account Balance shall be
distributed to you as soon as practicable following the end
of the Company's fiscal year during which your employment
terminates, based on EPS Growth as of the end of the most
recent Company fiscal quarter ending on or before the date
your employment terminates (or, if greater, EPS Growth as of
the end of the Company's fiscal year during which your
employment terminates);
(ii) The Company shall make a lump-sum cash payment to you equal
to the sum of (A) your base salary for the remaining Term of
Employment, (B) 57.5 percent of your maximum short-term
bonus opportunity for each full year in the remaining Term
of Employment, (C) in respect of any partial year in the
remaining Term of Employment, 57.5 percent of your maximum
short-term bonus opportunity for a full year multiplied by
the percentage of the full year that occurs before the end
of the Term of Employment, (D) 100 percent of your long-term
bonus opportunity for each full year in the remaining Term
of Employment, (E) in respect of any partial year in the
remaining Term of Employment, 100 percent of your long-term
bonus opportunity for a full year multiplied by the
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percentage of the full year that occurs before the end of
the Term of Employment, and (F) an amount equal to the
consulting fees that would have been paid to you pursuant to
paragraph 6(b) ("Consulting Fee"); provided that the sum of
the amounts specified in clauses (A) through (E), above,
shall be reduced (but not below zero) 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
ESDP, and excluding any amounts payable under the life
insurance arrangement described in Section 3 of Exhibit C
hereto) during the remaining Term of Employment. For this
purpose, your base salary shall be based on your base salary
rate in effect immediately before your employment terminated
(but no less than the amount specified in paragraph 6(a)
("Base Salary")); your annual maximum short-term bonus
opportunity shall be equal to 250 percent of your annual
base salary in effect immediately before your employment
terminated (but no less than the amount specified in
paragraph 6(a) ("Base Salary")); and your annual long-term
bonus opportunity shall be equal to 800 percent of your
annual base salary in effect immediately before your
employment terminated (but no less than the amount specified
in paragraph 6(a) ("Base Salary")). If your long-term bonus
is subject to a performance target, it shall be assumed that
the target is met;
(iii) The value of your then-outstanding performance-bonus awards
under LTIP, if any, which shall be deemed equal to 75
percent of target (or its equivalent) for your salary level
for each award cycle (but not more than the actual corporate
rating for the award cycle) multiplied by the percentage of
the award cycle that occurs by the end of the Term of
Employment shall be paid to you in accordance with the
provisions of LTIP governing the timing and form
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of distribution that apply from time to time to other
senior executives of the Company;
(iv) Your unvested stock options (including the Founders'
Grant) shall immediately vest, and you may exercise all
then-outstanding stock options at any time up to the
tenth anniversary of the date the option was granted;
(v) Your unvested Performance Share Retention Units shall
vest to the extent prescribed by the provisions of
paragraph 8(d) of Exhibit B hereto; and
(vi) If you terminate employment because of disability, you
shall be eligible for the financial planning services
described in paragraph 10(b)(2) ("Financial Planning")
for two years from the date of such termination and for
the office space and administrative support described
in paragraph 5(c) ("After Consulting Term") for five
years from the date of such termination;
provided that if you terminate employment because of death, your rights under
this subparagraph (b)(1) (excluding your rights under subparagraph (b)(1)(vi))
shall pass to a beneficiary that you have designated in writing (and in a form
and manner acceptable to the Company) before your death (or shall pass to your
estate if you did not designate a beneficiary or if no designated beneficiary
survives you).
(2) Consultancy - If, during the Consulting Term, you
terminate your service as Chairman of the Board and as consultant to the Company
under this Agreement because of your death or disability, you shall receive a
lump-sum payment equal to the consulting fees that would have been paid to you
pursuant to paragraph 6(b) ("Consulting Fee"); if your service terminates
because of your disability, you shall be eligible for the financial planning
services described in paragraph 10(b)(2) ("Financial Planning") for two years
from the date of such termination and for the office space and administrative
support described in paragraph 5(c) ("After Consulting Term") for five years
from the date of such termination; and regardless of whether your service
terminates because of your death or because of your disability, your access to
Company aircraft shall terminate; provided that if your service terminates
because of your death, your right to a lump-sum payment pursuant to this
paragraph 13(b)(2) shall pass to a beneficiary that
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you have designated in writing (and in a form and manner acceptable to the
Company) before your death (or shall pass to your estate if you did not
designate a beneficiary or if no designated beneficiary survives you).
