Exhibit 10(f)
Special Compensation and Non-Compete Agreement
This Agreement is entered into as of the 13th day of May, 2003 (the "Grant
Date"), by and between Sprint Corporation, a Kansas corporation ("Sprint," and
it, together with its Subsidiaries, the "Employer"), and Xxxxx X. Xxxxxxxxx
("Employee").
Recitals
1. Employer is engaged in the telecommunications and related businesses.
This is a worldwide business that may be conducted from sites and serve
customers throughout the world.
2. Employer has offered to employ Employee as an executive officer of
Employer.
3. By virtue of his work for Employer, Employee will gain access to
valuable Proprietary Information of Employer.
4. Employer desires to enter into this Agreement to provide severance and
other benefits for Employee in exchange for Employee's agreement to
maintain the confidentiality of certain information and to refrain from
competing with Employer during and after termination of his employment
with Employer.
Capitalized terms are defined in Section 6 or parenthetically throughout this
Agreement.
Now, Therefore, in consideration of the premises and of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereby
agree as follows:
1. Employment At Will
Employee's employment may be terminated by either party for any reason. Employee
shall provide Employer with written notice of his intent to terminate at least
30 days before the effective date of the termination. Except in the event of
Termination for Cause, Employer shall provide Employee with written notice of
its intent to terminate Employee's employment at least 30 days before the
effective date of the termination.
2. Employee's Covenants
2.01. Exclusivity of Services
Employee shall, during his employment with Employer, owe an undivided duty of
loyalty to Employer and agrees to devote his entire business time and attention
to the performance of those duties and responsibilities and to use his
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best efforts to promote and develop the business of Employer. Employee shall
adhere in all respects to Sprint's Principles of Business Conduct (together with
any successor provision, which is incorporated by this reference, the "Code of
Ethics") as in effect as of the date of this Agreement and as may be amended
from time to time hereafter. The determination of the Committee as to the
Employee's compliance with this provision shall be final.
2.02. Proprietary Information
Employee acknowledges that during the course of his employment he has learned or
will learn or develop Proprietary Information. Employee further acknowledges
that unauthorized disclosure or use of such Proprietary Information, other than
in discharge of Employee's duties, will cause Employer irreparable harm.
Except in the course of his employment with Employer under this Agreement, in
the pursuit of the business of Employer, or as otherwise required in employment
with Employer, Employee shall not, during the course of his employment or at any
time following termination of his employment, directly or indirectly, disclose,
publish, communicate, or use on his behalf or another's behalf, any Proprietary
Information. If during or after his employment Employee has any questions about
whether particular information is Proprietary Information he shall consult with
Employer's Corporate Secretary.
2.03. Non-Competition
Employee shall not, during the Non-Compete Period, engage in Competitive
Employment, whether paid or unpaid and whether as a consultant, employee, or
otherwise. This provision shall not apply if, within one year following a Change
in Control:
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability; or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
If Employee ceases to be employed by Employer because of the sale, spin-off,
divestiture, or other disposition by Employer of the Subsidiary, Division, or
other divested unit employing Employee, this provision shall continue to apply
during the Non-Compete Period, except that Employee's continued employment for
the Subsidiary, Division, or other divested unit disposed of by the Employer
shall not be deemed a violation of this provision. Employee agrees that, in
anticipation of the sale, spin-off, split-off, or other divestiture of a
business unit or division for whom Employee is then providing services, Employer
may change the Subsidiary employing Employee to the the Subsidiary that is the
subject of the sale, spin-off, split-off, or other divestiture.
Employee agrees that because of the worldwide nature of Employer's business,
breach of this agreement by accepting Competitive Employment anywhere in the
United States would irreparably injure Employer and that, therefore, a
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more limited geographic restriction is neither feasible nor appropriate to
protect Employer's interests.
2.04. Inducement of Employees, Customers and Others
During the term of his employment and the Non-Compete Period, Employee shall not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, or customer of Employer with whom he has worked or about whom he has
gained Proprietary Information to terminate his or its employment, agency, or
customer relationship with Employer or to render services for or transfer
business to any Competitor of Employer.
2.05. Return of Employer's Property
Employee shall, upon termination of his employment with Employer, return to
Employer all property of Employer in his possession, including all notes,
reports, sketches, plans, published memoranda or other documents, whether in
hard copy or in computer form, created, developed, generated, received, or held
by Employee during employment, concerning or related to Employer's business,
whether containing or relating to Proprietary Information or not. Employee shall
not remove, by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information, or
reproductions or copies thereof, or any apparatus from Employer's premises
without Employer's authorization.
2.06. Exit Interview
At Employer's request, Employee shall participate in an exit interview prior to
his Severance Date to provide for the orderly transition of his duties, to
arrange for the return of Employer's property, to discuss his intended new
employment, and to discuss and complete such other matters as may be necessary
to ensure full compliance with this Agreement.
2.07. Confidentiality of Agreement
Employee shall not disclose or discuss the existence of this Agreement, the
Stock-Based Award, the Special Compensation, or any other terms of the Agreement
except
(i) to members of his immediate family,
(ii) to his financial advisor or attorney, but then only to the extent
necessary for them to assist him,
(iii) to a potential employer on a strictly confidential basis, and then only
to the extent necessary for reasonable disclosure in the course of
serious negotiations, or
(iv) as required by law or to enforce his legal rights.
3. Stock-Based Awards
As partial consideration for Employee's agreements hereunder, Employee shall be
granted the Stock-Based Awards on the terms set forth in this section.
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3.01. Award of Stock Options
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option Plan, as of
the Grant Date (a) an option to purchase 107,250 shares of Sprint's FON Stock,
Series 1 and (b) an option to purchase 107,250 shares of Sprint's PCS Common
Stock, Series 1, both at a strike price equal to the Fair Market Value of one
share of the respective stock on the Grant Date. The options shall become
exercisable, with respect to 25% of the total shares granted, on each of the
first four anniversaries of the Grant Date. The options shall expire on the 10th
anniversary of the Grant Date. The terms of the 1990 Stock Option Plan, to the
extent not in conflict with the terms of this Agreement, are hereby incorporated
into this Agreement by reference.
Notwithstanding the terms of the 1990 Stock Option Plan, the definition of a
Change in Control set forth in this Agreement shall apply for all purposes.
3.02. Provisions Applicable to Stock-Based Award
(a) Acceleration of Stock-Based Awards
(1) Conditions to Acceleration
The the stock options shall become immediately exercisable if Employee
is not in breach of thisAgreement and
(i) Employer terminates Employee's employment with Employer for any
reason other than Termination for Cause or
(ii) Employee terminates his employment with Employer by reason of
Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer because of a sale,
merger, divestiture, or other transaction entered into by
Employer.
For purposes of the Stock-Based Award, the definition of Change in
Control set forth in this Agreement shall control, notwithstanding
terms of the the 1990 Stock Option Plan.
(2) No Acceleration on Transfer of Employment to Affiliates
In no event shall the exercisability of stock options be accelerated as
provided in the prior section upon Employee's ceasing employment with
Employer to commence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration
If the acceleration of the exercisability of the Stock-Based Award
hereunder, together with all other payments or benefits contingent on a
change in control within the meaning of Internal Revenue Code Section
280G or any successor provision ("280G"), results in any portion of
such payments or benefits to the Employee not being deductible by the
Employer or its successor as a result of the application of 280G, the
Employee's benefits shall be reduced until the entire amount of the
benefits is deductible. The reduction shall
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be effected by the exclusion of grants of options, restricted stock, or
other benefits not deductible by Sprint under 280G in reverse
chronological order of grant date from the application of this or other
acceleration provision, until no portion of such benefits is rendered
non-deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances
Employee shall not be entitled to continue to own any unexercisable
stock options if before the stock options become exercisable
(i) Employee ceases employment with Employer and begins employment
with an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer for any
reason constituting Termination for Cause, or
(iii) Employee terminates his employment with Employer for any reason
other than Employee's Constructive Discharge.
(c) Tax Withholding Employer may withhold the amount of any tax attributable
to any amount payable or shares issuable under this Agreement.
4. Payment of Special Compensation
4.01. Conditions to Payment
In lieu of any payments or benefits available under any and all Employer
severance plans or policies but not in lieu of benefits under Sprint's Long-Term
Disability Plan, Employee shall be entitled to Special Compensation plus any
vacation pay for vacation accrued but not taken by Employee on his Severance
Date, if
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
The payments and benefits provided for in this section shall be in addition to
all other sums then payable and owing to Employee hereunder and, except as
expressly provided herein, shall not be subject to reduction for any amounts
received by Employee for employment or services provided to any Person other
than Employer after the Severance Date and shall be in full settlement and
satisfaction of all of Employee's claims against and demands upon Employer.
Employee's right to receive severance or other benefits pursuant to this section
shall cease immediately if Employee is re-employed by Employer or Employee
materially breaches this Agreement.
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4.02. Payments Conditioned on Settlement and Release
The payments and benefits provided for hereunder shall be in full settlement and
satisfaction of all of Employee's claims and demands relating to or arising out
of his employment with the Company or the termination thereof except for any
claims Employee may have against Employer under this Agreement and any
indemnification agreements entered into between Employer and Employee.
The Company's obligation to provide these payments and benefits is expressly
made subject to and conditioned upon (i) the Employee's execution, within
forty-five (45) days after the Termination Date, of a release of those claims
and demands in such form as the Company may reasonably determine and (ii) the
Employee's non-revocation of the release in accordance with its terms.
5. Dispute Resolution
5.01. Jurisdiction and Venue
Employee consents to jurisdiction and venue in the state and federal courts in
and for Xxxxxxx County, Kansas, for any and all disputes arising under this
Agreement, provided, however, that Employer may seek injunctive relief in any
court of competent jurisdiction to enjoin any violation of the covenants under
Section 2, as well as seeking damages therefor.
5.02. Remedies
Employee acknowledges that the restraints and agreements herein provided are
fair and reasonable, that enforcement of the provisions of this Agreement will
not cause him undue hardship and that the provisions are reasonably necessary
and commensurate with the need to protect Employer and its legitimate and
proprietary business interests and property from irreparable harm.
Employee acknowledges that failure to comply with the terms of this Agreement,
particularly the provisions of Section 2, will cause irreparable damage to
Employer. Therefore, Employee agrees that, in addition to any other remedies at
law or in equity available to Employer for Employee's breach or threatened
breach of this Agreement, Employer is entitled to specific performance or
injunctive relief, without bond, against Employee to prevent such damage or
breach, and the existence of any claim or cause of action Employee may have
against Employer shall not constitute a defense thereto.
If Employee materially breaches any provision of Section 2 or if any of those
provisions are held to be unenforceable against Employee
(i) Employee shall return any Special Compensation paid pursuant to this
Agreement and
(ii) if Employee's breach occurs within the five-year period beginning on
the Grant Date, Employee shall return to Employer the stock received
with respect to the Stock-Based Award, or, if Employee has disposed of
the stock, an amount equal to the fair market value thereof on the date
of disposition.
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This remedy is a return of consideration and shall be in addition to any other
remedies. During Employee's employment with Employer, the Committee shall
determine whether Employee has materially breached the provisions of Section 2,
and the Committee's determination shall be final.
6. Definitions
6.01. Affiliate
"Affiliate" means, with respect to any Person, a Person, other than a Subsidiary
of such Person, (i) controlling, controlled by, or under common control with
such Person and (ii) any other Person with whom such Person reports consolidated
financial information for financial reporting purposes. "Control" for this
purpose means direct or indirect possession by one Person of voting or
management rights of at least 20% with respect to another Person.
6.02. Board
"Board" means the board of directors of Sprint.
6.03. Change in Control
"Change in Control" means the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person" or "group" (as
those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder, including, without limitation, Rule 13d-5(b)) of
"beneficial ownership" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities entitled to vote generally in the election
of directors ("voting securities") of Sprint that represent 30% or more
of the combined voting power of Sprint's then outstanding voting
securities, other than
(A) an acquisition by a trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint or by any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint, or
(B) an acquisition of voting securities by Sprint or a corporation
owned, directly or indirectly, by the stockholders of Sprint in
substantially the same proportions as their ownership of the
stock of Sprint, or
(C) an acquisition of voting securities pursuant to a transaction
described in clause (iii) below that would not be a Change in
Control under clause (iii);
(ii) a change in the composition of the Board that causes less than a
majority of the directors of Sprint to be directors that meet one or
more of the following descriptions:
(A) a director who has been a director of Sprint for a continuous
period of at least 24 months, or
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(B) a director whose election or nomination as director was approved
by a vote of at least 2/3's of the then directors described in
clauses (ii)(A), (B), or (C) by prior nomination or election, but
excluding, for the purpose of this subclause (B), any director
whose initial assumption of office occurred as a result of an
actual or threatened (y) election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
or group other than the Board or (z) tender offer, merger, sale
of substantially all of Sprint's assets, consolidation,
reorganization, or business combination that would be a Change in
Control under clause (iii) on consummation thereof, or
(C) who were serving on the Board as a result of the consummation of
a transaction described in clause (iii) that would not be a
Change in Control under clause (iii);
(iii) the consummation by Sprint (whether directly involving Sprint or
indirectly involving Sprint through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of Sprint's assets
or (z) the acquisition of assets or stock of another entity, in each
case, other than in a transaction
(A) that results in Sprint's voting securities outstanding
immediately before the transaction continuing to represent
(either by remaining outstanding or by being converted into
voting securities of Sprint or the person that, as a result of
the transaction, controls, directly or indirectly, Sprint or
owns, directly or indirectly, all or substantially all of
Sprint's assets or otherwise succeeds to the business of Sprint
(Sprint or such person, the "Successor Entity")) directly or
indirectly, at least 50% of the combined voting power of the
Successor Entity's outstanding voting securities immediately
after the transaction, and
(B) after which more than 50% of the members of the board of
directors of the Successor Entity were members of the Board at
the time of the Board's approval of the agreement providing for
the transaction or other action of the Board approving the
transaction (or whose election or nomination was approved by a
vote of at least 2_3's of the members who were members of the
Board at that time), and
(C) after which no person or group beneficially owns voting
securities representing 30% or more of the combined voting power
of the Successor Entity; provided, however, no person or group
shall be treated for purposes of this clause (C) as beneficially
owning 30% or more of combined voting power of the Successor
Entity solely as a result of the voting power held in Sprint
prior to the consummation of the transaction; or
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(iv) a liquidation or dissolution of Sprint.
For purposes of clarification, (x) a change in the voting power of Sprint voting
securities based on the relative trading values of Sprint's then outstanding
securities as determined pursuant to Sprint's Articles of Incorporation or (y)
an acquisition of Sprint securities by Sprint that, in either case, by itself
(or in combination only with the other event listed in this sentence) causes the
Sprint's voting securities beneficially owned by a person or group to represent
30% or more of the combined voting power of Sprint's then outstanding voting
securities is not to be treated as an "acquisition" by any person or group for
purposes of clause (i) above. For purposes of clause (i) above, Sprint makes the
calculation of voting power as if the date of the acquisition were a record date
for a vote of Sprint's shareholders, and for purposes of clause (iii) above,
Sprint makes the calculation of voting power as if the date of the consummation
of the transaction were a record date for a vote of Sprint's shareholders.
6.04. Committee
"Committee" means the Compensation Committee of Sprint's board of directors.
