EXHIBIT 10kk
FORM OF
STAY INCENTIVE AGREEMENT
(▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇)
THIS STAY INCENTIVE AGREEMENT (the "Agreement") is made as of the 23rd
day of November, 1998, by and between ▇▇▇▇ Atlantic Corporation, its successors
and assigns ("▇▇▇▇ Atlantic"), and ________________________________, an employee
of a ▇▇▇▇ Atlantic Company (the "Key Employee"). In this Agreement, "▇▇▇▇
Atlantic Company" means any or all of the following: ▇▇▇▇ Atlantic, a corporate
subsidiary or other company affiliated with ▇▇▇▇ Atlantic, a company in which
▇▇▇▇ Atlantic owns directly or indirectly an equity interest of at least ten
percent, and the successors and assigns of any such company.
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger,
dated as of July 27, 1998, among ▇▇▇▇ Atlantic, GTE Corporation ("GTE") and Beta
Gamma Corporation (the "Definitive Agreement"), ▇▇▇▇ Atlantic contemplates a
merger of the ▇▇▇▇ Atlantic and GTE businesses (the "Merger") on a date which is
yet to be decided (the "Closing Date");
WHEREAS, ▇▇▇▇ Atlantic considers the Key Employee to be an employee
whose continuing services, leadership and support are and will be valuable,
especially during the period prior to the Closing Date; and
WHEREAS, subject to the terms of this Agreement, ▇▇▇▇ Atlantic wishes
to incent the Key Employee to remain an employee in good standing during this
period;
NOW, THEREFORE, for good and valuable consideration, the Key Employee
and ▇▇▇▇ Atlantic hereby agree as follows:
1. Stay Incentive.
--------------
(a) Stay Incentive Bonus at Closing. If the Merger occurs pursuant to
-------------------------------
the Definitive Agreement, and if the Key Employee has remained an "Employee in
Good Standing" (as defined in Section 1(c) of this Agreement) of a ▇▇▇▇ Atlantic
Company from the date of this Agreement to the Closing Date, then, not later
than 30 calendar days following the Closing Date, ▇▇▇▇ Atlantic will cause the
▇▇▇▇ Atlantic Company which then employs the Key Employee to pay the Key
Employee a special stay incentive bonus (a "Stay Bonus") consisting of a single
cash payment in an amount equal (before withholding of taxes) to 1.5 multiplied
by the greater of (i) the sum of the Key Employee's annual rate of base salary
and 50% of the Key Employee's maximum short-term incentive under the ▇▇▇▇
Atlantic Short Term Incentive Plan (or other applicable short-term incentive
plan), both as of the date of this Agreement, or (ii) the sum of such items,
both as of the Closing Date.
(b) Adjusted Stay Incentive Bonus if Merger Plan is Terminated. If the
----------------------------------------------------------
Definitive Agreement is terminated without the Merger occurring, and the Key
Employee has remained an "Employee in Good Standing" of a ▇▇▇▇ Atlantic Company
from the date of this Agreement to the date the Definitive Agreement is
terminated, then, not later than 30 calendar days following the date of
termination of the Definitive Agreement, ▇▇▇▇ Atlantic will cause the ▇▇▇▇
Atlantic Company which then employs the Key Employee to pay the Key Employee a
special adjusted stay
incentive bonus (an "Adjusted Stay Bonus") consisting of a single cash payment
in an amount equal (before withholding of taxes) to 25 percent of the Stay Bonus
described in Section 1(a) of this Agreement, except that the date of termination
of the Definitive Agreement shall be substituted for the Closing Date for
purposes of calculating such amount.
(c) Definition of Employee in Good Standing. For purposes of this
---------------------------------------
Agreement, the Key Employee will be considered to be an "Employee in Good
Standing" on a given date if, on that date, the Key Employee is employed by a
▇▇▇▇ Atlantic Company, has not tendered oral or written notice of intent to
resign or retire effective as of a date on or before the given date, and has not
behaved in a manner that would be grounds for discharge for "Cause" as defined
in Section 1(d) of this Agreement.
(d) Definition of Cause. For purposes of this Agreement, the term
-------------------
"Cause" shall mean grossly incompetent performance or substantial or continuing
inattention to or neglect of the duties and responsibilities assigned to the Key
Employee as determined by the Key Employee's current supervisor, with the
concurrence of the Executive Vice President - Human Resources of ▇▇▇▇ Atlantic;
fraud, misappropriation or embezzlement involving any ▇▇▇▇ Atlantic Company; a
material breach of the Employee Code of Business Conduct or this Agreement; or
commission of any felony of which the Key Employee is finally adjudged guilty in
a court of competent jurisdiction.