(c) Retirement -If, during the Term of Employment, you terminate
employment by reason of Retirement (as defined below), you shall be entitled,
except as otherwise provided in paragraph 13(g) ("Mandatory Retirement"), 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) at any time up to the tenth anniversary of the date the
option was granted, and you shall be eligible for the financial planning
services described in paragraph 10(b)(2) ("Financial Planning") for two years
from the date of such termination and for the office space and administrative
support described in paragraph 5(c) ("After Consulting Term") for five years
from the date of such termination. For purposes of this Agreement, "Retirement"
means retirement under the terms of the Verizon Communications 2000 Broad-Based
Incentive Plan as in effect on the date hereof. 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) Employment - (i) Subject to the
provisions of subparagraph (d)(1)(iv), below, you may terminate your employment
under this Agreement for Good Reason by giving the Board 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 E, which is incorporated herein by reference.
(ii) Notwithstanding the foregoing, and subject to the
provisions of subparagraph (d)(1)(iv), 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.
(iii) Except as provided in subparagraph (d)(1)(ii), above,
and (d)(1)(iv), below, upon the lapse of the 30 calendar days' notice period,
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the Good Reason termination shall take effect, and your obligation to serve the
Company, and the Company's obligation to employ you, under the terms of this
Agreement shall terminate simultaneously, and you shall be deemed to have
incurred an Involuntary Termination Without Cause, with the consequences
described in subparagraph (e), below; provided that your rights under this
subparagraph (d) (other than those specified in subparagraph (e)(1)(iv) and (v))
are contingent on your execution of a release in accordance with paragraph 14
("Release").
(iv) 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 (6) or (7) of Exhibit E hereto, (A) you shall not be
required to fulfill such notice and explanation requirements, (B) subparagraph
(d)(1)(ii), above, shall not apply to you, and (C) notwithstanding subparagraph
(d)(1)(iii), 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.
(2) Consultancy - During the Consulting Term, you may terminate
your service as Chairman of the Board and as a consultant to Verizon for Good
Reason in accordance with the procedures that apply to the termination of your
employment for Good Reason, described above in this paragraph 13(d)
("Termination for Good Reason"). If you so terminate your service for Good
Reason, you shall be entitled to receive an amount equal to the consulting fees
that would have been paid to you during the remainder of the Consulting Term as
and when such fees otherwise would have been paid to you, and you shall be
eligible for the financial planning services described in paragraph 10(b)(2)
("Financial Planning") for two years from the date of such termination and for
the office space and administrative support described in paragraph 5(c) ("After
Consulting Term") for five years from the date of such termination, all subject
to your signing and delivering the release required by paragraph 14 ("Release")
and your compliance with the covenants incorporated in paragraph 15
("Covenants").
(e) Involuntary Termination Without Cause - (1) Employment - 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 paragraph 13(f) ("Involuntary Termination For
Cause")), such termination shall be deemed an Involuntary Termination by the
Company, and you shall be entitled to receive the following payments and
benefits
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in lieu of any payment or benefit otherwise provided pursuant to paragraphs 6
("Base Salary") through 10(d) ("Long-Term Performance Incentive") and paragraph
10(g) ("Financial Planning"):
(i) The Company shall make a lump-sum cash payment to you equal to
the sum of (A) your base salary for the remaining Term of
Employment, (B) 57.5 percent of your maximum short-term bonus
opportunity for each full year in the remaining Term of
Employment, (C) in respect of any partial year in the remaining
Term of Employment, 57.5 percent of your maximum short-term bonus
opportunity for a full year multiplied by the percentage of the
year that occurs before the end of the Term of Employment, (D)
100 percent of your long-term bonus opportunity for each full
year in the remaining Term of Employment, (E) in respect of any
partial year in the remaining Term of Employment, 100 percent of
your long-term bonus opportunity for a full year multiplied by
the percentage of the year that occurs before the end of the Term
of Employment, and (F) an amount equal to the consulting fees
that would have been paid to you pursuant to paragraph 6(b)
("Consulting Fee"); provided that the sum of the amounts
specified by clauses (A) through (E), above, shall be reduced
(but not below zero) by any severance or severance-type payments
payable to you under any Company-sponsored severance plan,
program, policy, contract, account, or arrangement (excluding any
amounts payable to you under Company-sponsored deferred
compensation plans, such as the ESDP, and excluding any amounts
payable under the life insurance arrangement described in Section
3 of Exhibit C hereto) during the remaining Term of Employment.