6.05. Competitive Employment
"Competitive Employment" means the performance of duties or responsibilities, or
the supervision of individuals performing such duties or responsibilities, for a
Competitor of Employer
(i) (A) that are of a similar nature or employ similar professional
or technical skills (for example, executive, managerial,
marketing, engineering, legal, etc.) to those employed by
Employee in his performance of services for Employer at any time
during the two years before the Severance Date, and
(B) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two years
before the Severance Date,
or
(ii) in the performance of which Proprietary Information to which Employee
had access at any time during the two-year period before the Severance
Date could be of substantial economic value to the Competitor of
Employer.
6.06. Competitor of Employer
Because of the highly competitive, evolving nature of Employer's industry, the
identities of companies in competition with Employer are likely to change over
time. The following tests, while not exclusive indications of what employment
may be competitive, are designed to assist the parties and any court in
evaluating whether particular employment is prohibited under this Agreement. A
Sprint Affiliate shall not be a Competitor of Employer.
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"Competitor of Employer" means any one or more of the following:
(i) any Person doing business in the United States or any of its Divisions
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenues from providing communications services
of any type (for example, voice, data, including Internet, and video),
employing any transmission medium (for example, wireline, wireless, or
any other technology), over any distance (for example, local,
long-distance, and distance insensitive services), using any protocol
(for example, circuitswitched, or packet-based, such as Internet
Protocol), or services or capabilities ancillary to such communications
services (for example, web hosting and network security services);
(ii) any Person doing business in the United States or its Division
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer receives at least 3% of its gross operating revenues;
(iii) any Person doing business in the United States, or its Division
employing Employee, operating for less than 5 years a line of business
from which Employer derives at least 3% of its gross operating
revenues, notwithstanding such Person's or Division's lack of
substantial revenues in such line of business; or
(iv) any Person doing business in the United States, or its Division
employing Employee, if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer has operated for less than 5 years, notwithstanding Employer's
lack of substantial revenues in such line of business.
For purposes of the foregoing, gross operating revenues of Employer and such
other Person shall be those of the Employer or such Person, together with their
Consolidated Affiliates, but those of any Division employing or proposing to
employ Employee shall be on a stand-alone basis, all measured by the most recent
available financial information of both Employer and such other Person or
Division at the time Employee accepts, or proposes to accept, employment with or
to otherwise perform services for such Person. If financial information is not
publicly available or is inadequate for purposes of applying this definition,
the burden shall be on the Employee to demonstrate that such Person is not a
Competitor of Employer.
6.07. Consolidated Affiliate
"Consolidated Affiliate" means, with respect to any person, all Affiliates and
Subsidiaries of such person, if any, with whom the financial statements of such
person are required, under generally accepted accounting principles, to be
reported on a consolidated basis.
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6.08. Constructive Discharge
"Constructive Discharge" means termination by the Employee of his employment
with the Employer by written notice given within 60 days following one or more
of the following events:
(i) unless Employer first offers to Employee a position having an equal or
greater grade rating, reassignment of Employee from his then current
position with Employer to a position having a lower grade rating, in
each case under Employer's methodology of rating employment positions
for its employees generally;
(ii) a reduction in Employee's targeted total compensation by more than 10%
other than by an across-the-board reduction affecting substantially all
similarly situated employees of Employer; or
(iii) a change in the Employee's base employment area to anywhere other than
the Kansas City metropolitan area within one year following a Change in
Control.
6.09. Division
"Division" means any distinct group or unit organized as a segment or portion of
a Person that is devoted to the production, provision, or management of a common
product or service or group of related products or services, regardless of
whether the group is organized as a legally distinct entity.
6.10. Non-Compete Period
"Non-Compete Period" means the 18-month period beginning on Employee's Severance
Date. If Employee breaches or violates any of the covenants or provisions of
this Agreement, the running of the Non-Compete Period shall be tolled during the
period the breach or violation continues.
6.11. Person
"Person" means any individual, corporation, partnership, association, company,
or other entity.
6.12. Proprietary Information
"Proprietary Information" means trade secrets (such as customer information,
technical and non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process) and other confidential and
proprietary information concerning the products, processes, or services of
Employer or Employer's Affiliates, including but not limited to: computer
programs, un- patented or unpatentable inventions, discoveries or improvements;
marketing, manufacturing, or organizational research and development results and
plans; business and strategic plans; sales forecasts and plans; personnel
information, including the identity of other employees of Employer, their
responsibilities, competence, abilities, and compensation; pricing and financial
information; current and prospective customer lists and information on customers
or their employees; information concerning purchases of major equipment or
property;
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and information about potential mergers or acquisitions which information: (i)
has not been made known generally to the public; and (ii) is useful or of value
to the current or anticipated business, or research or development activities of
Employer or of any customer or supplier of Employer, or (iii) has been
identified to Employee as confidential by Employer, either orally or in writing.
6.13. Severance Date
"Severance Date" means the last day on which Employee actually performs services
as an employee of Employer.
6.14. Severance Period
"Severance Period" means the 18-month period beginning on Employee's Severance
Date.
6.15. Special Compensation
"Special Compensation" means Employee's right
(i) to continue to receive during the Severance Period periodic
compensation at the same rate as his base salary in effect at the
Employee's Severance Date;
(ii) to receive bonuses under one or more of Sprint's Management Incentive
Plan, Executive Management Incentive Plan, and Sales Incentive
Compensation Plan in which Employee participated on the Severance Date
(together with other incentive compensation plans specifically approved
for this purpose by the Committee, the "Short-Term Incentive Plans")
based on the Employee's target amount under such plans on the Severance
Date, and assuming achievement of performance targets under the
Short-Term Incentive Plans of
(A) the actual performance level for periods before the beginning of
the Severance Period and
(B) the lesser of (a) the actual performance level during the
Severance Period and (b) 100% of targeted performance during the
Severance Period,
pro-rating the foregoing performance levels under the Short-Term
Incentive Plans based on the ratio of the amount of time in each of the
foregoing time periods to the amount of time in the whole performance
period under each Short-Term Incentive Plan;
(iii) to continue to participate throughout the Severance Period in all group
health plans (as defined in Code section 106(b)(3) or any successor
provision of the Internal Revenue Code of 1986, as amended, including
but not limited to any medical and dental) that Employer continues to
make available to Employer's employees generally and that Employee was
par- ticipating in on his Severance Date, except that participation in
those plans after Employee becomes employed full-time during the
Severance
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Period shall immediately cease unless Employee elects to continue
coverage under the COBRA continuation provisions of any group health
plan by paying the applicable premium therefor;
(iv) to continue to participate throughout the Severance Period in all group
life insurance and qualified or non-qualified retirement plans that
Employer continues to make available to Employer's employees generally
and that Employee was participating in on his Severance Date;
(v) to receive out-placement counseling by a firm selected by Employer to
continue until Employee becomes employed;
(vi) to continue to receive throughout the Severance Period all executive
perquisites (including automobile allowance, long distance services and
all miscellaneous services) Employee was entitled to receive on the
Severance Date except country club membership dues and accrual of paid
time off; and
(vii) to have the end of the Severance Period treated as Employee's
termination date for purposes of Sprint's employee stock option plans,
restricted stock plans, and other equity compensation plans.
Employee shall not be entitled to participate in Sprint's long- and short-term
disability plan after the Severance Date.
6.16. Stock-Based Award
"Stock-Based Award" means the award of stock options as elected by Employee
under Section 3 of this Agreement.
6.17. Subsidiary
"Subsidiary" means, with respect to any Person (the "Controlling Person"), all
other Persons (the "Controlled Persons") in whom the Controlling Person, alone
or in combination with one or more of its Subsidiaries, owns or controls more
than 50% of the management or voting rights, together with all Subsidiaries of
such Controlled Persons.
6.18. Termination for Cause
"Termination for Cause" means termination by Employer of Employee's
employment because of
(i) conduct by the Employee that violates the Code of Ethics or reflects
adversely on the Employee's honesty or
(ii) Employee's willful engagement in conduct that is materially injurious
to the Employer.
Termination for failure to meet performance expectations, unless willful,
continuing, and substantial, shall not be deemed a Termination for Cause.
6.19. Total Disability
"Total Disability" shall have the same meaning as in Sprint's Long Term
Disability Plan, as amended from time to time.
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7. General Provisions
7.01. Obligations to Survive Termination of Employment
Employee's obligations under this Agreement shall survive his termination of
employment with Employer.
7.02. Binding Effect
This Agreement shall be binding upon and inure to the benefit of Employee's
executors, administrators, legal representatives, heirs, and legatees and to
Employer's successors and assigns.
7.03. Partial Invalidity
The various provisions of this Agreement are intended to be severable and to
constitute independent and distinct binding obligations. Should any provision of
this Agreement be determined to be void and unenforceable, in whole or in part,
it shall not be deemed to affect or impair the validity of any other provision
or part thereof, and such provision or part thereof shall be deemed modified to
the extent required to permit enforcement. Without limiting the generality of
the foregoing, if the scope of any provision contained in this Agreement is too
broad to permit enforcement to its full extent, but may be enforceable by
limitations thereon, such provision shall be enforced to the maximum extent
permitted by law, and Employee hereby agrees that such scope may be judicially
modified accordingly.
7.04. Waiver
The waiver by either party of a breach of any provision of this Agreement by any
other party shall not operate or be construed as a waiver of any subsequent
breach.
7.05. Prior Agreements Merged into Agreement
This Agreement represents the entire understanding of the parties and, to the
extent that there is any conflict, supersedes all other agreements with respect
to the subject matter hereof.
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7.06. Notices
Any notice or other communication required or permitted to be given hereunder
shall be determined to have been duly given to any party
(i) upon actual receipt at the address of such party specified below if
delivered personally or by regular U.S. mail;
(ii) upon receipt by the sender of a "GOOD" or "OK" confirmation of
transmission if transmitted by facsimile, but only if a copy is also
sent by regular mail or courier;
(iii) when delivery is certified if sent as certified mail, return receipt
requested, addressed, in any case to the party at the following
addresses:
If to Employee: If to Employer:
Xxxxx X. Xxxxxxxxx Sprint Corporation
Attn: Corporate Secretary
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
FAX: (000) 000-0000
or to such other address or telecopy number as any party may designate
by written notice in the aforesaid manner, or with respect to Employee,
such address as Employee may provide Employer for purposes of its human
resources database.
7.07. Governing Law
Because Employer's business is headquartered in Kansas, and to ensure uniformity
of enforcement of this Agreement, the validity, interpretation, and enforcement
of this Agreement shall be governed by the laws of the State of Kansas without
regard to its choice of law provisions.
7.08. Number and Gender
Wherever the context requires, each term stated in either the singular or plural
shall include the singular and the plural, and the pronouns stated in either the
masculine, the feminine, or the neuter gender shall include the masculine,
feminine, or neuter as appropriate.
7.09. Headings
The headings of the Sections of this Agreement are for reference purposes only
and do not define or limit, and shall not be used to interpret or construe the
contents of this Agreement.
15
In Witness Whereof, the parties have caused this Agreement to be duly executed
on the date set forth below.
Sprint Corporation
by: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Senior Vice
President-Human Resources
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx, Employee
Dated: May 12, 0000
Xxxxxxxxxxx
Xxxxx xx Xxxxxx >
> ss.
County of Xxxxxxx >
Signed or attested before me on May 12th, 2003 by Xxxxx X. Xxxxxxxxx.
/s/ Xxxx X. Xxxxx
Notary Public
(Seal if any)
My appointment expires: 2/11/06
16
Special Compensation and Non-Compete Agreement
This Agreement is entered into as of the 13th day of May, 2003 (the "Grant
Date"), by and between Sprint Corporation, a Kansas corporation ("Sprint," and
it, together with its Subsidiaries, the "Employer"), and Xxxxxx X. Xxxxxx
("Employee").
Recitals
1. Employer is engaged in the telecommunications and related businesses.
This is a worldwide business that may be conducted from sites and serve
customers throughout the world.
2. By virtue of his work for Employer, Employee has gained and will
continue to gain additional valuable Proprietary Information of
Employer.
3. Employer desires to enter into this Agreement to provide severance and
other benefits for Employee in exchange for Employee's agreement to
maintain the confidentiality of certain information and to refrain from
competing with Employer during and after termination of his employment
with Employer.
Capitalized terms are defined in Section 6 or parenthetically throughout this
Agreement.
Now, Therefore, in consideration of the premises and of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereby
agree as follows:
1. Employment At Will
Employee's employment may be terminated by either party for any reason. Employee
shall provide Employer with written notice of his intent to terminate at least
30 days before the effective date of the termination. Except in the event of
Termination for Cause, Employer shall provide Employee with written notice of
its intent to terminate Employee's employment at least 30 days before the
effective date of the termination.
2. Employee's Covenants
2.01. Exclusivity of Services
Employee shall, during his employment with Employer, owe an undivided duty of
loyalty to Employer and agrees to devote his entire business time and attention
to the performance of those duties and responsibilities and to use his best
efforts to promote and develop the business of Employer. Employee shall adhere
in all respects to Sprint's Principles of Business Conduct (together with any
successor provision, which is incorporated by this reference, the "Code of
1
Ethics") as in effect as of the date of this Agreement and as may be amended
from time to time hereafter. The determination of the Committee as to the
Employee's compliance with this provision shall be final.
2.02. Proprietary Information
Employee acknowledges that during the course of his employment he has learned or
will learn or develop Proprietary Information. Employee further acknowledges
that unauthorized disclosure or use of such Proprietary Information, other than
in discharge of Employee's duties, will cause Employer irreparable harm.
Except in the course of his employment with Employer under this Agreement, in
the pursuit of the business of Employer, or as otherwise required in employment
with Employer, Employee shall not, during the course of his employment or at any
time following termination of his employment, directly or indirectly, disclose,
publish, communicate, or use on his behalf or another's behalf, any Proprietary
Information. If during or after his employment Employee has any questions about
whether particular information is Proprietary Information he shall consult with
Employer's Corporate Secretary.
2.03. Non-Competition
Employee shall not, during the Non-Compete Period, engage in Competitive
Employment, whether paid or unpaid and whether as a consultant, employee, or
otherwise. This provision shall not apply if, within one year following a Change
in Control:
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability; or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
If Employee ceases to be employed by Employer because of the sale, spin-off,
divestiture, or other disposition by Employer of the Subsidiary, Division, or
other divested unit employing Employee, this provision shall continue to apply
during the Non-Compete Period, except that Employee's continued employment for
the Subsidiary, Division, or other divested unit disposed of by the Employer
shall not be deemed a violation of this provision. Employee agrees that, in
anticipation of the sale, spin-off, split-off, or other divestiture of a
business unit or division for whom Employee is then providing services, Employer
may change the Subsidiary employing Employee to the the Subsidiary that is the
subject of the sale, spin-off, split-off, or other divestiture.
Employee agrees that because of the worldwide nature of Employer's business,
breach of this agreement by accepting Competitive Employment anywhere in the
United States would irreparably injure Employer and that, therefore, a more
limited geographic restriction is neither feasible nor appropriate to protect
Employer's interests.
2.04. Inducement of Employees, Customers and Others
2
During the term of his employment and the Non-Compete Period, Employee shall not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, or customer of Employer with whom he has worked or about whom he has
gained Proprietary Information to terminate his or its employment, agency, or
customer relationship with Employer or to render services for or transfer
business to any Competitor of Employer.