2. Termination of Employment.
-------------------------
(a) Voluntary Resignation, Retirement, or Discharge for Cause. In the
---------------------------------------------------------
event that, prior to the Closing Date or termination of the Definitive
Agreement, the Key Employee voluntarily resigns or retires for any reason or is
discharged by a ▇▇▇▇ Atlantic Company for Cause, the Key Employee shall forfeit
any and all rights to receive a Stay Bonus or an Adjusted Stay Bonus under
Section 1 of this Agreement.
(b) Involuntary Terminations. In the event that a ▇▇▇▇ Atlantic
------------------------
Company discharges the Key Employee other than for Cause, and either (i) the
Merger subsequently occurs pursuant to the Definitive Agreement, or (ii) the
Definitive Agreement is terminated without the Merger occurring, then ▇▇▇▇
Atlantic shall cause the Key Employee's last employing ▇▇▇▇ Atlantic Company to
pay the Key Employee a bonus equal in amount to the Stay Bonus or Adjusted Stay
Bonus which would otherwise have become payable under Section 1 (a) or (b) of
this Agreement, provided that the payment of such bonus shall be contingent upon
the absence, at the time of payment, of any act by the Key Employee that would
constitute a material breach of this Agreement, and provided further that the
date of discharge shall be substituted for the dates described in Section 1 (a)
or (b) for purposes of calculating the dollar amount of such bonus. Such bonus
shall be paid not later than the date on which the Stay Bonus or Adjusted Stay
Bonus would otherwise have become payable.
(c) Payment in Case of Death or Disability. In the event that the Key
--------------------------------------
Employee dies, or terminates his or her employment on account of disability
(within the meaning of the applicable disability benefit plan in which the Key
Employee participates from time to time) on a date on which the Key Employee was
an Employee in Good Standing, and the Merger subsequently occurs pursuant to the
Definitive Agreement, ▇▇▇▇ Atlantic shall cause the Key Employee's last
employing ▇▇▇▇ Atlantic Company to pay the Key Employee, or the Key Employee's
estate in the event of death, a single cash payment which shall be equal (before
withholding of taxes) to the Stay Bonus multiplied by the following fraction:
the numerator shall
2
be the number of days that have elapsed between the date of this Agreement and
the date of the Key Employee's death or disability, and the denominator shall be
the number of days that have elapsed between the date of this Agreement and the
Closing Date of the Merger. Such payment shall be made in accordance with the
timetable prescribed in Section 1(a) of this Agreement, substituting the date of
death or disability for the date described in Section 1(a) for purposes of
calculating the dollar amount of the payment. If the Definitive Agreement is
terminated without the Merger occurring after the Key Employee's death or
disability, and if the Key Employee was an Employee in Good Standing on the date
of such death or disability, a single cash payment shall be made to the Key
Employee, or the Key Employee's estate in the event of death, in an amount equal
(before withholding of taxes) to the Adjusted Stay Bonus. Such payment shall be
made in accordance with the timetable prescribed in Section 1(b) of this
Agreement, substituting the date of death or disability for the date described
in Section 1(b) for purposes of calculating the dollar amount of the payment.
3. Prohibition Against Recruiting or Hiring. Commencing on the
----------------------------------------
effective date of this Agreement and at all times thereafter through the second
anniversary of the Key Employee's termination of employment for any reason from
all ▇▇▇▇ Atlantic Companies, the Key Employee shall not, without the consent of
the Executive Vice President - Human Resources of ▇▇▇▇ Atlantic:
(i) recruit or solicit any active employee of any ▇▇▇▇
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 ▇▇▇▇
Atlantic Company) any person who is then an active employee of
any ▇▇▇▇ Atlantic Company, or provide names or other
information about ▇▇▇▇ Atlantic employees to any person or
business (other than a ▇▇▇▇ Atlantic Company) under
circumstances which the Key Employee knows or should know
could lead to the use of that information for purposes of
recruiting or hiring; or
(iii) interfere with the relationship of any ▇▇▇▇ Atlantic
Company with any of its employees, agents, or representatives.
