<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8606
BELL ATLANTIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-2259884
(State of Incorporation) (I.R.S. Employer
Identification No.)
1095 AVENUE OF THE AMERICAS 10036
NEW YORK, NEW YORK (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER (212) 395-2121
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
At June 30, 1998, 1,553,473,710 shares of the registrant's Common Stock were
outstanding, after deducting 22,772,614 shares held in treasury.
================================================================================
<PAGE>
- ------------------------------------------------
Table of Contents
- ------------------------------------------------
<TABLE>
<CAPTION>
Item No. Page
Part I. Financial Information
- ----------------------------------------------------------------------------------------------------
<S> <C>
1. Financial Statements
Condensed Consolidated Statements of Income
For the three and six months ended June 30, 1998 and 1997............................. 2-3
Condensed Consolidated Balance Sheets
June 30, 1998 and December 31, 1997................................................... 4-5
Condensed Consolidated Statement of Changes in Shareowners' Investment
For the six months ended June 30, 1998................................................ 6
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 1998, and 1997...................................... 7
Notes to Condensed Consolidated Financial Statements................................... 8-11
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................. 12-24
3. Quantitative and Qualitative Disclosures About Market Risk.............................. 24
Part II. Other Information
- ----------------------------------------------------------------------------------------------------
1. Legal Proceedings....................................................................... 25
4. Submission of Matters to a Vote of Security Holders..................................... 25
6. Exhibits and Reports on Form 8-K........................................................ 26
</TABLE>
1
<PAGE>
- ---------------------------------------------------
Part I - Financial Information
- ---------------------------------------------------
Item 1. Financial Statements
- --------------------------------------------------------------------------------
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in Millions, Except Per Share Amounts)
Three Months Ended
June 30,
---------------------
1998 1997
-------- --------
OPERATING REVENUES..................................... $7,927.8 $7,707.8
-------- --------
OPERATING EXPENSES
Employee costs, including benefits and taxes........... 2,116.0 2,149.0
Depreciation and amortization.......................... 1,445.8 1,363.8
Taxes other than income................................ 379.7 382.2
Other.................................................. 2,033.7 1,964.9
-------- --------
5,975.2 5,859.9
-------- --------
OPERATING INCOME....................................... 1,952.6 1,847.9
Loss from Unconsolidated Businesses.................... (25.5) (80.7)
Other Income and (Expense), Net........................ 41.8 (16.1)
Interest Expense....................................... 363.1 291.1
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
EXTRAORDINARY ITEM.................................... 1,605.8 1,460.0
Provision for Income Taxes............................. 578.6 563.2
-------- --------
INCOME BEFORE EXTRAORDINARY ITEM....................... 1,027.2 896.8
EXTRAORDINARY ITEM
Extinguishment of debt, net of tax................... (6.3) ---
-------- --------
NET INCOME............................................. $1,020.9 $ 896.8
======== ========
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary item....................... $ .66 $ .58
Extraordinary item..................................... --- ---
-------- --------
Net Income............................................. $ .66 $ .58
======== ========
Weighted-average shares outstanding (in
millions)............................................. 1,552.9 1,551.5
======== ========
DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary item....................... $ .65 $ .57
Extraordinary item..................................... --- ---
-------- --------
Net Income............................................. $ .65 $ .57
======== ========
Weighted-average shares - diluted (in
millions)............................................. 1,578.3 1,568.4
======== ========
Dividends declared per common share.................... $ .385 $ .37
======== ========
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in Millions, Except Per Share Amounts)
Six Months Ended
June 30,
---------------------
1998 1997
--------- ---------
OPERATING REVENUES..................................... $15,578.9 $15,124.3
--------- ---------
OPERATING EXPENSES
Employee costs, including benefits and taxes........... 4,420.4 4,619.1
Depreciation and amortization.......................... 2,856.3 2,735.1
Taxes other than income................................ 751.6 777.2
Other.................................................. 3,886.0 3,686.5
--------- ---------
11,914.3 11,817.9
--------- ---------
OPERATING INCOME....................................... 3,664.6 3,306.4
Loss from Unconsolidated Businesses.................... (2.7) (115.4)
Other Income and (Expense), Net........................ 55.6 (6.5)
Interest Expense....................................... 673.1 620.6
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
EXTRAORDINARY ITEM.................................... 3,044.4 2,563.9
Provision for Income Taxes............................. 1,107.6 968.9
--------- ---------
INCOME BEFORE EXTRAORDINARY ITEM....................... 1,936.8 1,595.0
EXTRAORDINARY ITEM
Extinguishment of debt, net of tax.................... (22.5) ---
--------- ---------
NET INCOME............................................. 1,914.3 1,595.0
Redemption of investee preferred stock................. (2.5) ---
--------- ---------
Net income available to common shareowners............. $ 1,911.8 $ 1,595.0
========= =========
BASIC EARNINGS PER COMMON SHARE*
Income before extraordinary item....................... $ 1.24 $ 1.03
Extraordinary item..................................... (.01) ---
--------- ---------
Net Income............................................. $ 1.23 $ 1.03
========= =========
Weighted-average shares outstanding (in millions)...... 1,552.9 1,551.4
========= =========
DILUTED EARNINGS PER COMMON SHARE*
Income before extraordinary item....................... $ 1.22 $ 1.02
Extraordinary item..................................... (.01) ---
--------- ---------
Net Income............................................. $ 1.21 $ 1.02
========= =========
Weighted-average shares - diluted (in millions)........ 1,578.4 1,566.7
========= =========
Dividends declared per common share.................... $ .77 $ .74
========= =========
See Notes to Condensed Consolidated Financial Statements.
* For purposes of computing earnings per share amounts, income before
extraordinary item and net income have been reduced by the amount of the
premium paid on the redemption of preferred stock by an equity investee.
3
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in Millions)
- --------------------------------------
Assets
- --------------------------------------
June 30, December 31,
1998 1997
----------- ------------
CURRENT ASSETS
Cash and cash equivalents............................ $ 303.1 $ 322.8
Short-term investments............................... 423.4 720.6
Accounts receivable, net of allowances of $649.1 and
$611.9.............................................. 6,467.3 6,340.8
Inventories.......................................... 604.9 550.3
Prepaid expenses..................................... 608.6 634.0
Other................................................ 595.5 432.3
--------- ---------
9,002.8 9,000.8
--------- ---------
PLANT, PROPERTY AND EQUIPMENT........................ 80,184.9 77,437.2
Less accumulated depreciation........................ 44,383.1 42,397.8
--------- ---------
35,801.8 35,039.4
--------- ---------
INVESTMENTS IN UNCONSOLIDATED BUSINESSES............. 5,224.8 5,144.2
OTHER ASSETS......................................... 4,686.3 4,779.7
--------- ---------
TOTAL ASSETS......................................... $54,715.7 $53,964.1
========= =========
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in Millions, Except Per Share Amounts)
- --------------------------------------------
Liabilities and Shareowners' Investment
- --------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year.......................... $ 4,352.8 $ 6,342.8
Accounts payable and accrued liabilities............... 6,103.4 5,966.4
Other.................................................. 1,362.9 1,355.0
--------- ---------
11,819.1 13,664.2
--------- ---------
LONG-TERM DEBT......................................... 15,503.2 13,265.2
--------- ---------
EMPLOYEE BENEFIT OBLIGATIONS........................... 9,914.8 10,004.4
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes.................................. 2,259.5 2,106.2
Unamortized investment tax credits..................... 236.3 250.7
Other.................................................. 698.4 772.6
--------- ---------
3,194.2 3,129.5
--------- ---------
MINORITY INTEREST, INCLUDING A PORTION SUBJECT TO
REDEMPTION REQUIREMENTS............................... 913.7 911.2
--------- ---------
PREFERRED STOCK OF SUBSIDIARY.......................... 200.5 200.5
--------- ---------
SHAREOWNERS' INVESTMENT
Series preferred stock ($.10 par value; none issued)... --- ---
Common stock ($.10 par value; 1,576,246,324 shares
and 1,576,052,790 shares issued)...................... 157.6 157.6
Contributed capital.................................... 13,286.5 13,176.8
Reinvested earnings.................................... 1,698.2 1,261.6
Accumulated other comprehensive loss................... (789.4) (553.3)
--------- ---------
14,352.9 14,042.7
Less common stock in treasury, at cost................. 583.6 590.5
Less deferred compensation - employee stock
ownership plans....................................... 599.1 663.1
--------- ---------
13,170.2 12,789.1
--------- ---------
TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT.......... $54,715.7 $53,964.1
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Shareowners' Investment
(Unaudited)
(Dollars in Millions and Shares in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998
----------------------
COMMON STOCK Shares Amount
--------- ---------
<S> <C> <C>
Balance at beginning of period........................ 1,576,053 $157.6
Shares issued:
Employee plans....................................... 193 ---
--------- ---------
Balance at end of period.............................. 1,576,246 157.6
--------- ---------
CONTRIBUTED CAPITAL
Balance at beginning of period........................ 13,176.8
Shares issued:
Employee plans....................................... 106.3
Other................................................. 3.4
---------
Balance at end of period.............................. 13,286.5
---------
REINVESTED EARNINGS
Balance at beginning of period........................ 1,261.6
Net income............................................ 1,914.3
Dividends declared.................................... (1,196.4)
Shares issued:
Employee plans....................................... (284.6)
Tax benefit of dividends paid to ESOPs................ 5.8
Redemption of investee preferred stock................ (2.5)
---------
Balance at end of period.............................. 1,698.2
---------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of period........................ (553.3)
Foreign currency translation adjustments, net of tax.. (247.4)
Unrealized gains on securities, net of tax............ 11.3
---------
Balance at end of period.............................. (789.4)
---------
TREASURY STOCK
Balance at beginning of period........................ 22,952 590.5
Shares purchased...................................... 13,791 655.3
Shares distributed:
Employee plans....................................... (13,941) (660.9)
Shareowner plans..................................... (26) (1.2)
Acquisition agreements............................... (3) (.1)
--------- ---------
Balance at end of period.............................. 22,773 583.6
--------- ---------
DEFERRED COMPENSATION - ESOPs
Balance at beginning of period........................ 663.1
Amortization.......................................... (64.0)
---------
Balance at end of period.............................. 599.1
---------
Total Shareowners' Investment......................... $13,170.2
=========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 1,914.3 $ 1,595.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 2,856.3 2,735.1
Extraordinary item, net of tax.................. 22.5 ---
Loss from unconsolidated businesses............. 2.7 115.4
Dividends received from unconsolidated
businesses.................................... 88.1 97.8
Amortization of unearned lease income........... (57.5) (52.5)
Deferred income taxes, net...................... 118.1 85.5
Investment tax credits.......................... (14.5) (21.4)
Other items, net................................ 101.2 (5.9)
Changes in certain assets and liabilities, net
of effects from acquisition/disposition of
businesses.................................... (158.5) (732.9)
--------- ---------
Net cash provided by operating activities............ 4,872.7 3,816.1
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments................. 299.9 66.1
Additions to plant, property and equipment........... (3,483.8) (3,074.8)
Proceeds from sale of plant, property and
equipment.......................................... 2.1 25.2
Investment in leased assets.......................... (26.8) (83.2)
Proceeds from leasing activities..................... 105.6 47.0
Investment in notes receivable....................... --- (17.9)
Proceeds from notes receivable....................... 20.8 29.6
Proceeds from Telecom Corporation of New Zealand
Limited share repurchase plan...................... --- 82.0
Investments in unconsolidated businesses, net........ (413.6) (387.4)
Acquisition of businesses............................ (15.8) ---
Proceeds from disposition of businesses.............. 4.6 271.5
Other, net........................................... (58.6) (84.9)
--------- ---------
Net cash used in investing activities................ (3,565.6) (3,126.8)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings............................. 2,990.1 151.3
Principal repayments of borrowings and capital
lease obligations.................................. (209.2) (349.6)
Early extinguishment of debt......................... (590.0) ---
Net change in short-term borrowings with original
maturities of three months or less................. (2,031.9) 1,026.4
Dividends paid....................................... (1,188.3) (1,158.6)
Proceeds from sale of common stock................... 375.5 310.5
Purchase of common stock for treasury................ (655.3) (390.6)
Minority interest.................................... --- (.1)
Reduction in preferred stock of subsidiary........... --- (10.0)
Net change in outstanding checks drawn on
controlled disbursement accounts................... (17.7) (332.1)
--------- ---------
Net cash used in financing activities................ (1,326.8) (752.8)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS................ (19.7) (63.5)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 322.8 249.4
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 303.1 $ 185.9
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
7
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
- --------------------------------------------------------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared based upon Securities and Exchange Commission rules that permit reduced
disclosure for interim periods. These financial statements reflect all
adjustments which are necessary for a fair presentation of results of operations
and financial position for the interim periods shown including normal recurring
accruals. The results for the interim periods are not necessarily indicative of
results for the full year. For a more complete discussion of significant
accounting policies and certain other information, you should refer to the
financial statements included in our 1997 Annual Report to Shareowners.
In this report, Bell Atlantic Corporation and its consolidated subsidiaries
are referred to as "we" or "Bell Atlantic." Reference to Bell Atlantic is also
made in connection with information about Bell Atlantic prior to the merger with
NYNEX Corporation. NYNEX Corporation is referred to as "NYNEX."
We have reclassified certain amounts from prior year's data to conform with
the 1998 presentation.
2. Common Stock Split
- --------------------------------------------------------------------------------
On May 1, 1998, the Board of Directors declared a two-for-one split of Bell
Atlantic common stock, effected in the form of a 100% stock dividend to
shareholders of record on June 1, 1998 and payable on June 29, 1998.
Shareholders of record received an additional share of common stock for each
share of common stock held at the record date. We retained the par value of
$.10 per share for all shares of common stock. The prior period financial
information (including share and per share data) contained in this report has
been adjusted to give retroactive recognition to this common stock split.
3. Comprehensive Income
- --------------------------------------------------------------------------------
Effective January 1, 1998, we adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." The new rules
establish standards for the reporting of comprehensive income and its components
in financial statements. Comprehensive income consists of net income and other
gains and losses affecting shareowners' equity that, under generally accepted
accounting principles, are excluded from net income. For our company, such
items consist primarily of foreign currency translation gains and losses and
unrealized gains and losses on marketable equity investments. The adoption of
SFAS No. 130 did not affect our statement of income, but did affect the
presentation of our statement of changes in shareowners' investment and balance
sheet.
The components of total comprehensive income for interim periods are presented
in the following table:
<TABLE>
<CAPTION>
(Dollars in Millions) Three Months Ended June 30, Six Months Ended June 30,
- --------------------- --------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $1,020.9 $ 896.8 $1,914.3 $1,595.0
-------- -------- -------- --------
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax (145.3) (73.1) (247.4) (173.5)
Unrealized gains (losses) on securities, net of tax 4.6 (2.4) 11.3 (3.4)
-------- -------- -------- --------
(140.7) (75.5) (236.1) (176.9)
-------- -------- -------- --------
Total comprehensive income $ 880.2 $ 821.3 $1,678.2 $1,418.1
======== ======== ======== ========
</TABLE>
8
<PAGE>
4. Earnings Per Share
- --------------------------------------------------------------------------------
The following table is a reconciliation of the numerators and denominators used
in computing earnings per share.
<TABLE>
<CAPTION>
(Dollars and Shares in Millions, Except Per Share Amounts) Three Months Ended June 30, Six Months Ended June 30,
- ---------------------------------------------------------- -------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income Available to Common Shareowners:
Income before extraordinary item $1,027.2 $ 896.8 $1,936.8 $1,595.0
Redemption of investee preferred stock --- --- (2.5) ---
-------- -------- -------- --------
Income available to common shareowners* 1,027.2 896.8 1,934.3 1,595.0
Extraordinary item (6.3) --- (22.5) ---
-------- -------- -------- --------
Net income available to common shareowners* $1,020.9 $ 896.8 $1,911.8 $1,595.0
======== ======== ======== ========
Basic Earnings Per Common Share:
Weighted-average shares outstanding 1,552.9 1,551.5 1,552.9 1,551.4
-------- -------- -------- --------
Income before extraordinary item per share - basic $ .66 $ .58 $ 1.24 $ 1.03
Extraordinary item --- --- (.01) ---
-------- -------- -------- --------
Earnings per share-basic $ .66 $ .58 $ 1.23 $ 1.03
======== ======== ======== ========
Diluted Earnings Per Common Share:
Weighted-average shares outstanding 1,552.9 1,551.5 1,552.9 1,551.4
Effect of dilutive securities 25.4 16.9 25.5 15.3
-------- -------- -------- --------
Weighted-average shares - diluted 1,578.3 1,568.4 1,578.4 1,566.7
-------- -------- -------- --------
Income before extraordinary item per share - diluted $ .65 $ .57 $ 1.22 $ 1.02
Extraordinary item --- --- (.01) ---
-------- -------- -------- --------
Earnings per share-diluted $ .65 $ .57 $ 1.21 $ 1.02
======== ======== ======== ========
</TABLE>
*Income and Net income available to common shareowners is the same for purposes
of calculating basic and diluted earnings per share.
The diluted earnings per share computation excludes the effect of stock
options when their exercise price is greater than the average market price of
the common shares. For the three and six month periods ended June 30, 1998 and
1997, options for 1.0 million and 9.0 million shares were not included in the
diluted earnings per share computation.
5. Debt
- --------------------------------------------------------------------------------
In February 1998, our wholly owned subsidiary Bell Atlantic Financial Services,
Inc. (FSI) issued $2,455.0 million of 5.75% exchangeable notes (TCNZ
Exchangeable Notes) due on April 1, 2003. The notes are exchangeable into
shares of Telecom Corporation of New Zealand Limited (TCNZ) stock at the option
of the holder beginning on September 1, 1999. The exchange price was
established at a 20% premium to the TCNZ share price at the time of the
offering. Upon exchange by investors, we retain the option to settle in cash or
by delivery of TCNZ shares. During the period from April 1, 2001 to March 31,
2002, the notes are callable at our option at 102.3% of the principal amount,
and thereafter and prior to maturity at 101.15%. The proceeds of the offering
were used for the repayment of a portion of our short-term debt. We currently
own 24.95% of TCNZ.
The TCNZ Exchangeable Notes have the benefit of a Support Agreement, dated
February 1, 1998, between Bell Atlantic and FSI in which Bell Atlantic
guarantees the payment of interest, premium (if any), principal and the cash
value of exchange property related to these notes should FSI fail to pay.
Another Support Agreement between Bell Atlantic and FSI, dated October 1, 1992,
guarantees payment of interest, premium (if any) and principal on FSI's medium-
term notes (aggregating $383.8 million at June 30, 1998) should FSI fail to pay.
The holders of FSI's debt do not have recourse to the stock or assets of our
operating telephone subsidiaries or TCNZ, however, they do have recourse to
dividends paid to Bell Atlantic by any of our consolidated subsidiaries as well
as assets not covered by the exclusion. The carrying value of the available
assets reflected in our condensed consolidated financial statements was
approximately $14.0 billion at June 30, 1998.
9
<PAGE>
Early Extinguishments of Long-Term Debt
In the first half of 1998, we recorded extraordinary charges totaling $22.5
million (net of an income tax benefit of $12.1 million) associated with the
following early extinguishments of long-term debt:
In January 1998, New York Telephone Company, an operating telephone
subsidiary, issued $250.0 million of 6.125% debentures due on January 15, 2010.
The proceeds of this issuance were used in February 1998 to redeem at a premium
$200.0 million of 7.75% refunding mortgage bonds due in 2006. Fiberoptic Link
Around the Globe, Ltd., an affiliate accounted for under the equity method,
redeemed $615.0 million of debt at a premium in February 1998. In the first
quarter of 1998, we recorded extraordinary charges totaling $16.2 million (net
of income tax benefit of $8.8 million) related to these redemptions.
In April 1998, New York Telephone Company issued $250.0 million of 6.0%
debentures due on April 15, 2008 and $100.0 million of 6.5% debentures due on
April 15, 2028. The proceeds of these issuances were used in May 1998 to redeem
$200.0 million of 7.875% debentures due in 2017 and $150.0 million of 7.5%
refunding mortgage bonds due in 2009. In June 1998, Bell Atlantic - West
Virginia, Inc., another operating telephone subsidiary, redeemed $40.0 million
of 7.25% debentures due in 2009. In the second quarter of 1998, we recorded
extraordinary charges totaling $6.3 million (net of an income tax benefit of
$3.3 million) related to these redemptions.
On July 24, 1998, Bell Atlantic - Washington, D.C., Inc. announced it will
redeem $60.0 million of 7.75% debentures due in 2013 on August 24, 1998. In
connection with this redemption, we will record an extraordinary charge of $1.0
million in the third quarter of 1998.
6. Commitments and Contingencies
- --------------------------------------------------------------------------------
In connection with certain incentive plan commitments with state regulatory
commissions, we have deferred revenues which will be recognized as the
commitments are met or obligations are satisfied under the plans. In addition,
several state and federal regulatory proceedings may require our operating
telephone subsidiaries to refund a portion of the revenues collected in the
current and prior periods. There are also various legal actions pending to
which we are a party. We have established reserves for specific liabilities in
connection with regulatory and legal matters which we currently deem to be
probable and estimable.
We do not expect that the ultimate resolution of pending regulatory and
legal matters in future periods will have a material effect on our financial
condition, but it could have a material effect on results of operations.
7. Proposed Bell Atlantic - GTE Merger
- --------------------------------------------------------------------------------
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger of
equals under a definitive merger agreement dated as of July 27, 1998. Under the
terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
We expect the merger to qualify as a "pooling of interests," which means for
accounting and financial reporting purposes the companies will be treated as if
they had always been combined. The completion of the merger is subject to a
number of conditions, including certain regulatory approvals, receipt of
opinions that the merger will be tax-free, and the approval of the shareholders
of both Bell Atlantic and GTE. The companies expect to close the merger in the
second half of 1999.
8. Bell Atlantic/CWC Exchangeable Notes
- --------------------------------------------------------------------------------
On August 5, 1998, FSI entered into an agreement to issue $3,180.0 million of
4.25% notes exchangeable into ordinary shares of Cable & Wireless Communications
plc (CWC). The notes will mature on September 15, 2005. The exchange price was
established at a 28.2% premium to the CWC share price at the time of the
offering. The notes are noncallable until September 15, 2002, and are not
exchangeable by investors prior to July 1, 2002. Upon exchange by investors, we
retain the option to settle in cash or delivery of shares. We currently own
18.5% of CWC. We expect the transaction to close in August 1998.
10
<PAGE>
9. Recent Accounting Pronouncements
- --------------------------------------------------------------------------------
Costs of Computer Software
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides,
among other things, guidance for determining whether computer software is for
internal use and when the cost related to such software should be expensed as
incurred or capitalized and amortized. SOP 98-1 is required to be adopted no
later than January 1, 1999.
Our operating telephone subsidiaries currently capitalize initial right-to-
use fees for central office switching equipment, including initial operating
system and initial application software costs. For noncentral office equipment,
only the initial operating system software is capitalized. Subsequent additions,
modifications, or upgrades of initial software programs, whether operating or
application packages, are expensed as incurred. We are currently evaluating the
provisions of SOP 98-1 and we have not yet quantified the effect at this time.
The adoption of SOP 98-1 is expected to result in an increase in earnings in the
year of adoption due to the prospective capitalization of costs which were
previously expensed.
Costs of Start-up Activities
In April 1998, the AICPA also issued Statement of Position No. 98-5, "Reporting
on the Costs of Start-up Activities" (SOP 98-5). SOP 98-5 must be adopted no
later than January 1, 1999, and requires that costs of start-up activities
including pre-operating, pre-opening and other organizational costs be expensed
as incurred. In addition, at the time of adoption the unamortized balance of
any previously deferred start-up costs must be expensed. We do not expect the
adoption of SOP 98-5 to have a material effect on our consolidated results of
operations or financial condition.
Employee Benefit Disclosures
The Financial Accounting Standards Board (FASB) issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," in February 1998.
This new standard does not change the measurement or recognition of costs for
pension or other postretirement plans. It standardizes disclosures and
eliminates those that are no longer useful. We are required to provide the new
disclosures for the first time in our 1998 Annual Report to shareowners. The
adoption of SFAS No. 132 will have no impact on our consolidated results of
operations or financial condition.
Derivatives and Hedging Activities
The FASB also issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" in June 1998. This statement requires that all derivatives
be measured at fair value and recognized as either assets or liabilities on our
balance sheet. Changes in the fair values of the derivative instruments will be
recognized in either earnings or comprehensive income, depending on the
designated use and effectiveness of the instruments. Bell Atlantic must adopt
SFAS No. 133 no later than January 1, 2000. We are currently evaluating the
provisions of SFAS No. 133 and have not yet determined what the impact of
adopting this statement will be on our future results of operations or financial
condition.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
(Tables shown in Dollars in Millions, Except Per Share Amounts)
- -----------------------------------
RESULTS OF OPERATIONS
- -----------------------------------
Our financial results for the three and six month periods ended June 30, 1998,
as compared to the same periods in 1997, are summarized as follows:
<TABLE>
<CAPTION>
Three Months Six Months % Change
------------------- -------------------- ------------------
For the Period Ended June 30, 1998 1997 1998 1997 QTR YTD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $7,927.8 $7,707.8 $15,578.9 $15,124.3 2.9% 3.0%
Operating expenses 5,975.2 5,859.9 11,914.3 11,817.9 2.0 .8
-------------------------------------------------
Operating income 1,952.6 1,847.9 3,664.6 3,306.4 5.7 10.8
Loss from unconsolidated businesses (25.5) (80.7) (2.7) (115.4) 68.4 97.7
Other income and (expense), net 41.8 (16.1) 55.6 (6.5) --- ---
Interest expense 363.1 291.1 673.1 620.6 24.7 8.5
Provision for income taxes 578.6 563.2 1,107.6 968.9 2.7 14.3
-------------------------------------------------
Income before extraordinary item 1,027.2 896.8 1,936.8 1,595.0 14.5 21.4
Extraordinary item (6.3) --- (22.5) --- --- ---
-------------------------------------------------
Net income 1,020.9 896.8 1,914.3 1,595.0 13.8 20.0
Redemption of investee preferred stock --- --- (2.5) --- --- ---
-------------------------------------------------
Net income available to common shareowners $1,020.9 $ 896.8 $1,911.8 $1,595.0 13.8 19.9
=================================================
Basic earnings per share $ .66 $ .58 $ 1.23 $ 1.03 13.8% 19.4%
Diluted earnings per share .65 .57 1.21 1.02 14.0 18.6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In the second quarter of 1998, our reported results included retirement
incentive charges of $34.2 million ($21.3 million after-tax or $.01 diluted
earnings per share), compared to $47.4 million ($30.3 million after-tax or $.02
diluted earnings per share) in the second quarter of 1997. For the first six
months of 1998, retirement incentive charges were $274.5 million ($168.0 million
after-tax or $.11 diluted earnings per share), compared to $434.2 million
($273.9 million after-tax or $.17 diluted earnings per share) in the first half
of 1997. For additional information about our retirement incentive program, see
"Retirement Incentives" on page 17.