For this purpose, your base salary shall be based on your base
salary rate in effect immediately before your employment
terminated (but no less than the amount referred to in paragraph
6(a) ("Base Salary")); your annual maximum short-term bonus
opportunity shall be equal to 250 percent of your annual base
salary in effect immediately before your employment terminated
(but no less than the amount referred to in paragraph 6(a) ("Base
Salary")); and your annual long-term bonus opportunity shall be
equal to 800 percent of your annual base salary in effect
immediately before your employment terminated (but no less than
the amount referred to in paragraph 6(a) ("Base
Xxxxxxx X. Xxx
December 5, 2000
Page 16
Salary")). If your long-term bonus is subject to a performance
target, it shall be assumed for this purpose that the target is
met;
(ii) The Long-Term Performance Incentive payment prescribed by
paragraph 10(d) ("Long-Term Performance Incentive") shall be paid
to you in accordance with the provisions of such paragraph as
though you had not separated from employment before the end of
the Term of Employment (or, if greater, the amount that would
have been payable in accordance with such paragraph if the
Performance Percentage were 100 percent), subject to your
execution of the release prescribed by paragraph 14 ("Release")
and your compliance with the covenants incorporated in paragraph
15 ("Covenants");
(iii) The value of your then-outstanding performance-bonus awards
under LTIP, if any, which shall be deemed equal to 75 percent of
target (or its equivalent) for your salary level for each award
cycle (but not more than the actual corporate rating for the
award cycle) multiplied by the percentage of the award cycle that
occurs by the end of the Term of Employment shall be paid to you
in accordance with the provisions of LTIP governing the timing
and form of distribution that apply from time to time to other
senior executives of the Company;
(iv) 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 tenth
anniversary of the date the option was granted;
(v) Your Performance Share Retention Units shall vest to the extent
prescribed by the provisions of paragraph 8(b) of Exhibit B
hereto;
(vi) You shall be eligible for the financial planning services
described in paragraph 10(b)(2) ("Financial Planning") until June
30, 2006, and for the office space and administrative support
described in paragraph 5(c) ("After Consulting Term") for five
years from the date of such termination;
Xxxxxxx X. Xxx
December 5, 2000
Page 17
(vii) You shall be eligible for outplacement services to the extent
that such services are then available to senior executives of the
Company;
(viii) For the remaining Term of Employment, you shall be eligible to
use (A) Company aircraft for personal travel, subject to the
availability of the aircraft, (B) a Company automobile and driver
for personal travel, and (C) access to a Company apartment in New
York City;
(ix) After the Term of Employment, you shall be entitled to use a
Company automobile and driver for personal travel to the extent
provided to previous retiring Chairmen; and
(x) You shall be entitled to all other payments, benefits, and grants
to you under this Agreement (but excluding all perquisites, e.g.,
club memberships, credit cards, other than those identified in
the preceding clauses) until the end of the Term of Employment,
as and when such payments, benefits, and grants would have been
provided if your employment under this Agreement had not been
terminated;
provided that your rights under this subparagraph (e)(1) (other than those
specified in clauses (iv) and (v), above) are contingent on your execution of a
release in accordance with paragraph 14 ("Release").
(2) Consultancy -- If, during the Consulting Term,
Verizon terminates your service as Chairman of the Board and consultant for any
reason other than Cause (as defined in paragraph 13(f) ("Involuntary Termination
For Cause")), you shall be entitled to receive an amount equal to the consulting
fees that would have been paid to you during the remainder of the Consulting
Term as and when such fees otherwise would have been paid to you, and you shall
be eligible for the financial planning services described in paragraph 10(b)(2)
("Financial Planning") for two years from the date of such termination and for
the office space and administrative support described in paragraph 5(c) ("After
Consulting Term") for five years from the date of such termination, all subject
to your signing and delivering the release required by paragraph 14 ("Release")
and your compliance with the covenants incorporated in paragraph 15
("Covenants").
(f) Involuntary Termination For Cause - (1) Employment - (i)
Nothing in this Agreement prevents the Company from terminating your
Xxxxxxx X. Xxx
December 5, 2000
Page 18
employment under this Agreement for Cause if such termination is approved by
affirmative vote of at least three-quarters of the entire membership of the
Board (excluding you). 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, you shall forfeit your unvested Founders' Grant
options and your unvested Performance Share Retention Units, 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.