4. Confidentiality. The Key Employee agrees not to disclose or
---------------
discuss, other than with the Key Employee's legal counsel, financial or tax
adviser, and spouse (if any) either the existence of or any details of this
Agreement. The Key Employee will make a good faith effort to ensure that any
such legal counsel, financial or tax adviser, or spouse will not disclose or
discuss the existence or any details of this Agreement with any other person.
5. Proprietary Information. The Key Employee shall at all times
-----------------------
preserve the confidentiality of all proprietary information and trade secrets of
any and all ▇▇▇▇ Atlantic Companies. "Proprietary information" means information
obtained or developed by the Key Employee during the Key Employee's employment
with any ▇▇▇▇ Atlantic Company that has not been fully disclosed in a writing
generally circulated to the public at large, and which is treated as
confidential within the business of any ▇▇▇▇ Atlantic Company.
6. Deferrals under IDP. Amounts otherwise payable to the Key
-------------------
Employee under Sections 1 or 2 of this Agreement may be deferred under the ▇▇▇▇
Atlantic Income Deferral Plan ("IDP") or any successor plan in accordance with
the terms of the IDP.
3
7. Assignment by ▇▇▇▇ Atlantic. ▇▇▇▇ Atlantic may assign this
---------------------------
Agreement without the Key Employee's consent to any company that acquires all or
substantially all of the stock or assets of ▇▇▇▇ Atlantic, or into which or with
which ▇▇▇▇ Atlantic is merged or consolidated. This Agreement may not be
assigned by the Key Employee, and no person other than the Key Employee (or the
Key Employee's estate) may assert the rights of the Key Employee under this
Agreement.
8. Business Discretion of ▇▇▇▇ Atlantic. Nothing in this
------------------------------------
Agreement is intended to limit the discretion of any ▇▇▇▇ Atlantic Company to
take any action with regard to the Merger which ▇▇▇▇ Atlantic may consider
appropriate, including, without limitation, postponing the Closing Date or
terminating the Definitive Agreement. This Agreement is not a contract to retain
the Key Employee in the employ of any ▇▇▇▇ Atlantic Company for any prescribed
period or term. This Agreement does not modify the employment-at-will status of
the Key Employee.
9. Non-Benefit Bearing Payments. Any amount to be paid under
----------------------------
Section 1 or Section 2 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 ▇▇▇▇ Atlantic Company.
10. Remedies. The Key Employee acknowledges that irreparable
--------
injury will result to ▇▇▇▇ Atlantic, and other ▇▇▇▇ Atlantic Companies, and to
their business, in the event of a material breach by the Key Employee of any of
the Key Employee's covenants and commitments under this Agreement. In the event
of a material breach of any of the Key Employee's covenants and commitments
under this Agreement, the Key Employee, in the sole discretion of ▇▇▇▇ Atlantic,
may forfeit any amount otherwise payable to the Key Employee under Sections 1 or
2 of this Agreement. In addition, ▇▇▇▇ Atlantic and any affected ▇▇▇▇ Atlantic
Company reserves all rights to seek any and all remedies and damages permitted
under law, including, but not limited to, injunctive relief, equitable relief
and compensatory damages.
11. Governing Law. This Agreement shall be interpreted and
-------------
enforced in accordance with the law of the State of New York.
12. Severability. If any clause, phrase or provision of this
------------
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, this shall not affect or
render invalid or unenforceable the remainder of this Agreement. Furthermore, in
the event that a court of law or equity determines that the duration of any
restrictions under this Agreement is not enforceable, this Agreement shall be
deemed to be amended to the extent necessary, but only to the extent necessary,
to permit the enforcement of the terms of this Agreement, as so amended.
13. Waiver: The waiver by ▇▇▇▇ Atlantic of a breach by the Key
------
Employee of any provision of this Agreement shall not be construed as a waiver
of any subsequent breach.
14. Entire Agreement: This Agreement sets forth the entire
----------------
understanding of ▇▇▇▇ Atlantic and the Key Employee, and supersedes all prior
agreements and communications, whether oral or written, pertaining to
eligibility for stay incentives of the type described herein, and covenants
pertaining to recruiting or hiring, and proprietary information. This Agreement
shall not be modified except by written agreement of the Key Employee and ▇▇▇▇
Atlantic.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
▇▇▇▇ ATLANTIC CORPORATION
By:
-------------------------------------
THE KEY EMPLOYEE
----------------------------------------
5