We also incurred merger-related transition and integration costs of $46.2
million ($28.6 million after-tax or $.02 diluted earnings per share) for the
three month period ended June 30, 1998 and $54.6 million ($33.9 million after-
tax or $.02 diluted earnings per share) for the six month period ended June 30,
1998. Transition and integration costs consist of costs associated with
integrating the operations of Bell Atlantic and NYNEX following the completion
of the merger of the two companies in August 1997. We expect over the three
years following the closing of the Bell Atlantic - NYNEX merger that such costs
will aggregate between $400 million and $500 million (pre-tax).
These and other items affecting the comparison of our results of operations
for the three and six month periods ended June 30, 1998 and 1997 are discussed
in the following sections. You should read this Management's Discussion and
Analysis in conjunction with our 1997 Annual Report.
All prior period share and per share amounts have been adjusted to reflect a
two-for-one common stock split declared and paid in the second quarter of 1998.
12
<PAGE>
- -----------------------------------
Operating Revenues
- -----------------------------------
Three Months Six Months
------------------ --------------------
For the Period Ended June 30, 1998 1997 1998 1997
- --------------------------------------------------------------------------------
Local services $3,462.4 $3,342.0 $ 6,794.0 $ 6,452.3
Network access services 1,942.8 1,852.8 3,849.3 3,711.6
Long distance services 474.2 561.4 976.1 1,131.4
Ancillary services 453.8 441.2 923.5 896.9
Directory and information services 628.6 622.4 1,186.3 1,153.3
Wireless services 943.7 823.6 1,800.1 1,597.7
Other services 22.3 64.4 49.6 181.1
------------------------------------------
Total Operating Revenues $7,927.8 $7,707.8 $15,578.9 $15,124.3
==========================================
Local Services Revenues
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $120.4 3.6%
- --------------------------------------------------------------------------------
Six Months $341.7 5.3%
- --------------------------------------------------------------------------------
Local services revenues are earned by our operating telephone subsidiaries from
the provision of local exchange, local private line, public telephone (pay
phone) and value-added services. Value-added services are a family of services
which expand the utilization of the network. These services include products
such as Caller ID, Call Waiting and Return Call.
Higher usage of our network facilities was the primary reason for the increase
in local services revenues in the second quarter and the six month period of
1998. This growth was generated by an increase in access lines in service of
4.4% from June 30, 1997. We had 40,827,000 access lines in service at June 30,
1998, compared to 39,112,000 access lines in service at June 30, 1997. Access
line growth reflects primarily higher demand for Centrex services and an
increase in additional residential lines. Access line numbers have been
restated to include Primary Rate ISDN (Integrated Services Digital Network)
channels. Higher revenues from private line and switched data services also
contributed to the revenue growth in the three and six month periods of 1998.
We also recognized higher revenues in both the 1998 periods from our public
telephone, directory assistance and value-added services. Our value-added and
directory assistance services revenues grew principally as a result of higher
customer demand and usage, while price increases for usage of our pay phones and
the implementation of new charges to carriers resulting from pay phone
deregulation in April 1997 were the principal reasons for the improvement in
public telephone services revenues.
In addition, local services revenue growth in the six month period was
attributable, in part, to a prior year refund to customers resulting from the
settlement of a state regulatory matter. The revenue impact of this refund was
offset entirely by a corresponding increase in Other Operating Expenses due to
the prior year reversal of an accrual.
Revenue growth in the three and six month periods of 1998 from these factors
was partially offset by price reductions on certain local services and the
elimination of Touch-Tone service charges in several of our operating telephone
subsidiaries.
Network Access Services Revenues
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $ 90.0 4.9%
- --------------------------------------------------------------------------------
Six Months $137.7 3.7%
- --------------------------------------------------------------------------------
Network access services revenues are earned from carriers for their use of our
local exchange facilities in providing usage services to their customers. In
addition, end-user subscribers pay flat rate access fees to connect to our
network.
13
<PAGE>
Our network access services revenues grew in the three and six month periods
of 1998 primarily as a result of higher customer demand as reflected by growth
in access minutes of use of 8.4% in the three month period and 8.5% in the six
month period over the same periods in 1997. Volume growth was boosted by the
expansion of the business market, particularly for high capacity services.
Demand for special access services grew as Internet service providers and other
high-capacity users increased their utilization of our network. Growth in
access services revenues also reflects higher network usage by alternative
providers of intraLATA toll services. In addition, higher end-user revenues
attributable to an increase in access lines in service contributed to revenue
growth in 1998. This volume-related growth was partially offset by net price
reductions mandated by federal and state price cap and incentive plans.
Effective July 1, 1998, we implemented price decreases of approximately $175
million on an annual basis for interstate services in connection with the
Federal Communications Commission's (FCC) Price Cap Plan. The rates included in
our 1998 filing will be in effect through June 1999. The July 1, 1998 rates
include amounts necessary to recover the operating telephone subsidiaries'
contribution to the FCC's new universal service fund. The FCC has created a
multi-billion dollar interstate fund to link schools and libraries to the
Internet and to subsidize low-income consumers and rural health care providers.
Under the FCC's rules, all providers of interstate telecommunications services
must contribute to the fund. The subsidiaries' contributions to the universal
service fund are included in Other Operating Expenses.
In April 1998, the New York State Public Service Commission ordered New York
Telephone Company, an operating telephone subsidiary, to reduce access charges
on intrastate toll calls by $94.2 million annually, beginning in the third
quarter of 1998. This reduction is, in part, an acceleration of access revenue
reductions expected under the New York Performance Regulation Plan and, in
addition, will be partially offset by increased revenues from the federal
universal service fund.
Long Distance Services Revenues
- --------------------------------------------------------------------------------
1998-1997 (Decrease)
- --------------------------------------------------------------------------------
Second Quarter $(87.2) (15.5)%
- --------------------------------------------------------------------------------
Six Months $(155.3) (13.7)%
- --------------------------------------------------------------------------------
Long distance services revenues are earned primarily from calls made outside a
customer's local calling area but within the same service area of our operating
telephone subsidiaries (intraLATA toll). Other long distance services that we
provide include 800 services, Wide Area Telephone Service (WATS), corridor
services and long distance services outside of our region.
The reduction in long distance services revenues in the second quarter and the
six month period of 1998 was caused principally by increased competition for
intraLATA toll services as a result of the introduction of presubscription
during 1997 in many states throughout the region, including New Jersey in May
1997, Pennsylvania in July 1997, West Virginia in August 1997 and Delaware in
September 1997. In those states where presubscription has been implemented,
customers may now use an alternative provider of their choice for intraLATA toll
calls without dialing a special access code when placing a call. The adverse
impact on long distance services revenues as a result of presubscription was
partially mitigated by increased network access services revenues for usage of
our network by these alternative providers.
Price reductions on certain toll services as part of our response to
competition also contributed to the decline in long distance services revenues
in 1998. These revenue reductions were partially offset by higher calling
volumes generated by an increase in access lines in service.
We believe that competition for long distance services, including competitive
pricing and customer selection of alternative providers of intraLATA toll
services in the states currently offering presubscription, will continue to
adversely affect revenue trends.
14
<PAGE>
Ancillary Services Revenues
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $12.6 2.9%
- --------------------------------------------------------------------------------
Six Months $26.6 3.0%
- --------------------------------------------------------------------------------
We provide ancillary services which include systems integration services,
equipment and construction services provided to other telecommunications
carriers, billing and collection services provided to long distance carriers,
customer premises equipment (CPE) services, facilities rental services and voice
messaging services.
Higher ancillary services revenues in both the three and six month periods of
1998 were principally due to increased demand by long distance carriers for
billing and collection services. Higher revenues from our systems integration
and voice messaging services also contributed to revenue growth in the first
half of 1998 and, to a lesser extent, in the second quarter of 1998.
Directory and Information Services Revenues
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $ 6.2 1.0%
- --------------------------------------------------------------------------------
Six Months $33.0 2.9%
- --------------------------------------------------------------------------------
We earn directory and information services revenues primarily from local
advertising and marketing services provided to businesses in our White and
Yellow Pages directories within our region, international directory services and
electronic publishing services. We also provide database services and directory
marketing services outside of our region. Revenues from our Internet services
businesses are also included in this revenue category.
Our directory and information services revenues grew in the three and six
month periods of 1998 mainly because of higher pricing for our directory
services and improved business volumes from our Internet services. Changes in
the timing of publication dates of certain directories in 1997 and a decline in
directory volumes in the second quarter of 1998 partially offset 1998 revenue
growth.
Wireless Services Revenues
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $120.1 14.6%
- --------------------------------------------------------------------------------
Six Months $202.4 12.7%
- --------------------------------------------------------------------------------
Wireless services consist of revenues generated from our consolidated
subsidiaries that provide cellular and paging communications services.
Improved revenue growth from our wireless businesses in both the 1998 periods
was principally due to higher customer demand and usage of our domestic wireless
services. Our domestic cellular customer base grew 17.1%, due, in part, to
strong market growth for new digital services. Volume-related revenue growth
from our domestic wireless subsidiary was partially offset by the effect of
competitive pricing factors in response to competition. Higher revenues from
our international wireless subsidiary in Mexico also contributed to revenue
growth in 1998.
Other Services Revenues
- --------------------------------------------------------------------------------
1998-1997 (Decrease)
- --------------------------------------------------------------------------------
Second Quarter $ (42.1) (65.4)%
- --------------------------------------------------------------------------------
Six Months $(131.5) (72.6)%
- --------------------------------------------------------------------------------
Other services include revenues from our telecommunications consulting and
financing businesses. In April 1997, we transferred our interests in cable
television and telecommunications operations in the United Kingdom to Cable &
Wireless Communications plc (CWC) in exchange for an 18.5% ownership interest in
CWC ("the CWC transaction"). We now account for our investment in CWC under the
equity method. Prior to the transfer, we included the accounts of these
operations in our consolidated financial statements.
The decline in other services revenues was caused primarily by reductions of
revenue of approximately $26 million in the first quarter of 1998 and
approximately $102 million year-to-date due to the effect of the CWC
transaction.
15
<PAGE>
- -----------------------------------
Operating Expenses
- -----------------------------------
Three Months Six Months
------------------ --------------------
For the Period Ended June 30, 1998 1997 1998 1997
- --------------------------------------------------------------------------------
Employee costs $2,116.0 $2,149.0 $ 4,420.4 $ 4,619.1
Depreciation and amortization 1,445.8 1,363.8 2,856.3 2,735.1
Taxes other than income 379.7 382.2 751.6 777.2
Other operating expenses 2,033.7 1,964.9 3,886.0 3,686.5
-------------------------------------------
Total Operating Expenses $5,975.2 $5,859.9 $11,914.3 $11,817.9
===========================================
For purposes of the following discussion, our network subsidiaries include our
operating telephone subsidiaries, subsidiaries that provide centralized services
and support, and network-related subsidiaries providing systems integration, CPE
distribution, inside wiring, long distance, and directory and information
services.
Employee Costs
- --------------------------------------------------------------------------------
1998-1997 (Decrease)
- --------------------------------------------------------------------------------
Second Quarter $ (33.0) (1.5)%
- --------------------------------------------------------------------------------
Six Months $(198.7) (4.3)%
- --------------------------------------------------------------------------------
Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes.
Our employee costs were lower in the second quarter and first half of 1998 as
a result of a decline in costs incurred in connection with our retirement
incentive program and the effect of the CWC transaction. (For a further
discussion of retirement incentives, see below.)
In addition, pension and benefit costs were lower in 1998 because of a number
of factors, including changes in actuarial assumptions, favorable pension plan
investment returns, lower than expected medical claims and plan amendments
including the conversion of a pension plan to a cash balance plan. Effective
January 1, 1998, we established common pension and savings plan benefit
provisions for all management employees. As a result, all NYNEX management
employees receive the same benefit levels as previously given under Bell
Atlantic management benefit plans. This change included the conversion of the
NYNEX management pension plan to a cash balance plan.
Employee cost reductions were offset, in part, by the effect of increased work
force levels, primarily at the network and wireless subsidiaries, and annual
salary and wage increases for network employees. Higher overtime pay for repair
and maintenance activity due to unusually severe winter storms in New York and
the New England states during the first quarter of 1998 further offset year-to-
date employee cost reductions.
Associate employee wages and pension and other benefits are determined under
contracts with unions representing associate employees of the network
subsidiaries. On August 11, 1998, Bell Atlantic and the Communications Workers
of America (CWA) reached a tentative agreement on new 2-year contracts. The
contracts, covering more than 73,000 workers, provide for wage increases of up
to 3.8 percent effective August 9, 1998, and up to 4 percent effective August 8,
1999. Pension increases will range from 11 percent to 20 percent. In addition,
certain union-represented employees will receive a $500 cash payment in
September 1998 and an additional $400 cash payment in August 1999, and employees
in certain bargaining units will receive lump sum payments of $700 each in 2000
and 2001 if customer care performance standards are achieved. Other bargaining
units are eligible for standard cash awards of $400 for 1998 and $500 for 1999,
which can be increased or decreased based on financial and customer care
performance results. The new contracts also include revised terms of the
retirement incentive program, other benefit improvements and certain employment
security provisions.
16
<PAGE>
On August 12, 1998, we concluded a tentative agreement on new 2-year
contracts with the International Brotherhood of Electrical Workers (IBEW). The
IBEW contracts provide for wage increases of up to 3.8 percent effective August
9, 1998, and up to 4 percent effective August 8, 1999. The contracts also
include cash payments, improved pension and other benefits and certain
employment security provisions. The IBEW contracts cover approximately 13,000
members in New York and the New England states. Contracts covering IBEW members
in New Jersey and Pennsylvania do not expire until August 2000.
The labor agreements with the CWA and IBEW are subject to ratification by the
union membership, which is expected within the next 30 days. We believe the
terms of the contracts are in line with other recent labor settlements in the
industry and with our strategic and financial objectives.
Retirement Incentives
In 1993, we incurred costs totaling $1.1 billion (pre-tax) for severance and
postretirement medical benefits in connection with a force reduction plan, and
we have incurred additional costs of $2.2 billion (pre-tax) under a related
retirement incentive program through June 30, 1998. These costs reflect 21,343
total employees who have left the business under the program, consisting of
9,329 management and 12,014 associate employees. As of August 7, 1998, an
estimated additional 800 associate employees had elected to retire under the
program, which will result in a pre-tax charge of approximately $60 million to
$80 million in the third quarter of 1998. We had previously estimated that the
total additional costs would approximate $2.2 billion through the completion of
the retirement incentive program in August 1998.
The retirement incentive program covering management employees ended on March
31, 1997 and the program covering associate employees, which was scheduled to
end on August 8, 1998, was revised under the terms of the tentative agreements
described above. Under the revised retirement incentive program, approximately
14,000 eligible associate employees are being offered an opportunity to elect,
during a 30-day period in August-September 1998, to retire on one of several
alternate dates in the last four months of 1998 and calendar year 1999. The
election to retire under the program will irrevocable, except in the event of
extraordinary personal circumstances. After the end of the election period, we
will tabulate the acceptances and announce the additional costs to be incurred
as a charge later this year. The number of applicants, and the resulting
additional cost, for the revised incentive program cannot be confidently
estimated in advance, particularly because the tentative agreements provide for
improvements to the terms of the ongoing pension plan which could incent
employees to defer retirement and continue their employment beyond the year
1999. Specifically, a 15 percent pension formula increase applies to retirements
after July 1, 2000, and, any of the 14,000 eligible associates who remain
employed through at least January 1, 2001, will be entitled to select either the
same pension that they would have received under the revised retirement
incentive program, or their pension under the ongoing plan.
Depreciation and Amortization
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $ 82.0 6.0%
- --------------------------------------------------------------------------------
Six Months $121.2 4.4%
- --------------------------------------------------------------------------------
Depreciation and amortization expense increased in the three and six months
periods of 1998 over the same periods in 1997 principally as a result of growth
in depreciable telephone plant and changes in the mix of plant assets at our
network and wireless subsidiaries.
This expense increase was partially offset by lower rates of depreciation at
our network subsidiaries and the effect of the CWC transaction.
17
<PAGE>
Taxes Other Than Income
- --------------------------------------------------------------------------------
1998-1997 (Decrease)
- --------------------------------------------------------------------------------
Second Quarter $ (2.5) (.7)%
- --------------------------------------------------------------------------------
Six Months $(25.6) (3.3)%
- --------------------------------------------------------------------------------
Taxes other than income consist principally of taxes for gross receipts,
property, capital stock and business licenses.
The decline in taxes other than income in both the 1998 periods is principally
attributable to the enactment of a New Jersey tax law that repealed the gross
receipts tax applicable to telephone companies and extended the net-income-based
corporate business tax to include telephone companies formerly subject to the
gross receipts tax. This state tax law change, which became effective on January
1, 1998, resulted in the reduction of gross receipts tax in 1998 for our
operating telephone subsidiary, Bell Atlantic - New Jersey. This reduction was
offset by higher state income taxes in both 1998 periods attributable to the
enactment of the law. The decline in taxes other than income was offset, in
part, by higher tax expense at our domestic wireless and other operating
telephone subsidiaries.
Other Operating Expenses
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $ 68.8 3.5%
- --------------------------------------------------------------------------------
Six Months $199.5 5.4%
- --------------------------------------------------------------------------------
Other operating expenses consist of contract services, rent, network software
costs, the provision for uncollectible accounts receivable, and other costs.
The rise in other operating expenses in the three and six month periods of
1998 was largely attributable to increased costs at our operating telephone
subsidiaries. These increases included higher interconnection payments to
competitive local exchange and other carriers to terminate calls on their
networks and merger-related transition and integration costs. We also recognized
additional costs in both the 1998 periods as a result of our contribution to the
federal universal service fund, as described earlier.
In addition, we incurred higher expenses in 1998 at our domestic wireless
subsidiaries largely due to higher business volumes. The year-to-date increase
also included the effect of a prior year reversal of an accrual for the
settlement of a state regulatory matter.
Cost increases at the operating telephone subsidiaries were partially offset
by a combination of lower network software purchases, lower costs associated
with opening our network to competitors, the effect of the CWC transaction, and
lower costs at our directory services subsidiary. The reversal of a prior year
accrual in the second quarter of 1998 associated with the settlement of tax-
related matters further offset expense increases. The actual settlement of
these tax-related matters in 1998 was recorded in Interest Expense.
Income (Loss) from Unconsolidated Businesses
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $ 55.2 68.4%
- --------------------------------------------------------------------------------
Six Months $112.7 97.7%
- --------------------------------------------------------------------------------
Income (loss) from unconsolidated businesses includes equity income and losses
from investments accounted for under the equity method and goodwill amortization
related to these investments. As described earlier, beginning in the second
quarter of 1997 we account for our investment in CWC under the equity method.
The changes in income (loss) from unconsolidated businesses in the second
quarter and the six month period of 1998 were attributable to improved operating
results in our global wireless investments including an international wireless
joint venture, Omnitel Pronto Italia S.p.A. (Omnitel), and our personal
communications services (PCS) joint venture, PrimeCo Personal Communications,
L.P. (PrimeCo). The change in accounting treatment for our investment in CWC
and the positive effects resulting from the write-down of our video investments
and the disposition of certain international investments during 1997 also
contributed to improved results in both periods of 1998.
18
<PAGE>
These factors were offset, in part, by higher equity losses reported by
certain international telecommunication investees in 1998. Results for the first
six months of 1998, as compared to the same period in 1997, were also negatively
affected by a pre-tax gain recognized in the first quarter of 1997 on the sale
of a global directory investee.
Other Income and Expense, Net
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $57.9
- --------------------------------------------------------------------------------
Six Months $62.1
- --------------------------------------------------------------------------------
Other income and expense, net, consists primarily of interest and dividend
income, minority interest in net income (loss) of consolidated subsidiaries, and
gains and losses from the disposition of subsidiaries and non-operating assets
and investments.
The principal items affecting the change in other income and expense in both
periods of 1998 were the recognition of interest income in connection with the
settlement of tax-related matters and higher foreign exchange gains associated
with our international investments.
Interest Expense
- --------------------------------------------------------------------------------
1998-1997 Increase
- --------------------------------------------------------------------------------
Second Quarter $72.0 24.7%
- --------------------------------------------------------------------------------
Six Months $52.5 8.5%
- --------------------------------------------------------------------------------
The increase in interest expense in the three and six month periods of 1998 was
primarily due to the recognition of interest expense in connection with the
settlement of tax-related matters in the second quarter of 1998. Higher
borrowing levels at our network subsidiaries also generated additional interest
costs in both the 1998 periods.
For the first half of 1998, the increase in interest expense was partially
offset by the effect of prior year, one-time interest costs associated with the
settlement of a sales tax audit and state regulatory issues.
Effective Income Tax Rates
- --------------------------------------------------------------------------------
Three Months Ended June 30,
- --------------------------------------------------------------------------------
1998 36.0%
- --------------------------------------------------------------------------------
1997 38.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
1998 36.4%
- --------------------------------------------------------------------------------
1997 37.8%
- --------------------------------------------------------------------------------
The effective income tax rate is the provision for income taxes as a percentage
of income before the provision for income taxes and extraordinary items.
The effective income tax rates for the second quarter and the six months ended
June 30, 1998 were lower as compared to the same periods last year due to higher
tax credits, primarily for foreign operations and investments in low income
housing, as well as adjustments to deferred income tax balances at certain
subsidiaries. These decreases were offset, in part, by higher state and local
income taxes caused principally by the aforementioned change in the New Jersey
tax law, which resulted in an increase in the effective income tax rate in 1998.
Extraordinary Item
- --------------------------------------------------------------------------------
In the three and six month periods ended June 30, 1998, we recorded
extraordinary charges of $6.3 million and $22.5 million, net of tax, associated
with the early extinguishments of long-term debt. See Note 5 to the condensed
consolidated financial statements for additional information on debt
refinancings.
19
<PAGE>
- ---------------------------------------
FINANCIAL CONDITION
- ---------------------------------------
Six Months Ended June 30, 1998 1997 Change
- --------------------------------------------------------------------------------
Cash Flows From (Used In):
Operating activities $ 4,872.7 $ 3,816.1 $1,056.6
Investing activities (3,565.6) (3,126.8) (438.8)
Financing activities (1,326.8) (752.8) (574.0)
- --------------------------------------------------------------------------------
We use the net cash generated from our operations and from external financing to
fund capital expenditures for network expansion and modernization, pay
dividends, and invest in new businesses. While current liabilities exceeded
current assets at June 30, 1998 and 1997 and at December 31, 1997, our sources
of funds, primarily from operations and, to the extent necessary, from readily
available external financing arrangements, are sufficient to meet ongoing
operating and investing requirements. We expect that presently foreseeable
capital requirements will continue to be financed primarily through internally
generated funds. Additional debt or equity financing may be needed to fund
additional development activities or to maintain our capital structure to ensure
our financial flexibility.
Cash Flows From Operating Activities
- --------------------------------------------------------------------------------
Our primary source of funds continues to be cash generated from operations.
Cash flows from operations were higher in the first half of 1998, as compared to
the same period in 1997, principally as a result of improved operating income
and timing differences in the payment of accounts payable and accrued taxes.
Cash Flows Used In Investing Activities
- --------------------------------------------------------------------------------
Capital expenditures continue to be our primary use of capital resources. The
majority of the capital expenditures are to support our network businesses in
order to facilitate the introduction of new products and services, enhance
responsiveness to competitive challenges, and increase the operating efficiency
and productivity of the network. We invested $3,092.9 million in our network
subsidiaries during the first half of 1998, as compared to $2,430.0 million in
the first half of 1997. We also invested $390.9 million in our wireless and
other businesses in the first six months of 1998, compared to $644.8 million
during the same period last year. The increase in total capital expenditures
during the first six months of 1998 is due to an expansion of our capital
investment program in 1998. We expect capital expenditures in 1998 to aggregate
to approximately $7 billion, including approximately $6 billion to be invested
in our network subsidiaries. In 1997, capital expenditures totaled $6.6
billion, including $5.5 billion in our network subsidiaries.
During the first half of 1998, we increased our ownership interest in Omnitel
from 17.45% to 19.71%, through a cash payment of $162.4 million, and we invested
$193.6 million in PrimeCo to fund the build-out of its PCS network and $57.6
million in lease financing partnerships. In the first six months of 1997, we
invested $387.4 million in unconsolidated businesses, including $202.1 million
in PrimeCo, $70.1 million in lease financing partnerships and $115.2 million in
other investments.
Our short-term investments include principally cash equivalents held in trust
accounts for the payment of certain employee benefits. During the first half of
1998, we invested $266.1 million primarily in a vacation pay trust, compared to
$146.8 million in the first half of 1997. We increased our pre-funding in 1998
to cover employees of the former NYNEX companies. Proceeds from the sales of
all short-term investments were $566.0 million in the first six months of 1998,
compared to $212.9 million in the corresponding period of 1997.
In the first six months of 1998, we invested $15.8 million to purchase a
cellular property and we received cash proceeds of $4.6 million in connection
with the disposition of certain investments. In the first six months of 1997,
we received cash proceeds of $271.5 million from the sales of real estate
properties and our interest in a joint venture.
During the first half of 1997, we received cash proceeds of $82.0 million from
the Telecom Corporation of New Zealand Limited (TCNZ) repurchase plan. TCNZ
completed its repurchase plan in December 1997.
20
<PAGE>
Cash Flows Used In Financing Activities
- --------------------------------------------------------------------------------
As in prior quarters, dividend payments were a significant use of capital
resources. We determine the appropriateness of the level of our dividend
payments on a periodic basis by considering such factors as long-term growth
opportunities, internal cash requirements, and the expectations of our
shareowners. In the second quarter of 1998, we announced a quarterly cash
dividend of $.385 per share. Year-to-date cash dividends totaled $.77 per
share.
In February 1998, our wholly owned subsidiary Bell Atlantic Financial
Services, Inc. (FSI) issued $2,455.0 million of 5.75% exchangeable notes (TCNZ
Exchangeable Notes) due on April 1, 2003. The proceeds from the offering were
used for the repayment of a portion of our short-term debt. For additional
information about the TCNZ Exchangeable Notes, see Note 5 to the condensed
consolidated financial statements and the "Market Risk" section below.