(ii) 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 the Verizon Employee Code of Business Conduct (as in effect from time
to time) or of any provision incorporated in paragraph 15 ("Covenants"), as
determined by the Board in its reasonable discretion, or (ii) commission of any
felony of which you are finally adjudged guilty by a court of competent
jurisdiction.
(iii) 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.
(2) Consultancy -- Nothing in this Agreement prevents
Verizon from terminating your service as Chairman of the Board and consultant
under this Agreement for Cause (as defined above) during the Consulting Term. In
the event of such a termination for Cause, your consulting fees shall cease to
accrue, your rights to office space, administrative support, and access to
Company aircraft shall terminate, and the Company shall have no further
obligations under this Agreement.
(g) Mandatory Retirement - When you retire on June 30, 2002, your
retirement shall not be governed by any other subparagraph of this paragraph 13
(except as otherwise provided by this subparagraph (g)), you shall not be
entitled to any severance or separation pay as a result of your retirement, you
shall be entitled to accelerated vesting of all outstanding stock options
(including the Founders' Grant) and to exercise all then-outstanding stock
options (including all Founders' Grant options) at any time up to the tenth
anniversary of the date the option was granted, and you shall be entitled to the
other benefits described in paragraph 13(c) ("Retirement").
Xxxxxxx X. Xxx
December 5, 2000
Page 19
(h) No Duty To Mitigate And No Offset - Nothing in this Agreement
shall require you to seek or to engage in employment or self-employment
following the termination of your employment or consultancy under this
Agreement, and any compensation you derive from any such subsequent employment
or self-employment shall not offset or reduce any amounts to which you are
entitled under this Agreement.
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 ESDP, 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 or if your employment terminates after a
Change in Control (within the meaning of the Verizon Communications 2000
Broad-Based Incentive Plan as in effect on the date hereof).
15. Covenants - In consideration for the benefits and agreements described
above, you agree to comply with the covenants set forth in Exhibit F 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 Board, in its 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
duplicates any payment, benefit, or grant that you are entitled to receive under
any Company compensation or benefit plan, award agreement, or other arrangement.
Xxxxxxx X. Xxx
December 5, 2000
Page 20
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 that is contrary to
written policies of the Company or is harmful to Verizon or to any corporate
subsidiary or other company affiliated with Verizon or to any company in which
Verizon directly or indirectly owns a substantial equity interest, or to any
successor or assign of any such company, or to the reputation of Verizon or of
any such subsidiary or other company, you may forfeit all or part of any amounts
that you defer or accrue under any Company-sponsored deferred compensation
program after your execution of this Agreement and any interest or earnings
thereon.
(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.
Xxxxxxx X. Xxx
December 5, 2000
Page 21
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 to your spouse or to your
legal, tax, or financial adviser the terms of this Agreement that the Company
has not already publicly disclosed, provided that you take all reasonable
measures to assure that he or she does not disclose such terms 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.
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
Xxxxxxx X. Xxx
December 5, 2000
Page 22
(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") and paragraph 32 ("Notices") shall survive the Term of
Agreement. 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 Agreement.
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
Xxxxxxx X. Xxx
December 5, 2000
Page 23
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 the Prior
Agreement, your ESA, and any severance agreement, policy, or arrangement. 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 amount payable to you pursuant to paragraph
10(d) ("Long-Term Performance Incentive")) may be deferred under the ESDP or any
Xxxxxxx X. Xxx
December 5, 2000
Page 24
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 ESDP
or successor plan.
32. Notices - All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
messenger, transmitted by telex or telegram, or mailed by registered or
certified mail, return receipt requested and postage prepaid, as follows:
(a) If to Verizon, to:
Verizon Communications Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President -
Human Resources
(b) If to you, to:
[Address]
[Address]
or to such other address as either Verizon or you shall hereafter designate to
the other from time to time by similar notice.
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. Xxxxxx,
on behalf of the Human Resources Committee
of the Board of Directors of Verizon Communications Inc.
Xxxxxxx X. Xxx
December 5, 2000
Page 25
Xxxx X. Xxxxxxxxxx
Co-Chief Executive Officer
Verizon Communications Inc.
I agree to the terms described above.