2.05. Return of Employer's Property
Employee shall, upon termination of his employment with Employer, return to
Employer all property of Employer in his possession, including all notes,
reports, sketches, plans, published memoranda or other documents, whether in
hard copy or in computer form, created, developed, generated, received, or held
by Employee during employment, concerning or related to Employer's business,
whether containing or relating to Proprietary Information or not. Employee shall
not remove, by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information, or
reproductions or copies thereof, or any apparatus from Employer's premises
without Employer's authorization.
2.06. Exit Interview
At Employer's request, Employee shall participate in an exit interview prior to
his Severance Date to provide for the orderly transition of his duties, to
arrange for the return of Employer's property, to discuss his intended new
employment, and to discuss and complete such other matters as may be necessary
to ensure full compliance with this Agreement.
2.07. Confidentiality of Agreement
Employee shall not disclose or discuss the existence of this Agreement, the
Stock-Based Award, the Special Compensation, or any other terms of the Agreement
except
(i) to members of his immediate family,
(ii) to his financial advisor or attorney, but then only to the extent
necessary for them to assist him,
(iii) to a potential employer on a strictly confidential basis, and then only
to the extent necessary for reasonable disclosure in the course of
serious negotiations, or
(iv) as required by law or to enforce his legal rights.
3. Stock-Based Awards
As partial consideration for Employee's agreements hereunder, Employee shall be
granted the Stock-Based Awards on the terms set forth in this section.
3.01. Award of Stock Options
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option Plan, as of
the Grant Date (a) an option to purchase 161,250 shares of Sprint's FON
3
Stock, Series 1 and (b) an option to purchase 161,250 shares of Sprint's PCS
Common Stock, Series 1, both at a strike price equal to the Fair Market Value of
one share of the respective stock on the Grant Date. The options shall become
exercisable, with respect to 25% of the total shares granted, on each of the
first four anniversaries of the Grant Date. The options shall expire on the 10th
anniversary of the Grant Date. The terms of the 1990 Stock Option Plan, to the
extent not in conflict with the terms of this Agreement, are hereby incorporated
into this Agreement by reference.
Notwithstanding the terms of the 1990 Stock Option Plan, the definition of a
Change in Control set forth in this Agreement shall apply for all purposes.
3.02. Provisions Applicable to Stock-Based Award
(a) Acceleration of Stock-Based Awards
(1) Conditions to Acceleration
The the stock options shall become immediately exercisable if Employee
is not in breach of this Agreement and
(i) Employer terminates Employee's employment with Employer for any
reason other than Termination for Cause or
(ii) Employee terminates his employment with Employer by reason of
Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer because of a sale,
merger, divestiture, or other transaction entered into by
Employer.
For purposes of the Stock-Based Award, the definition of Change in
Control set forth in this Agreement shall control, notwithstanding
terms of the the 1990 Stock Option Plan.
(2) No Acceleration on Transfer of Employment to Affiliates
In no event shall the exercisability of stock options be accelerated
as provided in the prior section upon Employee's ceasing employment
with Employer to commence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration
If the acceleration of the exercisability of the Stock-Based Award
hereunder, together with all other payments or benefits contingent on
a change in control within the meaning of Internal Revenue Code
Section 280G or any successor provision ("280G"), results in any
portion of such payments or benefits to the Employee not being
deductible by the Employer or its successor as a result of the
application of 280G, the Employee's benefits shall be reduced until
the entire amount of the benefits is deductible. The reduction shall
be effected by the exclusion of grants of options, restricted stock,
or other benefits not deductible by Sprint under 280G in reverse
chronological order of grant date from the application of this or
4
other acceleration provision, until no portion of such benefits
is rendered non-deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances
Employee shall not be entitled to continue to own any unexercisable
stock options if before the stock options become exercisable
(i) Employee ceases employment with Employer and begins employment
with an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer for any
reason constituting Termination for Cause, or
(iii) Employee terminates his employment with Employer for any reason
other than Employee's Constructive Discharge.
(c) Tax Withholding Employer may withhold the amount of any tax at-
tributable to any amount payable or shares issuable under this
Agreement.
4. Payment of Special Compensation
4.01. Conditions to Payment
In lieu of any payments or benefits available under any and all Employer
severance plans or policies but not in lieu of benefits under Sprint's Long-Term
Disability Plan, Employee shall be entitled to Special Compensation plus any pay
for paid time off accrued but not taken by Employee on his Severance Date, if
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
The payments and benefits provided for in this section shall be in addition to
all other sums then payable and owing to Employee hereunder and, except as
expressly provided herein, shall not be subject to reduction for any amounts
received by Employee for employment or services provided to any Person other
than Employer after the Severance Date and shall be in full settlement and
satisfaction of all of Employee's claims against and demands upon Employer.
Employee's right to receive severance or other benefits pursuant to this section
shall cease immediately if Employee is re-employed by Employer or Employee
materially breaches this Agreement.
4.02. Settlement and Release
The payments and benefits provided for hereunder shall be in full settlement and
satisfaction of all of Employee's claims and demands relating to or arising out
of his employment with the Company or the termination thereof except for any
claims Employee may have against Employer under this Agreement and
5
any indemnification agreements entered into between Employer and
Employee.
The Company's obligation to provide these payments and benefits is expressly
made subject to and conditioned upon (i) the Employee's execution, within
forty-five (45) days after the Termination Date, of a release of those claims
and demands in such form as the Company may reasonably determine and (ii) the
Employee's non-revocation of the release in accordance with its terms.
5. Dispute Resolution
5.01. Jurisdiction and Venue
Employee consents to jurisdiction and venue in the state and federal courts in
and for Xxxxxxx County, Kansas, for any and all disputes arising under this
Agreement, provided, however, that Employer may seek injunctive relief in any
court of competent jurisdiction to enjoin any violation of the covenants under
Section 2, as well as seeking damages therefor.
5.02. Remedies
Employee acknowledges that the restraints and agreements herein provided are
fair and reasonable, that enforcement of the provisions of this Agreement will
not cause him undue hardship and that the provisions are reasonably necessary
and commensurate with the need to protect Employer and its legitimate and
proprietary business interests and property from irreparable harm.
Employee acknowledges that failure to comply with the terms of this Agreement,
particularly the provisions of Section 2, will cause irreparable damage to
Employer. Therefore, Employee agrees that, in addition to any other remedies at
law or in equity available to Employer for Employee's breach or threatened
breach of this Agreement, Employer is entitled to specific performance or
injunctive relief, without bond, against Employee to prevent such damage or
breach, and the existence of any claim or cause of action Employee may have
against Employer shall not constitute a defense thereto.
If Employee materially breaches any provision of Section 2 or if any of those
provisions are held to be unenforceable against Employee
(i) Employee shall return any Special Compensation paid pursuant to this
Agreement and
(ii) if Employee's breach occurs within the five-year period beginning on
the Grant Date, Employee shall return to Employer the stock received
with respect to the Stock-Based Award, or, if Employee has disposed of
the stock, an amount equal to the fair market value thereof on the date
of disposition.
This remedy is a return of consideration and shall be in addition to any other
remedies. During Employee's employment with Employer, the Committee shall
determine whether Employee has materially breached the provisions of Section 2,
and the Committee's determination shall be final.
6. Definitions
6
6.01. Affiliate
"Affiliate" means, with respect to any Person, a Person, other than a Subsidiary
of such Person, (i) controlling, controlled by, or under common control with
such Person and (ii) any other Person with whom such Person reports consolidated
financial information for financial reporting purposes. "Control" for this
purpose means direct or indirect possession by one Person of voting or
management rights of at least 20% with respect to another Person.
6.02. Board
"Board" means the board of directors of Sprint.
6.03. Change in Control
"Change in Control" means the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person" or "group" (as
those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder, including, without limitation, Rule 13d-5(b)) of
"beneficial ownership" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities entitled to vote generally in the election
of directors ("voting securities") of Sprint that represent 30% or more
of the combined voting power of Sprint's then outstanding voting
securities, other than
(A) an acquisition by a trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint or by any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint, or
(B) an acquisition of voting securities by Sprint or a corporation
owned, directly or indirectly, by the stockholders of Sprint in
substantially the same proportions as their ownership of the
stock of Sprint, or
(C) an acquisition of voting securities pursuant to a transaction
described in clause (iii) below that would not be a Change in
Control under clause (iii);
(ii) a change in the composition of the Board that causes less than a
majority of the directors of Sprint to be directors that meet one or
more of the following descriptions:
(A) a director who has been a director of Sprint for a continuous
period of at least 24 months, or
(B) a director whose election or nomination as director was approved
by a vote of at least 2/3's of the then directors described in
clauses (ii)(A), (B), or (C) by prior nomination or election,
but excluding, for the purpose of this subclause (B), any
director whose initial assumption of office occurred as a result
of an actual or threatened (y) election contest with respect to
the election or removal of directors or other
7
actual or threatened solicitation of proxies or consents by or
on behalf of a person or group other than the Board or (z)
tender offer, merger, sale of substantially all of Sprint's
assets, consolidation, reorganization, or business combination
that would be a Change in Control under clause (iii) on
consummation thereof, or
(C) who were serving on the Board as a result of the consummation of
a transaction described in clause (iii) that would not be a
Change in Control under clause (iii);
(iii) the consummation by Sprint (whether directly involving Sprint or
indirectly involving Sprint through one or more intermediaries) of (x)
a merger, consolidation, reorganization, or business combination or (y)
a sale or other disposition of all or substantially all of Sprint's
assets or (z) the acquisition of assets or stock of another entity, in
each case, other than in a transaction
(A) that results in Sprint's voting securities outstanding
immediately before the transaction continuing to represent
(either by remaining outstanding or by being converted into
voting securities of Sprint or the person that, as a result of
the transaction, controls, directly or indirectly, Sprint or
owns, directly or indirectly, all or substantially all of
Sprint's assets or otherwise succeeds to the business of Sprint
(Sprint or such person, the "Successor Entity")) directly or
indirectly, at least 50% of the combined voting power of the
Successor Entity's outstanding voting securities immediately
after the transaction, and
(B) after which more than 50% of the members of the board of
directors of the Successor Entity were members of the Board at
the time of the Board's approval of the agreement providing for
the transaction or other action of the Board approving the
transaction (or whose election or nomination was approved by a
vote of at least 2/3's of the members who were members of the
Board at that time), and
(C) after which no person or group beneficially owns voting
securities representing 30% or more of the combined voting power
of the Successor Entity; provided, however, no person or group
shall be treated for purposes of this clause (C) as beneficially
owning 30% or more of combined voting power of the Successor
Entity solely as a result of the voting power held in Sprint
prior to the consummation of the transaction; or
(iv) a liquidation or dissolution of Sprint.
For purposes of clarification, (x) a change in the voting power of Sprint voting
securities based on the relative trading values of Sprint's then outstanding
securities as determined pursuant to Sprint's Articles of Incorporation or (y)
an acquisition of Sprint securities by Sprint that, in either case, by itself
8
(or in combination only with the other event listed in this sentence) causes the
Sprint's voting securities beneficially owned by a person or group to represent
30% or more of the combined voting power of Sprint's then outstanding voting
securities is not to be treated as an "acquisition" by any person or group for
purposes of clause (i) above. For purposes of clause (i) above, Sprint makes the
calculation of voting power as if the date of the acquisition were a record date
for a vote of Sprint's shareholders, and for purposes of clause (iii) above,
Sprint makes the calculation of voting power as if the date of the consummation
of the transaction were a record date for a vote of Sprint's shareholders.
6.04. Committee
"Committee" means the Organization, Compensation, and Nominating Com- mittee of
Sprint's board of directors.
6.05. Competitive Employment
"Competitive Employment" means the performance of duties or responsibilities, or
the supervision of individuals performing such duties or responsibilities, for a
Competitor of Employer
(i) (A) that are of a similar nature or employ similar professional
or technical skills (for example, executive, managerial,
marketing, engineering, legal, etc.) to those employed by
Employee in his performance of services for Employer at any time
during the two years before the Severance Date, and
(B) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two years
before the Severance Date,
or
(ii) in the performance of which Proprietary Information to which Employee
had access at any time during the two-year period before the Severance
Date could be of substantial economic value to the Competitor of
Employer.
6.06. Competitor of Employer
Because of the highly competitive, evolving nature of Employer's industry, the
identities of companies in competition with Employer are likely to change over
time. The following tests, while not exclusive indications of what employment
may be competitive, are designed to assist the parties and any court in
evaluating whether particular employment is prohibited under this Agreement. A
Sprint Affiliate shall not be a Competitor of Employer.
"Competitor of Employer" means any one or more of the following:
(i) any Person doing business in the United States or any of its Divisions
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenues from providing communications services
of any
9
type (for example, voice, data, including Internet, and video),
employing any transmission medium (for example, wireline, wireless, or
any other technology), over any distance (for example, local,
long-distance, and distance insensitive services), using any protocol
(for example, circuitswitched, or packet-based, such as Internet
Protocol), or services or capabilities ancillary to such communications
services (for example, web hosting and network security services);
(ii) any Person doing business in the United States or its Division
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer receives at least 3% of its gross operating revenues;
(iii) any Person doing business in the United States, or its Division
employing Employee, operating for less than 5 years a line of business
from which Employer derives at least 3% of its gross operating
revenues, notwithstanding such Person's or Division's lack of
substantial revenues in such line of business; or
(iv) any Person doing business in the United States, or its Division
employing Employee, if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer has operated for less than 5 years, notwithstanding Employer's
lack of substantial revenues in such line of business.
For purposes of the foregoing, gross operating revenues of Employer and such
other Person shall be those of the Employer or such Person, together with their
Consolidated Affiliates, but those of any Division employing or proposing to
employ Employee shall be on a stand-alone basis, all measured by the most recent
available financial information of both Employer and such other Person or
Division at the time Employee accepts, or proposes to accept, employment with or
to otherwise perform services for such Person. If financial information is not
publicly available or is inadequate for purposes of applying this definition,
the burden shall be on the Employee to demonstrate that such Person is not a
Competitor of Employer.
6.07. Consolidated Affiliate
"Consolidated Affiliate" means, with respect to any person, all Affiliates and
Subsidiaries of such person, if any, with whom the financial statements of such
person are required, under generally accepted accounting principles, to be
reported on a consolidated basis.
6.08. Constructive Discharge
"Constructive Discharge" means termination by the Employee of his employment
with the Employer by written notice given within 60 days following one or more
of the following events:
(i) unless Employer first offers to Employee a position having an equal or
greater grade rating, reassignment of Employee from his then current
10
position with Employer to a position having a lower grade rating, in
each case under Employer's methodology of rating employment positions
for its employees generally;
(ii) a reduction in Employee's targeted total compensation by more than 10%
other than by an across-the-board reduction affecting substantially all
similarly situated employees of Employer; or
(iii) a change in the Employee's base employment area to anywhere other than
the Kansas City metropolitan area within one year following a Change in
Control.
6.09. Division
"Division" means any distinct group or unit organized as a segment or portion of
a Person that is devoted to the production, provision, or management of a common
product or service or group of related products or services, regardless of
whether the group is organized as a legally distinct entity.
6.10. Non-Compete Period
"Non-Compete Period" means the 18-month period beginning on Employee's Severance
Date. If Employee breaches or violates any of the covenants or provisions of
this Agreement, the running of the Non-Compete Period shall be tolled during the
period the breach or violation continues.
6.11. Person
"Person" means any individual, corporation, partnership, association, company,
or other entity.