We increased our total debt (including capital lease obligations) by $248.0
million from December 31, 1997, principally due to an increase in our capital
investment program, higher purchases of shares to fund employee stock option
exercises, and continued funding of investments in PrimeCo. Additional pre-
funding of benefit trusts also contributed to the increase in debt levels during
1998. Our debt ratio was 60.1% as of June 30, 1998, compared to 59.1% as of
June 30, 1997 and 60.5% as of December 31, 1997. In 1998, we expect our debt
level to increase slightly over the current level at June 30, 1998, as we
continue to invest in our capital program and in our unconsolidated
subsidiaries, primarily PrimeCo.
As of June 30, 1998, we had unused bank lines of credit in excess of $5.2
billion and $237.9 million in borrowings outstanding. As of June 30, 1998, our
operating telephone and finance subsidiaries had shelf registrations for the
issuance of up to $2.9 billion of unsecured debt securities. The debt securities
of those subsidiaries continue to be accorded high ratings by primary rating
agencies. Subsequent to the announcement of the Bell Atlantic - GTE merger,
rating agencies have maintained current credit ratings, but have placed the
ratings of certain of our subsidiaries under review for potential downgrade.
Financing activities in the first six months of 1998 also included the early
extinguishment of $350.0 million of refunding mortgage bonds and $240.0 million
of debentures, and the issuance of $600.0 million of debentures by several of
our operating telephone subsidiaries. In July 1998, another operating telephone
subsidiary announced it will redeem $60.0 million of 7.75% debentures on August
24, 1998. See Note 5 to our condensed consolidated financial statements for
additional information on our debt.
On August 5, 1998, FSI entered into an agreement to issue $3,180.0 million of
4.25% notes exchangeable into ordinary shares of CWC. The notes will mature on
September 15, 2005. The exchange price was established at a 28.2% premium to the
CWC share price at the time of the offering. The notes are noncallable until
September 15, 2002, and are not exchangeable by investors prior to July 1, 2002.
Upon exchange by investors, we retain the option to settle in cash or delivery
of shares. The proceeds of the offering will be used for ongoing business
opportunities and the reduction of short-term debt. This transaction, which is
expected to close in August 1998, is not anticipated to have a material effect
on our financial condition or results of operations.
Market Risk
- --------------------------------------------------------------------------------
We are exposed to various types of market risk in the normal course of our
business, including the impact of interest rate changes, foreign currency
exchange rate fluctuations and changes in corporate tax rates. We employ risk
management strategies including the use of derivatives such as interest rate
swap agreements, interest rate caps and floors, foreign currency forwards and
options, and basis swap agreements to manage those exposures. We do not hold
derivatives for trading purposes.
It is our policy to enter into interest rate, foreign currency and other
transactions only to the extent necessary to achieve the desired objectives of
our management in limiting our exposures to the various market risks discussed
above. We do not hedge all of our market risk exposure in a manner that would
completely eliminate the impact of changes in interest rates and foreign
exchange rates on our net income. We do not expect that our results of
operations or liquidity will be materially affected by these risk management
strategies.
21
<PAGE>
Interest Rate Risk Management
The issuance of the TCNZ Exchangeable Notes in the first quarter of 1998, as
described below, resulted in an increase of $2,455.0 million in our long-term
debt.
The TCNZ Exchangeable Notes have a maturity of five years, carry a fixed
interest rate of 5.75%, and are exchangeable into shares of TCNZ common stock at
the option of the holder beginning on September 1, 1999. The exchange price was
established at a 20% premium to the TCNZ share price at the time of the
offering. Upon exchange, we retain the option to settle in cash or by delivery
of TCNZ shares.
As of June 30, 1998, the fair value of our long-term debt and interest rate
derivatives was approximately $16.7 billion. The aggregate hypothetical fair
value of the portfolio assuming a 100-basis-point upward parallel shift in the
yield curve is estimated to be $15.7 billion. The aggregate hypothetical fair
value of the portfolio assuming a 100-basis-point downward parallel shift in the
yield curve is estimated to be $18.0 billion. The fair values of our commercial
paper and bank loans are not significantly affected by changes in market
interest rates.
Foreign Exchange Risk Management
The fair values of our foreign currency derivatives and investments accounted
for under the cost method continue to be subject to fluctuations in foreign
exchange rates. The fair value of the TCNZ Exchangeable Notes is also affected
by changes in the U.S. dollar/ New Zealand dollar exchange rate. As of June 30,
1998, the net fair value of our foreign currency derivatives, cost method
investments and the TCNZ Exchangeable Notes was a liability of approximately
$2.1 billion. The aggregate hypothetical decrease in the fair value of that
liability resulting from a 10% increase in the value of the U.S. dollar against
the various currencies that we are exposed to at June 30, 1998 was estimated to
be $49 million. The aggregate hypothetical increase in the fair value of that
liability resulting from a 10% decrease in the value of the U.S. dollar against
the various currencies that we are exposed to at June 30, 1998 was estimated to
be $105 million. This calculation does not include potential changes in the
value of our international investments accounted for under the equity method.
As of June 30, 1998, the carrying value of our equity method international
investments totaled approximately $1.8 billion.
As described in our 1997 Annual Report to Shareowners, we currently hold an
international portfolio of telecommunications-related infrastructure projects
that includes investments in Thailand and Indonesia accounted for under the cost
method. During the past several months, we have been closely monitoring the
financial and political situations in these countries to ensure the long-term
viability of our investments. Although the volatility of the Asian financial
markets has had a negative effect on the fair values of these investments, we
currently believe that the declines from recorded book values are temporary.
The events in Asia are dynamic and the ultimate resolution will depend on many
yet to be determined actions taken by Asian governments, market participants and
world monetary authorities. We continue to monitor the political, economic and
financial aspects of these investments on a quarterly basis. Should we
determine that any declines in the fair values of these investments are other
than temporary, the impact could be material to our results of operations.
Other Risk Management
The fair value of the TCNZ Exchangeable Notes is affected by changes in the
price of TCNZ shares. The hypothetical fair value of the TCNZ Exchangeable
Notes assuming a 10% increase or decrease in the value of TCNZ shares at June
30, 1998 was estimated to be $2,625 million and $2,459 million, respectively.
Other than the issuance of the TCNZ Exchangeable Notes, there has been no
material change in our exposure to other market risks since December 31, 1997.
The TCNZ Exchangeable Notes also expose us to a potential earnings impact.
Should the aggregate value of the TCNZ shares rise to greater than 120% of the
share price at the time of the offering, our earnings would be affected as a
result of adjusting the debt liability to its fair value. Our cash flows would
not be affected by changes in the price of the TCNZ shares, unless we elect to
pay the noteholders in cash.
22
<PAGE>
- -------------------------------------------------
OTHER FACTORS THAT MAY EFFECT FUTURE RESULTS
- -------------------------------------------------
Recent Regulatory Development
- --------------------------------------------------------------------------------
In April 1998, New York Telephone Company filed with the New York State Public
Service Commission (NYSPSC) a statement setting forth additional commitments
that it will make to the FCC in connection with our anticipated application for
permission to enter the in-region long distance market in New York. Those
commitments include additional operations support systems capabilities, enhanced
interconnection options to stimulate facilities-based competitive alternatives,
and detailed performance standards with prescribed adjustments to wholesale
prices if standards are not met. In addition, New York Telephone Company will
offer combinations of unbundled network elements and an Unbundled Network
Element Platform (UNE-P) to competitors wishing to provide basic local and ISDN
service to business or residential customers. New York Telephone Company
estimates that the UNE-P will provide competitors with discounts from its retail
rates of 30-40 percent on residential lines and 50-60 percent on business lines.
New York Telephone Company will offer UNE-P throughout its New York operating
area, but UNE-P will not be available to competitors for service to business
customers in those parts of New York City where there is a defined level of
local competition from two or more competitive local exchange carriers. New
York Telephone Company's commitment to offer the discounted UNE-P will be for
four years in New York City and other major urban areas and for six years in the
rest of the state. Following New York Telephone Company's filing, the chairman
of the NYSPSC announced that, subject to New York Telephone Company meeting its
commitments, he would recommend that our application to the FCC be approved. We
expect to file our application with the FCC by the fourth quarter of 1998, with
the goal of entering the New York in-region long distance market by the first
quarter of next year, but there can be no assurance that any approval will be
forthcoming in time to permit us to do so.
- ---------------------------------------
OTHER MATTERS
- ---------------------------------------
Proposed Bell Atlantic - GTE Merger
- --------------------------------------------------------------------------------
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger of
equals under a definitive merger agreement dated as of July 27, 1998. Under the
terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
We expect the merger to qualify as a "pooling of interests," which means for
accounting and financial reporting purposes the companies will be treated as if
they had always been combined. The completion of the merger is subject to a
number of condition, including certain regulatory approvals, receipt of opinions
that the merger will be tax free, and the approval of the shareholders of both
Bell Atlantic and GTE. The companies expect to close the merger in the second
half of 1999.
The companies have identified the following synergy targets by the third year
following completion of the merger: (i) expense savings of approximately $2
billion annually, principally related to economies of scale and other operating
efficiencies; (ii) savings in annual capital expenditures of approximately $500
million; and (iii) incremental revenues of approximately $2 billion annually.
Based on cost and revenue synergy targets, we expect the transaction to be
accretive to earnings per share, excluding one-time, merger-related charges, in
the first year following the completion of the merger. It is anticipated that
the merged company will target annual earnings per share growth of 15%,
excluding one-time, merger-related charges, by the third year following the
completion of the merger.
Recent Accounting Pronouncements
- --------------------------------------------------------------------------------
For a discussion of recent accounting pronouncements and their impact on our
financial statements, you should read Note 9 to the condensed consolidated
financial statements.
23
<PAGE>
- ----------------------------------------------------------------
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
- ----------------------------------------------------------------
Information contained above in this Management's Discussion and Analysis with
respect to expected financial results and future events and trends is forward-
looking, based on our estimates and assumptions and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.
The following important factors could affect the future results of our company
and could cause those results to differ materially from those expressed in the
forward-looking statements: (i) materially adverse changes in economic
conditions in the markets served by us or by companies in which we have
substantial investments; (ii) material changes in available technology; (iii)
the final outcome of FCC rulemakings, and judicial review of those rulemakings,
with respect to the access and interconnection that we must provide other
carriers under the Telecommunications Act of 1996; (iv) the final outcome of FCC
rulemakings with respect to access charge reform and universal service; (v)
future state regulatory actions in our operating areas; (vi) the extent, timing
and success of competition from others in the local telephone and intraLATA toll
service markets; (vii) the timing and profitability of our entry into the in-
region long distance market; (viii) the success and expense of the remediation
efforts of our company and suppliers in achieving year 2000 compliance; and (ix)
the timing of, and regulatory or other conditions associated with, the
completion of the merger with GTE.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------------------
Information relating to market risk is included in Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, in the
Financial Condition section under the caption "Market Risk."
24
<PAGE>
- -----------------------------------
Part II - Other Information
- -----------------------------------
Item 1. Legal Proceedings
- --------------------------------------------------------------------------------
There were no proceedings reportable under this item.
Item 4. Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------------------------
The Company's 1998 Annual Meeting of Shareowners was held on May 1, 1998. At
the meeting, the following items were submitted to a vote of shareowners.
(a) The following nominees were elected to serve on the Board of Directors:
Name of Nominee Votes Cast For Votes Withheld
--------------- -------------- --------------
Lawrence T. Babbio, Jr. 617,639,416 14,817,517
Richard L. Carrion 617,999,510 14,457,423
James G. Cullen 617,952,035 14,504,898
Lodewijk J. R. de Vink 618,223,906 14,233,027
James H. Gilliam, Jr. 617,662,150 14,794,783
Stanley P. Goldstein 618,161,465 14,295,468
Helene L. Kaplan 617,806,023 14,650,909
Thomas H. Kean 617,566,762 14,890,171
Elizabeth T. Kennan 617,702,941 14,753,991
John F. Maypole 618,362,832 14,094,101
Joseph Neubauer 618,096,057 14,360,876
Thomas H. O'Brien 618,183,926 14,273,007
Eckhard Pfeiffer 619,141,104 13,315,829
Hugh B. Price 617,464,186 14,992,747
Rozanne L. Ridgway 617,285,767 15,171,166
Frederic V. Salerno 617,165,515 15,291,418
Ivan G. Seidenberg 617,273,100 15,183,833
Walter V. Shipley 618,283,445 14,173,488
Raymond W. Smith 614,890,564 17,566,369
John R. Stafford 618,309,470 14,147,462
Morrison DeS. Webb 618,173,052 14,283,881
Shirley Young 617,981,032 14,475,900
(b) The appointment of Coopers & Lybrand L.L.P. as independent accountants for
1998 was ratified with 621,141,173 votes for, 6,872,906 votes against, and
4,442,854 abstentions. (Effective July 1, 1998, Coopers & Lybrand L.L.P. became
PricewaterhouseCoopers LLP.)
(c) A shareowner proposal regarding additional disclosure of executive officer
compensation was defeated with 66,329,711 votes for, 473,093,666 votes against,
15,948,023 abstentions, and 77,085,532 broker non-votes.
(d) A shareowner proposal regarding cumulative voting was defeated with
146,540,695 votes for, 394,289,253 votes against, 14,541,452 abstentions, and
77,085,532 broker non-votes.
(e) A shareowner proposal regarding executive incentive compensation was
defeated with 75,749,036 votes for, 464,413,604 votes against, 15,208,762
abstentions, and 77,085,532 broker non-votes.
(f) A shareowner proposal regarding executive severance agreements was defeated
with 174,611,552 votes for, 365,056,473 votes against, 15,703,377 abstentions,
and 77,085,532 broker non-votes.
(g) A shareowner proposal regarding composition of the Board of Directors was
defeated with 96,696,635 votes for, 441,962,678 votes against, 16,712,088
abstentions, and 77,085,532 broker non-votes.
With respect to items (b) through (g), abstentions and broker non-votes are not
counted in the vote totals in accordance with the Company's by-laws and,
therefore, have no effect on the vote.
25
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
(a) Exhibits:
Exhibit Number
10a Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and Lawrence T. Babbio, Jr.
10b Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and James G. Cullen.
10c Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and Frederic V. Salerno.
10d Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and Donald J. Sacco.
10e Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and Morrison DeS. Webb.
10f Employment Agreement, dated as of June 1, 1998, by and between Bell
Atlantic Corporation and James R. Young.
10v(i) Letter dated April 16, 1998, to Raymond W. Smith concerning employment-
related issues.
10v(ii) Resolutions dated May 1, 1998, approving amendments to Employment
Agreement of Raymond W. Smith.
10w(i) Resolution dated May 1, 1998, approving amendment to Employment
Agreement of Ivan G. Seidenberg.
12 Ratio of Earnings to Fixed Charges.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedules - 1997 interim periods.
27.3 Restated Financial Data Schedules - 1996 interim periods.
(b) Reports on Form 8-K filed during the quarter ended June 30, 1998:
A Current Report on Form 8-K, dated April 23, 1998, was filed regarding Bell
Atlantic's first quarter 1998 financial results.
A Current Report on Form 8-K, dated May 1, 1998, was filed regarding the two-
for-one split of Bell Atlantic's common stock.
26
<PAGE>
Signatures
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELL ATLANTIC CORPORATION
Date: August 13, 1998 By /s/ Mel Meskin
------------------------------
Mel Meskin
Vice President - Comptroller
(Principal Accounting Officer)
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF AUGUST 12, 1998.
27
<PAGE>
EXHIBIT 10a
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and Lawrence T. Babbio, Jr., President and Chief Executive
Officer - Network Group, and Chairman - Global Wireless Group, of Bell Atlantic
(the "Key Executive"). In this Agreement, "Bell Atlantic Companies" means all
of, and "Bell Atlantic Company" means any one of, Bell Atlantic, all corporate
subsidiaries or other companies affiliated with Bell Atlantic, all companies in
which Bell Atlantic directly or indirectly owns a substantial equity interest,
and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Employment Agreement dated July 10, 1996 (the "Prior Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
------------------
"Term of Employment") shall commence on June 1, 1998 and end on the fifth
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
-------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager and shall compensate the Key
Executive at a base salary of (i) not less than his current base salary for
the period June 1, 1998 through August 13, 1998, and (ii) not less than
$750,000 per year (pro-rated for August 14, 1998 through December 31, 1998)
for the remainder of his Term of Employment.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for
a potential maximum award which shall not be less than the potential
maximum award he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.6 multiplied by the Key
Executive's base salary on the date of the grant.
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently
<PAGE>
10) and shall have an aggregate of 4 management personal days and 5 weeks
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.
(e) Corporate Aircraft. Subject to the needs of the business, the Key
------------------
Executive shall be entitled to personal use of corporate aircraft for three
trips per year without geographic restriction, and unlimited reasonable
personal use of corporate aircraft within the Bell Atlantic footprint. The
Key Executive shall be responsible for the payment of taxes on imputed
income attributable to personal use of corporate aircraft, except that,
whenever the Key Executive uses corporate aircraft for business purposes
and is accompanied by an immediate family member whose use of corporate
aircraft results in the imputation of income to the Key Executive, the
Company shall pay the Key Executive additional cash compensation in an
amount sufficient to allow the Key Executive to pay taxes on (i) such
additional compensation, plus (ii) the income imputed to the Key Executive
because of such family member's use of corporate aircraft.
(f) Apartment. The Key Executive shall be entitled to use a corporate
---------
owned or leased apartment located in New York City on an as-needed basis.
(g) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to
participate in all of the benefit and compensation plans, and the programs
or perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
(h) Board of Directors. The Key Executive shall be nominated for
------------------
election to the Board of Directors of Bell Atlantic (the "Board")
at each annual meeting of shareowners which occurs prior to the end
of the Term of Employment.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Director and Officer. The Key Executive shall continue to fully and
--------------------
faithfully perform his duties and responsibilities (i) as a director, so
long as he is elected and serving, and (ii) as an officer, reporting only
to the Chief Executive Officer and the Board.
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board or the Chief
Executive Officer may from time to time prescribe, and the Key Executive
shall perform all duties incidental to such positions, shall cooperate
fully with the Board and the Chief Executive Officer, and shall work
cooperatively with the other officers of the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall continue to
-----------------------
diligently devote his entire business skill, time and effort to the
affairs of the Bell Atlantic Companies in accordance with the duties
assigned to him, and shall perform all such duties, and otherwise conduct
himself, in a manner reasonably calculated in good faith by him to promote
the best interests of the Bell Atlantic Companies. Prior to the Key
Executive's termination of employment, except to the extent specifically
permitted by
<PAGE>
the Chief Executive Officer or the Board, and except for memberships on
boards of directors which the Key Executive holds on the date of this
Agreement, the Key Executive shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other
person or organization other than a Bell Atlantic Company or a venture in
which a Bell Atlantic Company has a financial interest, whether or not the
services are rendered for compensation.
4. IDP Credit. Upon the Key Executive's execution of this Agreement, Bell
----------
Atlantic shall credit $881,906 to the Company Contribution sub-account contained
within the Key Executive's account under the Bell Atlantic Income Deferral Plan
("IDP"). The parties acknowledge that such credit is in complete satisfaction
of, and will fully discharge, any right or entitlement that the Key Executive
may have, now or in the future, to the retirement pension benefits provided for
in Section 5 of the Prior Agreement.
5. Stay Incentive.
--------------
(a) Initial Payment. If the Key Executive has remained an "Employee in
---------------
Good Standing" (as hereinafter defined) of a Bell Atlantic Company from the
date of this Agreement to July 1, 1998, then Bell Atlantic will cause the
Bell Atlantic Company which then employs the Key Executive (i) to pay him,
not later than July 31, 1998, an amount of cash equal to 100% of his Pay as
of July 1, 1998, and (ii) to credit to his account under the IDP, in
accordance with the deferral election previously made by the Key Executive,
an additional amount equal to 100% of his Pay as of July 1, 1998.
(b) Additional Payment. If the Key Executive has remained an Employee
------------------
in Good Standing of a Bell Atlantic Company from the date of this Agreement
to August 14, 1999, then Bell Atlantic will cause the Bell Atlantic Company
which then employs the Key Executive to pay him an additional amount equal
to 100 percent of his Pay as of August 14, 1999. This payment shall be made
in a single cash payment, not later than September 13, 1999.
(c) Definition of Pay. As used in this Section 5, "Pay" means the sum
-----------------
of (i) an amount equal to the Key Executive's then current base salary,
plus (ii) the greater of (A) the value of the Key Executive's most recent
award under the STIP or (B) 75% of the potential maximum award for the Key
Executive under the STIP for the performance year that includes the
relevant date. In the event that the most recent STIP award was prorated
for a portion of a year, the STIP award shall be annualized.
(d) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Executive will be considered to be an "Employee in Good
Standing" on a given date if, on or before that date, the Key Executive has
not terminated employment for any reason (other than "constructive
discharge" as defined in Section 7(d) of this Agreement), has not tendered
oral or written notice of intent to resign or retire effective as of a date
on or before the given date (other than pursuant to a "constructive
discharge" as defined in Section 7(d) of this Agreement), and has not
behaved in a manner that would be grounds for discharge with cause as
defined in Section 7(b) of this Agreement.
<PAGE>
6. Phantom Shares.
--------------
(a) Phantom Share Award. Upon the Key Executive's execution of the
-------------------
Agreement, Bell Atlantic shall establish a notional account on behalf of
the Key Executive and credit to that account 70,000 shares of Bell Atlantic
stock ("Phantom Shares"). This account shall further be credited, on each
subsequent dividend payment date for Bell Atlantic stock, with an amount
equivalent to the dividend payable on the number of shares of Bell Atlantic
stock equal to the number of Phantom Shares in the Key Executive's account
on the record date for such dividend. Such amount shall immediately be
converted to a number of additional Phantom Shares calculated by dividing
such amount by the value of Bell Atlantic stock, as determined pursuant to
Section 6(c)(i) of this Agreement.
(b) Cash Payments. Provided the Key Executive remains an Employee in
-------------
Good Standing from the date of this Agreement to the dates specified below,
the Key Executive shall be entitled to receive the following cash payments
no later than 30 days after the following dates, and the number of Phantom
Shares in his notional account shall be reduced to reflect the number of
Phantom Shares which served as the measurement of each such payment:
(i) on June 1, 2001, a cash payment in an amount equal to the
value (determined pursuant to Section 6(c)(ii) of this Agreement) of
three-sevenths of the Key Executive's Phantom Shares in his notional
account on that date;
(ii) on June 1, 2002, a cash payment in an amount equal to the
value (determined pursuant to Section 6(c)(ii) of this Agreement) of
one-half of the Key Executive's then remaining Phantom Shares in his
notional account on that date; and
(iii) on June 1, 2003, a cash payment in an amount equal to the
value (determined pursuant to Section 6(c)(ii) of this Agreement) of
the Key Executive's Phantom Shares in his notional account on that
date.
(c) Value of Shares. The value of Bell Atlantic stock or Phantom
---------------
Shares shall be determined as follows:
(i) for purposes of Section 6(a) of this Agreement, such value
shall be the average of the high and low sale prices of Bell Atlantic
stock on the New York Stock Exchange ("NYSE") on the applicable
dividend payment date;
(ii) for purposes of Section 6(b) of this Agreement, such value
shall be the greater of (A) the average of the high and low sale prices
of Bell Atlantic stock on the NYSE on the applicable payment date, or
(B) the average of the daily high and low sale prices of Bell Atlantic
stock on the NYSE for the period of twenty trading days ending on the
applicable payment date, or the period of twenty trading days
immediately preceding the applicable payment date if the NYSE is closed
on that date; and
<PAGE>
(iii) for purposes of Section 7(c)(iii) of this Agreement, such
value shall be determined in the manner described in clause (ii)
above, except that the Key Executive's separation date shall be used
instead of the payment dates specified in Section 6(b).
(d) Stock Split. The number of Phantom Shares provided for in this
-----------
Section 6 shall be adjusted to reflect the two for one split of Bell
Atlantic stock that is scheduled to occur in June, 1998, plus any further
stock splits, corporate reorganizations or other changes in capital
structure that may occur.
7. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
---------------------------------------------------------
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined), or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key Executive shall forfeit any and
all rights to receive the compensation and benefits set forth in Sections
2, 5 and 6 of this Agreement which as of the relevant date have not yet
been earned under this Agreement, but shall otherwise be eligible to
receive any and all compensation and benefits for which a similarly-
situated senior manager 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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the Employee Code of
Business Conduct or Paragraphs 9 (Non-Compete/No Solicitation), 10 (Return
of Property; Intellectual Property Rights) or 11 (Proprietary and
Confidential Information) of this Agreement; each of the foregoing as
determined in the reasonable discretion and judgment of the Chief Executive
Officer of Bell Atlantic, or (ii) commission of any felony of which the Key
Executive is finally adjudged guilty in a court of competent jurisdiction.
In the event that Bell Atlantic terminates the employment of the Key
Executive for cause, it will state in writing the grounds for such
termination and provide this statement to the Key Executive within 10
business days after the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or the
Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment, then the Key Executive shall be
entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit, or benefit otherwise
provided in Sections 2, 5 and 6 of this Agreement, provided that each
payment, credit and benefit shall be contingent upon the absence, at the
time such payment, credit or benefit is due, of any act that would
constitute a material breach of this Agreement:
<PAGE>
(i) Salary: through the Term of Employment, on a monthly basis, an
amount equal to the monthly salary which would have been paid to the Key
Executive under Section 2 of this Agreement, assuming that his annual rate
of salary would have been increased each January 1 by the greater of (A)
5%, or (B) the general percentage increase, if any, approved by the Human
Resources Committee ("HRC") of the Board for comparable positions in the
senior management group based on the HRC's review of market-median values
for such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on an
annual basis, not later than 30 days after the date on which incentives are
awarded by Bell Atlantic under the STIP for the prior year's performance,
an amount equal to the value of the potential maximum award which the Key
Executive would have been entitled to receive under the STIP based on the
maximum STIP award for comparable positions in the senior management group,
without adjustment for individual performance;
(iii) Phantom Shares: not later than 30 days after the Key Executive's
separation from service, an amount equal to the total value of the Phantom
Shares in the Key Executive's Phantom Shares' account on the date of such
separation from service, as determined pursuant to Section 6(c)(iii) of
this Agreement;
(iv) Stock Options: through the Term of Employment, on an annual
basis, within 30 days of the granting of stock options for the year to
senior managers, an amount equal to 1.6 multiplied by the annual salary
amount determined in accordance with clause (i) above; provided further,
with respect to any and all Bell Atlantic stock options which are
outstanding on the date of the Key Executive's separation from service, the
Key Executive shall be deemed, for purposes of determining the duration of
the Key Executive's right to exercise any and all such stock options, to
have remained in active service with Bell Atlantic continuously through the
Term of Employment, and then to have separated from service with whatever
rights would then be applicable to a holder of such options under the Stock
Option Plan;
(v) IDP Benefits: through the Term of Employment, company credits to
the Company Contribution sub-account contained within the Key Executive's
account under the IDP to the fullest extent provided, and at the same time
such amounts would have been credited, as if the Key Executive had remained
actively employed until the end of the Term of Employment and received the
salary and maximum STIP awards determined in accordance with clauses (i)
and (ii) above; provided further, that Bell Atlantic shall also credit to
such IDP sub-account an amount each year equal to the sum of (A) the amount
which the Key Executive would otherwise have been eligible to receive as
company matching contributions under the Bell Atlantic Savings Plan or any
successor to that plan (if he had fully participated in contributions to
that plan) and (B) the pay credits which the Key Executive would otherwise
have been eligible to receive under the Bell Atlantic Cash Balance Plan or
any successor to that plan;
<PAGE>
(vi) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under the terms of the Bell Atlantic
Senior Management Estate Management Program;
(vii) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,500 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive;
and
(viii) Stay Incentive: on the dates specified in Section 5(a) and
5(b), the amounts specified in those sections, provided that, for
purposes of calculating the Section 5(b) amount, if the separation
from service occurs prior to January 1, 1999, the Key Executive's
salary and maximum STIP award shall be determined in accordance with
clauses (i) and (ii) above.