-----------------------------------------------
Xxxxxxx X. Xxx
Attachments: Attachment A - Long Term Performance Incentive
Exhibit A - Founders' Grant
Exhibit B - Performance Share Retention Unit Grant
Exhibit C - Additional Benefits
Exhibit D - Excise Tax Gross-Up
Exhibit E - Good Reason
Exhibit F - Covenants
cc: Xxxx X. Xxxxxx
ATTACHMENT A
--------------------------------------------------------------------------------
Year/1/ Threshold Target Maximum
(10%) (14.4%) (17.3%)
--------------------------------------------------------------------------------
Dec. 31, 2001
Cumulative EPS $11.19 $12.13 $12.77
Bonus/2/ $4.2 $6.0 $7.8
--------------------------------------------------------------------------------
June 30, 2002
Cumulative EPS $13.44 $14.76 $15.68
Bonus/2/ $2.8 $4.0 $5.2
--------------------------------------------------------------------------------
--------
/1/ Performance reflects results for the period ending on the date identified.
/2/ Bonus amounts are before any additional earnings have been calculated.
Note: Interpolation shall be used for performance between the points shown on
the chart. Earnings shown assume consistent performance from year to year. The
HRC may adjust the EPS Growth goals at any time as it deems equitable in its
discretion. In addition, because the EPS Growth goals were established before
the Merger, the HRC shall adjust these goals to reflect the Merger as it deems
equitable in its discretion.
Attachment A
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. If the Participant does not timely execute this
Agreement, 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.
7. (a) Option Period and Vesting Schedule. The period for which the Option is
granted is until June 30, 2010 (the "Option Period"). In no event
shall the Option be exercisable after the Option Period, and the
Exhibit A-1
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 for the balance of the Option Period, i.e., until
June 30, 2010; provided that upon the occurrence of a Change in
Control (as defined in the Plan as in effect on the date of the
employment agreement to which this Agreement is an exhibit), the
Option shall be exercisable in full for the balance of the Option
Period, i.e., until June 30, 2010.
(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) before
June 30, 2002, 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 shall be exercisable in full for the balance of the Option
Period, i.e., until June 30, 2010.
(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
June 30, 2002, the Option shall be forfeited. If the Participant
Retires on June 30, 2002, the Option shall be immediately
exercisable in full for the balance of the Option Period, i.e.,
until June 30, 2010.
(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 for the balance of the
Option Period, i.e., until June 30, 2010. For purposes of this
subsection (b)(3), a Participant's separation from employment
with the Company occurs on the last day the
Exhibit A-2
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 for the balance of the
Option Period, i.e., until June 30, 2010. For purposes of this
subsection (b)(4), a Participant's termination 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 for the balance
of the Option Period, i.e., until June 30, 2010. 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
immediately exercisable in full by the Participant's beneficiary
for the balance of the Option Period, i.e., until June 30, 2010.
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.
(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
Exhibit A-3
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:
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 in
accordance with paragraph 13(f) ("Involuntary Termination For
Cause") of the employment agreement to which this Agreement is an
exhibit.
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.
Exhibit A-4
(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
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
Exhibit A-5
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 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 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.
Exhibit A-6
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
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
Exhibit A-7
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. 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 the Participant's spouse 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-8
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: Xxxxxxx X. Xxx
------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: [Social Security Number]
------------------------------------------------------------------------
DATE OF GRANT: Sept. 7, 2000
------------------------------------------------------------------------
NUMBER OF SHARES: 650,000
------------------------------------------------------------------------
OPTION PRICE: $43.34
------------------------------------------------------------------------
PLAN FROM WHICH OPTIONS ARE 1997 GTE Long-Term Incentive Plan
AWARDED:
------------------------------------------------------------------------
IN WITNESS WHEREOF, Verizon Communications Inc., by its duly authorized Officer,
and the Participant have executed this Agreement.
VERIZON COMMUNICATIONS INC.
----------------------------
By: Xxxx X. Xxxxxx
Executive Vice President - Human Resources
-------------------------
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.
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. If the
Participant does not timely execute this Agreement, 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
Exhibit B-1
balance.
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:
-------------------------------------------------------------
Years of Service Percentage Aggregate
to Vest Percentage 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.
Exhibit B-2
(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.
(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:
--------------------------------------------------------------
Target Baseline Revenue Percentage Aggregate
Year Year Growth to Vest Percentage
Goal 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
Exhibit B-3
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.
(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:
----------------------------------------------------------------------
Aggregate
Target Baseline EPS Percentage Percentage
Year Year Growth 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.
Exhibit B-4
(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 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.