6.12. Proprietary Information
"Proprietary Information" means trade secrets (such as customer information,
technical and non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process) and other confidential and
proprietary information concerning the products, processes, or services of
Employer or Employer's Affiliates, including but not limited to: computer
programs, un- patented or unpatentable inventions, discoveries or improvements;
marketing, manufacturing, or organizational research and development results and
plans; business and strategic plans; sales forecasts and plans; personnel
information, including the identity of other employees of Employer, their
responsibilities, competence, abilities, and compensation; pricing and financial
information; current and prospective customer lists and information on customers
or their employees; information concerning purchases of major equipment or
property; and information about potential mergers or acquisitions which
information: (i) has not been made known generally to the public; and (ii) is
useful or of value to the current or anticipated business, or research or
development activities of Employer or of any customer or supplier of Employer,
or (iii) has been identified to Employee as confidential by Employer, either
orally or in writing.
11
6.13. Severance Date
"Severance Date" means the last day on which Employee actually performs services
as an employee of Employer.
6.14. Severance Period
"Severance Period" means the 18-month period beginning on Employee's Severance
Date.
6.15. Special Compensation
"Special Compensation" means Employee's right
(i) to continue to receive during the Severance Period periodic
compensation at the same rate as his base salary in effect at the
Employee's Severance Date;
(ii) to receive bonuses under one or more of Sprint's Management Incentive
Plan, Executive Management Incentive Plan, and Sales Incentive
Compensation Plan in which Employee participated on the Severance Date
(together with other incentive compensation plans specifically approved
for this purpose by the Committee, the "Short-Term Incentive Plans")
based on the Employee's target amount under such plans on the Severance
Date, and assuming achievement of performance targets under the
Short-Term Incentive Plans of
(A) the actual performance level for periods before the beginning of
the Severance Period and
(B) the lesser of (a) the actual performance level during the
Severance Period and (b) 100% of targeted performance during the
Severance Period,
pro-rating the foregoing performance levels under the Short-Term
Incentive Plans based on the ratio of the amount of time in each of the
foregoing time periods to the amount of time in the whole performance
period under each Short-Term Incentive Plan;
(iii) to continue to participate throughout the Severance Period in all group
health plans (as defined in Code section 106(b)(3) or any successor
provision of the Internal Revenue Code of 1986, as amended, including
but not limited to any medical and dental) that Employer continues to
make available to Employer's employees generally and that Employee was
par- ticipating in on his Severance Date, except that participation in
those plans after Employee becomes employed full-time during the
Severance Period shall immediately cease unless Employee elects to
continue coverage under the COBRA continuation provisions of any group
health plan by paying the applicable premium therefor;
(iv) to continue to participate throughout the Severance Period in all group
life insurance and qualified or non-qualified retirement plans that Em-
12
ployer continues to make available to Employer's employees
generally and that Employee was participating in on his
Severance Date;
(v) to receive out-placement counseling by a firm selected by Employer to
continue until Employee becomes employed;
(vi) to continue to receive throughout the Severance Period all executive
perquisites (including automobile allowance, long distance services and
all miscellaneous services) Employee was entitled to receive on the
Severance Date except country club membership dues and accrual of paid
time off; and
(vii) to have the end of the Severance Period treated as Employee's
termination date for purposes of Sprint's employee stock option plans,
restricted stock plans, and other equity compensation plans.
Employee shall not be entitled to participate in Sprint's long- and short-term
disability plan after the Severance Date.
6.16. Stock-Based Award
"Stock-Based Award" means the award of stock options as elected by Employee
under Section 3 of this Agreement.
6.17. Subsidiary
"Subsidiary" means, with respect to any Person (the "Controlling Person"), all
other Persons (the "Controlled Persons") in whom the Controlling Person, alone
or in combination with one or more of its Subsidiaries, owns or controls more
than 50% of the management or voting rights, together with all Subsidiaries of
such Controlled Persons.
6.18. Termination for Cause
"Termination for Cause" means termination by Employer of Employee's
employment because of
(i) conduct by the Employee that violates the Code of Ethics or reflects
adversely on the Employee's honesty or
(ii) Employee's willful engagement in conduct that is materially injurious
to the Employer.
Termination for failure to meet performance expectations, unless willful,
continuing, and substantial, shall not be deemed a Termination for Cause.
6.19. Total Disability
"Total Disability" shall have the same meaning as in Sprint's Long Term
Disability Plan, as amended from time to time.
7. General Provisions
7.01. Obligations to Survive Termination of Employment
Employee's obligations under this Agreement shall survive his termination of
employment with Employer.
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7.02. Binding Effect
This Agreement shall be binding upon and inure to the benefit of Employee's
executors, administrators, legal representatives, heirs, and legatees and to
Employer's successors and assigns.
7.03. Partial Invalidity
The various provisions of this Agreement are intended to be severable and to
constitute independent and distinct binding obligations. Should any provision of
this Agreement be determined to be void and unenforceable, in whole or in part,
it shall not be deemed to affect or impair the validity of any other provision
or part thereof, and such provision or part thereof shall be deemed modified to
the extent required to permit enforcement. Without limiting the generality of
the foregoing, if the scope of any provision contained in this Agreement is too
broad to permit enforcement to its full extent, but may be enforceable by
limitations thereon, such provision shall be enforced to the maximum extent
permitted by law, and Employee hereby agrees that such scope may be judicially
modified accordingly.
7.04. Waiver
The waiver by either party of a breach of any provision of this Agreement by any
other party shall not operate or be construed as a waiver of any subsequent
breach.
7.05. Prior Agreements Merged into Agreement
This Agreement represents the entire understanding of the parties and, to the
extent that there is any conflict, supersedes all other agreements with respect
to the subject matter hereof.
7.06. Notices
Any notice or other communication required or permitted to be given hereunder
shall be determined to have been duly given to any party
(i) upon actual receipt at the address of such party specified below if
delivered personally or by regular U.S. mail;
(ii) upon receipt by the sender of a "GOOD" or "OK" confirmation of
transmission if transmitted by facsimile, but only if a copy is also
sent by regular mail or courier;
(iii) when delivery is certified if sent as certified mail, return receipt
requested, addressed, in any case to the party at the following
addresses:
If to Employee: If to Employer:
Xxxxxx X. Xxxxxx Sprint Corporation
Attn: Corporate Secretary
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
FAX: (000) 000-0000
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or to such other address or telecopy number as any party may designate
by written notice in the aforesaid manner, or with respect to Employee,
such address as Employee may provide Employer for purposes of its human
resources database.
7.07. Governing Law
Because Employer's business is headquartered in Kansas, and to ensure uniformity
of enforcement of this Agreement, the validity, interpretation, and enforcement
of this Agreement shall be governed by the laws of the State of Kansas without
regard to its choice of law provisions.
7.08. Number and Gender
Wherever the context requires, each term stated in either the singular or plural
shall include the singular and the plural, and the pronouns stated in either the
masculine, the feminine, or the neuter gender shall include the masculine,
feminine, or neuter as appropriate.
7.09. Headings
The headings of the Sections of this Agreement are for reference purposes only
and do not define or limit, and shall not be used to interpret or construe the
contents of this Agreement.
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In Witness Whereof, the parties have caused this Agreement to be duly executed
on the date set forth below.
Sprint Corporation
by: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Senior Vice
President-Human Resources
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Employee
Dated: May 12, 0000
Xxxxxxxxxxx
Xxxxx xx Xxxxxx >
> ss.
County of Xxxxxxx >
Signed or attested before me on 12th of May 2003 by Xxxxxx X. Xxxxxx.
/s/ Xxxx X. Xxxxx
Notary Public
(Seal if any)
My appointment expires: 2/11/06
16
Special Compensation and Non-Compete Agreement
This Agreement is entered into as of the 13th day of May, 2003 (the "Grant
Date"), by and between Sprint Corporation, a Kansas corporation ("Sprint," and
it, together with its Subsidiaries, the "Employer"), and Xxxxxxx Xxxxx
("Employee").
Recitals
1. Employer is engaged in the telecommunications and related businesses.
This is a worldwide business that may be conducted from sites and serve
customers throughout the world.
2. Employer has offered to employ Employee as an executive officer of
Employer.
3. By virtue of his work for Employer, Employee will gain access to
valuable Proprietary Information of Employer.
4. Employer desires to enter into this Agreement to provide severance and
other benefits for Employee in exchange for Employee's agreement to
maintain the confidentiality of certain information and to refrain from
competing with Employer during and after termination of his employment
with Employer.
Capitalized terms are defined in Section 6 or parenthetically throughout this
Agreement.
Now, Therefore, in consideration of the premises and of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereby
agree as follows:
1. Employment At Will
Employee's employment may be terminated by either party for any reason. Employee
shall provide Employer with written notice of his intent to terminate at least
30 days before the effective date of the termination. Except in the event of
Termination for Cause, Employer shall provide Employee with written notice of
its intent to terminate Employee's employment at least 30 days before the
effective date of the termination.
2. Employee's Covenants
2.01. Exclusivity of Services
Employee shall, during his employment with Employer, owe an undivided duty of
loyalty to Employer and agrees to devote his entire business time and attention
to the performance of those duties and responsibilities and to use his
1
best efforts to promote and develop the business of Employer. Employee shall
adhere in all respects to Sprint's Principles of Business Conduct (together with
any successor provision, which is incorporated by this reference, the "Code of
Ethics") as in effect as of the date of this Agreement and as may be amended
from time to time hereafter. The determination of the Committee as to the
Employee's compliance with this provision shall be final.
2.02. Proprietary Information
Employee acknowledges that during the course of his employment he has learned or
will learn or develop Proprietary Information. Employee further acknowledges
that unauthorized disclosure or use of such Proprietary Information, other than
in discharge of Employee's duties, will cause Employer irreparable harm.
Except in the course of his employment with Employer under this Agreement, in
the pursuit of the business of Employer, or as otherwise required in employment
with Employer, Employee shall not, during the course of his employment or at any
time following termination of his employment, directly or indirectly, disclose,
publish, communicate, or use on his behalf or another's behalf, any Proprietary
Information. If during or after his employment Employee has any questions about
whether particular information is Proprietary Information he shall consult with
Employer's Corporate Secretary.
2.03. Non-Competition
Employee shall not, during the Non-Compete Period, engage in Competitive
Employment, whether paid or unpaid and whether as a consultant, employee, or
otherwise. This provision shall not apply if, within one year following a Change
in Control:
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability; or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
If Employee ceases to be employed by Employer because of the sale, spin-off,
divestiture, or other disposition by Employer of the Subsidiary, Division, or
other divested unit employing Employee, this provision shall continue to apply
during the Non-Compete Period, except that Employee's continued employment for
the Subsidiary, Division, or other divested unit disposed of by the Employer
shall not be deemed a violation of this provision. Employee agrees that, in
anticipation of the sale, spin-off, split-off, or other divestiture of a
business unit or division for whom Employee is then providing services, Employer
may change the Subsidiary employing Employee to the the Subsidiary that is the
subject of the sale, spin-off, split-off, or other divestiture.
Employee agrees that because of the worldwide nature of Employer's business,
breach of this agreement by accepting Competitive Employment anywhere in the
United States would irreparably injure Employer and that, therefore, a
2
more limited geographic restriction is neither feasible nor appropriate to
protect Employer's interests.
2.04. Inducement of Employees, Customers and Others
During the term of his employment and the Non-Compete Period, Employee shall not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, or customer of Employer with whom he has worked or about whom he has
gained Proprietary Information to terminate his or its employment, agency, or
customer relationship with Employer or to render services for or transfer
business to any Competitor of Employer.
2.05. Return of Employer's Property
Employee shall, upon termination of his employment with Employer, return to
Employer all property of Employer in his possession, including all notes,
reports, sketches, plans, published memoranda or other documents, whether in
hard copy or in computer form, created, developed, generated, received, or held
by Employee during employment, concerning or related to Employer's business,
whether containing or relating to Proprietary Information or not. Employee shall
not remove, by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information, or
reproductions or copies thereof, or any apparatus from Employer's premises
without Employer's authorization.
2.06. Exit Interview
At Employer's request, Employee shall participate in an exit interview prior to
his Severance Date to provide for the orderly transition of his duties, to
arrange for the return of Employer's property, to discuss his intended new
employment, and to discuss and complete such other matters as may be necessary
to ensure full compliance with this Agreement.
2.07. Confidentiality of Agreement
Employee shall not disclose or discuss the existence of this Agreement, the
Stock-Based Award, the Special Compensation, or any other terms of the Agreement
except
(i) to members of his immediate family,
(ii) to his financial advisor or attorney, but then only to the extent
necessary for them to assist him,
(iii) to a potential employer on a strictly confidential basis, and then only
to the extent necessary for reasonable disclosure in the course of
serious negotiations, or
(iv) as required by law or to enforce his legal rights.
3. Stock-Based Awards
As partial consideration for Employee's agreements hereunder, Employee shall be
granted the Stock-Based Awards on the terms set forth in this section.
3
3.01. Award of Stock Options
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option Plan, as of
the Grant Date (a) an option to purchase 107,250 shares of Sprint's FON Stock,
Series 1 and (b) an option to purchase 107,250 shares of Sprint's PCS Common
Stock, Series 1, both at a strike price equal to the Fair Market Value of one
share of the respective stock on the Grant Date. The options shall become
exercisable, with respect to 25% of the total shares granted, on each of the
first four anniversaries of the Grant Date. The options shall expire on the 10th
anniversary of the Grant Date. The terms of the 1990 Stock Option Plan, to the
extent not in conflict with the terms of this Agreement, are hereby incorporated
into this Agreement by reference.
Notwithstanding the terms of the 1990 Stock Option Plan, the definition of a
Change in Control set forth in this Agreement shall apply for all purposes.
3.02. Provisions Applicable to Stock-Based Award
(a) Acceleration of Stock-Based Awards
(1) Conditions to Acceleration
The the stock options shall become immediately exercisable if Employee
is not in breach of this Agreement and
(i) Employer terminates Employee's employment with Employer for
any reason other than Termination for Cause or
(ii) Employee terminates his employment with Employer by reason of
Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer because of a sale,
merger, divestiture, or other transaction entered into by
Employer.
For purposes of the Stock-Based Award, the definition of Change in
Control set forth in this Agreement shall control, notwithstanding
terms of the the 1990 Stock Option Plan.
(2) No Acceleration on Transfer of Employment to Affiliates
In no event shall the exercisability of stock options be accelerated as
provided in the prior section upon Employee's ceasing employment with
Employer to commence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration
If the acceleration of the exercisability of the Stock-Based Award
hereunder, together with all other payments or benefits contingent on
a change in control within the meaning of Internal Revenue Code
Section 280G or any successor provision ("280G"), results in any
portion of such payments or benefits to the Employee not being
deductible by the Employer or its successor as a result of the
application of 280G, the Employee's benefits shall be reduced until
the entire amount of the benefits is deductible. The reduction shall
4
be effected by the exclusion of grants of options, restricted stock, or
other benefits not deductible by Sprint under 280G in reverse
chronological order of grant date from the application of this or other
acceleration provision, until no portion of such benefits is rendered
non-deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances
Employee shall not be entitled to continue to own any unexercisable
stock options if before the stock options become exercisable
(i) Employee ceases employment with Employer and begins employment
with an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer for any
reason constituting Termination for Cause, or
(iii) Employee terminates his employment with Employer for any reason
other than Employee's Constructive Discharge.