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an employee in Good Standing and he terminates his employment
for any of the following reasons: Bell Atlantic (or the Key Executive's
employing company) has materially breached this Agreement; the Key
Executive's responsibilities have been significantly reduced in type or
scope; there has been a significant adverse change in the Key Executive's
reporting relationship; there has been a significant adverse change in the
Key Executive's relative compensation (including a negative individual
performance adjustment which causes the Key Executive's STIP award for a
particular year to be reduced by 10% or more); Ivan Seidenberg is not
elected Chairman of the Board by December 31, 1998 or is removed from or
resigns from that position during the Term of Employment (unless the Board
determines that such event results from Mr. Seidenberg's death,
"Disability" (as defined in Section 4(a) of his Employment Agreement, dated
as of August 14, 1997), or his election to terminate his employment
"without Good Reason" (as provided in Section 4(c) of his Employment
Agreement)); or there has been a "change of control" of Bell Atlantic. For
purposes of this Agreement, a change of control of Bell Atlantic shall mean
that any of the following events or circumstances has occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of
stock of Bell Atlantic representing 20% or more of the total voting
power of Bell Atlantic's then outstanding voting stock, provided,
however, that if such beneficial ownership is acquired in a
transaction that has been negotiated and approved by the Board, such
acquisition of beneficial ownership shall not be treated as a change
of control of Bell Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is required
to be made with the Securities and Exchange Commission under section
14(d) of the Securities Exchange Act of 1934) is made for the stock of
Bell Atlantic, and the Person making the offer owns or has accepted
for payment shares of one or more classes of Bell Atlantic stock which
represent, when combined with any
<PAGE>
shares otherwise acquired and owned by such Person, 20% or more of the
total voting power of Bell Atlantic's then outstanding stock,
provided, however, that if such tender offer has been negotiated and
approved by the Board, such tender offer and stock acquisition shall
not be treated as a change of control of Bell Atlantic for purposes of
this Agreement; or
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously
for a period of not less than two years, or (B) are new directors
whose election by the Board or nomination for election by shareowners
of Bell Atlantic was approved by a vote of at least two-thirds of the
directors then in office who either were directors described in clause
(A) hereof or whose election or nomination for election was previously
so approved.
(e) Disability or Death. If, during the Term of Employment at a time
-------------------
when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release
in the form of Exhibit A from the Key Executive (in the case of disability)
or from his estate (in the case of death), then Bell Atlantic shall pay to
the Key Executive (in the case of disability) or pay to the Key Executive's
estate (in the case of death) the amounts determined as if, at the date of
termination of employment on account of disability or death, the Key
Executive had been terminated without cause under Section 7(c) of this
Agreement; provided, however, that in the case of a termination of
employment on account of disability, the amounts paid pursuant to Sections
7 (c)(i) and (ii) of this Agreement shall reduce dollar for dollar the
disability benefits which would otherwise be payable to the Key Executive
during the remainder of the Term of Employment under the various disability
benefit plans in which he participates.
8. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
9. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined in
Section 9(b) of this Agreement); or
<PAGE>
(ii) 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, however, that the Key Executive's
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
the Key Executive's equity interest in any such company is less than a
controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic Companies, and (ii) for
which the Key Executive then has responsibility to plan, develop, manage,
market or oversee, or had any such responsibility within the prior 24
months. Notwithstanding the previous sentence, a business activity will
not be treated as a Competitive Activity if the geographic marketing area
of the relevant products or services sold by the Key Executive or a third
party does not overlap with the geographic marketing area for the
applicable products and services of the Bell Atlantic Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of
employment for any reason from all Bell Atlantic Companies, the Key
Executive shall not, without the consent of the Chief Executive Officer of
Bell Atlantic:
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party)
in the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to
any person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic
Company with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive from
------
requesting, at the time of the Key Executive's termination of employment or
at any time thereafter, that the Chief Executive Officer of Bell Atlantic
waive, in his sole discretion, Bell Atlantic's rights to enforce some or
all of this Section.
10. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all property owned by each such company or in
which any such company has an interest,
<PAGE>
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. The Key Executive acknowledges that Bell Atlantic
or an applicable Bell Atlantic Company is the rightful owner of any programs,
ideas, inventions, discoveries, copyright material or trademarks which the Key
Executive may have originated or developed, or assisted in originating or
developing, during the Key Executive's period of employment with any Bell
Atlantic Company, where any such origination or development involved the use of
company time or resources, or the exercise of the Key Executive's
responsibilities for or on behalf of any such company. The Key Executive shall
at all times, both before and after termination of employment, cooperate with
Bell Atlantic in executing and delivering documents requested by any Bell
Atlantic Company, and taking any other actions, that are necessary or requested
by Bell Atlantic to assist any Bell Atlantic Company in patenting, copyrighting
or registering any programs, ideas, inventions, discoveries, copyright material
or trademarks, and to vest title thereto in the applicable company.
11. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. " Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's products or services; and other confidential matters
pertaining to or known by one or more Bell Atlantic Companies, including
confidential information of a third party which the Key Executive knows a Bell
Atlantic Company is bound to protect.
12. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
13. Assignment by Bell Atlantic. The obligations of Bell Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Bell
Atlantic. Bell Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
14. Non-Benefit Bearing Payments. The amounts to be paid, provided or
----------------------------
credited under Sections 4, 5, 6, 7, and 8 of this Agreement shall not be treated
as compensation for purposes of computing or determining any additional benefit
payable under any savings plan,
<PAGE>
insurance plan, pension plan, or other employee benefit plan maintained by any
Bell Atlantic Company.
15. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 5, 6, or 7 of this Agreement may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
16. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 9 (Non-Compete/No Solicitation) of this Agreement or engages in
serious misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
17. 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.
18. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 9 (Non-Compete/No Solicitation), 10
(Return of Property), 11 (Proprietary and Confidential Information), and 12
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
19. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
<PAGE>
20. 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 Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President
and General Counsel
(b) If to the Key Executive, to:
10003 High Hill Place
Great Falls, Virginia 22066
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
21. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 9 through
12 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
9 through 12 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief, as referred to in Section 18 of this Agreement. Notice of the existence
of a dispute which a party wishes to have resolved by arbitration shall be
provided pursuant to Section 20 of this Agreement. The arbitration shall be
expedited and conducted in New York, New York pursuant to the Center for Public
Resources ("CPR") Rules for Non-Administered Arbitration of Employment Disputes
in effect at the time of notice of the dispute before one neutral arbitrator
appointed by CPR from the CPR Panel of Neutrals unless the parties mutually
agree to the appointment of a different neutral arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16,
and judgment upon the award rendered by the arbitration may be entered by any
court having jurisdiction. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever 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.
22. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
23. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire
<PAGE>
understanding of Bell Atlantic and the Key Executive and shall supersede all
prior agreements and communications, whether oral or written, between Bell
Atlantic and the Key Executive including, without limitation, the Prior
Agreement. This Agreement shall not be modified except by written agreement of
the Key Executive and Bell Atlantic.
24. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
-----------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
-------------------------
Lawrence T. Babbio, Jr.
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key
Executive's employing company (the "Employer") on __________ , _____ (the
"Separation Date") pursuant to the terms of the Agreement, and the Key Executive
wishes to execute this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key
Executive might have against any Bell Atlantic Company, and any benefit plan
maintained by any Bell Atlantic Company (or any plan administrator of any such
plan), for salary payments, vacation pay, incentives, bonuses, or other
remuneration or employee benefits of any kind, with the exception of any
obligations of the Company or Employer arising after the Separation Date under
Sections 7 and 8 of the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621
et seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)),
- -- ---
the Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights
Act of 1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by
the Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by
any court to be illegal or invalid, the validity of the remaining parts, terms
or provisions shall not be affected thereby, and said illegal or invalid part,
term or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS
---------------------------------------------------
ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE. THE COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS
BENEFITS PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY
ENFORCEABLE BY THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE
PROVISIONS OF THIS RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A
PERIOD OF SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX,
FINANCIAL AND LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO
BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE
WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME
ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release
as of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
-----------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the
terms of the Agreement (the "Contract Payments") or of any other plan,
arrangement or agreement of any Bell Atlantic Company ("Other Payments"
and, together with the Contract Payments, 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
paragraph, Bell Atlantic shall pay to the Key Executive, at the time
specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Key Executive, after deduction of the Excise
Tax on 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 the Key Executive 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. For purposes of determining whether any
of the Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) 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 Bell Atlantic and reasonably acceptable to the Key Executive
("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; (ii) the amount of the Payments that shall
be treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code (after
applying clause (i) hereof); and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Independent Counsel
in accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, the
Key Executive 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 the Key
Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than
the amount previously taken into account hereunder, the Key Executive shall
repay to Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key Executive if such repayment results in a reduction
in Excise Tax or a federal, state and local income tax deduction) plus any
interest received by the Key Executive on the amount of such repayment,
provided, however, that if any such amount has been paid by the Key
Executive as an Excise Tax or other tax, the Key Executive shall cooperate
with Bell Atlantic in seeking a refund of any tax overpayments, and shall
not be required to make repayments to Bell Atlantic until the overpaid
taxes and interest thereon are refunded to the Key Executive. 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), Bell Atlantic shall
make an additional Gross-Up Payment in respect of such excess within thirty
(30) days of Bell Atlantic's receipt of notice of such final determination
or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the
regulations promulgated thereunder, the Key Executive shall be entitled, by
written notice to Bell Atlantic, to request a written opinion of
Independent Counsel regarding the application of such change to any of the
foregoing, and Bell Atlantic shall use its best efforts to cause such
opinion to be rendered as promptly as practicable. All fees and expenses
of Independent Counsel incurred in connection with this Exhibit B shall be
borne by Bell Atlantic.
<PAGE>
EXHIBIT 10b
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and James G. Cullen, President and Chief Executive Officer -
Telecom Group of Bell Atlantic (the "Key Executive"). In this Agreement, "Bell
Atlantic Companies" means all of, and "Bell Atlantic Company" means any one of,
Bell Atlantic, all corporate subsidiaries or other companies affiliated with
Bell Atlantic, all companies in which Bell Atlantic directly or indirectly owns
a substantial equity interest, and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Employment Agreement dated July 10, 1996 (the "Prior Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
------------------
"Term of Employment") shall commence on June 1, 1998 and end on the third
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager and shall compensate the Key
Executive at a base salary of (i) not less than his current base salary for
the period June 1, 1998 through August 13, 1998, and (ii) not less than
$750,000 per year (pro-rated for August 14, 1998 through December 31, 1998)
for the remainder of his Term of Employment.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for
a potential maximum award which shall not be less than the potential
maximum award he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.6 multiplied by the Key
Executive's base salary on the date of the grant.
<PAGE>
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently 10) and shall have an aggregate of 4 management
personal days and 5 weeks 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.
(e) Corporate Aircraft. Subject to the needs of the business, the Key
------------------
Executive shall be entitled to personal use of corporate aircraft for three
trips per year without geographic restriction, and unlimited reasonable
personal use of corporate aircraft within the Bell Atlantic footprint. The
Key Executive shall be responsible for the payment of taxes on imputed
income attributable to personal use of corporate aircraft, except that,
whenever the Key Executive uses corporate aircraft for business purposes
and is accompanied by an immediate family member whose use of corporate
aircraft results in the imputation of income to the Key Executive, the
Company shall pay the Key Executive additional cash compensation in an
amount sufficient to allow the Key Executive to pay taxes on (i) such
additional compensation, plus (ii) the income imputed to the Key Executive
because of such family member's use of corporate aircraft.
(f) Apartment. The Key Executive shall be entitled to use a corporate
---------
owned or leased apartment located in New York City on an as-needed basis.
(g) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to participate
in all of the benefit and compensation plans, and the programs or
perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
(h) Board of Directors. The Key Executive shall be nominated for
------------------
election to the Board of Directors of Bell Atlantic (the "Board") at each
annual meeting of shareowners which occurs prior to the end of the Term of
Employment.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Director and Officer. The Key Executive shall continue to fully and
--------------------
faithfully perform his duties and responsibilities (i) as a director, so
long as he is elected and serving, and (ii) as an officer, reporting only
to the Chief Executive Officer and the Board.
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board or the Chief
Executive Officer may from time to time prescribe, and the Key Executive
shall perform all duties incidental to such positions, shall cooperate
fully with the Board and the Chief Executive Officer, and shall work
cooperatively with the other officers of the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall continue to
-----------------------
diligently devote his entire business skill, time and effort to the affairs
of the Bell Atlantic Companies in accordance with the duties assigned to
him, and shall perform all such duties, and otherwise conduct himself, in a
manner reasonably calculated in good faith
<PAGE>
by him to promote the best interests of the Bell Atlantic Companies. Prior
to the Key Executive's termination of employment, except to the extent
specifically permitted by the Chief Executive Officer or the Board, and
except for memberships on boards of directors which the Key Executive holds
on the date of this Agreement, the Key Executive shall not, directly or
indirectly, render any services of a business, commercial or professional
nature to any other person or organization other than a Bell Atlantic
Company or a venture in which a Bell Atlantic Company has a financial
interest, whether or not the services are rendered for compensation.
4. IDP Credit. Upon the Key Executive's execution of this Agreement, Bell
----------
Atlantic shall credit $891,512 to the Company Contribution sub-account contained
within the Key Executive's account under the Bell Atlantic Income Deferral Plan
("IDP"). The parties acknowledge that such credit is in complete satisfaction
of, and will fully discharge, any right or entitlement that the Key Executive
may have, now or in the future, to the retirement pension benefits provided for
in Section 5 of the Prior Agreement.
5. Stay Incentive.
--------------
(a) Initial Payment. If the Key Executive has remained an "Employee in
---------------
Good Standing" (as hereinafter defined) of a Bell Atlantic Company from the
date of this Agreement to July 1, 1998, then Bell Atlantic will cause the
Bell Atlantic Company which then employs the Key Executive (i) to pay him,
not later than July 31, 1998, an amount of cash equal to (A) two times the
Key Executive's Pay as of July 1, 1998, less (B) $500,000, and (ii) to
credit $500,000 to his account under the IDP, in accordance with the
deferral election previously made by the Key Executive.
(b) Additional Payment. If the Key Executive has remained an Employee
------------------
in Good Standing of a Bell Atlantic Company from the date of this Agreement
to August 14, 1999, then Bell Atlantic will cause the Bell Atlantic Company
which then employs the Key Executive to pay him an additional amount equal
to 100 percent of his Pay as of August 14, 1999. This payment shall be made
in a single cash payment, not later than September 13, 1999.
(c) Definition of Pay. As used in this Section 5, "Pay" means the sum
-----------------
of (i) an amount equal to the Key Executive's then current base salary,
plus (ii) the greater of (A) the value of the Key Executive's most recent
award under the STIP or (B) 75% of the potential maximum award for the Key
Executive under the STIP for the performance year that includes the
relevant date. In the event that the most recent STIP award was prorated
for a portion of a year, the STIP award shall be annualized.
(d) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Executive will be considered to be an "Employee in Good
Standing" on a given date if, on or before that date, the Key Executive has
not terminated employment for any reason (other than "constructive
discharge" as defined in Section 7(d) of this Agreement), has not tendered
oral or written notice of intent to resign or retire effective as of a date
on or before the given date (other than pursuant to a "constructive
discharge" as defined in Section 7(d) of this Agreement), and has not
behaved in a manner that would be grounds for discharge with cause as
defined in Section 7(b) of this Agreement.
<PAGE>
6. Phantom Shares.
--------------
(a) Phantom Share Award. Upon the Key Executive's execution of the
-------------------
Agreement, Bell Atlantic shall establish a notional account on behalf of
the Key Executive and credit to that account 30,000 shares of Bell Atlantic
stock ("Phantom Shares"). This account shall further be credited, on each
subsequent dividend payment date for Bell Atlantic stock, with an amount
equivalent to the dividend payable on the number of shares of Bell Atlantic
stock equal to the number of Phantom Shares in the Key Executive's account
on the record date for such dividend. Such amount shall immediately be
converted to a number of additional Phantom Shares calculated by dividing
such amount by the value of Bell Atlantic stock, as determined pursuant to
Section 6(c)(i) of this Agreement.
(b) Cash Payment. Provided the Key Executive remains an Employee in
------------
Good Standing from the date of this Agreement to June 1, 2001, the Key
Executive shall be entitled to receive, not later than July 1, 2001, a cash
payment in an amount equal to the value of the Key Executive's Phantom
Shares in his notional account on June 1, 2001, as determined pursuant to
Section 6(c)(ii) of this Agreement.
(c) Value of Shares. The value of Bell Atlantic stock or Phantom Shares
---------------
shall be determined as follows:
(i) for purposes of Section 6(a) of this Agreement, such value
shall be the average of the high and low sale prices of Bell Atlantic
stock on the New York Stock Exchange ("NYSE") on the applicable
dividend payment date;
(ii) for purposes of Section 6(b) of this Agreement, such value
shall be the greater of (A) the average of the high and low sale prices
of Bell Atlantic stock on the NYSE on June 1, 2001, or (B) the average
of the daily high and low sale prices of Bell Atlantic stock on the
NYSE for the period of twenty trading days ending on June 1, 2001, or
the period of twenty trading days immediately preceding June 1, 2001 if
the NYSE is closed on that date; and
(iii) for purposes of Section 7(c)(iii) of this Agreement, such
value shall be determined in the manner described in clause (ii) above,
except that the Key Executive's separation date shall be used instead
of June 1, 2001.
(d) Stock Split. The number of Phantom Shares provided for in this
-----------
Section 6 shall be adjusted to reflect the two for one split of Bell
Atlantic stock that is scheduled to occur in June, 1998, plus any further
stock splits, corporate reorganizations or other changes in capital
structure that may occur.
7. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined), or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key
<PAGE>
Executive shall forfeit any and all rights to receive the compensation and
benefits set forth in Sections 2 and 5 of this Agreement which as of the
relevant date have not yet been earned under this Agreement, and shall
forfeit the right to receive the compensation set forth in Section 6 of
this Agreement, but shall otherwise be eligible to receive any and all
compensation and benefits for which a similarly-situated senior manager
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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the Employee Code of
Business Conduct or Paragraphs 9 (Non-Compete/No Solicitation), 10 (Return
of Property; Intellectual Property Rights) or 11 (Proprietary and
Confidential Information) of this Agreement; each of the foregoing as
determined in the reasonable discretion and judgment of the Chief Executive
Officer of Bell Atlantic, or (ii) commission of any felony of which the Key
Executive is finally adjudged guilty in a court of competent jurisdiction.
In the event that Bell Atlantic terminates the employment of the Key
Executive for cause, it will state in writing the grounds for such
termination and provide this statement to the Key Executive within 10
business days after the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or the
Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment, then the Key Executive shall be
entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit, or benefit otherwise
provided in Sections 2, 5 and 6 of this Agreement, provided that each
payment, credit and benefit shall be contingent upon the absence, at the
time such payment, credit or benefit is due, of any act that would
constitute a material breach of this Agreement:
(i) Salary: through the Term of Employment, on a monthly basis,
an amount equal to the monthly salary which would have been paid to the
Key Executive under Section 2 of this Agreement, assuming that his
annual rate of salary would have been increased each January 1 by the
greater of (A) 5%, or (B) the general percentage increase, if any,
approved by the Human Resources Committee ("HRC") of the Board for
comparable positions in the senior management group based on the HRC's
review of market-median values for such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on an
annual basis, not later than 30 days after the date on which incentives
are awarded by Bell Atlantic under the STIP for the prior year's
performance, an amount equal to the value of the potential maximum
award which the Key Executive would have been entitled to receive under
the STIP based on the
<PAGE>
maximum STIP award for comparable positions in the senior management
group, without adjustment for individual performance;
(iii) Phantom Shares: not later than 30 days after the Key
Executive's separation from service, an amount equal to the total value
of the Phantom Shares in the Key Executive's Phantom Shares' account on
the date of such separation from service, as determined pursuant to
Section 6(c)(iii) of this Agreement;
(iv) Stock Options: through the Term of Employment, on an annual
basis, within 30 days of the granting of stock options for the year to
senior managers, an amount equal to 1.6 multiplied by the annual salary
amount determined in accordance with clause (i) above; provided
further, with respect to any and all Bell Atlantic stock options which
are outstanding on the date of the Key Executive's separation from
service, the Key Executive shall be deemed, for purposes of determining
the duration of the Key Executive's right to exercise any and all such
stock options, to have remained in active service with Bell Atlantic
continuously through the Term of Employment, and then to have separated
from service with whatever rights would then be applicable to a holder
of such options under the Stock Option Plan;
(v) IDP Benefits: through the Term of Employment, company
credits to the Company Contribution sub-account contained within the
Key Executive's account under the IDP to the fullest extent provided,
and at the same time such amounts would have been credited, as if the
Key Executive had remained actively employed until the end of the Term
of Employment and received the salary and maximum STIP awards
determined in accordance with clauses (i) and (ii) above; provided
further, that Bell Atlantic shall also credit to such IDP sub-account
an amount each year equal to the sum of (A) the amount which the Key
Executive would otherwise have been eligible to receive as company
matching contributions under the Bell Atlantic Savings Plan or any
successor to that plan (if he had fully participated in contributions
to that plan) and (B) the pay credits which the Key Executive would
otherwise have been eligible to receive under the Bell Atlantic Cash
Balance Plan or any successor to that plan;
(vi) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under the terms of the Bell Atlantic
Senior Management Estate Management Program;
(vii) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,500 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive;
and
(viii) Stay Incentive: on the dates specified in Section 5(a) and
5(b), the amounts specified in those sections, provided that, for
purposes of calculating the Section 5(b) amount, if the separation from
service occurs prior to January 1, 1999, the Key Executive's salary and
maximum STIP award shall be determined in accordance with clauses (i)
and (ii) above.
<PAGE>
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an Employee in Good Standing and he terminates his employment
for any of the following reasons: Bell Atlantic (or the Key Executive's
employing company) has materially breached this Agreement; the Key
Executive's responsibilities have been significantly reduced in type or
scope; there has been a significant adverse change in the Key Executive's
reporting relationship; there has been a significant adverse change in the
Key Executive's relative compensation (including a negative individual
performance adjustment which causes the Key Executive's STIP award for a
particular year to be reduced by 10% or more); Ivan Seidenberg is not
elected Chairman of the Board by December 31, 1998 or is removed from or
resigns from that position during the Term of Employment (unless the Board
determines that such event results from Mr. Seidenberg's death,
"Disability" (as defined in Section 4(a) of his Employment Agreement, dated
as of August 14, 1997), or his election to terminate his employment
"without Good Reason" (as provided in Section 4(c) of his Employment
Agreement)); or there has been a "change of control" of Bell Atlantic. For
purposes of this Agreement, a change of control of Bell Atlantic shall mean
that any of the following events or circumstances has occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of
stock of Bell Atlantic representing 20% or more of the total voting
power of Bell Atlantic's then outstanding voting stock, provided,
however, that if such beneficial ownership is acquired in a transaction
that has been negotiated and approved by the Board, such acquisition of
beneficial ownership shall not be treated as a change of control of
Bell Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is required to
be made with the Securities and Exchange Commission under section 14(d)
of the Securities Exchange Act of 1934) is made for the stock of Bell
Atlantic, and the Person making the offer owns or has accepted for
payment shares of one or more classes of Bell Atlantic stock which
represent, when combined with any shares otherwise acquired and owned
by such Person, 20% or more of the total voting power of Bell
Atlantic's then outstanding stock, provided, however, that if such
tender offer has been negotiated and approved by the Board, such tender
offer and stock acquisition shall not be treated as a change of control
of Bell Atlantic for purposes of this Agreement; or
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously
for a period of not less than two years, or (B) are new directors whose
election by the Board or nomination for election by shareowners of Bell
Atlantic was approved by a vote of at least two-thirds of the directors
then in office who either were directors described in clause (A) hereof
or whose election or nomination for election was previously so
approved.
<PAGE>
(e) Disability or Death. If, during the Term of Employment at a time
-------------------
when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release
in the form of Exhibit A from the Key Executive (in the case of disability)
or from his estate (in the case of death), then Bell Atlantic shall pay to
the Key Executive (in the case of disability) or pay to the Key Executive's
estate (in the case of death) the amounts determined as if, at the date of
termination of employment on account of disability or death, the Key
Executive had been terminated without cause under Section 7(c) of this
Agreement; provided, however, that in the case of a termination of
employment on account of disability, the amounts paid pursuant to Sections
7(c)(i) and (ii) of this Agreement shall reduce dollar for dollar the
disability benefits which would otherwise be payable to the Key Executive
during the remainder of the Term of Employment under the various disability
benefit plans in which he participates.
8. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
9. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined in
Section 9(b) of this Agreement); or
(ii) 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, however, that the Key Executive's 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 the Key
Executive's equity interest in any such company is less than a
controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic
<PAGE>
Companies, and (ii) for which the Key Executive then has responsibility to
plan, develop, manage, market or oversee, or had any such responsibility
within the prior 24 months. Notwithstanding the previous sentence, a
business activity will not be treated as a Competitive Activity if the
geographic marketing area of the relevant products or services sold by the
Key Executive or a third party does not overlap with the geographic
marketing area for the applicable products and services of the Bell
Atlantic Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of employment
for any reason from all Bell Atlantic Companies, the Key Executive shall
not, without the consent of the Chief Executive Officer of Bell Atlantic:
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party) in
the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to any
person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic Company
with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive from
------
requesting, at the time of the Key Executive's termination of employment or
at any time thereafter, that the Chief Executive Officer of Bell Atlantic
waive, in his sole discretion, Bell Atlantic's rights to enforce some or
all of this Section.
10. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all property owned by each such company or in
which any such company has an interest, including files, documents, data and
records (whether on paper or in tapes, disks, or other machine-readable form),
office equipment, credit cards and employee identification cards. The Key
Executive acknowledges that Bell Atlantic or an applicable Bell Atlantic Company
is the rightful owner of any programs, ideas, inventions, discoveries, copyright
material or trademarks which the Key Executive may have originated or developed,
or assisted in originating or developing, during the Key Executive's period of
employment with any Bell Atlantic Company, where any such origination or
development involved the use of company time or resources, or the exercise of
the Key Executive's responsibilities for or on behalf of any such company. The
Key Executive shall at all times, both before and after termination of
employment, cooperate with Bell Atlantic in executing and delivering documents
requested by any Bell Atlantic Company, and taking any other actions, that are
necessary or requested by Bell Atlantic to assist any Bell Atlantic Company in
patenting, copyrighting or registering any programs, ideas, inventions,
discoveries, copyright material or trademarks, and to vest title thereto in the
applicable company.
<PAGE>
11. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. "Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's products or services; and other confidential matters
pertaining to or known by one or more Bell Atlantic Companies, including
confidential information of a third party which the Key Executive knows a Bell
Atlantic Company is bound to protect.
12. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
13. Assignment by Bell Atlantic. The obligations of Bell Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Bell
Atlantic. Bell Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
14. Non-Benefit Bearing Payments. The amounts to be paid, provided or
----------------------------
credited under Sections 4, 5, 6, 7, and 8 of this Agreement shall not be treated
as compensation for purposes of computing or determining any additional benefit
to be paid, provided or credited under any savings plan, insurance plan, pension
plan, or other employee benefit plan maintained by any Bell Atlantic Company.
15. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 5, 6, or 7 of this Agreement may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
16. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 9 (Non-Compete/No Solicitation) of this Agreement or engages in
serious misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
<PAGE>
17. 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.
18. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 9 (Non-Compete/No Solicitation), 10
(Return of Property), 11 (Proprietary and Confidential Information), and 12
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
19. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
20. 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:
<PAGE>
(a) If to Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President
and General Counsel
(b) If to the Key Executive, to:
407 Duke St.
Alexandria, Virginia 22314
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
21. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 9 through
12 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
9 through 12 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief, as referred to in Section 18 of this Agreement. Notice of the existence
of a dispute which a party wishes to have resolved by arbitration shall be
provided pursuant to Section 20 of this Agreement. The arbitration shall be
expedited and conducted in New York, New York pursuant to the Center for Public
Resources ("CPR") Rules for Non-Administered Arbitration of Employment Disputes
in effect at the time of notice of the dispute before one neutral arbitrator
appointed by CPR from the CPR Panel of Neutrals unless the parties mutually
agree to the appointment of a different neutral arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16,
and judgment upon the award rendered by the arbitration may be entered by any
court having jurisdiction. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever 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.
22. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
23. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire understanding of Bell Atlantic and the Key Executive and shall
supersede all prior agreements and communications, whether oral or written,
between Bell Atlantic and the Key Executive including, without limitation, the
Prior Agreement. This Agreement shall not be modified except by written
agreement of the Key Executive and Bell Atlantic.
<PAGE>
24. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
-----------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
------------------
James G. Cullen
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key
Executive's employing company (the "Employer") on __________ , _____ (the
"Separation Date") pursuant to the terms of the Agreement, and the Key Executive
wishes to execute this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key
Executive might have against any Bell Atlantic Company, and any benefit plan
maintained by any Bell Atlantic Company (or any plan administrator of any such
plan), for salary payments, vacation pay, incentives, bonuses, or other
remuneration or employee benefits of any kind, with the exception of any
obligations of the Company or Employer arising after the Separation Date under
Sections 7 and 8 of the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
--
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
- ---
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by
the Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by
any court to be illegal or invalid, the validity of the remaining parts, terms
or provisions shall not be affected thereby, and said illegal or invalid part,
term or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS
---------------------------------------------------
ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE. THE COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS
BENEFITS PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY
ENFORCEABLE BY THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE
PROVISIONS OF THIS RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A
PERIOD OF SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX,
FINANCIAL AND LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO
BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE
WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME
ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release
as of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the terms
of the Agreement (the "Contract Payments") or of any other plan, arrangement or
agreement of any Bell Atlantic Company ("Other Payments" and, together with the
Contract Payments, 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 paragraph, Bell Atlantic shall pay to the
Key Executive, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Key Executive, after
deduction of the Excise Tax on 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 the Key Executive 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. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) 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 Bell Atlantic and reasonably acceptable to
the Key Executive ("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; (ii) the amount of the Payments that shall be treated
as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code (after applying clause (i)
hereof); and (iii) the value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Key Executive 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 the Key Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than the
amount previously taken into account hereunder, the Key Executive shall repay to
Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key
Executive if such repayment results in a reduction in Excise Tax or a federal,
state and local income tax deduction) plus any interest received by the Key
Executive on the amount of such repayment, provided, however, that if any such
amount has been paid by the Key Executive as an Excise Tax or other tax, the Key
Executive shall cooperate with Bell Atlantic in seeking a refund of any tax
overpayments, and shall not be required to make repayments to Bell Atlantic
until the overpaid taxes and interest thereon are refunded to the Key Executive.
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), Bell Atlantic shall make an additional Gross-
Up Payment in respect of such excess within thirty (30) days of Bell Atlantic's
receipt of notice of such final determination or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Key Executive shall be entitled, by written notice
to Bell Atlantic, to request a written opinion of Independent Counsel regarding
the application of such change to any of the foregoing, and Bell Atlantic shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Independent Counsel incurred in connection
with this Exhibit B shall be borne by Bell Atlantic.
<PAGE>
EXHIBIT 10.C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and Frederic V. Salerno, Senior Executive Vice President and
Chief Financial Officer/Strategy and Business Development of Bell Atlantic (the
"Key Executive"). In this Agreement, "Bell Atlantic Companies" means all of, and
"Bell Atlantic Company" means any one of, Bell Atlantic, all corporate
subsidiaries or other companies affiliated with Bell Atlantic, all companies in
which Bell Atlantic directly or indirectly owns a substantial equity interest,
and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Executive Retention and Employment Agreement last amended January 27, 1997
(the "Prior Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
-------------------
"Term of Employment") shall commence on June 1, 1998 and end on the third
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
-------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager and shall compensate the Key
Executive at a base salary of not less than his current base salary.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for
a potential maximum award which shall not be less than the potential
maximum award he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.6 multiplied by the Key
Executive's base salary on the date of grant.
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently 11) and shall have an aggregate of 4 management
personal days and 5 weeks
<PAGE>
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.
(e) Corporate Aircraft. Subject to the needs of the business, the Key
------------------
Executive shall be entitled to personal use of corporate aircraft for three
trips per year without geographic restriction, and unlimited reasonable
personal use of corporate aircraft within the Bell Atlantic footprint. The
Key Executive shall be responsible for the payment of taxes on imputed
income attributable to personal use of corporate aircraft, except that,
whenever the Key Executive uses corporate aircraft for business purposes
and is accompanied by an immediate family member whose use of corporate
aircraft results in the imputation of income to the Key Executive, the
Company shall pay the Key Executive additional cash compensation in an
amount sufficient to allow the Key Executive to pay taxes on (i) such
additional compensation, plus (ii) the income imputed to the Key Executive
because of such family member's use of corporate aircraft.
(f) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to participate
in all of the benefit and compensation plans, and the programs or
perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
(g) Board of Directors. The Key Executive shall be nominated for
------------------
election to the Board of Directors of Bell Atlantic (the "Board") at each
annual meeting of shareowners which occurs prior to the end of the Term of
Employment.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Director and Officer. The Key Executive shall continue to fully
--------------------
and faithfully perform his duties and responsibilities (i) as a director,
so long as he is elected and serving, and (ii) as an officer, reporting
only to the Chief Executive Officer and the Board.
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board or the Chief
Executive Officer may from time to time prescribe, and the Key Executive
shall perform all duties incidental to such positions, shall cooperate
fully with the Board and the Chief Executive Officer, and shall work
cooperatively with the other officers of the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall continue to
-----------------------
diligently devote his entire business skill, time and effort to the affairs
of the Bell Atlantic Companies in accordance with the duties assigned to
him, and shall perform all such duties, and otherwise conduct himself, in a
manner reasonably calculated in good faith by him to promote the best
interests of the Bell Atlantic Companies. Prior to the Key Executive's
termination of employment, except to the extent specifically permitted by
the Chief Executive Officer or the Board, and except for memberships on
boards of directors which the Key Executive holds on the date of this
Agreement, the Key Executive shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other
person or organization other than a Bell Atlantic
<PAGE>
Company or a venture in which a Bell Atlantic Company has a financial
interest, whether or not the services are rendered for compensation.
4. Potential Interim Amount. Upon the Key Executive's execution of this
------------------------
Agreement, Bell Atlantic shall credit $1,586,871 to the Company Contribution
sub-account contained within the Key Executive's account under the Bell Atlantic
Income Deferral Plan ("IDP"). The parties acknowledge that such credit is in
complete satisfaction of and will fully discharge any right or entitlement that
the Key Executive may have, now or in the future, to a Potential Interim Amount
("PIA") under the IDP or under any other benefit plan maintained by any Bell
Atlantic Company.
5. Prior Agreement Payments.
------------------------
(a) Retention Award. Upon the Key Executive's execution of this
---------------
Agreement, the Key Executive will forfeit any right or entitlement that he
may have, now or in the future, to the Retention Award provided for in
Section 3(f) of the Prior Agreement. In lieu thereof, Bell Atlantic shall
credit the Key Executive's account under the IDP with the number of Bell
Atlantic shares comprising, as of June 1, 1998, the Retention Award. This
credit shall be allocated in full to the Bell Atlantic Shares Fund
maintained under the IDP, which fund shall be adjusted to reflect the two
for one split of Bell Atlantic stock that is scheduled to occur in June,
1998 plus any further stock splits, corporate reorganizations or other
changes in capital structure that may occur; provided, further, that the
Key Executive shall have the right to change this allocation from the Bell
Atlantic Shares Fund to any other permitted investment option in accordance
with the terms of the IDP.
(b) Severance. Upon the Key Executive's execution of this Agreement,
---------
Bell Atlantic shall credit the Key Executive's account under the IDP with
the value of the Severance Payment, including the Global Balanced Fund
Account, provided for in Section 3(i) of the Prior Agreement. Such value
shall be determined in accordance with the provisions of the Prior
Agreement, except that the value shall be determined as of June 1, 1998.
The parties acknowledge that this credit to the IDP shall be in complete
satisfaction of, and will fully discharge, any right or entitlement that
the Key Executive may have, now or in the future, to the Severance Payment.
6. Phantom Shares.
--------------
(a) Phantom Share Award. Upon the Key Executive's execution of this
-------------------
Agreement, Bell Atlantic shall establish a notional account on behalf of
the Key Executive and credit to that account 30,000 shares of Bell Atlantic
stock ("Phantom Shares"). This account shall further be credited, on each
subsequent dividend payment date for Bell Atlantic stock, with an amount
equivalent to the dividend payable on the number of shares of Bell Atlantic
stock equal to the number of Phantom Shares in the Key Executive's account
on the record date for such dividend. Such amount shall immediately be
converted to a number of additional Phantom Shares calculated by dividing
such amount by the value of Bell Atlantic stock, as determined pursuant to
Section 6(c)(i) of this Agreement.
<PAGE>
(b) Cash Payment. Provided the Key Executive remains an "Employee in
------------
Good Standing" from the date of this Agreement to June 1, 2001, the Key
Executive shall be entitled to receive, not later than July 1, 2001, a cash
payment in an amount equal to the value of the Key Executive's Phantom
Shares in his notional account on June 1, 2001, as determined pursuant to
Section 6(c)(ii) of this Agreement.
(c) Value of Shares. The value of Bell Atlantic stock or Phantom
---------------
Shares shall be determined as follows:
(i) for purposes of Section 6(a) of this Agreement, such value
shall be the average of the high and low sale prices of Bell Atlantic
stock on the New York Stock Exchange ("NYSE") on the applicable
dividend payment date;
(ii) for purposes of Section 6(b) of this Agreement, such value
shall be the greater of (A) the average of the high and low sale prices
of Bell Atlantic stock on the NYSE on June 1, 2001, or (B) the average
of the daily high and low sale prices of Bell Atlantic stock on the
NYSE for the period of twenty trading days ending on June 1, 2001, or
the period of twenty trading days immediately preceding June 1, 2001 if
the NYSE is closed on that date; and
(iii) for purposes of Section 7(c)(iii) of this Agreement, such
value shall be determined in the manner described in clause (ii) above,
except that the Key Executive's separation date shall be used instead
of June 1, 2001.
(d) Stock Split. The number of Phantom Shares provided for in this
-----------
Section 6 shall be adjusted to reflect the two for one split of Bell
Atlantic stock that is scheduled to occur in June, 1998, plus any further
stock splits, corporate reorganizations or other changes in capital
structure that may occur.
(e) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Executive will be considered to be an "Employee in Good
Standing" on a given date if, on or before that date, the Key Executive has
not terminated employment for any reason (other than "constructive
discharge" as defined in Section 7(d) of this Agreement), has not tendered
oral or written notice of intent to resign or retire effective as of a date
on or before the given date (other than pursuant to a "constructive
discharge" as defined in Section 7(d) of this Agreement), and has not
behaved in a manner that would be grounds for discharge with cause as
defined in Section 7(b) of this Agreement.
7. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
---------------------------------------------------------
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined), or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key Executive shall forfeit any and
all rights to receive the compensation and benefits set forth in Section 2
of this Agreement which as of the relevant date have not yet been earned
under this Agreement, and shall forfeit the right to receive the
compensation set forth in Section 6 of this Agreement, but shall otherwise
be eligible to receive any and
<PAGE>
all compensation and benefits for which a similarly-situated senior manager
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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the Employee Code of
Business Conduct or Paragraphs 9 (Non-Compete/No Solicitation), 10 (Return
of Property; Intellectual Property Rights) or 11 (Proprietary and
Confidential Information) of this Agreement; each of the foregoing as
determined in the reasonable discretion and judgment of the Chief Executive
Officer of Bell Atlantic, or (ii) commission of any felony of which the Key
Executive is finally adjudged guilty in a court of competent jurisdiction.
In the event that Bell Atlantic terminates the employment of the Key
Executive for cause, it will state in writing the grounds for such
termination and provide this statement to the Key Executive within 10
business days after the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or the
Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment, then the Key Executive shall be
entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit, or benefit otherwise
provided in Sections 2 and 6 of this Agreement, provided that each payment,
credit and benefit shall be contingent upon the absence, at the time such
payment, credit or benefit is due, of any act that would constitute a
material breach of this Agreement:
(i) Salary: through the Term of Employment, on a monthly basis,
an amount equal to the monthly salary which would have been paid to the
Key Executive under Section 2 of this Agreement, assuming that his
annual rate of salary would have been increased each January 1 by the
greater of (A) 5%, or (B) the general percentage increase, if any,
approved by the Human Resources Committee ("HRC") of the Board for
comparable positions in the senior management group based on the HRC's
review of market-median values for such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on an
annual basis, not later than 30 days after the date on which incentives
are awarded by Bell Atlantic under the STIP for the prior year's
performance, an amount equal to the value of the potential maximum
award which the Key Executive would have been entitled to receive under
the STIP based on the maximum STIP award for comparable positions in
the senior management group, without adjustment for individual
performance;
(iii) Phantom Shares: not later than 30 days after the Key
Executive's separation from service, an amount equal to the total value
of the Phantom Shares in the Key Executive's Phantom Shares' account on
the date of such
<PAGE>
separation from service, as determined pursuant to Section 6(c)(iii)
of this Agreement;
(iv) Stock Options: through the Term of Employment, on an
annual basis, within 30 days of the granting of stock options for the
year to senior managers, an amount equal to 1.6 multiplied by the
annual salary amount determined in accordance with clause (i) above;
provided further, with respect to any and all Bell Atlantic stock
options which are outstanding on the date of the Key Executive's
separation from service, the Key Executive shall be deemed, for
purposes of determining the duration of the Key Executive's right to
exercise any and all such stock options, to have remained in active
service with Bell Atlantic continuously through the Term of
Employment, and then to have separated from service with whatever
rights would then be applicable to a holder of such options under the
Stock Option Plan;
(v) IDP Benefits: through the Term of Employment, company
credits to the Company Contribution sub-account contained within the
Key Executive's account under the IDP to the fullest extent provided,
and at the same time such amounts would have been credited, as if the
Key Executive had remained actively employed until the end of the Term
of Employment and received the salary and maximum STIP awards
determined in accordance with clauses (i) and (ii) above; provided
further, that Bell Atlantic shall also credit to such IDP sub-account
an amount each year equal to the sum of (A) the amount which the Key
Executive would otherwise have been eligible to receive as company
matching contributions under the Bell Atlantic Savings Plan or any
successor to that plan (if he had fully participated in contributions
to that plan) and (B) the pay credits which the Key Executive would
otherwise have been eligible to receive under the Bell Atlantic Cash
Balance Plan or any successor to that plan;
(vi) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under the terms of the Bell Atlantic
Senior Management Estate Management Program; and
(vii) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,500 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive.
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an Employee in Good Standing and he terminates his employment
for any of the following reasons: Bell Atlantic (or the Key Executive's
employing company) has materially breached this Agreement; the Key
Executive's responsibilities have been significantly reduced in type or
scope; there has been a significant adverse change in the Key Executive's
reporting relationship; there has been a significant adverse change in the
Key Executive's relative compensation (including a negative individual
performance adjustment which causes the Key Executive's STIP award for a
particular year to be reduced by 10% or more); Ivan Seidenberg is not
elected Chairman of the
<PAGE>
Board by December 31, 1998 or is removed from or resigns from that position
during the Term of Employment (unless the Board determines that such event
results from Mr. Seidenberg's death, "Disability" (as defined in Section
4(a) of his Employment Agreement, dated as of August 14, 1998), or his
election to terminate his employment "without Good Reason" (as provided in
Section 4(c) of his Employment Agreement)); or there has been a "change of
control" of Bell Atlantic. For purposes of this Agreement, a change of
control of Bell Atlantic shall mean that any of the following events or
circumstances has occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of
stock of Bell Atlantic representing 20% or more of the total voting
power of Bell Atlantic's then outstanding voting stock, provided,
however, that if such beneficial ownership is acquired in a
transaction that has been negotiated and approved by the Board, such
acquisition of beneficial ownership shall not be treated as a change
of control of Bell Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is required
to be made with the Securities and Exchange Commission under section
14(d) of the Securities Exchange Act of 1934) is made for the stock of
Bell Atlantic, and the Person making the offer owns or has accepted
for payment shares of one or more classes of Bell Atlantic stock which
represent, when combined with any shares otherwise acquired and owned
by such Person, 20% or more of the total voting power of Bell
Atlantic's then outstanding stock, provided, however, that if such
tender offer has been negotiated and approved by the Board, such
tender offer and stock acquisition shall not be treated as a change of
control of Bell Atlantic for purposes of this Agreement; or
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously
for a period of not less than two years, or (B) are new directors
whose election by the Board or nomination for election by shareowners
of Bell Atlantic was approved by a vote of at least two-thirds of the
directors then in office who either were directors described in clause
(A) hereof or whose election or nomination for election was previously
so approved.
(e) Disability or Death. If, during the Term of Employment at a time
-------------------
when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release
in the form of Exhibit A from the Key Executive (in the case of disability)
or from his estate (in the case of death), then Bell Atlantic shall pay to
the Key Executive (in the case of disability) or pay to the Key Executive's
estate (in the case of death) the amounts determined as if, at the date of
termination of employment on account of disability or death, the Key
Executive had been terminated without cause under Section 7(c) of this
Agreement; provided, however, that in the case of a termination of
employment on account of disability, the amounts paid pursuant to Sections
7(c)(i) and (ii) of this Agreement shall reduce dollar
<PAGE>
for dollar the disability benefits which would otherwise be payable to the
Key Executive during the remainder of the Term of Employment under the
various disability benefit plans in which he participates.
8. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
9. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined in
Section 9(b) of this Agreement); or
(ii) 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, however, that the Key Executive's
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
the Key Executive's equity interest in any such company is less than a
controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic Companies, and (ii) for which
the Key Executive then has responsibility to plan, develop, manage, market
or oversee, or had any such responsibility within the prior 24 months.
Notwithstanding the previous sentence, a business activity will not be
treated as a Competitive Activity if the geographic marketing area of the
relevant products or services sold by the Key Executive or a third party
does not overlap with the geographic marketing area for the applicable
products and services of the Bell Atlantic Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of employment
for any reason from all Bell Atlantic Companies, the Key Executive shall
not, without the consent of the Chief Executive Officer of Bell Atlantic:
<PAGE>
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party) in
the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to
any person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic Company
with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive from
------
requesting, at the time of the Key Executive's termination of employment or
at any time thereafter, that the Chief Executive Officer of Bell Atlantic
waive, in his sole discretion, Bell Atlantic's rights to enforce some or
all of this Section.
10. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all property owned by each such company or in
which any such company has an interest, including files, documents, data and
records (whether on paper or in tapes, disks, or other machine-readable form),
office equipment, credit cards and employee identification cards. The Key
Executive acknowledges that Bell Atlantic or an applicable Bell Atlantic Company
is the rightful owner of any programs, ideas, inventions, discoveries, copyright
material or trademarks which the Key Executive may have originated or developed,
or assisted in originating or developing, during the Key Executive's period of
employment with any Bell Atlantic Company, where any such origination or
development involved the use of company time or resources, or the exercise of
the Key Executive's responsibilities for or on behalf of any such company. The
Key Executive shall at all times, both before and after termination of
employment, cooperate with Bell Atlantic in executing and delivering documents
requested by any Bell Atlantic Company, and taking any other actions, that are
necessary or requested by Bell Atlantic to assist any Bell Atlantic Company in
patenting, copyrighting or registering any programs, ideas, inventions,
discoveries, copyright material or trademarks, and to vest title thereto in the
applicable company.
11. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. "Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's
<PAGE>
products or services; and other confidential matters pertaining to or known by
one or more Bell Atlantic Companies, including confidential information of a
third party which the Key Executive knows a Bell Atlantic Company is bound to
protect.
12. Nondisclosure. Unless and until the precise terms of this Agreement, and
-------------
the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
13. Assignment by Bell Atlantic. The obligations of Bell Atlantic hereunder
---------------------------
shall be the obligations of any and all successors and assigns of Bell Atlantic.
Bell Atlantic may assign this Agreement without the Key Executive's consent to
any company that acquires all or substantially all of the stock or assets of
Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
14. Non-Benefit Bearing Payments. The amounts to be paid, provided or
----------------------------
credited under Sections 4, 5, 6, 7, and 8 of this Agreement shall not be treated
as compensation for purposes of computing or determining any additional benefit
payable under any savings plan, insurance plan, pension plan, or other employee
benefit plan maintained by any Bell Atlantic Company.
15. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 6 or 7 of this Agreement may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
16. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 9 (Non-Compete/No Solicitation) of this Agreement or engages in
serious misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
17. 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.
18. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 9 (Non-Compete/No Solicitation), 10
(Return of Property), 11 Proprietary and Confidential Information), and 12
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
<PAGE>
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
19. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
20. 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 Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President and General Counsel
(b) If to the Key Executive, to:
8 Commodore Ave.
Rye, New York 10580
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
21. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 9 through
12 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
9 through 12 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief,
<PAGE>
including but not limited to injunctive relief, as referred to in Section 18 of
this Agreement. Notice of the existence of a dispute which a party wishes to
have resolved by arbitration shall be provided pursuant to Section 20 of this
Agreement. The arbitration shall be expedited and conducted in New York, New
York pursuant to the Center for Public Resources ("CPR") Rules for Non-
Administered Arbitration of Employment Disputes in effect at the time of notice
of the dispute before one neutral arbitrator appointed by CPR from the CPR Panel
of Neutrals unless the parties mutually agree to the appointment of a different
neutral arbitrator. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered by
the arbitration may be entered by any court having jurisdiction. The finding of
the arbitrator may not change the express terms of this Agreement and shall be
consistent with the arbitrator's understanding of the findings a court of proper
jurisdiction would make in applying the applicable law to the facts underlying
the dispute. In no event whatsoever 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.
22. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
23. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire understanding of Bell Atlantic and the Key Executive and shall
supersede all prior agreements and communications, whether oral or written,
between Bell Atlantic and the Key Executive including, without limitation, the
Prior Agreement. This Agreement shall not be modified except by written
agreement of the Key Executive and Bell Atlantic.
24. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
------------------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
-----------------------------------------
Frederic V. Salerno
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key Executive's
employing company (the "Employer") on __________ , _____ (the "Separation Date")
pursuant to the terms of the Agreement, and the Key Executive wishes to execute
this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key Executive
might have against any Bell Atlantic Company, and any benefit plan maintained by
any Bell Atlantic Company (or any plan administrator of any such plan), for
salary payments, vacation pay, incentives, bonuses, or other remuneration or
employee benefits of any kind, with the exception of any obligations of the
Company or Employer arising after the Separation Date under Sections 7 and 8 of
the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
--
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
- ---
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by the
Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by any
court to be illegal or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby, and said illegal or invalid part, term
or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS ADVISED
---------------------------------------------------
ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE. THE
COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS BENEFITS
PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY ENFORCEABLE BY
THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE PROVISIONS OF THIS
RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A PERIOD OF
SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX, FINANCIAL AND
LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO BE LEGALLY
BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE WITHIN SEVEN
(7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME ENFORCEABLE OR
EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release as
of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
---------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the
terms of the Agreement (the "Contract Payments") or of any other plan,
arrangement or agreement of any Bell Atlantic Company ("Other Payments"
and, together with the Contract Payments, 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
paragraph, Bell Atlantic shall pay to the Key Executive, at the time
specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Key Executive, after deduction of the Excise
Tax on 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 the Key Executive 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. For purposes of determining whether any
of the Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) 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 Bell Atlantic and reasonably acceptable to the Key Executive
("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; (ii) the amount of the Payments that shall
be treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code (after
applying clause (i) hereof); and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Independent Counsel
in accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, the
Key Executive 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 the Key
Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than
the amount previously taken into account hereunder, the Key Executive shall
repay to Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key Executive if such repayment results in a reduction
in Excise Tax or a federal, state and local income tax deduction) plus any
interest received by the Key Executive on the amount of such repayment,
provided, however, that if any such amount has been paid by the Key
Executive as an Excise Tax or other tax, the Key Executive shall cooperate
with Bell Atlantic in seeking a refund of any tax overpayments, and shall
not be required to make repayments to Bell Atlantic until the overpaid
taxes and interest thereon are refunded to the Key Executive. 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), Bell Atlantic shall
make an additional Gross-Up Payment in respect of such excess within thirty
(30) days of Bell Atlantic's receipt of notice of such final determination
or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the
regulations promulgated thereunder, the Key Executive shall be entitled, by
written notice to Bell Atlantic, to request a written opinion of
Independent Counsel regarding the application of such change to any of the
foregoing, and Bell Atlantic shall use its best efforts to cause such
opinion to be rendered as promptly as practicable. All fees and expenses
of Independent Counsel incurred in connection with this Exhibit B shall be
borne by Bell Atlantic.