Exhibit B-5
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(f) hereof, RSUs may vest or be forfeited before
vesting in accordance with paragraph 6 hereof as follows:
(a) Retirement (Before June 30, 2002), Voluntary Separation, or
Termination for Cause. If the Participant retires, quits, or otherwise
separates from employment under circumstances not described in
subparagraphs (b) through (e), 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 in accordance with paragraph 13(f)
("Involuntary Termination For Cause") of the employment agreement to which
this Agreement is an exhibit.
(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.
Exhibit B-6
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).
For purposes of this Agreement, the Participant shall not be considered to
have been involuntarily terminated without Cause if his employment is
terminated for refusal to accept a reassignment that involves no relocation
or downgrade and paragraph 8(c) does not apply.
(c) Retirement On June 30, 2002. When the Participant retires on
June 30, 2002, the then-unvested RSUs in each tranche shall be subject to
the vesting provisions set forth in paragraph 8(d) ("Termination for Good
Reason"), below.
(d) 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.
(e) 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.
(f) Change in Control. Upon the occurrence of a Change in Control
(as defined in the 2000 Verizon Communications Broad-Based Incentive Plan
as in effect on the date of the employment agreement to which this
Agreement is an exhibit), all then-unvested RSUs shall vest in full and be
payable immediately without regard to the Revenue Growth Goals or EPS
Growth Goals or the continuous employment requirement 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.
(g) Vesting Schedule. Except as provided in subparagraphs (b), (c),
(d), (e), and (f), 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
Exhibit B-7
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.
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 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.
Exhibit B-8
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.
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
Exhibit B-9
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 the
Participant's spouse 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 B-10
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: Xxxxxxx X. Xxx
--------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: [Social Security Number]
--------------------------------------------------------------------------------
GRANT DATE: September 7, 2000
--------------------------------------------------------------------------------
NUMBER OF RSUs: 150,000
--------------------------------------------------------------------------------
PLAN(S) FROM WHICH RSUs Tranche 1--Verizon Communications
AWARDED: 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: Xxxx X. Xxxxxx
Executive Vice President - Human Resources
-------------------------
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.
Exhibit C
---------
Additional Benefits
1. Insurance. The Company shall provide you, at the Company's expense, for
---------
a period beginning on the date of your termination of employment with the
Company, the same medical, dental, and life insurance coverage as was in effect
on the June 30, 2002, or, if greater, coverage under any other Company-sponsored
medical, dental, or life insurance coverage in effect immediately before your
termination of employment. Such coverage shall end upon the expiration of 24
months after your termination of employment. For purposes of this Section 1, "at
the Company's expense" means that the Company shall make all contributions or
premium payments required to obtain coverage, and that you shall not make any
such contributions or premium payments, but that you shall be subject to any
deductibles and co-payment provisions in effect on June 30, 2000 (or, if
applicable, immediately before the termination of employment). Except to the
extent otherwise required by law, the period of coverage for any health care
continuation coverage required by the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, shall begin on the date of your termination of
employment.
2. Pension And Benefit Credit - (a) General - The Company shall provide you
-------------------------- -------
with the following pension benefits:
(i) Service Credit - Upon execution of the Agreement to which this
--------------
Exhibit C is attached, you shall be credited with 18.68749 years of
service as of June 30, 2000, and with two years of service for each year
during the Term of Agreement that you actually work or consult for the
Company for purposes of receiving benefits and for vesting, retirement
eligibility, benefit accrual, and all other purposes relevant to
determining your pension benefits. If you terminate your service with
the Company for any reason before June 30, 2004, you shall receive
service credit pursuant to the immediately preceding sentence through
June 30, 2004.
(ii) Compensation - This paragraph (a)(ii) shall apply if (and only
------------
if) the benefits that result from the application of this paragraph
(a)(ii) equal or exceed the benefits that result from the application of
paragraph (a)(iii), below. For purposes of determining your benefits
under all defined benefit pension plans maintained by the Company,
including the GTE Excess Pension Plan and the GTE Supplemental Executive
Retirement Plan (collectively the "GTE SERP"), your compensation shall
be equal to the amount specified in clause (A),
Exhibit C-1
below, or the amount specified in clause (B), below, whichever is
greater:
(A) Your compensation shall include the greater of 100
percent of your base salary and the Average Percentage
(as defined below) of your maximum short-term bonus
opportunity (both as of June 30, 2000) for two years; or
(B) Your compensation shall include the greater of 100
percent of your base salary and the Average Percentage
(as defined below) of your maximum short-term bonus
opportunity (both as in effect immediately before your
employment is terminated) for two years;
provided that, for purposes of this paragraph (a)(ii), you shall be
deemed to have received the greater of the amounts set forth in
paragraph (a)(ii)(A) or paragraph (a)(ii)(B) in monthly
installments over the 24 months following your termination of
employment, each equal to 1/24th of the amount deemed paid pursuant
to this paragraph (a)(ii).