(c) Tax Withholding Employer may withhold the amount of any tax at-
tributable to any amount payable or shares issuable under this
Agreement.
4. Payment of Special Compensation
4.01. Conditions to Payment
In lieu of any payments or benefits available under any and all Employer
severance plans or policies but not in lieu of benefits under Sprint's Long-Term
Disability Plan, Employee shall be entitled to Special Compensation plus any
vacation pay for vacation accrued but not taken by Employee on his Severance
Date, if
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability or
(ii) Employee terminates his employment with Employer upon Constructive
Discharge.
The payments and benefits provided for in this section shall be in addition to
all other sums then payable and owing to Employee hereunder and, except as
expressly provided herein, shall not be subject to reduction for any amounts
received by Employee for employment or services provided to any Person other
than Employer after the Severance Date and shall be in full settlement and
satisfaction of all of Employee's claims against and demands upon Employer.
Employee's right to receive severance or other benefits pursuant to this section
shall cease immediately if Employee is re-employed by Employer or Employee
materially breaches this Agreement.
5
4.02. Payments Conditioned on Settlement and Release
The payments and benefits provided for hereunder shall be in full settlement and
satisfaction of all of Employee's claims and demands relating to or arising out
of his employment with the Company or the termination thereof except for any
claims Employee may have against Employer under this Agreement and any
indemnification agreements entered into between Employer and Employee.
The Company's obligation to provide these payments and benefits is expressly
made subject to and conditioned upon (i) the Employee's execution, within
forty-five (45) days after the Termination Date, of a release of those claims
and demands in such form as the Company may reasonably determine and (ii) the
Employee's non-revocation of the release in accordance with its terms.
5. Dispute Resolution
5.01. Jurisdiction and Venue
Employee consents to jurisdiction and venue in the state and federal courts in
and for Xxxxxxx County, Kansas, for any and all disputes arising under this
Agreement, provided, however, that Employer may seek injunctive relief in any
court of competent jurisdiction to enjoin any violation of the covenants under
Section 2, as well as seeking damages therefor.
5.02. Remedies
Employee acknowledges that the restraints and agreements herein provided are
fair and reasonable, that enforcement of the provisions of this Agreement will
not cause him undue hardship and that the provisions are reasonably necessary
and commensurate with the need to protect Employer and its legitimate and
proprietary business interests and property from irreparable harm.
Employee acknowledges that failure to comply with the terms of this Agreement,
particularly the provisions of Section 2, will cause irreparable damage to
Employer. Therefore, Employee agrees that, in addition to any other remedies at
law or in equity available to Employer for Employee's breach or threatened
breach of this Agreement, Employer is entitled to specific performance or
injunctive relief, without bond, against Employee to prevent such damage or
breach, and the existence of any claim or cause of action Employee may have
against Employer shall not constitute a defense thereto.
If Employee materially breaches any provision of Section 2 or if any of those
provisions are held to be unenforceable against Employee
(i) Employee shall return any Special Compensation paid pursuant to this
Agreement and
(ii) if Employee's breach occurs within the five-year period beginning on
the Grant Date, Employee shall return to Employer the stock received
with respect to the Stock-Based Award, or, if Employee has disposed of
the stock, an amount equal to the fair market value thereof on the date
of disposition.
6
This remedy is a return of consideration and shall be in addition to any other
remedies. During Employee's employment with Employer, the Committee shall
determine whether Employee has materially breached the provisions of Section 2,
and the Committee's determination shall be final.
6. Definitions
6.01. Affiliate
"Affiliate" means, with respect to any Person, a Person, other than a Subsidiary
of such Person, (i) controlling, controlled by, or under common control with
such Person and (ii) any other Person with whom such Person reports consolidated
financial information for financial reporting purposes. "Control" for this
purpose means direct or indirect possession by one Person of voting or
management rights of at least 20% with respect to another Person.
6.02. Board
"Board" means the board of directors of Sprint.
6.03. Change in Control
"Change in Control" means the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person" or "group" (as
those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder, including, without limitation, Rule 13d-5(b)) of
"beneficial ownership" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities entitled to vote generally in the election
of directors ("voting securities") of Sprint that represent 30% or more
of the combined voting power of Sprint's then outstanding voting
securities, other than
(A) an acquisition by a trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint or by any employee benefit plan (or related trust)
sponsored or maintained by Sprint or any person controlled by
Sprint, or
(B) an acquisition of voting securities by Sprint or a corporation
owned, directly or indirectly, by the stockholders of Sprint in
substantially the same proportions as their ownership of the
stock of Sprint, or
(C) an acquisition of voting securities pursuant to a transaction
described in clause (iii) below that would not be a Change in
Control under clause (iii);
(ii) a change in the composition of the Board that causes less than a
majority of the directors of Sprint to be directors that meet one or
more of the following descriptions:
(A) a director who has been a director of Sprint for a continuous
period of at least 24 months, or
7
(B) a director whose election or nomination as director was approved
by a vote of at least 2/3's of the then directors described in
clauses (ii)(A), (B), or (C) by prior nomination or election, but
excluding, for the purpose of this subclause (B), any director
whose initial assumption of office occurred as a result of an
actual or threatened (y) election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
or group other than the Board or (z) tender offer, merger, sale
of substantially all of Sprint's assets, consolidation,
reorganization, or business combination that would be a Change in
Control under clause (iii) on consummation thereof, or
(C) who were serving on the Board as a result of the consummation of
a transaction described in clause (iii) that would not be a
Change in Control under clause (iii);
(iii) the consummation by Sprint (whether directly involving Sprint or
indirectly involving Sprint through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of Sprint's assets
or (z) the acquisition of assets or stock of another entity, in each
case, other than in a transaction
(A) that results in Sprint's voting securities outstanding
immediately before the transaction continuing to represent
(either by remaining outstanding or by being converted into
voting securities of Sprint or the person that, as a result of
the transaction, controls, directly or indirectly, Sprint or
owns, directly or indirectly, all or substantially all of
Sprint's assets or otherwise succeeds to the business of Sprint
(Sprint or such person, the "Successor Entity")) directly or
indirectly, at least 50% of the combined voting power of the
Successor Entity's outstanding voting securities immediately
after the transaction, and
(B) after which more than 50% of the members of the board of
directors of the Successor Entity were members of the Board at
the time of the Board's approval of the agreement providing for
the transaction or other action of the Board approving the
transaction (or whose election or nomination was approved by a
vote of at least 2/3's of the members who were members of the
Board at that time), and
(C) after which no person or group beneficially owns voting
securities representing 30% or more of the combined voting power
of the Successor Entity; provided, however, no person or group
shall be treated for purposes of this clause (C) as beneficially
owning 30% or more of combined voting power of the Successor
Entity solely as a result of the voting power held in Sprint
prior to the consummation of the transaction; or
8
(iv) a liquidation or dissolution of Sprint.
For purposes of clarification, (x) a change in the voting power of Sprint voting
securities based on the relative trading values of Sprint's then outstanding
securities as determined pursuant to Sprint's Articles of Incorporation or (y)
an acquisition of Sprint securities by Sprint that, in either case, by itself
(or in combination only with the other event listed in this sentence) causes the
Sprint's voting securities beneficially owned by a person or group to represent
30% or more of the combined voting power of Sprint's then outstanding voting
securities is not to be treated as an "acquisition" by any person or group for
purposes of clause (i) above. For purposes of clause (i) above, Sprint makes the
calculation of voting power as if the date of the acquisition were a record date
for a vote of Sprint's shareholders, and for purposes of clause (iii) above,
Sprint makes the calculation of voting power as if the date of the consummation
of the transaction were a record date for a vote of Sprint's shareholders.
6.04. Committee
"Committee" means the Organization, Compensation, and Nominating Committee of
Sprint's board of directors.
6.05. Competitive Employment
"Competitive Employment" means the performance of duties or responsibilities, or
the supervision of individuals performing such duties or responsibilities, for a
Competitor of Employer
(i) (A) that are of a similar nature or employ similar professional
or technical skills (for example, executive, managerial,
marketing, engineering, legal, etc.) to those employed by
Employee in his performance of services for Employer at any time
during the two years before the Severance Date, and
(B) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two years
before the Severance Date,
or
(ii) in the performance of which Proprietary Information to which Employee
had access at any time during the two-year period before the Severance
Date could be of substantial economic value to the Competitor of
Employer.
6.06. Competitor of Employer
Because of the highly competitive, evolving nature of Employer's industry, the
identities of companies in competition with Employer are likely to change over
time. The following tests, while not exclusive indications of what employment
may be competitive, are designed to assist the parties and any court in
evaluating whether particular employment is prohibited under this Agreement. A
Sprint Affiliate shall not be a Competitor of Employer.
9
"Competitor of Employer" means any one or more of the following:
(i) any Person doing business in the United States or any of its Divisions
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenues from providing communications services
of any type (for example, voice, data, including Internet, and video),
employing any transmission medium (for example, wireline, wireless, or
any other technology), over any distance (for example, local,
long-distance, and distance insensitive services), using any protocol
(for example, circuitswitched, or packet-based, such as Internet
Protocol), or services or capabilities ancillary to such communications
services (for example, web hosting and network security services);
(ii) any Person doing business in the United States or its Division
employing Employee if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer receives at least 3% of its gross operating revenues;
(iii) any Person doing business in the United States, or its Division
employing Employee, operating for less than 5 years a line of business
from which Employer derives at least 3% of its gross operating
revenues, notwithstanding such Person's or Division's lack of
substantial revenues in such line of business; or
(iv) any Person doing business in the United States, or its Division
employing Employee, if the Person or its Division receives at least 15%
of its gross operating revenue from a line of business in which
Employer has operated for less than 5 years, notwithstanding Employer's
lack of substantial revenues in such line of business.
For purposes of the foregoing, gross operating revenues of Employer and such
other Person shall be those of the Employer or such Person, together with their
Consolidated Affiliates, but those of any Division employing or proposing to
employ Employee shall be on a stand-alone basis, all measured by the most recent
available financial information of both Employer and such other Person or
Division at the time Employee accepts, or proposes to accept, employment with or
to otherwise perform services for such Person. If financial information is not
publicly available or is inadequate for purposes of applying this definition,
the burden shall be on the Employee to demonstrate that such Person is not a
Competitor of Employer.
6.07. Consolidated Affiliate
"Consolidated Affiliate" means, with respect to any person, all Affiliates and
Subsidiaries of such person, if any, with whom the financial statements of such
person are required, under generally accepted accounting principles, to be
reported on a consolidated basis.
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6.08. Constructive Discharge
"Constructive Discharge" means termination by the Employee of his employment
with the Employer by written notice given within 60 days following one or more
of the following events:
(i) unless Employer first offers to Employee a position having an equal or
greater grade rating, reassignment of Employee from his then current
position with Employer to a position having a lower grade rating, in
each case under Employer's methodology of rating employment positions
for its employees generally;
(ii) a reduction in Employee's targeted total compensation by more than 10%
other than by an across-the-board reduction affecting substantially all
similarly situated employees of Employer; or
(iii) a change in the Employee's base employment area to anywhere other than
the Kansas City metropolitan area within one year following a Change in
Control.
6.09. Division
"Division" means any distinct group or unit organized as a segment or portion of
a Person that is devoted to the production, provision, or management of a common
product or service or group of related products or services, regardless of
whether the group is organized as a legally distinct entity.
6.10. Non-Compete Period
"Non-Compete Period" means the 18-month period beginning on Employee's Severance
Date. If Employee breaches or violates any of the covenants or provisions of
this Agreement, the running of the Non-Compete Period shall be tolled during the
period the breach or violation continues.
6.11. Person
"Person" means any individual, corporation, partnership, association, company,
or other entity.
6.12. Proprietary Information
"Proprietary Information" means trade secrets (such as customer information,
technical and non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process) and other confidential and
proprietary information concerning the products, processes, or services of
Employer or Employer's Affiliates, including but not limited to: computer
programs, un- patented or unpatentable inventions, discoveries or improvements;
marketing, manufacturing, or organizational research and development results and
plans; business and strategic plans; sales forecasts and plans; personnel
information, including the identity of other employees of Employer, their
responsibilities, competence, abilities, and compensation; pricing and financial
information; current and prospective customer lists and information on customers
or their employees; information concerning purchases of major equipment or
property;
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and information about potential mergers or acquisitions which information: (i)
has not been made known generally to the public; and (ii) is useful or of value
to the current or anticipated business, or research or development activities of
Employer or of any customer or supplier of Employer, or (iii) has been
identified to Employee as confidential by Employer, either orally or in writing.
6.13. Severance Date
"Severance Date" means the last day on which Employee actually performs services
as an employee of Employer.
6.14. Severance Period
"Severance Period" means the 18-month period beginning on Employee's Severance
Date.
6.15. Special Compensation
"Special Compensation" means Employee's right
(i) to continue to receive during the Severance Period periodic
compensation at the same rate as his base salary in effect at the
Employee's Severance Date;
(ii) to receive bonuses under one or more of Sprint's Management Incentive
Plan, Executive Management Incentive Plan, and Sales Incentive
Compensation Plan in which Employee participated on the Severance Date
(together with other incentive compensation plans specifically approved
for this purpose by the Committee, the "Short-Term Incentive Plans")
based on the Employee's target amount under such plans on the Severance
Date, and assuming achievement of performance targets under the
Short-Term Incentive Plans of
(A) the actual performance level for periods before the beginning of
the Severance Period and
(B) the lesser of (a) the actual performance level during the
Severance Period and (b) 100% of targeted performance during the
Severance Period,
pro-rating the foregoing performance levels under the Short-Term
Incentive Plans based on the ratio of the amount of time in each of the
foregoing time periods to the amount of time in the whole performance
period under each Short-Term Incentive Plan;
(iii) to continue to participate throughout the Severance Period in all group
health plans (as defined in Code section 106(b)(3) or any successor
provision of the Internal Revenue Code of 1986, as amended, including
but not limited to any medical and dental) that Employer continues to
make available to Employer's employees generally and that Employee was
par- ticipating in on his Severance Date, except that participation in
those plans after Employee becomes employed full-time during the
Severance
12
Period shall immediately cease unless Employee elects to continue
coverage under the COBRA continuation provisions of any group health
plan by paying the applicable premium therefor;
(iv) to continue to participate throughout the Severance Period in all group
life insurance and qualified or non-qualified retirement plans that
Employer continues to make available to Employer's employees generally
and that Employee was participating in on his Severance Date;
(v) to receive out-placement counseling by a firm selected by Employer to
continue until Employee becomes employed;
(vi) to continue to receive throughout the Severance Period all executive
perquisites (including automobile allowance, long distance services and
all miscellaneous services) Employee was entitled to receive on the
Severance Date except country club membership dues and accrual of paid
time off; and
(vii) to have the end of the Severance Period treated as Employee's
termination date for purposes of Sprint's employee stock option plans,
restricted stock plans, and other equity compensation plans.
Employee shall not be entitled to participate in Sprint's long- and short-term
disability plan after the Severance Date.
6.16. Stock-Based Award
"Stock-Based Award" means the award of stock options as elected by Employee
under Section 3 of this Agreement.
6.17. Subsidiary
"Subsidiary" means, with respect to any Person (the "Controlling Person"), all
other Persons (the "Controlled Persons") in whom the Controlling Person, alone
or in combination with one or more of its Subsidiaries, owns or controls more
than 50% of the management or voting rights, together with all Subsidiaries of
such Controlled Persons.