<PAGE>
EXHIBIT 10d
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and Donald J. Sacco, Executive Vice President - Human
Resources of Bell Atlantic (the "Key Executive"). In this Agreement, "Bell
Atlantic Companies" means all of, and "Bell Atlantic Company" means any one of,
Bell Atlantic, all corporate subsidiaries or other companies affiliated with
Bell Atlantic, all companies in which Bell Atlantic directly or indirectly owns
a substantial equity interest, and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Executive Retention and Employment Agreement last amended May 15, 1996 (the
"Prior Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
-------------------
"Term of Employment") shall commence on June 1, 1998 and end on the second
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
-------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager and shall compensate the Key
Executive at a base salary of not less than his current base salary.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for
a potential maximum award which shall not be less than the potential
maximum award he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.2 multiplied by the Key
Executive's base salary on the date of grant.
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently 11) and shall have an aggregate of 4 management
personal days and 5 weeks
<PAGE>
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.
(e) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to participate
in all of the benefit and compensation plans, and the programs or
perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Officer. The Key Executive shall continue to fully and faithfully
-------
perform his duties and responsibilities as an officer, reporting only to
the Chief Executive Officer.
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board of Directors of
Bell Atlantic (the "Board") or the Chief Executive Officer may from time to
time prescribe, and the Key Executive shall perform all duties incidental
to such positions, shall cooperate fully with the Board and the Chief
Executive Officer, and shall work cooperatively with the other officers of
the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall continue to
-----------------------
diligently devote his entire business skill, time and effort to the affairs
of the Bell Atlantic Companies in accordance with the duties assigned to
him, and shall perform all such duties, and otherwise conduct himself, in a
manner reasonably calculated in good faith by him to promote the best
interests of the Bell Atlantic Companies. Prior to the Key Executive's
termination of employment, except to the extent specifically permitted by
the Chief Executive Officer or the Board, and except for memberships on
boards of directors which the Key Executive holds on the date of this
Agreement, the Key Executive shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other
person or organization other than a Bell Atlantic Company or a venture in
which a Bell Atlantic Company has a financial interest, whether or not the
services are rendered for compensation.
4. Potential Interim Amount. Upon the Key Executive's execution of this
------------------------
Agreement, Bell Atlantic shall credit $722,784 to the Company Contribution sub-
account contained within the Key Executive's account under the Bell Atlantic
Income Deferral Plan ("IDP"). The parties acknowledge that such credit is in
complete satisfaction of, and will fully discharge, any right or entitlement
that the Key Executive may have, now or in the future, to a Potential Interim
Amount ("PIA") under the IDP or under any other benefit plan maintained by any
Bell Atlantic Company.
5. Prior Agreement Payments.
------------------------
(a) Retention Award. Upon the Key Executive's execution of this
---------------
Agreement, the Key Executive's rights to the Retention Award provided for
in Section
<PAGE>
3(e) of the Prior Agreement will fully vest, and the restriction on the
Award under such Section 3(e) will immediately lapse.
(b) Severance. Upon the Key Executive's execution of this Agreement,
---------
Bell Atlantic shall pay the Key Executive the value of the Severance
Payment, including the Global Balanced Fund Account, provided for in
Section 3(h) of the Prior Agreement. Such value shall be determined in
accordance with the provisions of the Prior Agreement, except that the
value shall be determined as of June 1, 1998. The parties acknowledge that
this payment shall be in complete satisfaction of, and will fully
discharge, any right or entitlement that the Key Executive may have, now or
in the future, to the Severance Payment.
6. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
---------------------------------------------------------
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined), or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key Executive shall forfeit any and
all rights to receive the compensation and benefits set forth in Section 2
of this Agreement which as of the relevant date have not yet been earned
under this Agreement, but shall otherwise be eligible to receive any and
all compensation and benefits for which a similarly-situated senior manager
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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the Employee Code of
Business Conduct or Paragraphs 8 (Non-Compete/No Solicitation),9 (Return of
Property; Intellectual Property Rights) or 10 (Proprietary and Confidential
Information) of this Agreement; each of the foregoing as determined in the
reasonable discretion and judgment of the Chief Executive Officer of Bell
Atlantic, or (ii) commission of any felony of which the Key Executive is
finally adjudged guilty in a court of competent jurisdiction. In the event
that Bell Atlantic terminates the employment of the Key Executive for
cause, it will state in writing the grounds for such termination and
provide this statement to the Key Executive within 10 business days after
the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or the
Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment, then the Key Executive shall be
entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit or benefit otherwise
provided in Section 2 of this Agreement, provided that each payment, credit
and benefit shall be contingent upon the absence, at the time such payment,
credit or
<PAGE>
benefit is due, of any act that would constitute a material breach of this
Agreement:
(i) Salary: through the Term of Employment, on a monthly
basis, an amount equal to the monthly salary which would have been
paid to the Key Executive under Section 2 of this Agreement, assuming
that his annual rate of salary would have been increased each January
1 by the greater of (A) 5%, or (B) the general percentage increase, if
any, approved by the Human Resources Committee ("HRC") of the Board
for comparable positions in the senior management group based on the
HRC's review of market-median values for such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on
an annual basis, not later than 30 days after the date on which
incentives are awarded by Bell Atlantic under the STIP for the prior
year's performance, an amount equal to the value of the potential
maximum award which the Key Executive would have been entitled to
receive under the STIP based on the maximum STIP award for comparable
positions in the senior management group, without adjustment for
individual performance;
(iii) Stock Options: through the Term of Employment, on an
annual basis, within 30 days of the granting of stock options for the
year to senior managers, an amount equal to 1.2 multiplied by the
annual salary amount determined in accordance with clause (i) above;
provided further, with respect to any and all Bell Atlantic stock
options which are outstanding on the date of the Key Executive's
separation from service, the Key Executive shall be deemed, for
purposes of determining the duration of the Key Executive's right to
exercise any and all such stock options, to have remained in active
service with Bell Atlantic continuously through the Term of
Employment, and then to have separated from service with whatever
rights would then be applicable to a holder of such options under the
Stock Option Plan;
(iv) IDP Benefits: through the Term of Employment, company
credits to the Company Contribution sub-account contained within the
Key Executive's account under the IDP to the fullest extent provided,
and at the same time such amounts would have been credited, as if the
Key Executive had remained actively employed until the end of the Term
of Employment and received salary and maximum STIP awards determined
in accordance with clauses (i) and (ii) above; provided further, that
Bell Atlantic shall also credit to such IDP sub-account an amount each
year equal to the sum of (A) the amount which the Key Executive would
otherwise have been eligible to receive as company matching
contributions under the Bell Atlantic Savings Plan or any successor to
that plan (if he had fully participated in contributions to that plan)
and (B) the pay credits which the Key Executive would otherwise have
been eligible to receive under the Bell Atlantic Cash Balance Plan or
any successor to that plan;
(v) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under
<PAGE>
the terms of the Bell Atlantic Senior Management Estate Management
Program; and
(vi) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,000 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive.
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an "Employee in Good Standing" (as hereinafter defined) and he
terminates his employment for any of the following reasons: Bell Atlantic
(or the Key Executive's employing company) has materially breached this
Agreement; the Key Executive's responsibilities have been significantly
reduced in type or scope; there has been a significant adverse change in
the Key Executive's reporting relationship; there has been a significant
adverse change in the Key Executive's relative compensation (including a
negative individual performance adjustment which causes the Key Executive's
STIP award for a particular year to be reduced by 10% or more); Ivan
Seidenberg is not elected Chairman of the Board by December 31, 1998 or is
removed from or resigns from that position during the Term of Employment
(unless the Board determines that such event results from Mr. Seidenberg's
death, "Disability" (as defined in Section 4(a) of his Employment
Agreement, dated as of August 14, 1998), or his election to terminate his
employment "without Good Reason" (as provided in Section 4(c) of his
Employment Agreement)); or there has been a "change of control" of Bell
Atlantic. For purposes of this Agreement, a change of control of Bell
Atlantic shall mean that any of the following events or circumstances has
occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of
stock of Bell Atlantic representing 20% or more of the total voting
power of Bell Atlantic's then outstanding voting stock, provided,
however, that if such beneficial ownership is acquired in a
transaction that has been negotiated and approved by the Board, such
acquisition of beneficial ownership shall not be treated as a change
of control of Bell Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is required
to be made with the Securities and Exchange Commission under section
14(d) of the Securities Exchange Act of 1934) is made for the stock of
Bell Atlantic, and the Person making the offer owns or has accepted
for payment shares of one or more classes of Bell Atlantic stock which
represent, when combined with any shares otherwise acquired and owned
by such Person, 20% or more of the total voting power of Bell
Atlantic's then outstanding stock, provided, however, that if such
tender offer has been negotiated and approved by the Board, such
tender offer and stock acquisition shall not be treated as a change of
control of Bell Atlantic for purposes of this Agreement; or
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously
for a period of not less than two years, or (B) are new directors
whose election by the
<PAGE>
Board or nomination for election by shareowners of Bell Atlantic was
approved by a vote of at least two-thirds of the directors then in
office who either were directors described in clause (A) hereof or
whose election or nomination for election was previously so approved.
(e) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Executive will be considered to be an "Employee in Good
Standing" on a given date if, on or before that date, the Key Executive has
not terminated employment for any reason (other than "constructive
discharge" as defined in Section 6(d) of this Agreement), has not tendered
oral or written notice of intent to resign or retire effective as of a date
on or before the given date (other than pursuant to a "constructive
discharge" as defined in Section 6(d) of this Agreement), and has not
behaved in a manner that would be grounds for discharge with cause as
defined in Section 6(b) of this Agreement.
(f) Disability or Death. If, during the Term of Employment at a time
-------------------
when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release
in the form of Exhibit A from the Key Executive (in the case of disability)
or from his estate (in the case of death), then Bell Atlantic shall
continue to pay to the Key Executive (in the case of disability) or pay to
the Key Executive's estate (in the case of death) the amounts determined as
if, at the date of termination of employment on account of disability or
death, the Key Executive had been terminated without cause under Section
6(c) of this Agreement; provided, however, that in the case of a
termination of employment on account of disability, the amounts paid
pursuant to Sections 6(c)(i) and (ii) of this Agreement shall reduce dollar
for dollar the disability benefits which would otherwise be payable to the
Key Executive during the remainder of the Term of Employment under the
various disability benefit plans in which he participates.
7. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
8. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined in
Section 8(b) of this Agreement); or
<PAGE>
(ii) 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, however, that the Key Executive's
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
the Key Executive's equity interest in any such company is less than a
controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic Companies, and (ii) for which
the Key Executive then has responsibility to plan, develop, manage, market
or oversee, or had any such responsibility within the prior 24 months.
Notwithstanding the previous sentence, a business activity will not be
treated as a Competitive Activity if the geographic marketing area of the
relevant products or services sold by the Key Executive or a third party
does not overlap with the geographic marketing area for the applicable
products and services of the Bell Atlantic Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of employment
for any reason from all Bell Atlantic Companies, the Key Executive shall
not, without the consent of the Chief Executive Officer of Bell Atlantic:
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party)
in the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to
any person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic
Company with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive
------
from requesting, at the time of the Key Executive's termination of
employment or at any time thereafter, that the Chief Executive Officer of
Bell Atlantic waive, in his sole discretion, Bell Atlantic's rights to
enforce some or all of this Section.
9. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all
<PAGE>
property owned by each such company or in which any such company has an
interest, including files, documents, data and records (whether on paper or in
tapes, disks, or other machine-readable form), office equipment, credit cards
and employee identification cards. The Key Executive acknowledges that Bell
Atlantic or an applicable Bell Atlantic Company is the rightful owner of any
programs, ideas, inventions, discoveries, copyright material or trademarks which
the Key Executive may have originated or developed, or assisted in originating
or developing, during the Key Executive's period of employment with any Bell
Atlantic Company, where any such origination or development involved the use of
company time or resources, or the exercise of the Key Executive's
responsibilities for or on behalf of any such company. The Key Executive shall
at all times, both before and after termination of employment, cooperate with
Bell Atlantic in executing and delivering documents requested by any Bell
Atlantic Company, and taking any other actions, that are necessary or requested
by Bell Atlantic to assist any Bell Atlantic Company in patenting, copyrighting
or registering any programs, ideas, inventions, discoveries, copyright material
or trademarks, and to vest title thereto in the applicable company.
10. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. "Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's products or services; and other confidential matters
pertaining to or known by one or more Bell Atlantic Companies, including
confidential information of a third party which the Key Executive knows a Bell
Atlantic Company is bound to protect.
11. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
12. Assignment by Bell Atlantic. The obligations of Bell Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Bell
Atlantic. Bell Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
13. Non-Benefit Bearing Payments. The amounts to be paid, provided, or
----------------------------
credited under Sections 4, 5, 6 and 7 of this Agreement shall not be treated as
compensation for
<PAGE>
purposes of computing or determining any additional benefit to be paid, provided
or credited under any savings plan, insurance plan, pension plan, or other
employee benefit plan maintained by any Bell Atlantic Company.
14. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Section 6 of this Agreement may be deferred under the IDP or any successor
plan, but only if and to the extent that a valid deferral election is in place
and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
15. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 8 (Non-Compete/No Solicitation) of this Agreement or engages in
serious misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
16. 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.
17. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 8 (Non-Compete/No Solicitation), 9
(Return of Property), 10 Proprietary and Confidential Information), and 11
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
18. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
<PAGE>
19. 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 Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President
and General Counsel
(b) If to the Key Executive, to:
121 Concourse West
Brightwaters, New York 11718
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
20. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 8 through
11 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
8 through 11 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief, as referred to in Section 17 of this Agreement. Notice of the existence
of a dispute which a party wishes to have resolved by arbitration shall be
provided pursuant to Section 19 of this Agreement. The arbitration shall be
expedited and conducted in New York, New York pursuant to the Center for Public
Resources ("CPR") Rules for Non-Administered Arbitration of Employment Disputes
in effect at the time of notice of the dispute before one neutral arbitrator
appointed by CPR from the CPR Panel of Neutrals unless the parties mutually
agree to the appointment of a different neutral arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16,
and judgment upon the award rendered by the arbitration may be entered by any
court having jurisdiction. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever 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.
21. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
22. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire
<PAGE>
understanding of Bell Atlantic and the Key Executive and shall supersede all
prior agreements and communications, whether oral or written, between Bell
Atlantic and the Key Executive including, without limitation, the Prior
Agreement. This Agreement shall not be modified except by written agreement of
the Key Executive and Bell Atlantic.
23 Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
--------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
------------------
Donald J. Sacco
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key Executive's
employing company (the "Employer") on __________ , _____ (the "Separation Date")
pursuant to the terms of the Agreement, and the Key Executive wishes to execute
this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key Executive
might have against any Bell Atlantic Company, and any benefit plan maintained by
any Bell Atlantic Company (or any plan administrator of any such plan), for
salary payments, vacation pay, incentives, bonuses, or other remuneration or
employee benefits of any kind, with the exception of any obligations of the
Company or Employer arising after the Separation Date under Sections 6 and 7 of
the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
--
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
- ---
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by the
Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by any
court to be illegal or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby, and said illegal or invalid part, term
or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS ADVISED
---------------------------------------------------
ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE. THE
COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS BENEFITS
PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY ENFORCEABLE BY
THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE PROVISIONS OF THIS
RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A PERIOD OF
SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX, FINANCIAL AND
LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO BE LEGALLY
BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE WITHIN SEVEN
(7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME ENFORCEABLE OR
EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release as
of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
----------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the
terms of the Agreement (the "Contract Payments") or of any other plan,
arrangement or agreement of any Bell Atlantic Company ("Other Payments"
and, together with the Contract Payments, 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
paragraph, Bell Atlantic shall pay to the Key Executive, at the time
specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Key Executive, after deduction of the Excise
Tax on 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 the Key Executive 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. For purposes of determining whether any
of the Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) 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 Bell Atlantic and reasonably acceptable to the Key Executive
("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; (ii) the amount of the Payments that shall
be treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code (after
applying clause (i) hereof); and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Independent Counsel
in accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, the
Key Executive 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 the Key
Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than
the amount previously taken into account hereunder, the Key Executive shall
repay to Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key Executive if such repayment results in a reduction
in Excise Tax or a federal, state and local income tax deduction) plus any
interest received by the Key Executive on the amount of such repayment,
provided, however, that if any such amount has been paid by the Key
Executive as an Excise Tax or other tax, the Key Executive shall cooperate
with Bell Atlantic in seeking a refund of any tax overpayments, and shall
not be required to make repayments to Bell Atlantic until the overpaid
taxes and interest thereon are refunded to the Key Executive. 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), Bell Atlantic shall
make an additional Gross-Up Payment in respect of such excess within thirty
(30) days of Bell Atlantic's receipt of notice of such final determination
or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the
regulations promulgated thereunder, the Key Executive shall be entitled, by
written notice to Bell Atlantic, to request a written opinion of
Independent Counsel regarding the application of such change to any of the
foregoing, and Bell Atlantic shall use its best efforts to cause such
opinion to be rendered as promptly as practicable. All fees and expenses
of Independent Counsel incurred in connection with this Exhibit B shall be
borne by Bell Atlantic.
<PAGE>
EXHIBIT 10e
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and Morrison DeS. Webb, Executive Vice President -
External Affairs and Corporate Communications of Bell Atlantic (the "Key
Executive"). In this Agreement, "Bell Atlantic Companies" means all of, and
"Bell Atlantic Company" means any one of, Bell Atlantic, all corporate
subsidiaries or other companies affiliated with Bell Atlantic, all companies in
which Bell Atlantic directly or indirectly owns a substantial equity interest,
and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Executive Retention Agreement last amended May 22, 1996 (the "Prior
Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
-------------------
"Term of Employment") shall commence on June 1, 1998 and end on the third
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
-------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager and shall compensate the Key
Executive at a base salary of not less than his current base salary.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for
a potential maximum award which shall not be less than the potential
maximum award he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.2 multiplied by the Key
Executive's base salary on the date of grant.
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently 11) and shall have an aggregate of 4 management
personal days and 5 weeks
<PAGE>
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.
(e) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to participate
in all of the benefit and compensation plans, and the programs or
perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Director and Officer. The Key Executive shall fully and faithfully
--------------------
perform his duties and responsibilities (i) as a director, so long as he is
elected and serving, and (ii) as an officer, reporting only to the Chief
Executive Officer and the Board of Directors of Bell Atlantic (the
"Board").
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board or the Chief
Executive Officer may from time to time prescribe, and the Key Executive
shall perform all duties incidental to such positions, shall cooperate
fully with the Board and the Chief Executive Officer, and shall work
cooperatively with the other officers of the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall diligently devote
-----------------------
his entire business skill, time and effort to the affairs of the Bell
Atlantic Companies in accordance with the duties assigned to him, and shall
perform all such duties, and otherwise conduct himself, in a manner
reasonably calculated in good faith by him to promote the best interests of
the Bell Atlantic Companies. Prior to the Key Executive's termination of
employment, except to the extent specifically permitted by the Chief
Executive Officer or the Board, and except for memberships on boards of
directors which the Key Executive holds on the date of this Agreement, the
Key Executive shall not, directly or indirectly, render any services of a
business, commercial or professional nature to any other person or
organization other than a Bell Atlantic Company or a venture in which a
Bell Atlantic Company has a financial interest, whether or not the services
are rendered for compensation.
4. Medical Coverage/IDP Credits. Provided the Key Executive remains an
----------------------------
"Employee in Good Standing" (as hereinafter defined), the Key Executive shall be
entitled to participate in the Bell Atlantic Medical Plan (For Bell Atlantic
North) (the "Medical Plan") and receive credits under the Bell Atlantic Income
Deferral Plan ("IDP") on the following basis.
(a) Medical Coverage. During the "Extended Period of Agreement" (as
----------------
hereinafter defined), the Key Executive shall be entitled to participate
in the Medical Plan on the same basis as other similarly situated senior
managers of Bell Atlantic.
(b) Obligation to Provide IDP Credits. During the Extended Period of
---------------------------------
Agreement, and at the times specified in the IDP, Bell Atlantic shall
credit to the Company Contribution sub-account contained within the Key
Executive's account
<PAGE>
under the IDP amounts equal to (i) 32% of the Key Executive's STIP awards,
plus (ii) 32% of the Key Executive's monthly base salary in excess of
$13,333.33.
(c) Definitions. The "Extended Period of Agreement" shall begin on June
-----------
1, 1998 and end on June 1, 2003. For purposes of this Agreement, the Key
Executive will be considered to be an "Employee in Good Standing" on a
given date during the Term of Employment or the Extended Period of
Agreement if, on or before that date, the Key Executive has not terminated
employment for any reason (other than "constructive discharge" as defined
in Section 7(d) of this Agreement), has not tendered oral or written notice
of intent to resign or retire effective as of a date on or before the given
date (other than pursuant to a "constructive discharge" as defined in
Section 7(d) of this Agreement), and has not behaved in a manner that would
be grounds for discharge with cause as defined in Section 7(b) of this
Agreement.
5. Prior Agreement Payments.
------------------------
(a) Retention Award. Upon the Key Executive's execution of this
---------------
Agreement, the Key Executive will forfeit any right or entitlement that he
may have, now or in the future, to the Retention Award provided for in
Section 3(e) of the Prior Agreement. In lieu thereof, Bell Atlantic shall
credit the Key Executive's account under the IDP with 4,755.17 Bell
Atlantic shares comprising, as of June 1, 1998, the Retention Award. This
credit shall be allocated in full to the Bell Atlantic Shares Fund
maintained under the IDP, which fund shall be adjusted to reflect the two
for one split of Bell Atlantic stock that is scheduled to occur in June,
1998 plus any further stock splits, corporate reorganizations or other
changes in capital structure that may occur; provided, further, that the
Key Executive shall have the right to change this allocation from the Bell
Atlantic Shares Fund to any other permitted investment option in accordance
with the terms of the IDP.
(b) Severance. Upon the Key Executive's execution of this Agreement,
---------
Bell Atlantic shall credit the Key Executive's account under the IDP with
$1,486,707.79, such amount representing the value of the Severance Payment,
including the Global Balanced Fund Account, provided for in Section 3(h) of
the Prior Agreement as of June 1, 1998. The parties acknowledge that this
credit to the IDP shall be in complete satisfaction of, and will fully
discharge, any right or entitlement that the Key Executive may have, now or
in the future, to the Severance Payment.
6. Phantom Shares.
--------------
(a) Phantom Share Award. Upon the Key Executive's execution of this
-------------------
Agreement, Bell Atlantic shall establish a notional account on behalf of
the Key Executive and credit to that account 10,000 shares of Bell Atlantic
stock ("Phantom Shares"). This account shall further be credited, on each
subsequent dividend payment date for Bell Atlantic stock, with an amount
equivalent to the dividend payable on the number of shares of Bell Atlantic
stock equal to the number of Phantom Shares in the Key Executive's account
on the record date for such dividend. Such amount shall immediately be
converted to a number of additional Phantom Shares calculated by dividing
such amount by the value of Bell Atlantic stock, as determined pursuant to
Section 6(c)(i) of this Agreement.
<PAGE>
(b) Cash Payment. Provided the Key Executive remains an Employee in
------------
Good Standing from the date of this Agreement to June 1, 2001, the Key
Executive shall be entitled to receive, not later than July 1, 2001, a cash
payment in an amount equal to the value of the Key Executive's Phantom
Shares in his notional account on June 1, 2001, as determined pursuant to
Section 6(c)(ii) of this Agreement.
(c) Value of Shares. The value of Bell Atlantic stock or Phantom
---------------
Shares shall be determined as follows:
(i) for purposes of Section 6(a) of this Agreement, such value
shall be the average of the high and low sale prices of Bell Atlantic
stock on the New York Stock Exchange ("NYSE") on the applicable
dividend payment date;
(ii) for purposes of Section 6(b) of this Agreement, such value
shall be the greater of (A) the average of the high and low sale prices
of Bell Atlantic stock on the NYSE on June 1, 2001, or (B) the average
of the daily high and low sale prices of Bell Atlantic stock on the
NYSE for the period of twenty trading days ending on June 1, 2001, or
the period of twenty trading days immediately preceding June 1, 2001 if
the NYSE is closed on that date; and
(iii) for purposes of Section 7(c)(iii) of this Agreement, such
value shall be determined in the manner described in clause (ii) above,
except that the Key Executive's separation date shall be used instead
of June 1, 2001.
(d) Stock Split. The number of Phantom Shares provided for in this
Section 6 shall be adjusted to reflect the two for one split of Bell
Atlantic stock that is scheduled to occur in June, 1998, plus any further
stock splits, corporate reorganizations or other changes in capital
structure that may occur.
7. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
----------------------------------------------------------
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined), or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key Executive shall forfeit any and
all rights to receive the compensation and benefits set forth in Sections 2
and 4 of this Agreement which as of the relevant date have not yet been
earned under this Agreement, and shall forfeit the right to receive the
compensation set forth in Section 6 of this Agreement, but shall otherwise
be eligible to receive any and all compensation and benefits for which a
similarly-situated senior manager 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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the
<PAGE>
Employee Code of Business Conduct or Paragraphs 9 (Non-Compete/No
Solicitation), 10 (Return of Property; Intellectual Property Rights) or 11
(Proprietary and Confidential Information) of this Agreement; each of the
foregoing as determined in the reasonable discretion and judgment of the
Chief Executive Officer of Bell Atlantic; or (ii) commission of any felony
of which the Key Executive is finally adjudged guilty in a court of
competent jurisdiction. In the event that Bell Atlantic terminates the
employment of the Key Executive for cause, it will state in writing the
grounds for such termination and provide this statement to the Key
Executive within 10 business days after the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or the
Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment or, with respect to the medical
coverage and IDP Credits provided for in Section 4 of this Agreement, prior
to the end of the Extended Period of Agreement, then the Key Executive
shall be entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit, or benefit otherwise
provided in Sections 2, 4, and 6 of this Agreement, provided that each
payment, credit and benefit shall be contingent upon the absence, at the
time such payment, credit or benefit is due, of any act that would
constitute a material breach of this Agreement:
(i) Salary: through the Term of Employment, on a monthly basis,
an amount equal to the monthly salary which would have been paid to the
Key Executive under Section 2 of this Agreement, assuming that his
annual rate of salary would have been increased each January 1 by the
greater of (A) 5%, or (B) the general percentage increase, if any,
approved by the Human Resources Committee ("HRC") of the Board for
comparable positions in the senior management group based on the HRC's
review of market-median values for such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on an
annual basis, not later than 30 days after the date on which incentives
are awarded by Bell Atlantic under the STIP for the prior year's
performance, an amount equal to the value of the potential maximum
award which the Key Executive would have been entitled to receive under
the STIP based on the maximum STIP award for comparable positions in
the senior management group, without adjustment for individual
performance;
(iii) Phantom Shares: not later than thirty days after the Key
Executive's separation from service, an amount equal to the total value
of the Phantom Shares in the Key Executive's Phantom Shares' account on
the date of such separation from service, as determined pursuant to
Section 6(c)(iii) of this Agreement;
(iv) Stock Options: through the Term of Employment, on an annual
basis, within 30 days of the granting of stock options for the year to
senior managers, an amount equal to 1.2 multiplied by the annual salary
amount
<PAGE>
determined in accordance with clause (i) above; provided further, with
respect to any and all Bell Atlantic stock options which are
outstanding on the date of the Key Executive's separation from service,
the Key Executive shall be deemed, for purposes of determining the
duration of the Key Executive's right to exercise any and all such
stock options, to have remained in active service with Bell Atlantic
continuously through the Term of Employment, and then to have separated
from service with whatever rights would then be applicable to a holder
of such options under the Stock Option Plan;
(v) IDP Credits: through the Extended Period of Agreement,
company credits to the Company Contribution sub-account contained
within the Key Executive's account under the IDP in amounts calculated
in accordance with Section 4(b) of this Agreement, and at the same time
such amounts would have been credited, as if the Key Executive had
remained actively employed until the end of the Extended Period of
Agreement and received the salary and maximum STIP awards determined in
accordance with clauses (i) and (ii) above;
(vi) Other IDP Credits: through the Term of Employment, company
credits to the Company Contribution sub-account contained within the
Key Executive's account under the IDP in an amount each year equal to
the sum of (A) the amount which the Key Executive would otherwise have
been eligible to receive as company matching contributions under the
Bell Atlantic Savings Plan or any successor to that plan (if he had
fully participated in contributions to that plan) and (B) the pay
credits which the Key Executive would otherwise have been eligible to
receive under the Bell Atlantic Cash Balance Plan or any successor to
that plan;
(vii) Medical Benefits: if the Medical Plan provides for post-
retirement medical benefits at the time the Key Executive separates
from service and the Key Executive is not eligible for such benefits,
the Key Executive and any eligible dependents covered under the Medical
Plan as of the separation date shall be entitled, in accordance with
the federal law commonly known as COBRA, to purchase coverage under the
Medical Plan for eighteen months, starting on the first day of the
first calendar month following the separation date, and Bell Atlantic
shall reimburse the Key Executive for the cost of such coverage;
provided, further, that following the expiration of this eighteen month
period, the Key Executive shall be entitled to purchase, from a third
party, continued medical coverage for himself and his eligible
dependents, comparable in all respects (including the dependents to be
covered, the amount of coverage, and the coverage period) to the
coverage that would have been provided if the Key Executive had been
eligible to receive post-retirement medical benefits under the Medical
Plan, and Bell Atlantic shall reimburse the Key Executive for the cost
of such coverage; provided, further, that if the Key Executive is
unable to purchase such medical coverage from a third party, Bell
Atlantic shall make arrangements to provide such medical coverage; and
provided, finally, that any payments or reimbursements made to the Key
Executive pursuant to this clause (vii) shall be in an amount
sufficient to also reimburse the Key Executive for any tax liability he
may incur as a result of receiving such payments or reimbursements;
<PAGE>
(viii) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under the terms of the Bell Atlantic
Senior Management Estate Management Program; and
(ix) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,000 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive.
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an Employee in Good Standing and he terminates his employment for
any of the following reasons: Bell Atlantic (or the Key Executive's employing
company) has materially breached this Agreement; the Key Executive's
responsibilities have been significantly reduced in type or scope; there has
been a significant adverse change in the Key Executive's reporting relationship;
there has been a significant adverse change in the Key Executive's relative
compensation (including a negative individual performance adjustment which
causes the Key Executive's STIP award for a particular year to be reduced by 10%
or more); Ivan Seidenberg is not elected Chairman of the Board by December 31,
1998 or is removed from or resigns from that position during the Term of
Employment (unless the Board determines that such event results from Mr.
Seidenberg's death, "Disability" (as defined in Section 4(a) of his Employment
Agreement, dated as of August 14, 1997), or his election to terminate his
employment "without Good Reason" (as provided in Section 4(c) of his Employment
Agreement)); or there has been a "change of control" of Bell Atlantic. For
purposes of this Agreement, a change of control of Bell Atlantic shall mean that
any of the following events or circumstances has occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of stock of
Bell Atlantic representing 20% or more of the total voting power of Bell
Atlantic's then outstanding voting stock, provided, however, that if such
beneficial ownership is acquired in a transaction that has been negotiated
and approved by the Board, such acquisition of beneficial ownership shall
not be treated as a change of control of Bell Atlantic for purpose of this
Agreement;
(ii) a tender offer (for which a filing has been or is required
to be made with the Securities and Exchange Commission under section 14(d)
of the Securities Exchange Act of 1934) is made for the stock of Bell
Atlantic, and the Person making the offer owns or has accepted for payment
shares of one or more classes of Bell Atlantic stock which represent, when
combined with any shares otherwise acquired and owned by such Person, 20%
or more of the total voting power of Bell Atlantic's then outstanding
stock, provided, however, that if such tender offer has been negotiated and
approved by the Board, such tender offer and stock acquisition shall not be
treated as a change of control of Bell Atlantic for purposes of this
Agreement; or
<PAGE>
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously for
a period of not less than two years, or (B) are new directors whose
election by the Board or nomination for election by shareowners of Bell
Atlantic was approved by a vote of at least two-thirds of the directors
then in office who either were directors described in clause (A) hereof or
whose election or nomination for election was previously so approved.
(e) Disability or Death. If, during the Term of Employment at a
-------------------
time when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release in
the form of Exhibit A from the Key Executive (in the case of disability) or
from his estate (in the case of death), then Bell Atlantic shall continue to
pay to the Key Executive (in the case of disability) or pay to the Key
Executive's estate (in the case of death) the amounts determined as if, at the
date of termination of employment on account of disability or death, the Key
Executive had been terminated without cause under Section 7(c) of this
Agreement; provided, however, that in the case of a termination of employment
on account of disability, the amounts paid pursuant to Sections 7(c)(i) and
(ii) of this Agreement shall reduce dollar for dollar the disability benefits
which would otherwise be payable to the Key Executive during the remainder of
the Term of Employment under the various disability benefit plans in which he
participates.
8. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
9. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined
in Section 9(b) of this Agreement); or
(ii) 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, however, that the
<PAGE>
Key Executive's 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 the Key Executive's equity interest in any such
company is less than a controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic Companies, and (ii) for which
the Key Executive then has responsibility to plan, develop, manage, market
or oversee, or had any such responsibility within the prior 24 months.
Notwithstanding the previous sentence, a business activity will not be
treated as a Competitive Activity if the geographic marketing area of the
relevant products or services sold by the Key Executive or a third party
does not overlap with the geographic marketing area for the applicable
products and services of the Bell Atlantic Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of employment
for any reason from all Bell Atlantic Companies, the Key Executive shall
not, without the consent of the Chief Executive Officer of Bell Atlantic:
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party) in
the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to any
person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic Company
with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive from
------
requesting, at the time of the Key Executive's termination of employment or
at any time thereafter, that the Chief Executive Officer of Bell Atlantic
waive, in his sole discretion, Bell Atlantic's rights to enforce some or
all of this Section.
10. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all property owned by each such company or in
which any such company has an interest, including files, documents, data and
records (whether on paper or in tapes, disks, or other machine-readable form),
office equipment, credit cards and employee identification cards. The Key
Executive acknowledges that Bell Atlantic or an applicable Bell Atlantic Company
is the rightful owner of any programs, ideas, inventions, discoveries, copyright
material or trademarks which the Key Executive may have originated or developed,
or assisted in originating or
<PAGE>
developing, during the Key Executive's period of employment with any Bell
Atlantic Company, where any such origination or development involved the use of
company time or resources, or the exercise of the Key Executive's
responsibilities for or on behalf of any such company. The Key Executive shall
at all times, both before and after termination of employment, cooperate with
Bell Atlantic in executing and delivering documents requested by any Bell
Atlantic Company, and taking any other actions, that are necessary or requested
by Bell Atlantic to assist any Bell Atlantic Company in patenting, copyrighting
or registering any programs, ideas, inventions, discoveries, copyright material
or trademarks, and to vest title thereto in the applicable company.
11. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. "Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's products or services; and other confidential matters
pertaining to or known by one or more Bell Atlantic Companies, including
confidential information of a third party which the Key Executive knows a Bell
Atlantic Company is bound to protect.
12. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
13. Assignment by Bell Atlantic. The obligations of Bell Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Bell
Atlantic. Bell Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
14. Non-Benefit Bearing Payments. The amounts to be paid, provided, or
----------------------------
credited under Sections 4, 5, 6, 7, and 8 of this Agreement shall not be treated
as compensation for purposes of computing or determining any additional benefit
to be paid, provided or credited under any savings plan, insurance plan, pension
plan, or other employee benefit plan maintained by any Bell Atlantic Company .
15. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 6 or 7 of this Agreement may be deferred under the IDP or any
successor plan, but
<PAGE>
only if and to the extent that a valid deferral election is in place and
deferral of such amounts is permitted under the terms of the IDP or successor
plan.
16. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 9 (Non-Compete/No Solicitation) of this Agreement or engages in
serious misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
17. 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.
18. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 9 (Non-Compete/No Solicitation), 10
(Return of Property), 11 Proprietary and Confidential Information), and 12
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
19. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
20. 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:
<PAGE>
(a) If to Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President and General Counsel
(b) If to the Key Executive, to:
120 Rye Ridge Road
Harrison, New York 10528
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
21. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 9 through
12 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
9 through 12 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief, as referred to in Section 18 of this Agreement. Notice of the existence
of a dispute which a party wishes to have resolved by arbitration shall be
provided pursuant to Section 20 of this Agreement. The arbitration shall be
expedited and conducted in New York, New York pursuant to the Center for Public
Resources ("CPR") Rules for Non-Administered Arbitration of Employment Disputes
in effect at the time of notice of the dispute before one neutral arbitrator
appointed by CPR from the CPR Panel of Neutrals unless the parties mutually
agree to the appointment of a different neutral arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16,
and judgment upon the award rendered by the arbitration may be entered by any
court having jurisdiction. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever 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.
22. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
23. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire understanding of Bell Atlantic and the Key Executive and shall
supersede all prior agreements and communications, whether oral or written,
between Bell Atlantic and the Key Executive including, without limitation, the
Prior Agreement. This Agreement shall not be modified except by written
agreement of the Key Executive and Bell Atlantic.
<PAGE>
24. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
--------------------
Morrison DeS. Webb
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key Executive's
employing company (the "Employer") on __________ , _____ (the "Separation Date")
pursuant to the terms of the Agreement, and the Key Executive wishes to execute
this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key Executive
might have against any Bell Atlantic Company, and any benefit plan maintained by
any Bell Atlantic Company (or any plan administrator of any such plan), for
salary payments, vacation pay, incentives, bonuses, or other remuneration or
employee benefits of any kind, with the exception of any obligations of the
Company or Employer arising after the Separation Date under Sections 7 and 8 of
the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
--
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
- ---
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by the
Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by any
court to be illegal or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby, and said illegal or invalid part, term
or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS ADVISED
---------------------------------------------------
ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE. THE
COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS BENEFITS
PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY ENFORCEABLE BY
THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE PROVISIONS OF THIS
RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A PERIOD OF
SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX, FINANCIAL AND
LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO BE LEGALLY
BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE WITHIN SEVEN
(7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME ENFORCEABLE OR
EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release as
of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the terms
of the Agreement (the "Contract Payments") or of any other plan, arrangement or
agreement of any Bell Atlantic Company ("Other Payments" and, together with the
Contract Payments, 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 paragraph, Bell Atlantic shall pay to the
Key Executive, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Key Executive, after
deduction of the Excise Tax on 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 the Key Executive 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. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) 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 Bell Atlantic and reasonably acceptable to
the Key Executive ("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; (ii) the amount of the Payments that shall be treated
as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code (after applying clause (i)
hereof); and (iii) the value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Key Executive 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 the Key Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than the
amount previously taken into account hereunder, the Key Executive shall repay to
Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key
Executive if such repayment results in a reduction in Excise Tax or a federal,
state and local income tax deduction) plus any interest received by the Key
Executive on the amount of such repayment, provided, however, that if any such
amount has been paid by the Key Executive as an Excise Tax or other tax, the Key
Executive shall cooperate with Bell Atlantic in seeking a refund of any tax
overpayments, and shall not be required to make repayments to Bell Atlantic
until the overpaid taxes and interest thereon are refunded to the Key Executive.
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), Bell Atlantic shall make an additional Gross-
Up Payment in respect of such excess within thirty (30) days of Bell Atlantic's
receipt of notice of such final determination or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Key Executive shall be entitled, by written notice
to Bell Atlantic, to request a written opinion of Independent Counsel regarding
the application of such change to any of the foregoing, and Bell Atlantic shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Independent Counsel incurred in connection
with this Exhibit B shall be borne by Bell Atlantic.
<PAGE>
EXHIBIT 10f
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
June, 1998, by and between Bell Atlantic Corporation, its successors and assigns
("Bell Atlantic"), and James R. Young, the Executive Vice President and General
Counsel of Bell Atlantic (the "Key Executive"). In this Agreement, "Bell
Atlantic Companies" means all of, and "Bell Atlantic Company" means any one of,
Bell Atlantic, all corporate subsidiaries or other companies affiliated with
Bell Atlantic, all companies in which Bell Atlantic directly or indirectly owns
a substantial equity interest, and their successors and assigns.
WHEREAS, Bell Atlantic and the Key Executive have previously entered into
an Employment Agreement dated July 23, 1996 (the "Prior Agreement"); and
WHEREAS, Bell Atlantic and the Key Executive wish to supersede, in its
entirety, the Prior Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive and
Bell Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement (the
------------------
"Term of Employment") shall commence on June 1, 1998 and end on the third
anniversary of such date.
2. Obligations of the Bell Atlantic Companies. During the Term of
-------------------------------------------
Employment, the Bell Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. One or more Bell Atlantic Companies shall employ the Key
------
Executive as an officer and senior manager, and as General Counsel of Bell
Atlantic, and shall compensate the Key Executive at a base salary of (i)
not less than his current base salary for the period June 1, 1998 through
August 13, 1998, and (ii) not less than $475,000 per year (pro-rated for
August 14, 1998 through December 31, 1998) for the remainder of his Term of
Employment.
(b) STIP. The Key Executive shall participate in the Bell Atlantic
----
Senior Management Short Term Incentive Plan or any successor to that plan
("STIP") and shall be eligible each year during the Term of Employment for a
potential maximum award which shall not be less than the potential maximum award
he is eligible to receive for the performance year 1998.
(c) Stock Options. The Key Executive shall participate in the Bell
-------------
Atlantic 1985 Incentive Stock Option Plan or any successor to that plan
(the "Stock Option Plan") and shall receive an annual grant of options
thereunder with a value equal to or greater than 1.2 multiplied by the Key
Executive's base salary on the date of grant.
<PAGE>
(d) Vacation. The Key Executive shall have the same holidays per
--------
calendar year recognized by his employing company for its management
employees (presently 10) and shall have an aggregate of 4 management
personal days and 5 weeks 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.
(e) Apartment. The Key Executive shall be entitled to use a corporate
---------
owned or leased apartment located in New York City on an as-needed basis.
(f) Other Benefit Plans. To the extent not otherwise modified by the
-------------------
terms of this Agreement, the Key Executive shall be eligible to participate
in all of the benefit and compensation plans, and the programs or
perquisites, applicable to similarly-situated senior managers of Bell
Atlantic, as those plans and programs may be amended, supplemented,
replaced or terminated from time to time.
3. Obligations of the Key Executive. During the Term of Employment, the
--------------------------------
Key Executive shall have the following obligations and duties.
(a) Officer. The Key Executive shall continue to fully and faithfully
-------
perform his duties and responsibilities as an officer, reporting only to
the Chief Executive Officer.
(b) Executive. The Key Executive shall serve in such executive
---------
capacities, with such titles and authorities, as the Board of Directors of
Bell Atlantic (the "Board") or the Chief Executive Officer may from time to
time prescribe, and the Key Executive shall perform all duties incidental
to such positions, shall cooperate fully with the Board and the Chief
Executive Officer, and shall work cooperatively with the other officers of
the Bell Atlantic Companies.
(c) Entire Business Efforts. The Key Executive shall continue to
-----------------------
diligently devote his entire business skill, time and effort to the affairs
of the Bell Atlantic Companies in accordance with the duties assigned to
him, and shall perform all such duties, and otherwise conduct himself, in a
manner reasonably calculated in good faith by him to promote the best
interests of the Bell Atlantic Companies. Prior to the Key Executive's
termination of employment, except to the extent specifically permitted by
the Chief Executive Officer or the Board, and except for memberships on
boards of directors which the Key Executive holds on the date of this
Agreement, the Key Executive shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other
person or organization other than a Bell Atlantic Company or a venture in
which a Bell Atlantic Company has a financial interest, whether or not the
services are rendered for compensation.
4. IDP Credit. Upon the Key Executive's execution of this Agreement, Bell
----------
Atlantic shall credit $211,397 to the Company Contribution sub-account contained
within the Key Executive's account under the Bell Atlantic Income Deferral Plan
("IDP"). The parties acknowledge that such credit is in complete satisfaction
of, and will fully discharge, any right or entitlement that the Key Executive
may have, now or in the future, to the additional age and service benefits
provided for in Section 4 of the Prior Agreement.
<PAGE>
5. Phantom Shares.
--------------
(a) Phantom Share Award. Upon the Key Executive's execution of the
-------------------
Agreement, Bell Atlantic shall establish a notional account on behalf of
the Key Executive and credit to that account 10,000 shares of Bell Atlantic
stock ("Phantom Shares"). This account shall further be credited, on each
subsequent dividend payment date for Bell Atlantic stock, with an amount
equivalent to the dividend payable on the number of shares of Bell Atlantic
stock equal to the number of Phantom Shares in the Key Executive's account
on the record date for such dividend. Such amount shall immediately be
converted to a number of additional Phantom Shares calculated by dividing
such amount by the value of Bell Atlantic stock, as determined pursuant to
Section 5(c)(i) of this Agreement.
(b) Cash Payment. Provided the Key Executive remains an "Employee in
------------
Good Standing" (as hereinafter defined) of a Bell Atlantic Company from the
date of this Agreement to June 1, 2001, the Key Executive shall be entitled
to receive, not later than July 1, 2001, a cash payment in an amount equal
to the value of the Key Executive's Phantom Shares in his notional account
on June 1, 2001, as determined pursuant to Section 5(c)(ii) of this
Agreement.
(c) Value of Shares. The value of Bell Atlantic stock or Phantom
---------------
Shares shall be determined as follows:
(i) for purposes of Section 5(a) of this Agreement, such value
shall be the average of the high and low sale prices of Bell Atlantic
stock on the New York Stock Exchange ("NYSE") on the applicable
dividend payment date;
(ii) for purposes of Section 5(b) of this Agreement, such value
shall be the greater of (A) the average of the high and low sale
prices of Bell Atlantic stock on the NYSE on June 1, 2001, or (B) the
average of the daily high and low sale prices of Bell Atlantic stock
on the NYSE for the period of twenty trading days ending June 1, 2001,
or the period of twenty trading days immediately preceding June 1,
2001 if the NYSE is closed on that date; and
(iii) for purposes of Section 6(c)(iii) of this Agreement, such
value shall be determined in the manner described in clause (ii)
above, except that the Key Executive's separation date shall be used
instead of June 1, 2001.
(d) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Executive will be considered to be an "Employee in Good
Standing" on a given date if, on or before that date, the Key Executive has
not terminated employment for any reason (other than "constructive
discharge" as defined in Section 6(d) of this Agreement), has not tendered
oral or written notice of intent to resign or retire effective as of a date
on or before the given date (other than pursuant to a "constructive
discharge" as defined in Section 6(d) of this Agreement), and has not
behaved in a manner that would be grounds for discharge with cause as
defined in Section 6(b) of this Agreement.
<PAGE>
(e) Stock Split. The number of Phantom Shares provided for in this
-----------
Section 5 shall be adjusted to reflect the two for one split of Bell
Atlantic stock that is scheduled to occur in June, 1998, plus any further
stock splits, corporate reorganizations or other changes in capital
structure that may occur.
6. Terminations of Employment.
--------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
---------------------------------------------------------
event that, prior to the end of the Term of Employment, the Key Executive
voluntarily resigns or retires for any reason (except a "constructive
discharge", as hereinafter defined, or is discharged by Bell Atlantic for
"cause" (as hereinafter defined), the Key Executive shall forfeit any and
all rights to receive the compensation and benefits set forth in Section 2
of this Agreement which as of the relevant date have not yet been earned
under this Agreement, and shall forfeit the right to receive the
compensation set forth in Section 5 of this Agreement, but shall otherwise
be eligible to receive any and all compensation and benefits for which a
similarly-situated senior manager 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.
(b) Cause. For purposes of this Agreement, the term "cause" shall mean
-----
(i) grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to
the Key Executive; fraud, misappropriation or embezzlement involving any
Bell Atlantic Company; or a material breach of the Employee Code of
Business Conduct or Paragraphs 8 (Non-Compete/No Solicitation), 9 (Return
of Property; Intellectual Property Rights) or 10 (Proprietary and
Confidential Information) of this Agreement; each of the foregoing as
determined in the reasonable discretion and judgment of the Chief Executive
Officer of Bell Atlantic, or (ii) commission of any felony of which the Key
Executive is finally adjudged guilty in a court of competent jurisdiction.
In the event that Bell Atlantic terminates the employment of the Key
Executive for cause, it will state in writing the grounds for such
termination and provide this statement to the Key Executive within 10
business days after the date of termination.
(c) Involuntary Terminations. Except in the case of a discharge for
------------------------
cause, in the event that Bell Atlantic discharges the Key Executive, or
the Key Executive is "constructively discharged" (as hereinafter defined),
prior to the end of the Term of Employment, then the Key Executive shall
be entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit, or benefit otherwise
provided in Sections 2 and 5 of this Agreement, provided that each
payment, credit and benefit shall be contingent upon the absence, at the
time such payment, credit or benefit is due, of any act that would
constitute a material breach of this Agreement:
(i) Salary: through the Term of Employment, on a monthly basis, an
amount equal to the monthly salary which would have been paid to the
Key Executive under Section 2 of this Agreement, assuming that his
annual rate of salary would have been increased each January 1 by the
greater of (A) 5%, or (B) the general percentage increase, if any,
approved by the Human Resources
<PAGE>
Committee ("HRC") of the Board for comparable positions in the senior
management group based on the HRC's review of market-median values for
such comparable positions;
(ii) Short-Term Incentives: through the Term of Employment, on an
annual basis, not later than 30 days after the date on which incentives
are awarded by Bell Atlantic under the STIP for the prior year's
performance, an amount equal to the value of the potential maximum
award which the Key Executive would have been entitled to receive under
the STIP based on the maximum STIP award for comparable positions in
the senior management group, without adjustment for individual
performance;
(iii) Phantom Shares: not later than 30 days after the Key
Executive's separation from service, an amount equal to the total value
of the Phantom Shares in the Key Executive's Phantom Shares' account on
the date of such separation from service, as determined pursuant to
Section 5(c)(iii) of this Agreement;
(iv) Stock Options: through the Term of Employment, on an annual
basis, within 30 days of the granting of stock options for the year to
senior managers, an amount equal to 1.2 multiplied by the annual salary
amount determined in accordance with clause (i) above; provided
further, with respect to any and all Bell Atlantic stock options which
are outstanding on the date of the Key Executive's separation from
service, the Key Executive shall be deemed, for purposes of determining
the duration of the Key Executive's right to exercise any and all such
stock options, to have remained in active service with Bell Atlantic
continuously through the Term of Employment, and then to have separated
from service with whatever rights would then be applicable to a holder
of such options under the Stock Option Plan;
(v) IDP Benefits: through the Term of Employment, company
credits to the Company Contribution sub-account contained within the
Key Executive's account under the IDP to the fullest extent provided,
and at the same time such amounts would have been credited, as if the
Key Executive had remained actively employed until the end of the Term
of Employment and received the salary and maximum STIP awards
determined in accordance with clauses (i) and (ii) above; provided
further, that Bell Atlantic shall also credit to such IDP sub-account
an amount each year equal to the sum of (A) the amount which the Key
Executive would otherwise have been eligible to receive as company
matching contributions under the Bell Atlantic Savings Plan or any
successor to that plan (if he had fully participated in contributions
to that plan) and (B) the pay credits which the Key Executive would
otherwise have been eligible to receive under the Bell Atlantic Cash
Balance Plan or any successor to that plan;
(vi) Split- Dollar Benefits: regardless of whether the Key
Executive is retirement eligible at the time of his separation from
service, split-dollar life insurance benefits applicable to a retiring
participating senior manager, under the terms of the Bell Atlantic
Senior Management Estate Management Program; and
<PAGE>
(vii) Flexible Perquisites: through the Term of Employment, on a
monthly basis, $2,000 in lieu of the Flexible Perquisites Account
allowance that the Key Executive would have been entitled to receive.