(iii) Average Compensation - If the benefits that result from the
--------------------
application of this paragraph (a)(iii) exceed the benefits that result
from the application of paragraph (a)(ii), above, your benefits under
all defined benefit pension plans maintained by the Company, including
the GTE SERP, shall be calculated on the basis of the highest of (A)
your final year of pensionable compensation as an employee, (B) your
final average three years of pensionable compensation as an employee, or
(C) your final average five years of pensionable compensation as an
employee. For purposes of the preceding provisions of this paragraph
(a)(iii), "pensionable compensation" means compensation as defined by
the applicable pension plan, and any pensionable compensation paid
pursuant to paragraph 13 of the Agreement to which this Exhibit C is
attached ("Termination Of Service") after your employment terminates
shall be treated as paid when it would have been paid if your employment
had not terminated.
(iv) Pension Commencement Date - Your pension (calculated in
-------------------------
accordance with the provisions of this Exhibit C) may commence
immediately following the end of the Term of Employment, or later,
taking into account any service credit to be granted for the
Exhibit C-2
subsequent Consulting Term in accordance with the provisions of
paragraph (a)(i), above.
(v) Plan Amendment - If any Company tax-qualified defined benefit
--------------
plan in which you participate (the "Qualified Plan") is amended after
the date of this Agreement, your benefits under the GTE Supplemental
Executive Retirement Plan or any successor thereto (the "SERP") shall be
equal to the greater of the benefits determined under the terms of the
Qualified Plan in effect on the date of the Agreement to which this
Exhibit C is attached or the benefits determined under the terms of the
Qualified Plan and the SERP in effect on the date as of which your
benefits are determined (taking into account in each case the extra
service credit provided by paragraph (a)(i), above, and the compensation
adjustment prescribed by paragraph (a)(ii) and (iii), above), offset by
any benefits due to you from the Qualified Plan. There shall be no
duplication of benefits between the pension benefits prescribed by the
preceding provisions of this paragraph (a)(v) and the pension payable
from the Qualified Plan or the SERP.
(b) Rule of 76 - You shall be considered to have not less than 76 points
----------
and 15 years of Accredited Service for purposes of determining (i) your
eligibility for early retirement benefits under the Company's defined benefit
pension plans (including, but not limited to, the GTE SERP), and (ii) your
eligibility for benefits under the GTE Executive Retired Life Insurance Plan
("ERLIP") (or any predecessor or successor thereto).
(c) Definitions - For purposes of Section 2(a)(ii), the following
-----------
definitions shall apply --
(i) Your "Average Percentage" shall mean the average of your
Annual Percentage for each of the Determination Years.
(ii) The "Determination Years" shall mean (A) for purposes of
Section 2(a)(ii)(A), the last three short-term bonus plan years ending
before June 30, 2000, and (B) for purposes of Section 2(a)(ii)(B), the
last three short-term bonus plan years ending before the date on which
your employment is terminated.
(iii) The "Annual Percentage" for each Determination Year means--
(A) for Determination Years before 2000, one-half of a
fraction (expressed as a percentage), the numerator of which is
Exhibit C-3
the GTE Executive Income Plan ("EIP") award you earned for such
Determination Year, and the denominator of which is the annual
value of the normal payment under the EIP for your salary level
(such annual value and normal payment being those that were in
effect under the EIP for such Determination Year for your salary
level for such Determination Year);
(B) for Determination Years after 2000, a fraction (expressed
as a percentage), the numerator of which is the actual short-term
bonus you earned for such Determination Year, and the denominator
of which is the maximum short-term bonus opportunity for your
salary level for such Determination Year; or
(C) for the 2000 Determination Year, a percentage equal to
one-half of the sum of--
(1) one-half of a fraction (expressed as a percentage),
the numerator of which is the EIP award you earned for the
first six months of the 2000 Determination Year, and the
denominator of which is the value of the normal payment under
the EIP for your salary level (such value and normal payment
being those that were in effect under the EIP for the first
six months of the 2000 Determination Year for your salary
level for the first six months of the 2000 Determination
Year); and
(2) a fraction (expressed as a percentage), the numerator
of which is the actual short-term bonus you earned for the
portion of the 2000 Determination Year occurring after June
30, 2000, and the denominator of which is the maximum
short-term bonus opportunity for your salary level for the
portion of the 2000 Determination Year occurring after June
30, 2000.