6.18. Termination for Cause
"Termination for Cause" means termination by Employer of Employee's
employment because of
(i) conduct by the Employee that violates the Code of Ethics or reflects
adversely on the Employee's honesty or
(ii) Employee's willful engagement in conduct that is materially injurious
to the Employer.
Termination for failure to meet performance expectations, unless willful,
continuing, and substantial, shall not be deemed a Termination for Cause.
6.19. Total Disability
"Total Disability" shall have the same meaning as in Sprint's Long Term
Disability Plan, as amended from time to time.
13
7. General Provisions
7.01. Obligations to Survive Termination of Employment
Employee's obligations under this Agreement shall survive his termination of
employment with Employer.
7.02. Binding Effect
This Agreement shall be binding upon and inure to the benefit of Employee's
executors, administrators, legal representatives, heirs, and legatees and to
Employer's successors and assigns.
7.03. Partial Invalidity
The various provisions of this Agreement are intended to be severable and to
constitute independent and distinct binding obligations. Should any provision of
this Agreement be determined to be void and unenforceable, in whole or in part,
it shall not be deemed to affect or impair the validity of any other provision
or part thereof, and such provision or part thereof shall be deemed modified to
the extent required to permit enforcement. Without limiting the generality of
the foregoing, if the scope of any provision contained in this Agreement is too
broad to permit enforcement to its full extent, but may be enforceable by
limitations thereon, such provision shall be enforced to the maximum extent
permitted by law, and Employee hereby agrees that such scope may be judicially
modified accordingly.
7.04. Waiver
The waiver by either party of a breach of any provision of this Agreement by any
other party shall not operate or be construed as a waiver of any subsequent
breach.
7.05. Prior Agreements Merged into Agreement
This Agreement represents the entire understanding of the parties and, to the
extent that there is any conflict, supersedes all other agreements with respect
to the subject matter hereof.
14
7.06. Notices
Any notice or other communication required or permitted to be given hereunder
shall be determined to have been duly given to any party
(i) upon actual receipt at the address of such party specified below if
delivered personally or by regular U.S. mail;
(ii) upon receipt by the sender of a "GOOD" or "OK" confirmation of
transmission if transmitted by facsimile, but only if a copy is also
sent by regular mail or courier;
(iii) when delivery is certified if sent as certified mail, return receipt
requested, addressed, in any case to the party at the following
addresses:
If to Employee: If to Employer:
Xxxxxxx Xxxxx Sprint Corporation
Attn: Corporate Secretary
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
FAX: (000) 000-0000
or to such other address or telecopy number as any party may designate
by written notice in the aforesaid manner, or with respect to Employee,
such address as Employee may provide Employer for purposes of its human
resources database.
7.07. Governing Law
Because Employer's business is headquartered in Kansas, and to ensure uniformity
of enforcement of this Agreement, the validity, interpretation, and enforcement
of this Agreement shall be governed by the laws of the State of Kansas without
regard to its choice of law provisions.
7.08. Number and Gender
Wherever the context requires, each term stated in either the singular or plural
shall include the singular and the plural, and the pronouns stated in either the
masculine, the feminine, or the neuter gender shall include the masculine,
feminine, or neuter as appropriate.
7.09. Headings
The headings of the Sections of this Agreement are for reference purposes only
and do not define or limit, and shall not be used to interpret or construe the
contents of this Agreement.
15
In Witness Whereof, the parties have caused this Agreement to be duly executed
on the date set forth below.
Sprint Corporation
by: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, Senior Vice
President-Human Resources
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Employee
Dated: 5/8/03
Attestation
State of NM >
> ss.
County of Santa Fe >
Signed or attested before me on May 8th, 2003 by Xxxxxxx Xxxxx.
/s/ A. G.
Notary Public
(Seal if any)
My appointment expires: 5/24/2006
16
Special Compensation and Non-Compete Agreement
This Agreement is entered into as of the 9th day of December, 1997 (the
"Effective Date"), by and between Sprint Corporation, a Kansas corporation
("Sprint," and it, together with its Subsidiaries, the "Employer"), and Xxxxxx
X. Xxxxx ("Employee").
Recitals
1. Employer is engaged in the telecommunications and related businesses.
This is a worldwide business that may be conducted from sites and serve
customers throughout the world.
2. By virtue of his work for Employer, Employee has gained and will
continue to gain additional valuable Proprietary Information of
Employer.
3. Employer desires to enter into this Agreement to provide severance and
other benefits for Employee in exchange for Employee's agreement to
maintain the confidentiality of certain information and to refrain from
competing with Employer during and after termination of his employment
with Employer.
Capitalized terms are defined in Section 6 or parenthetically throughout this
Agreement.
Now, Therefore, in consideration of the premises and of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereby
agree as follows:
1. Employment At Will.
Employee's employment may be terminated by either party for any reason. Employee
shall provide Employer with written notice of his intent to terminate at least
30 days before the effective date of the termination. Except in the event of
Termination for Cause, Employer shall provide Employee with written notice of
its intent to terminate Employee's employment at least 30 days before the
effective date of the termination.
2. Employee's Covenants.
2.01. Exclusivity of Services.
Employee shall, during his employment with Employer, owe an undivided duty of
loyalty to Employer and agrees to devote his entire business time and
1
attention to the performance of those duties and responsibilities and to use his
best efforts to promote and develop the business of Employer. Employee shall
adhere to the conflicts of interest provisions set forth in Section 7 of the
Sprint Code of Ethics (or any successor provision, which is incorporated by this
reference) as in effect as of the date of this Agreement and as may be amended
from time to time hereafter. The determination of the Committee as to the
Employee's compliance with this provision shall be final.
2.02. Proprietary Information.
Employee acknowledges that during the course of his employment he has learned or
will learn or develop Proprietary Information. Employee further acknowledges
that unauthorized disclosure or use of such Proprietary Information, other than
in discharge of Employee's duties, will cause Employer irreparable harm.
Except in the course of his employment with Employer under this Agree- ment, in
the pursuit of the business of Employer, or as otherwise required in employment
with Employer, Employee shall not, during the course of his employment or at any
time following termination of his employment, directly or indirectly, disclose,
publish, communicate, or use on his behalf or another's behalf, any Proprietary
Information. If during or after his employment Employee has any questions about
whether particular information is Proprietary Information he shall consult with
Employer's Corporate Secretary.
2.03. Non-Competition.
Employee shall not, during the Non-Compete Period, engage in Compet- itive
Employment, whether paid or unpaid and whether as a consultant, employee, or
otherwise. This provision shall not apply if, within one year following a Change
in Control:
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability; or
(ii) Employee terminates his employment with Employer upon Construc- tive
Discharge.
If Employee ceases to be employed by Employer because of the sale, spin-off,
divestiture, or other disposition by Employer of the Subsidiairy, division, or
other divested unit employing Employee, this provision shall continue to apply
during the Non-Compete Period, except that Employee's continued employment for
the Subsidiary, division, or other divested unit disposed of by the Employer
shall not be deemed a violation of this provision.
2
Employee agrees that because of the worldwide nature of Employer's business,
breach of this agreement by accepting Competitive Employment anywhere in the
United States would irreparably injure Employer and that, therefore, a more
limited geographic restriction is neither feasible nor appropriate to protect
Employer's interests.
2.04. Inducement of Employees, Customers and Others.
During the term of his employment and the Non-Compete Period, Employee shall not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, or customer of Employer with whom he has worked or about whom he has
gained Proprietary Information to terminate his or its employment, agency, or
customer relationship with Employer or to render services for or transfer
business to any Competitor of Employer.
2.05. Return of Employer's Property.
Employee shall, upon termination of his employment with Employer, return to
Employer all property of Employer in his possession, including all notes,
reports, sketches, plans, published memoranda or other documents, whether in
hard copy or in computer form, created, developed, generated, received, or held
by Employee during employment, concerning or related to Employer's business,
whether containing or relating to Proprietary Information or not. Employee shall
not remove, by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information, or
reproductions or copies thereof, or any apparatus from Employer's premises
without Employer's authorization.
2.06. Exit Interview.
At Employer's request, Employee shall participate in an exit interview prior to
his Severance Date to provide for the orderly transition of his duties, to
arrange for the return of Employer's property, to discuss his intended new
employment, and to discuss and complete such other matters as may be necessary
to ensure full compliance with this Agreement.
3
2.07. Confidentiality of Agreement.
Employee shall not disclose or discuss the existence of this Agreement, the
Alternative Stock-Based Award, the Special Compensation, or any other terms of
the Agreement except
(i) to members of his immediate family,
(ii) to his financial advisor or attorney, but then only to the extent
necessary for them to assist him,
(iii) to a potential employer on a strictly confidential basis, and then only
to the extent necessary for reasonable disclosure in the course of
serious negotiations, or
(iv) as required by law or to enforce his legal rights.
3. Alternative Stock-Based Awards.
As partial consideration for Employee's agreements hereunder, Employee shall be
granted one of the two Stock-Based Awards, at the election of Employee, on the
terms set forth in this section. Employee must indicate which of the two forms
of compensation he elects to receive by checking the corresponding box above his
signature line at the bottom of this Agreement. If Employee signs this Agreement
but checks neither box or both boxes, Employee shall be considered to have
elected to receive restricted stock.
3.01. Alternative Award of Restricted Stock.
If Employee elects to receive Restricted Stock, this Section 3.01 shall be
considered a part of this Agreement, otherwise it shall not be considered a part
of this Agreement.
Employer hereby grants to Employee an award of 2,500 shares of restricted stock
under Sprint's 1990 Restricted Stock Plan, the terms of which are hereby
incorporated into this Agreement by this reference.
(a) Lapse of Restrictions.
Employee may not sell, transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock until the restrictions on the
shares lapse. Restrictions on the shares covered by this award shall
lapse, with respect to 25% of the total shares granted, on each of the
first four anniversary dates of the Effective Date.
(b) Rights as Stockholder and Issuance of Shares.
Except as set forth in the 1990 Restricted Stock Plan, Employee shall
have all rights of a stockholder with respect to the shares of restricted
4
stock, including the right to vote the shares of stock and the right to
dividends on the shares. The shares of restricted stock shall be
registered in the name of the Employee and the certificates evidencing
the shares shall, at Employer's sole election, either (i) bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to the award or (ii) be held in escrow by the Company. Within
60 days of the Effective Date of this Agreement, the Employee shall
execute a stock power or powers assigning the shares of restricted stock
to Sprint, and Sprint shall hold the stock power and the certificate in
escrow and may use the stock power to effect forfeiture of the restricted
stock to the extent the shares are forfeited under the terms of this
Agreement. Sprint shall cause the certificate evidencing unrestricted
shares of com- mon stock to be issued to the Employee as soon as
practicable after the restrictions lapse on the restricted shares.
3.02. Alternative Award of Stock Options.
If Employee elects to receive stock options, this Section 3.02 shall be
considered a part of this Agreement; otherwise it shall not be considered a part
of this Agreement.
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option Plan, an
option to purchase 10,000 shares of Sprint common stock at a price of $56.50 per
share. The option shall become exercisable, with respect to 25% of the total
shares granted, on each of the first four anniversaries of the Effective Date.
The option shall expire on December 9, 2007. The terms of the 1990 Stock Option
Plan are hereby incorporated into this Agreement by reference.
3.03. Provisions Applicable to Awards of both Restricted Stock and Stock
Options.
(a) Acceleration of Stock-Based Awards.
(1) Conditions to Acceleration.
The restrictions on all shares of restricted stock that have not
otherwise lapsed shall lapse or the stock options shall become
immediately exercisable, as the case may be, if, on or after the
first anniversary of the Effective Date, Employee is not in breach
of this Agreement and
(i) Employer terminates Employee's employment with Employer
for any reason other than Termination for Cause or
Employee's Total Disability or
5
(ii) Employee terminates his employment with Employer by
reason of Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer because of a
sale, merger, divestiture, or other transaction entered
into by Employer.
(2) No Acceleration on Transfer of Employment to Affiliates.
In no event shall the restrictions lapse on restricted stock nor
the exercisability of stock options be accelerated as provided in
the prior section upon Employee's ceasing employment with Employer
to commence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration.
If the acceleration of the vesting of restricted stock or the
exercisability of the stock-based award hereunder, together with
all other payments or benefits contingent on a change in control
within the meaning of Internal Revenue Code Section 280G or any
successor provision ("280G"), results in any portion of such
payments or benefits to the Employee not being deductible by the
Employer or its successor as a result of the application of 280G,
the Employee's benefits shall be reduced until the entire amount
of the benefits is deductible. The reduction shall be effected by
the exclusion of grants of options, restricted stock, or other
benefits not deductible by Sprint under 280G in reverse
chronological order of grant date from the application of this or
other acceleration provision, until no portion of such benefits is
rendered non-deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances.
Employee shall not be entitled to sell or continue to own any unvested
shares of restricted stock or exercise or continue to own any
unexercisable stock options, as the case may be, if before such
restricted shares vest or before such stock options become exercisable
(i) Employee ceases employment with Employer and begins employment
with an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer for any
reason constituting Termination for Cause or by reason of
Employee's Total Disability, or
6
(iii) Employee terminates his employment with Employer for any reason
other than Employee's Constructive Discharge.
Except as to clause (iii), this provision applies regardless of what
subsequent employment Employee may take.
(c) Tax Withholding. Employer may withhold the amount of any tax attributable
to any amount payable or shares issuable under this Agreement.
4. Payment of Special Compensation.
In lieu of any payments or benefits available under any and all Employer
severance plans or policies but not in lieu of benefits under Sprint's LongTerm
Disability Plan, Employee shall be entitled to Special Compensation plus any
vacation pay for vacation accrued but not taken by Employee on his Severance
Date, if
(i) Employer terminates Employee's employment with Employer for any reason
other than Termination for Cause or Total Disability or
(ii) Employee terminates his employment with Employer upon Construc- tive
Discharge.
The payments and benefits provided for in this section shall be in addition to
all other sums then payable and owing to Employee hereunder and, except as
expressly provided herein, shall not be subject to reduction for any amounts
received by Employee for employment or services provided to any Person other
than Employer after the Severance Date and shall be in full settlement and
satisfaction of all of Employee's claims against and demands upon Employer.
Employee's right to receive severance or other benefits pursuant to this section
shall cease immediately if Employee is re-employed by Employer or Employee
materially breaches this Agreement.
5. Dispute Resolution.
5.01. Jurisdiction and Venue.
Employee consents to jurisdiction and venue in the state and federal courts in
and for Xxxxxxx County, Kansas, for any and all disputes arising under this
Agreement, provided, however, that Employer may seek injunctive relief in any
court of competent jurisdiction to enjoin any violation of the covenants under
Section 2, as well as seeking damages therefor.
7
5.02. Remedies.
Employee acknowledges that the restraints and agreements herein provided are
fair and reasonable, that enforcement of the provisions of this Agreement will
not cause him undue hardship and that the provisions are reasonably necessary
and commensurate with the need to protect Employer and its legitimate and
proprietary business interests and property from irreparable harm.
Employee acknowledges that failure to comply with the terms of this Agreement,
particularly the provisions of Section 2, will cause irreparable damage to
Employer. Therefore, Employee agrees that, in addition to any other remedies at
law or in equity available to Employer for Employee's breach or threatened
breach of this Agreement, Employer is entitled to specific performance or
injunctive relief, without bond, against Employee to prevent such damage or
breach, and the existence of any claim or cause of action Employee may have
against Employer shall not constitute a defense thereto.