(d) Constructive Discharge. The Key Executive shall be deemed to have
----------------------
been "constructively discharged" for purposes of this Agreement if the Key
Executive is an Employee in Good Standing and he terminates his employment
for any of the following reasons: Bell Atlantic (or the Key Executive's
employing company) has materially breached this Agreement; the Key
Executive's responsibilities have been significantly reduced in type or
scope; there has been a significant adverse change in the Key Executive's
reporting relationship; there has been a significant adverse change in the
Key Executive's relative compensation (including a negative individual
performance adjustment which causes the Key Executive's STIP award for a
particular year to be reduced by 10% or more); Ivan Seidenberg is not
elected Chairman of the Board by December 31, 1998 or is removed from or
resigns from that position during the Term of Employment (unless the Board
determines that such event results from Mr. Seidenberg's death,
"Disability" (as defined in Section 4(a) of his Employment Agreement, dated
as of August 14, 1997), or his election to terminate his employment
"without Good Reason" (as provided in Section 4(c) of his Employment
Agreement)); or there has been a "change of control" of Bell Atlantic. For
purposes of this Agreement, a change of control of Bell Atlantic shall mean
that any of the following events or circumstances has occurred:
(i) any "Person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes a beneficial
owner, directly or indirectly, of shares of one or more classes of
stock of Bell Atlantic representing 20% or more of the total voting
power of Bell Atlantic's then outstanding voting stock, provided,
however, that if such beneficial ownership is acquired in a transaction
that has been negotiated and approved by the Board, such acquisition of
beneficial ownership shall not be treated as a change of control of
Bell Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is required
to be made with the Securities and Exchange Commission under section
14(d) of the Securities Exchange Act of 1934) is made for the stock of
Bell Atlantic, and the Person making the offer owns or has accepted for
payment shares of one or more classes of Bell Atlantic stock which
represent, when combined with any shares otherwise acquired and owned
by such Person, 20% or more of the total voting power of Bell
Atlantic's then outstanding stock, provided, however, that if such
tender offer has been negotiated and approved by the Board, such tender
offer and stock acquisition shall not be treated as a change of control
of Bell Atlantic for purposes of this Agreement; or
(iii) there ceases to be a majority of the Board comprised of
individuals who either (A) have been members of the Board continuously
for a period of not less than two years, or (B) are new directors whose
election by the Board or nomination for election by shareowners of Bell
Atlantic was approved by a vote of at least two-thirds of the directors
then in office who either were
<PAGE>
directors described in clause (A) hereof or whose election or
nomination for election was previously so approved.
(e) Disability or Death. If, during the Term of Employment at a time
-------------------
when the Key Executive is an Employee in Good Standing, the Key Executive
terminates employment on account of disability (within the meaning of the
applicable disability benefit plans in which the Key Executive participates
from time to time) or dies, and provided Bell Atlantic receives a Release
in the form of Exhibit A from the Key Executive (in the case of disability)
or from his estate (in the case of death), then Bell Atlantic shall
continue to pay to the Key Executive (in the case of disability) or pay to
the Key Executive's estate (in the case of death) the amounts determined as
if, at the date of termination of employment on account of disability or
death, the Key Executive had been terminated without cause under Section
6(c) of this Agreement; provided, however, that in the case of a
termination of employment on account of disability, the amounts paid
pursuant to Sections 6(c)(i) and (ii) of this Agreement shall reduce dollar
for dollar the disability benefits which would otherwise be payable to the
Key Executive during the remainder of the Term of Employment under the
various disability benefit plans in which he participates.
7. Payments Subject to Excise Tax. In the event that it shall be
------------------------------
determined, in the manner described in Exhibit B, that any payment or
distribution by any Bell Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Bell
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
8. Prohibition Against Competitive Activities.
------------------------------------------
(a) Prohibited Conduct by the Key Executive. During the period of the
---------------------------------------
Key Executive's employment with any Bell Atlantic Company, and for a period
of 24 months following the Key Executive's termination of employment for
any reason from all Bell Atlantic Companies, the Key Executive, without the
prior written consent of the Chief Executive Officer of Bell Atlantic shall
not:
(i) personally engage in "Competitive Activities" (as defined in
Section 8(b) of this Agreement); or
(ii) 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, however, that the Key Executive's
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
the Key Executive's equity interest in any such company is less than a
controlling interest.
<PAGE>
(b) Competitive Activities. For purposes of this Agreement,
----------------------
"Competitive Activities" means business activities relating to products or
services of the same or similar type as the products or services which (i)
are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of one or more Bell Atlantic Companies,
and (ii) for which the Key Executive then has responsibility to plan,
develop, manage, market or oversee, or had any such responsibility within
the prior 24 months. Notwithstanding the previous sentence, a business
activity will not be treated as a Competitive Activity if the geographic
marketing area of the relevant products or services sold by the Key
Executive or a third party does not overlap with the geographic marketing
area for the applicable products and services of the Bell Atlantic
Companies.
(c) No Solicitation of Bell Atlantic Employees. During the period of
------------------------------------------
the Key Executive's employment with any Bell Atlantic Company, and for a
period of 24 months following the Key Executive's termination of employment
for any reason from all Bell Atlantic Companies, the Key Executive shall
not, without the consent of the Chief Executive Officer of Bell Atlantic:
(i) recruit or solicit any active employee of any Bell Atlantic
Company for employment or for retention as a consultant or service
provider;
(ii) hire or participate (with another company or third party) in
the process of hiring (other than for a Bell Atlantic Company) any
person who is then an active employee of any Bell Atlantic Company, or
provide names or other information about Bell Atlantic employees to any
person or business (other than a Bell Atlantic Company) under
circumstances which could lead to the use of that information for
purposes of recruiting or hiring; or
(iii) interfere with the relationship of any Bell Atlantic Company
with any of its employees, agents, or representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key Executive from
------
requesting, at the time of the Key Executive's termination of employment or
at any time thereafter, that the Chief Executive Officer of Bell Atlantic
waive, in his sole discretion, Bell Atlantic's rights to enforce some or
all of this Section.
9. Return of Property; Intellectual Property Rights. The Key Executive
------------------------------------------------
agrees that on or before the Key Executive's termination of employment for any
reason with all Bell Atlantic Companies, the Key Executive shall return to the
appropriate Bell Atlantic Company all property owned by each such company or in
which any such company has an interest, including files, documents, data and
records (whether on paper or in tapes, disks, or other machine-readable form),
office equipment, credit cards and employee identification cards. The Key
Executive acknowledges that Bell Atlantic or an applicable Bell Atlantic Company
is the rightful owner of any programs, ideas, inventions, discoveries, copyright
material or trademarks which the Key Executive may have originated or developed,
or assisted in originating or developing, during the Key Executive's period of
employment with any Bell Atlantic Company, where any such origination or
development involved the use of company time or resources, or the exercise of
the Key Executive's responsibilities for or on behalf of any such company. The
Key Executive shall at all times, both before and after termination of
employment, cooperate with Bell Atlantic in executing and delivering documents
requested by any Bell Atlantic Company, and
<PAGE>
taking any other actions, that are necessary or requested by Bell Atlantic to
assist any Bell Atlantic Company in patenting, copyrighting or registering any
programs, ideas, inventions, discoveries, copyright material or trademarks, and
to vest title thereto in the applicable company.
10. Proprietary and Confidential Information. The Key Executive shall at
----------------------------------------
all times preserve the confidentiality of all proprietary information and trade
secrets of any and all Bell Atlantic Companies, except to the extent that
disclosure of such information is legally required. "Proprietary information"
means information that has not been disclosed to the public, and which is
treated as confidential within the business of any Bell Atlantic Company, such
as strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions which are contemplated or planned; research data;
personnel information and data; identities of users and purchasers of any Bell
Atlantic Company's products or services; and other confidential matters
pertaining to or known by one or more Bell Atlantic Companies, including
confidential information of a third party which the Key Executive knows a Bell
Atlantic Company is bound to protect.
11. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Bell Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
12. Assignment by Bell Atlantic. The obligations of Bell Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Bell
Atlantic. Bell Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Bell Atlantic, or into which or with which Bell Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
13. Non-Benefit Bearing Payments. The amounts to be paid, provided or
----------------------------
credited under Sections 4, 5, 6, and 7 of this Agreement shall not be treated as
compensation for purposes of computing or determining any additional benefit to
be paid, provided or credited under any savings plan, insurance plan, pension
plan, or other employee benefit plan maintained by any Bell Atlantic Company.
14. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 5 or 6 of this Agreement may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
15. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 8 (Non-Compete/No Solicitation) of this Agreement or engages in
serious
<PAGE>
misconduct that is contrary to written policies of Bell Atlantic and is
harmful to any Bell Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
16. 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.
17. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 8 (Non-Compete/No Solicitation), 9
(Return of Property), 10 (Proprietary and Confidential Information), and 11
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Bell Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future livelihood. The parties hereto further recognize that
irreparable damage to Bell Atlantic will result in the event that these sections
of the Agreement are not specifically enforced and that monetary damages will
not adequately protect Bell Atlantic from a breach of these sections of the
Agreement. If any dispute arises concerning the violation by the Key Executive
of these sections of the Agreement, the parties hereto agree that an injunction
may be issued restraining such violation pending the determination of such
controversy, and no bond or other security may be required in connection
therewith.
18. Reformation and Severability. The Key Executive and Bell Atlantic
----------------------------
agree that the agreements contained herein and within the 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 the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the 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 Bell Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
19. 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:
<PAGE>
(a) If to Bell Atlantic, to:
Bell Atlantic Corporation
1095 Avenue of the Americas
New York, New York 10036
Attention: Executive Vice President
Human Resources
(b) If to the Key Executive, to:
11212 Elmview Place
Great Falls, Virginia 22066
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
20. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 8 through
11 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Bell Atlantic arising out of or relating to Sections
8 through 11 of this Agreement, Bell Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief, as referred to in Section 17 of this Agreement. Notice of the existence
of a dispute which a party wishes to have resolved by arbitration shall be
provided pursuant to Section 19 of this Agreement. The arbitration shall be
expedited and conducted in New York, New York pursuant to the Center for Public
Resources ("CPR") Rules for Non-Administered Arbitration of Employment Disputes
in effect at the time of notice of the dispute before one neutral arbitrator
appointed by CPR from the CPR Panel of Neutrals unless the parties mutually
agree to the appointment of a different neutral arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16,
and judgment upon the award rendered by the arbitration may be entered by any
court having jurisdiction. The finding of the arbitrator may not change the
express terms of this Agreement and shall be consistent with the arbitrator's
understanding of the findings a court of proper jurisdiction would make in
applying the applicable law to the facts underlying the dispute. In no event
whatsoever 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.
21. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
22. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire understanding of Bell Atlantic and the Key Executive and shall
supersede all prior agreements and communications, whether oral or written,
between Bell Atlantic and the Key Executive including, without limitation, the
Prior Agreement. This Agreement shall not be modified except by written
agreement of the Key Executive and Bell Atlantic.
<PAGE>
23. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
BELL ATLANTIC CORPORATION
By:
---------------------------
Ivan Seidenberg
Chief Executive Officer
THE KEY EXECUTIVE
By:
---------------------------
James R. Young
<PAGE>
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________ (the
"Key Executive"), for the benefit of BELL ATLANTIC CORPORATION (the "Company"),
and all companies, and their officers, directors and employees, which are
affiliated with the Company or in which the Company owns a substantial economic
interest, and any benefit plan maintained by any Bell Atlantic Company (or any
plan administrator of any such plan). Capitalized terms in this document which
are not otherwise defined herein shall have the respective meanings assigned to
them in the Employment Agreement between the Company and the Key Executive,
dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key
Executive's employing company (the "Employer") on __________ , _____ (the
"Separation Date") pursuant to the terms of the Agreement, and the Key Executive
wishes to execute this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key
Executive might have against any Bell Atlantic Company, and any benefit plan
maintained by any Bell Atlantic Company (or any plan administrator of any such
plan), for salary payments, vacation pay, incentives, bonuses, or other
remuneration or employee benefits of any kind, with the exception of any
obligations of the Company or Employer arising after the Separation Date under
Sections 6 or 7 of the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Bell Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Bell Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Bell Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
-- ---
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
--
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
- ---
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
<PAGE>
3. The Key Executive hereby reaffirms all covenants and promises given by
the Key Executive under the Agreement, and all other terms and conditions of the
Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by
any court to be illegal or invalid, the validity of the remaining parts, terms
or provisions shall not be affected thereby, and said illegal or invalid part,
term or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS
---------------------------------------------------
ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE. THE COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS
BENEFITS PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY
ENFORCEABLE BY THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE
PROVISIONS OF THIS RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A
PERIOD OF SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX,
FINANCIAL AND LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO
BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE
WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME
ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this Release
as of the ___ day of _________, _____, that being the Key Executive's Separation
Date.
THE KEY EXECUTIVE
Signed:
------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
<PAGE>
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment
---------------------------------
or benefit received or to be received by the Key Executive pursuant to the terms
of the Agreement (the "Contract Payments") or of any other plan, arrangement or
agreement of any Bell Atlantic Company ("Other Payments" and, together with the
Contract Payments, 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 paragraph, Bell Atlantic shall pay to the
Key Executive, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Key Executive, after
deduction of the Excise Tax on 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 the Key Executive 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. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) 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 Bell Atlantic and reasonably acceptable to
the Key Executive ("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; (ii) the amount of the Payments that shall be treated
as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code (after applying clause (i)
hereof); and (iii) the value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Key Executive 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 the Key Executive's 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.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in
--------------------------
this Exhibit B shall be made upon the earlier of (i) the payment to the Key
Executive of any Payment or (ii) the imposition upon the Key Executive or
payment by the Key Executive of any Excise Tax.
Adjustments to 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 is less than the
amount previously taken into account hereunder, the Key Executive shall repay to
Bell Atlantic within thirty (30) days of
<PAGE>
the Key Executive's 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 the Key
Executive if such repayment results in a reduction in Excise Tax or a federal,
state and local income tax deduction) plus any interest received by the Key
Executive on the amount of such repayment, provided, however, that if any such
amount has been paid by the Key Executive as an Excise Tax or other tax, the Key
Executive shall cooperate with Bell Atlantic in seeking a refund of any tax
overpayments, and shall not be required to make repayments to Bell Atlantic
until the overpaid taxes and interest thereon are refunded to the Key Executive.
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), Bell Atlantic shall make an additional Gross-
Up Payment in respect of such excess within thirty (30) days of Bell Atlantic's
receipt of notice of such final determination or opinion.
Change in Law or Interpretation. In the event of any change in, or
--------------------------------
further interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Key Executive shall be entitled, by written notice
to Bell Atlantic, to request a written opinion of Independent Counsel regarding
the application of such change to any of the foregoing, and Bell Atlantic shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Independent Counsel incurred in connection
with this Exhibit B shall be borne by Bell Atlantic.
<PAGE>
EXHIBIT 10v(i)
Letter dated April 16, 1998, to Raymond W. Smith
------------------------------------------------
concerning employment-related issues
------------------------------------
Bell Atlantic Corporation Ivan Seidenberg
1095 Avenue of the Americas Vice Chairman, President and
New York, NY 10036 Chief Operating Officer
April 16, 1998
Raymond W. Smith
Chairman and Chief Executive Officer
Room 3919
1095 Avenue of Americas
New York, NY 10036
Re: Confirmation of Recent Discussions
----------------------------------
Dear Ray:
This letter will confirm our discussions regarding a number of employment-
related issues:
As contemplated by Section 3(d) of your employment agreement, it is agreed and
understood that for whatever period you continue to represent Bell Atlantic on
any outside board or council (but for at least five years after your
retirement), (a) you will continue to have access to and use of the corporate
aircraft (including limited personal use in accordance with Bell Atlantic's
current policies) subject to the needs of the business, (b) you will continue to
be furnished office space and secretarial support, and (c) you will be
reimbursed for any dues payments or travel and lodging expenses incurred as a
representative of Bell Atlantic on any outside board or council, including the
Madison Council of the Library of Congress and the Lincoln Center.
With respect to the Madison Council, it is agreed that you may continue to serve
as a representative of Bell Atlantic for as long as you deem appropriate. With
respect to the Lincoln Center board, it is agreed that you may continue to serve
as Bell Atlantic's representative for a period of two years after your
retirement.
In addition, it is agreed that, at least until December 31, 1999, you will serve
as non-executive Chairman of the proposed Bell Atlantic Venture Fund, which will
be responsible for assessing new technologies, interfacing with providers of
these technologies, and making appropriate recommendations to the Company.
Sincerely,
Ivan
<PAGE>
EXHIBIT 10v(ii)
Resolutions dated May 1, 1998, approving amendments to Employment Agreement of
- ------------------------------------------------------------------------------
Raymond W. Smith
----------------
The following resolutions were adopted by the Board of Directors of Bell
Atlantic Corporation on May 1, 1998
RESOLVED, that this Board hereby approves an amendment to the employment
agreement dated August 14, 1997 between the Corporation and Raymond W. Smith,
Chairman and Chief Executive Officer of the Corporation (the "Smith Employment
Agreement"), to provide that (a) the Corporation shall continue to provide the
current New York City residence for Mr. Smith's use for a two year period
following the date of his separation from the Corporation's service, unless Mr.
Smith exercises the option provided for by the following clause (b) prior to the
end of said term; and (b) Mr. Smith shall have an option to purchase said New
York City residence at any time during the term contemplated in (a) at a price
equal to the Corporation's cost of acquisition of the residence (including the
cost of all improvements) reduced, if the option is exercised prior to the end
of said term, by the amount of expense avoided by the Corporation in not
providing the residence to Mr. Smith for the full term;
FURTHER RESOLVED, that the Board hereby approves amendments to the Smith
Employment Agreement and the employment agreement dated August 14, 1997 between
the Corporation and Ivan G. Seidenberg, Vice Chairman, President and Chief
Operating Officer of the Corporation (the "Seidenberg Employment Agreement"), to
provide that, during the Secondary Period, as defined in the Smith Employment
Agreement and the Seidenberg Employment Agreement, the Chief Executive Officer
shall report to this Board and not to the Chairman, and the principal executive
officers of the Corporation shall report to the Chief Executive Officer and not
to the Office of the Chairman
<PAGE>
EXHIBIT 10w(i)
Resolution dated May 1, 1998, approving amendment to Employment Agreement of
----------------------------------------------------------------------------
Ivan G. Seidenberg
------------------
FURTHER RESOLVED, that the Board hereby approves amendments to the Smith
Employment Agreement and the employment agreement dated August 14, 1997 between
the Corporation and Ivan G. Seidenberg, Vice Chairman, President and Chief
Operating Officer of the Corporation (the "Seidenberg Employment Agreement"), to
provide that, during the Secondary Period, as defined in the Smith Employment
Agreement and the Seidenberg Employment Agreement, the Chief Executive Officer
shall report to this Board and not to the Chairman, and the principal executive
officers of the Corporation shall report to the Chief Executive Officer and not
to the Office of the Chairman
<PAGE>
EXHIBIT 12
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Dollars in Millions)
Six Months Ended
June 30, 1998
----------------
Income before provision for income taxes and extraordinary
item....................................................... $ 3,044.4
Loss from unconsolidated businesses......................... 2.7
Dividends received from unconsolidated businesses........... 88.1
Interest expense, including interest on capital lease
obligations................................................ 697.3
Portion of rent expense representative of the interest
factor..................................................... 95.7
Preferred stock dividend.................................... 6.1
----------
Income, as adjusted......................................... $ 3,934.3
==========
Fixed charges:
Interest expense, including interest on capital lease
obligations................................................ $ 697.3
Portion of rent expense representative of the interest
factor..................................................... 95.7
Capitalized interest........................................ 42.7
Preferred stock dividend requirement........................ 9.6
----------
Fixed charges............................................... $ 845.3
==========
Ratio of Earnings to Fixed Charges.......................... 4.65
==========
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 727
<SECURITIES> 0
<RECEIVABLES> 7,116
<ALLOWANCES> 649
<INVENTORY> 605
<CURRENT-ASSETS> 9,003
<PP&E> 80,185
<DEPRECIATION> 44,383
<TOTAL-ASSETS> 54,716
<CURRENT-LIABILITIES> 11,819
<BONDS> 15,503
0
0
<COMMON> 158
<OTHER-SE> 13,012
<TOTAL-LIABILITY-AND-EQUITY> 54,716
<SALES> 0
<TOTAL-REVENUES> 15,579
<CGS> 0
<TOTAL-COSTS> 11,914
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 673
<INCOME-PRETAX> 3,044
<INCOME-TAX> 1,107
<INCOME-CONTINUING> 1,937
<DISCONTINUED> 0
<EXTRAORDINARY> (23)
<CHANGES> 0
<NET-INCOME> 1,914
<EPS-PRIMARY> 1.23<F1>
<EPS-DILUTED> 1.21<F1>
<FN>
<F1>REFLECTS A TWO-FOR-ONE STOCK SPLIT PAID ON JUNE 29, 1998 TO SHAREHOLDERS
OF RECORD ON JUNE 1, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
APPLICABLE 1997 INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 609<F1> 427<F1> 483
<SECURITIES> 0 0 0
<RECEIVABLES> 6,588<F1> 6,733<F1> 6,739
<ALLOWANCES> 593<F1> 590<F1> 592
<INVENTORY> 501<F1> 544<F1> 516
<CURRENT-ASSETS> 8,542<F1> 8,435<F1> 8,455
<PP&E> 77,049<F1> 75,829<F1> 76,471
<DEPRECIATION> 40,582<F1> 41,199<F1> 41,746
<TOTAL-ASSETS> 53,839<F1> 52,668<F1> 52,891
<CURRENT-LIABILITIES> 12,318<F1> 12,310<F1> 13,113
<BONDS> 13,500<F1> 13,202<F1> 13,071
0 0 0
0 0 0
<COMMON> 157<F1><F4> 158<F1><F4> 158<F4>
<OTHER-SE> 12,838<F1><F4> 13,076<F1><F4> 12,391<F4>
<TOTAL-LIABILITY-AND-EQUITY> 53,839<F1> 52,668<F1> 52,891
<SALES> 0 0 0
<TOTAL-REVENUES> 7,417<F1> 15,124<F1> 22,498
<CGS> 0 0 0
<TOTAL-COSTS> 5,958<F1> 11,818<F1> 18,771
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 330<F1> 621<F1> 919
<INCOME-PRETAX> 1,104<F1> 2,564<F1> 2,552
<INCOME-TAX> 406<F1> 969<F1> 1,037
<INCOME-CONTINUING> 698<F1> 1,595<F1> 1,515
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 698<F1> 1,595<F1> 1,515
<EPS-PRIMARY> .45<F2><F4> 1.03<F2><F4> .98<F3><F4>
<EPS-DILUTED> .45<F2><F4> 1.02<F2><F4> .97<F3><F4>
<FN>
<F1>RESTATED TO REFLECT THE MERGER OF BELL ATLANTIC CORPORATION AND NYNEX
CORPORATION COMPLETED ON AUGUST 14, 1997 AND ACCOUNTED FOR AS A POOLING OF
INTERESTS.
<F4>ADJUSTED TO REFLECT A TWO-FOR-ONE STOCK SPLIT PAID ON JUNE 29, 1998 TO
SHAREHOLDERS OF RECORD ON JUNE 1, 1998.
<F2>RESTATED TO REFLECT THE MERGER (FOOTNOTE F1) AND THE ADOPTION OF FINANCIAL
ACCOUNTING STANDARDS BOARD STATEMENT NO. 128, "EARNINGS PER SHARE."
<F3>RESTATED TO REFLECT THE ADOPTION OF FINANCIAL ACCOUNTING STANDARDS BOARD
STATEMENT NO. 128, "EARNINGS PER SHARE."
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
APPLICABLE 1996 INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996
<CASH> 331<F1> 281<F1> 282<F1>
<SECURITIES> 0 0 0
<RECEIVABLES> 6,404<F1> 6,522<F1> 6,491<F1>
<ALLOWANCES> 573<F1> 586<F1> 586<F1>
<INVENTORY> 339<F1> 361<F1> 414<F1>
<CURRENT-ASSETS> 7,912<F1> 8,010<F1> 7,960<F1>
<PP&E> 72,575<F1> 73,445<F1> 74,281<F1>
<DEPRECIATION> 37,952<F1> 38,758<F1> 39,224<F1>
<TOTAL-ASSETS> 50,387<F1> 50,747<F1> 51,237<F1>
<CURRENT-LIABILITIES> 9,041<F1> 8,738<F1> 8,577<F1>
<BONDS> 15,259<F1> 15,498<F1> 15,464<F1>
0 0 0
0 0 0
<COMMON> 157<F1><F3> 157<F1><F3> 157<F1><F3>
<OTHER-SE> 11,619<F1><F3> 12,058<F1><F3> 12,475<F1><F3>
<TOTAL-LIABILITY-AND-EQUITY> 50,387<F1> 50,747<F1> 51,237<F1>
<SALES> 0 0 0
<TOTAL-REVENUES> 7,044<F1> 14,373<F1> 21,750<F1>
<CGS> 0 0 0
<TOTAL-COSTS> 5,698<F1> 11,428<F1> 17,137<F1>
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 278<F1> 547<F1> 813<F1>
<INCOME-PRETAX> 1,098<F1> 2,405<F1> 3,786<F1>
<INCOME-TAX> 408<F1> 885<F1> 1,394<F1>
<INCOME-CONTINUING> 690<F1> 1,520<F1> 2,392<F1>
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 273<F1> 273<F1> 273<F1>
<NET-INCOME> 963<F1> 1,793<F1> 2,665<F1>
<EPS-PRIMARY> .62<F2><F3> 1.16<F2><F3> 1.72<F2><F3>
<EPS-DILUTED> .62<F2><F3> 1.15<F2><F3> 1.71<F2><F3>
<FN>
<F1>RESTATED TO REFLECT THE MERGER OF BELL ATLANTIC CORPORATION AND NYNEX
CORPORATION COMPLETED ON AUGUST 14, 1997 AND ACCOUNTED FOR AS A POOLING OF
INTERESTS.
<F2>RESTATED TO REFLECT THE MERGER (FOOTNOTE F1) AND THE ADOPTION OF FINANCIAL
ACCOUNTING STANDARDS BOARD STATEMENT NO. 128, "EARNINGS PER SHARE."
<F3>ADJUSTED TO REFLECT A TWO-FOR-ONE STOCK SPLIT PAID ON JUNE 29, 1998 TO
SHAREHOLDERS OF RECORD ON JUNE 1, 1998.
</FN>
</TABLE>