(d) ERLIP - Your benefit under ERLIP shall be based on your base salary
-----
immediately before your termination of employment with the Company.
(e) No Impact On Service Credit - Any compensation recognized under
---------------------------
paragraph (a)(ii) of this Section 2 (including the 24-month period over which
that compensation is recognized) shall not modify the service credit recognized
under paragraph (a)(i) of this Section 2.
Exhibit C-4
(f) Payment - Notwithstanding the service credit granted under
-------
paragraph (a)(i) of this Section 2 and the compensation recognized under
paragraph (a)(ii) of this Section 2, nothing in this Exhibit C shall prevent you
from receiving any benefits to which you are entitled under any defined benefit
or defined contribution pension plan maintained by the Company, including the
GTE SERP (as such benefits are modified by this Exhibit C) in any form permitted
by such plans (including but not limited to a lump-sum distribution) immediately
following your termination of employment. To the extent that the Company's tax-
qualified retirement plans cannot provide the benefits specified by this Exhibit
C without jeopardizing the tax qualification of such plans, the Company shall
provide such benefits under the GTE SERP or its successor.
3. Life Insurance. As soon as practicable after execution of the Agreement
--------------
to which this Exhibit C is attached, the Company shall purchase for your
benefit, at a premium cost of $6,044,000 and on terms that are cost-neutral to
the Company, life insurance coverage similar to that provided to other Company
executives.
4. Stock Options. Annual stock options granted in 1999 and 2000 (except
-------------
for the Founders' Grant) under the GTE Long-Term Incentive Plan (or any
successor thereto) shall be immediately vested and exercisable at any time after
termination of employment up to the tenth anniversary of the date the option was
granted.
5. Nonduplication. No provision of this Exhibit C shall require the
--------------
Company to provide you with any payment, benefit, or grant that duplicates any
payment, benefit, or grant that you are entitled to receive under any Company
compensation or benefit plan, award agreement, or other arrangement.
Exhibit C-5
EXHIBIT D
---------
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 D 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 D, 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.
Exhibit D-1
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 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 D 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.
Exhibit D-2
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 D shall be borne by Verizon.
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
D 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 D shall terminate immediately.
10. Defined Terms - 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 to which this Exhibit D is attached.
Exhibit D-3
EXHIBIT E
---------
Good Reason
For purposes of the Agreement to which this Exhibit E is attached (the
"Agreement"), "Good Reason" means any of the following events:
(1) The Company materially breaches the Agreement.
(2) Your responsibilities, as described in paragraph 4 of the Agreement
("Duties And Responsibilities"), have been significantly reduced in type
or scope.
(3) There has been a significant adverse change in your reporting
relationship, as described in paragraph 4 of the Agreement ("Duties And
Responsibilities").
(4) There has been a significant adverse change in your relative compensation
(including a negative individual performance adjustment that causes your
short-term bonus award for a particular year to be reduced by ten percent
or more).
(5) The Company requires that your services be rendered, during the Term of
Employment, primarily at a location or locations other than that provided
in paragraph 5(a) of the Agreement ("Term of Employment").
(6) The other Co-CEO's employment terminates for any reason before June 30,
2002, and you are not named as sole CEO of Verizon through June 30, 2002
(during which period the Agreement shall remain in effect).
(7) A Change in Control (within the meaning of the Verizon Communications 2000
Broad-Based Incentive Plan as in effect on the date of the Agreement)
occurs.
Except where clearly provided to the contrary, all capitalized terms used in
this Exhibit E shall have definitions given to those terms in the Agreement.
Exhibit E-1
EXHIBIT F
---------
Covenants
1. Noncompetition - In consideration for the benefits and agreements
described in the Agreement to which this Exhibit F is attached, you agree that:
(a) Prohibited Conduct - During the period of your employment with
the Company, and for the period ending 24 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 F 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
Exhibit F-1
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 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 24
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
Exhibit F-2
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 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 F shall have the definitions given to
those terms in the Agreement to which this Exhibit F is attached.
Exhibit F-3