If Employee materially breaches any provision of Section 2 or if any of those
provisions are held to be unenforceable against Employee
(i) Employee shall return any Special Compensation paid pursuant to this
Agreement and
(ii) if Employee's breach occurs within the five-year period beginning on
the Effective Date of this Agreement, Employee shall return to Employer
the stock received with respect to the Stock-Based Award, or, if
Employee has disposed of the stock, an amount equal to the fair market
value thereof on the date of disposition.
This remedy is a return of consideration and shall be in addition to any other
remedies. During Employee's employment with Employer, the Committee shall
determine whether Employee has materially breached the provisions of Section 2,
and the Committee's determination shall be final.
6. Definitions.
6.01. Affiliate.
"Affiliate" means, with respect to any Person, a Person, other than a Subsidiary
of such Person, (i) controlling, controlled by, or under common control with
such Person and (ii) any other Person with whom such Person reports consolidated
financial information for financial reporting purposes. "Control" for this
purpose means direct or indirect possession by one Person of voting or
management rights of at least 20% with respect to another Person.
8
6.02. Change in Control.
"Change in Control" means the occurrence of any of the following events:
(i) the acquisition, without the approval of a majority of the directors
described in clause (ii) of this Section 6.02, by any "person" or
"group" as such terms are defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder other than
(A) a trustee or other fiduciary holding securities under an
employee benefit plan of Sprint,
(B) Sprint or a corporation owned, directly or indirectly, by the
stockholders of Sprint in substantially the same proportions as
their ownership of stock of Sprint, or
(C) Deutsche Telekom AG or FranceeTlecom, individually or
collectively;
of securities of Sprint representing 20% or more of the combined voting
power of Sprint's then outstanding securities; or
(ii) at the end of any two-year period, less than a majority of the
directors of Sprint are directors
(A) who were directors of Sprint at the beginning of the two-year
period or
(B) whose election or nomination as director was approved by a vote
of 2/3's of the then directors described in this clause (ii) of
this Section 6.02 by prior nomination or election; or
(iii) the shareholders of Sprint approve a merger (in which Sprint is not the
surviving operating entity), consolidation, liquidation, or dissolution
of Sprint, or a sale of all or substantially all of the assets of
Sprint; or
(iv) the acquisition by Deutsche Telekom AG or FranceeTlecom, individually
or collectively, of additional securities of the Company that would
result in their possessing in the aggregate 35% or more of the combined
voting power of the Company's then outstanding securities.
6.03. Committee.
"Committee" means the Organization, Compensation, and Nominating Committee of
Sprint's board of directors.
9
6.04. Competitive Employment.
"Competitive Employment" means the performance of duties or responsibilities
for a Competitor of Employer
(i) that are of a similar nature or employ similar professional or
technical skills (e.g., marketing, engineering, legal, etc.) to those
employed by Employee in his performance of services for Employer at any
time during the two years before the Severance Date,
(ii) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two years before
the Severance Date, or
(iii) in the performance of which Proprietary Information to which Employee
had access at any time during the two-year period before the Severance
Date could be of substantial economic value to the Competitor of
Employer.
6.05. Competitor of Employer.
Because of the highly competitive, evolving nature of Employer's industry, the
identities of companies in competition with Employer are likely to change over
time. The following tests, while not exclusive indications of what employment
may be competitive, are designed to assist the parties and any court in
evaluating whether particular employment is prohibited under this Agreement. A
Sprint Affiliate shall not be a Competitor of Employer.
"Competitor of Employer" means
(i) any Person doing business in the United States whose primary business
is providing local or long distance telephone or wireless service;
(ii) any Person doing business in the United States, who, together with its
Consolidated Affiliates, receives more than 15% of its gross operating
revenue from a line of business in which Employer, together with its
Consolidated Affiliates, receives more than 15% of its gross operating
revenues, all as measured by the most recent available financial
information of both Employer and such other Person, at the time
Employee accepts, or proposes to accept, employment with or to
otherwise perform services for such Person;
(iii) any Person doing business in the United States and operating, for less
than 5 years, a line of business from which Employer derives more than
15% of its gross operating revenues, notwithstanding such Person's lack
10
of substantial revenues in such line of business; and
(iv) any Person doing business in the United States, who receives more than
15% of its gross operating revenue from a line of business in which
Employer has operated for less than 5 years, notwithstanding Employer's
lack of substantial revenues in such line of business.
If financial information is not publicly available or is inadequate for purposes
of applying this definition, the burden shall be on the Employee to demonstrate
that such Person is not a Competitor of Employer.
6.06. Consolidated Affiliate.
"Consolidated Affiliate" means, with respect to any person, all Affiliates and
Subsidiaries of such person, if any, with whom the financial statements of such
person are required, under generally accepted accounting principles, to be
reported on a consolidated basis.
6.07. Constructive Discharge.
"Constructive Discharge" means termination by the Employee of his employment
with the Employer by written notice given within 60 days following one or more
of the following events:
(i) unless Employer first offers to Employee a position having an equal or
greater grade rating, reassignment of Employee from his then current
position with Employer to a position having a lower grade rating, in
each case under Employer's methodology of rating employment positions
for its employees generally;
(ii) a reduction in Employee's targeted total compensation by more than 10%
other than by an across-the-board reduction affecting substantially all
similarly situated employees of Employer; or
(iii) a change in the Employee's base employment area to anywhere other than
the Kansas City metropolitan area within one year following a Change in
Control.
6.08. Non-Compete Period.
"Non-Compete Period" means the 18-month period beginning on Employee's Severance
Date. If Employee breaches or violates any of the covenants or provisions of
this Agreement, the running of the Non-Compete Period shall be tolled during the
period the breach or violation continues.
11
6.09. Person.
"Person" means any individual, corporation, partnership, association, company,
or other entity.
6.10. Proprietary Information.
"Proprietary Information" means trade secrets (such as customer information,
technical and non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process) and other confidential and
proprietary information concerning the products, processes, or services of
Employer or Employer's Affiliates, including but not limited to: computer
programs, unpatented or unpatentable inventions, discoveries or improvements;
marketing, manufacturing, or organizational research and development results and
plans; business and strategic plans; sales forecasts and plans; personnel
information, including the identity of other employees of Employer, their
responsibilities, competence, abilities, and compensation; pricing and financial
information; current and prospective customer lists and information on customers
or their employees; information concerning purchases of major equipment or
property; and information about potential mergers or acquisitions which
information: (i) has not been made generally to the public; and (ii) is useful
or of value to the current or anticipated business, or research or development
activities of Employer or of any customer or supplier of Employer, or (iii) has
been identified to Employee as confidential by Employer, either orally or in
writing.
6.11. Severance Date.
"Severance Date" means the last day on which Employee actually performs services
as an employee of Employer.
6.12. Severance Period.
"Severance Period" means the 18-month period beginning on Employee's Severance
Date.
6.13. Special Compensation.
"Special Compensation" means Employee's right
(i) to continue to receive during the Severance Period periodic
compensation at the same rate as his base salary in effect at the
Employee's Severance Date;
(ii) to receive bonuses under one or more of Sprint's Management Incentive
Plan, Executive Management Incentive Plan, and Sales Incentive
Compensation Plan in which Employee participated on the Severance
12
Date (together with other incentive compensation plans specifically
approved for this purpose by the Committee, the "Short-Term Incentive
Plans") based on the Employee's target amount under such plans on the
Severance Date, and assuming achievement of performance targets under
the Short-Term Incentive Plans of
(A) the actual performance level for periods before the beginning of
the Severance Period and
(B) the lesser of (a) the actual performance level during the
Severance Period and (b) 100% of targeted performance during the
Severance Period,
pro-rating the foregoing performance levels under the Short-Term
Incentive Plans based on the ratio of the amount of time in each of the
foregoing time periods to the amount of time in the whole performance
period under each Short-Term Incentive Plan;
(iii) to receive an award under the Long Term Incentive Plan and the Executive
Long Term Incentive Plan (the "Long-Term Incentive Plans"), assuming
achievement of performance targets under the Long-Term Incentive Plans
of
(A) the actual performance level for periods before the beginning of
the Severance Period and
(B) 0% of targeted performance during the Severance Period,
pro-rating the foregoing performance levels under the Long-Term
Incentive Plans based on the ratio of the amount of time in each of the
foregoing time periods to the amount of time in the whole performance
period under each Long-Term Incentive Plan;
(iv) to continue to participate throughout the Severance Period in all group
health plans (as defined in Code section 106(b)(3) or any successor
provision of the Internal Revenue Code of 1986, as amended, including
but not limited to any medical and dental) that Employer continues to
make available to Employer's employees generally and that Employee was
participating in on his Severance Date, except that participation in
those plans after Employee becomes employed full-time during the
Severance Period shall immediately cease unless Employee elects to
continue coverage under the COBRA continuation provisions of any group
health plan by paying the applicable premium therefor;
13
(v) to continue to participate throughout the Severance Period in all group
life insurance and qualified or non-qualified retirement plans that
Employer continues to make available to Employer's employees generally
and that Employee was participating in on his Severance Date;
(vi) to receive out-placement counseling by a firm selected by Employer to
continue until Employee becomes employed;
(vii) to continue to receive throughout the Severance Period all executive
perquisites (including automobile allowance, long distance services and
all miscellaneous services) Employee was entitled to receive on the
Severance Date except country club membership dues and accrual of
vacation; and
(viii) to have the end of the Severance Period treated as Employee's
termination date for purposes of Sprint's employee stock option plans
and restricted stock plans.
Employee shall not be entitled to participate in Sprint's long- and short-term
disability plan after the Severance Date.
6.14. Stock-Based Award.
"Stock-Based Award" means the award of restricted stock or stock options as
elected by Employee under Section 3 of this Agreement.
6.15. Subsidiary.
"Subsidiary" means, with respect to any Person (the "Controlling Person"), all
other Persons (the "Controlled Persons") in whom the Controlling Person, alone
or in combination with one or more of its Subsidiaries, owns or controls more
than 50% of the management or voting rights, together with all Subsidiaries of
such Controlled Persons.
6.16. Termination for Cause.
"Termination for Cause" means termination by Employer of Employee's employment
because of
(i) conduct by the Employee that violates the Employers code of ethics or
reflects adversely on the Employee's honesty or
(ii) Employee's willful engagement in conduct that is materially injurious
to the Employer.
Termination for failure to meet performance expectations, unless willful,
continuing, and substantial, shall not be deemed a Termination for Cause.
14
6.17. Total Disability.
"Total Disability" shall have the same meaning as in Sprint's Long Term
Disability Plan, as amended from time to time.
7. General Provisions.
7.01. Obligations to Survive Termination of Employment.
Employee's obligations under this Agreement shall survive his termination of
employment with Employer.
7.02. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of Employee's
executors, administrators, legal representatives, heirs, and legatees and to
Employer's successors and assigns.
7.03. Partial Invalidity.
The various provisions of this Agreement are intended to be severable and to
constitute independent and distinct binding obligations. Should any provision of
this Agreement be determined to be void and unenforceable, in whole or in part,
it shall not be deemed to affect or impair the validity of any other provision
or part thereof, and such provision or part thereof shall be deemed modified to
the extent required to permit enforcement. Without limiting the generality of
the foregoing, if the scope of any provision contained in this Agreement is too
broad to permit enforcement to its full extent, but may be enforceable by
limitations thereon, such provision shall be enforced to the maximum extent
permitted by law, and Employee hereby agrees that such scope may be judicially
modified accordingly.
7.04. Waiver.
The waiver by either party of a breach of any provision of this Agreement by any
other party shall not operate or be construed as a waiver of any subsequent
breach.
7.05. Prior Agreements Merged into Agreement.
This Agreement represents the entire understanding of the parties and, to the
extent that there is any conflict, supersedes all other agreements with respect
to the subject matter hereof.
7.06. Notices.
Any notice or other communication required or permitted to be given hereunder
shall be determined to have been duly given to any party
15
(i) upon actual receipt at the address of such party specified below if
delivered personally or by regular U.S. mail;
(ii) upon receipt by the sender of a "GOOD" or "OK" confirmation of
transmission if transmitted by facsimile, but only if a copy is also
sent by regular mail or courier;
(iii) when delivery is certified if sent as certified mail, return receipt
requested, addressed, in any case to the party at the following
addresses:
If to Employee: If to Employer:
Xxxxxx X. Xxxxx Sprint Corporation
Attn: Corporate Secretary
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
FAX: (000) 000-0000
or to such other address or telecopy number as any party may designate
by written notice in the aforesaid manner, or with respect to Employee,
such address as Employee may provide Employer for purposes of its human
resources database.
7.07. Governing Law.
Because Employer's business is headquartered in Kansas, and to ensure uniformity
of enforcement of this Agreement, the validity, interpretation, and enforcement
of this Agreement shall be governed by the laws of the State of Kansas.
7.08. Number and Gender.
Wherever the context requires, each term stated in either the singular or plural
shall include the singular and the plural, and the pronouns stated in either the
masculine, the feminine, or the neuter gender shall include the masculine,
feminine, or neuter as appropriate.
7.09. Headings.
The headings of the Sections of this Agreement are for reference purposes only
and do not define or limit, and shall not be used to interpret or construe the
contents of this Agreement.
16
In Witness Whereof, the parties have caused this Agreement to be duly executed
and effective as of December 9, 1997.
Sprint Corporation
by: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx,
Vice President and Secretary
I hereby elect to receive the following as the Stock-Based Award
(check one):
_____ Restricted Stock
__X__ Stock Options
/s/ Xxx Xxxxx
Xxxxxx X. Xxxxx, Employee
17
Special Compensation and Non-Compete Agreement
This Agreement is entered into as of the 8th day of February, 1999 (the
"Grant Date"), by and between Sprint Corporation, a Kansas corporation
("Sprint," and it, together with its Subsidiaries, the "Employer"),
and Xxxxxxx Xxxxx ("Employee").
Recitals
1. Employer is engaged in the telecommunications and related
businesses. This is a worldwide business that may be conducted
from sites and serve customers throughout the world.
2. By virtue of his work for Employer, Employee has gained
and will continue to gain additional valuable Proprietary
Information of Employer.
3. Employer desires to enter into this Agreement to provide
severance and other benefits for Employee in exchange for
Employee's agreement to maintain the confidentiality of
certain information and to refrain from competing with
Employer during and after termination of his employment
with Employer.
Capitalized terms are defined in Section 6 or parenthetically
throughout this Agreement.
Now, Therefore, in consideration of the premises and of the
mutual promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, the parties hereby agree as follows:
1. Employment At Will.
Employee's employment may be terminated by either party for any
reason. Employee shall provide Employer with written notice of
his intent to terminate at least 30 days before the effective date
of the termination. Except in the event of Termination for Cause,
Employer shall provide Employee with written notice of its intent to
terminate Employee's employment at least 30 days before the effective
date of the termination.
2. Employee's Covenants.
2.01. Exclusivity of Services.
Employee shall, during his employment with Employer, owe an
undivided duty of loyalty to Employer and agrees to devote his entire
business time and attention to the performance of those duties and
responsibilities and to use his best efforts to promote and develop
the business of Employer. Employee shall adhere to the conflicts
of interest provisions set forth in Section 7 of the Sprint Code of
Ethics (or any successor provision, which is incorporated by this
reference) as
1
in effect as of the date of this Agreement and as may be amended
from time to time hereafter. The determination of the Committee as
to the Employee's compliance with this provision shall be final.
2.02. Proprietary Information.
Employee acknowledges that during the course of his employment
he has learned or will learn or develop Proprietary Information.
Employee further acknowledges that unauthorized disclosure or use
of such Proprietary Information, other than in discharge of Employee's
duties, will cause Employer irreparable harm.
Except in the course of his employment with Employer under this
Agreement, in the pursuit of the business of Employer, or as otherwise
required in employment with Employer, Employee shall not, during the
course of his employment or at any time following termination of his
employment, directly or indirectly, disclose, publish, communicate,
or use on his behalf or another's behalf, any Proprietary Information.
If during or after his employment Employee has any questions about
whether particular information is Proprietary Information he shall
consult with Employer's Corporate Secretary.
2.03. Non-Competition.
Employee shall not, during the Non-Compete Period, engage in
Competitive Employment, whether paid or unpaid and whether as a
consultant, employee, or otherwise. This provision shall not apply
if, within one year following a Change in Control:
(i) Employer terminates Employee's employment with Employer for
any reason other than Termination for Cause or Total
Disability; or
(ii) Employee terminates his employment with Employer upon
Constructive Discharge.
If Employee ceases to be employed by Employer because of the sale,
spin-off, divestiture, or other disposition by Employer of the
Subsidiary, division, or other divested unit employing Employee, this
provision shall continue to apply during the Non-Compete Period,
except that Employee's continued employment for the Subsidiary,
division, or other divested unit disposed of by the Employer shall
not be deemed a violation of this provision.
Employee agrees that because of the worldwide nature of Employer's
business, breach of this agreement by accepting Competitive Employment
anywhere in the United States would irreparably injure Employer and
that, therefore, a more limited geographic restriction is neither
feasible nor appropriate to protect Employer's interests.
2.04. Inducement of Employees, Customers and Others.
During the term of his employment and the Non-Compete Period, Employee
shall not directly or indirectly solicit, induce, or encourage any
employee, consultant, agent, or customer of Employer with whom he
has worked or about whom he has gained Proprietary Information to
terminate his or its employment, agency, or customer relationship
with Employer or to render services for
2
or transfer business to any Competitor of Employer.
2.05. Return of Employer's Property.
Employee shall, upon termination of his employment with Employer,
return to Employer all property of Employer in his possession,
including all notes, reports, sketches, plans, published memoranda or
other documents, whether in hard copy or in computer form, created,
developed, generated, received, or held by Employee during employment,
concerning or related to Employer's business, whether containing or
relating to Proprietary Information or not. Employee shall not remove,
by e-mail, by removal of computer discs or hard drives, or by other
means, any of the above property containing Proprietary Information,
or reproductions or copies thereof, or any apparatus from Employer's
premises without Employer's authorization.
2.06. Exit Interview.
At Employer's request, Employee shall participate in an exit interview
prior to his Severance Date to provide for the orderly transition
of his duties, to arrange for the return of Employer's property,
to discuss his intended new employment, and to discuss and complete
such other matters as may be necessary to ensure full compliance with
this Agreement.
2.07. Confidentiality of Agreement.
Employee shall not disclose or discuss the existence of this Agreement,
the Alternative Stock-Based Award, the Special Compensation, or any
other terms of the Agreement except
(i) to members of his immediate family,
(ii) to his financial advisor or attorney, but then only to the
extent necessary for them to assist him,
(iii) to a potential employer on a strictly confidential basis, and
then only to the extent necessary for reasonable disclosure
in the course of serious negotiations, or
(iv) as required by law or to enforce his legal rights.
3. Alternative Stock-Based Awards.
As partial consideration for Employee's agreements hereunder, Employee
shall be granted one of the two Stock-Based Awards, at the election
of Employee, on the terms set forth in this section. Employee must
indicate which of the two forms of compensation he elects to receive
by checking the corresponding box above his signature line at the
bottom of this Agreement. If Employee signs this Agreement but
checks neither box or both boxes, Employee shall be considered to
have elected to receive restricted stock.
3.01. Alternative Award of Restricted Stock.
If Employee elects to receive Restricted Stock, this Section 3.01
shall be considered a part of this Agreement, otherwise it shall
not be considered a part of
3
this Agreement.
Employer hereby grants to Employee, as of the Grant Date an award of
(a) 1,150 shares of restricted stock of Sprint's FON Common Stock,
Series 1, and (b) 650 shares of restricted stock of Sprint's PCS
Common Stock, Series 1, under Sprint's 1990 Restricted Stock Plan,
the terms of which, to the extent not in conflict with this Agreement,
are hereby incorporated into this Agreement by this reference.
(a) Lapse of Restrictions.
Employee may not sell, transfer, assign, pledge, or otherwise
encumber or dispose of shares of restricted stock until the
restrictions on the shares lapse. Restrictions on the shares
covered by this award shall lapse, with respect to 25% of the
total shares granted, on each of the first four anniversary
dates of the Grant Date.
(b) Rights as Stockholder and Issuance of Shares.
Except as set forth in the 1990 Restricted Stock Plan, Employee
shall have all rights of a stockholder with respect to the
shares of restricted stock, including the right to vote the
shares of stock and the right to dividends on the shares.
The shares of restricted stock shall be registered in the
name of the Employee and the certificates evidencing the
shares shall, at Employer's sole election, either (i) bear
an appropriate legend referring to the terms, conditions,
and restrictions applicable to the award or (ii) be held in
escrow by the Company. Within 60 days of the Grant Date, the
Employee shall execute a stock power or powers assigning the
shares of restricted stock to Sprint, and Sprint shall hold the
stock power and the certificate in escrow and may use the stock
power to effect forfeiture of the restricted stock to the extent
the shares are forfeited under the terms of this Agreement.
Sprint shall cause the certificate evidencing unrestricted
shares of common stock to be issued to the Employee as soon
as practicable after the restrictions lapse on the restricted
shares.
3.02. Alternative Award of Stock Options.
If Employee elects to receive stock options, this Section 3.02 shall
be considered a part of this Agreement; otherwise it shall not be
considered a part of this Agreement.
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option
Plan, as of the Grant Date (a) an option to purchase 4,150 shares
of Sprint's FON Stock, Series 1, at a strike price of $77.96875
per share and (b) an option to purchase 1,200 shares of Sprint's
PCS Common Stock, Series 1, at a strike price of $31.1875 per share
respectively, on the Grant Date. The options shall become exercisable,
with respect to 25% of the total shares granted, on each of the first
four anniversaries of the Grant Date. The options shall expire on
February 8, 2009. The terms of the 1990 Stock Option Plan, to the
extent not in conflict with the terms of this Agreement, are hereby
incorporated into this Agreement by reference.
4
3.03. Provisions Applicable to Awards of both Restricted Stock and Stock
Options.
(a) Acceleration of Stock-Based Awards.
(1) Conditions to Acceleration.
The restrictions on all shares of restricted stock that
have not otherwise lapsed shall lapse or the stock
options shall become immediately exercisable, as the case
may be, if, on or after the first anniversary of the Grant
Date, Employee is not in breach of this Agreement and
(i) Employer terminates Employee's employment with
Employer for any reason other than Termination
for Cause or Employee's Total Disability or
(ii) Employee terminates his employment with Employer
by reason of Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer
because of a sale, merger, divestiture, or other
transaction entered into by Employer.
(2) No Acceleration on Transfer of Employment to Affiliates.
In no event shall the restrictions lapse on restricted
stock nor the exercisability of stock options be
accelerated as provided in the prior section upon
Employee's ceasing employment with Employer to com-
mence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration.
If the acceleration of the vesting of restricted stock or
the exercisability of the stock-based award hereunder,
together with all other payments or benefits contingent on
a change in control within the meaning of Internal Revenue
Code Section 280G or any successor provision ("280G"),
results in any portion of such payments or benefits to
the Employee not being deductible by the Employer or its
successor as a result of the application of 280G, the
Employee's benefits shall be reduced until the entire
amount of the benefits is deductible. The reduction
shall be effected by the exclusion of grants of options,
restricted stock, or other benefits not deductible by
Sprint under 280G in reverse chronological order of grant
date from the application of this or other acceleration
provision, until no portion of such benefits is rendered
non-deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances.
Employee shall not be entitled to sell or continue to own any
unvested shares of restricted stock or exercise or continue
to own any unexercisable stock options, as the case may be,
if before such restricted shares vest or before such stock
options become exercisable
5
(i) Employee ceases employment with Employer and begins
employment with an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer
for any reason constituting Termination for Cause or
by reason of Employee's Total Disability, or
(iii) Employee terminates his employment with Employer for
any reason other than Employee's Constructive Discharge.
Except as to clause (iii), this provision applies regardless
of what subsequent employment Employee may take.
(c) Tax Withholding. Employer may withhold the amount of any tax
attributable to any amount payable or shares issuable under
this Agreement.
4. Payment of Special Compensation.
In lieu of any payments or benefits available under any and all
Employer severance plans or policies but not in lieu of benefits
under Sprint's Long-Term Disability Plan, Employee shall be entitled
to Special Compensation plus any vacation pay for vacation accrued
but not taken by Employee on his Severance Date, if
(i) Employer terminates Employee's employment with Employer for
any reason other than Termination for Cause or Total
Disability or
(ii) Employee terminates his employment with Employer upon
Constructive Discharge.
The payments and benefits provided for in this section shall be in
addition to all other sums then payable and owing to Employee hereunder
and, except as expressly provided herein, shall not be subject
to reduction for any amounts received by Employee for employment
or services provided to any Person other than Employer after the
Severance Date and shall be in full settlement and satisfaction of
all of Employee's claims against and demands upon Employer.
Employee's right to receive severance or other benefits pursuant to
this section shall cease immediately if Employee is re-employed by
Employer or Employee materially breaches this Agreement.
5. Dispute Resolution.
5.01. Jurisdiction and Venue.
Employee consents to jurisdiction and venue in the state and federal
courts in and for Xxxxxxx County, Kansas, for any and all disputes
arising under this Agreement, provided, however, that Employer may
seek injunctive relief in any court of competent jurisdiction to
enjoin any violation of the covenants under Section 2, as well as
seeking damages therefor.
5.02. Remedies.
Employee acknowledges that the restraints and agreements herein
provided are fair and reasonable, that enforcement of the provisions
of this Agreement will
6
not cause him undue hardship and that the provisions are reasonably
necessary and commensurate with the need to protect Employer and
its legitimate and proprietary business interests and property from
irreparable harm.
Employee acknowledges that failure to comply with the terms of this
Agreement, particularly the provisions of Section 2, will cause
irreparable damage to Employer. Therefore, Employee agrees that,
in addition to any other remedies at law or in equity available to
Employer for Employee's breach or threatened breach of this Agreement,
Employer is entitled to specific performance or injunctive relief,
without bond, against Employee to prevent such damage or breach,
and the existence of any claim or cause of action Employee may have
against Employer shall not constitute a defense thereto.
If Employee materially breaches any provision of Section 2 or if any
of those provisions are held to be unenforceable against Employee
(i) Employee shall return any Special Compensation paid pursuant
to this Agreement and
(ii) if Employee's breach occurs within the five-year period beginning
on the Grant Date, Employee shall return to Employer the
stock received with respect to the Stock-Based Award, or,
if Employee has disposed of the stock, an amount equal to
the fair market value thereof on the date of disposition.
This remedy is a return of consideration and shall be in addition
to any other remedies. During Employee's employment with Employer,
the Committee shall determine whether Employee has materially breached
the provisions of Section 2, and the Committee's determination shall
be final.
6. Definitions.
6.01. Affiliate.
"Affiliate" means, with respect to any Person, a Person, other
than a Subsidiary of such Person, (i) controlling, controlled by,
or under common control with such Person and (ii) any other Person
with whom such Person reports consolidated financial information
for financial reporting purposes. "Control" for this purpose means
direct or indirect possession by one Person of voting or management
rights of at least 20% with respect to another Person.
6.02. Change in Control.
"Change in Control" means the occurrence of any of the following
events:
(i) the acquisition by any "person" or "group" as such terms are
defined in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules thereunder
other than
(A) a trustee or other fiduciary holding securities under
an employee benefit plan of Sprint,
(B) Sprint or a corporation owned, directly or indirectly,
by the stockholders of Sprint in substantially the
same proportions as their own-
7
ership of stock of Sprint, or
(C) Deutsche Telekom AG or FranceeTlecom, individually
or collectively;
of securities of Sprint representing 20% or more of the
combined voting power of Sprint's then outstanding securities;
or
(ii) at the end of any two-year period, less than a majority of the
directors of Sprint are directors
(A) who were directors of Sprint at the beginning of the
two-year period or
(B) whose election or nomination as director was approved
by a vote of 2/3's of the then directors described
in this clause (ii) of this Section 6.02 by prior
nomination or election; or
(iii) the shareholders of Sprint approve a merger (in which Sprint
is not the surviving operating entity), consolidation,
liquidation, or dissolution of Sprint, or a sale of all or
substantially all of the assets of Sprint; or
(iv) the acquisition by Deutsche Telekom AG or FranceeTlecom,
individually or collectively, of additional securities of
the Company that would result in their possessing in the
aggregate 35% or more of the combined voting power of the
Company's then outstanding securities.
6.03. Committee.
"Committee" means the Organization, Compensation, and Nominating Com-
mittee of Sprint's board of directors.
6.04. Competitive Employment.
"Competitive Employment" means the performance of duties or
responsibilities for a Competitor of Employer
(i) that are of a similar nature or employ similar professional or
technical skills (e.g., marketing, engineering, legal, etc.)
to those employed by Employee in his performance of services
for Employer at any time during the two years before the
Severance Date,
(ii) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two
years before the Severance Date, or
(iii) in the performance of which Proprietary Information to which
Employee had access at any time during the two-year period
before the Severance Date could be of substantial economic
value to the Competitor of Employer.
6.05. Competitor of Employer.
Because of the highly competitive, evolving nature of Employer's
industry, the identities of companies in competition with Employer
are likely to change over
8
time. The following tests, while not exclusive indications of what
employment may be competitive, are designed to assist the parties and
any court in evaluating whether particular employment is prohibited
under this Agreement. A Sprint Affiliate shall not be a Competitor
of Employer.
"Competitor of Employer" means
(i) any Person doing business in the United States whose primary
business is providing local or long distance telephone or
wireless service;
(ii) any Person doing business in the United States, who, together
with its Consolidated Affiliates, receives more than 15%
of its gross operating revenue from a line of business in
which Employer, together with its Consolidated Affiliates,
receives more than 15% of its gross operating revenues,
all as measured by the most recent available financial
information of both Employer and such other Person, at the
time Employee accepts, or proposes to accept, employment
with or to otherwise perform services for such Person;
(iii) any Person doing business in the United States and operating,
for less than 5 years, a line of business from which Employer
derives more than 15% of its gross operating revenues,
notwithstanding such Person's lack of substantial revenues
in such line of business; and
(iv) any Person doing business in the United States, who receives
more than 15% of its gross operating revenue from a line of
business in which Employer has operated for less than 5
years, notwithstanding Employer's lack of substantial revenues
in such line of business.
If financial information is not publicly available or is inadequate
for purposes of applying this definition, the burden shall be on
the Employee to demonstrate that such Person is not a Competitor
of Employer.
6.06. Consolidated Affiliate.
"Consolidated Affiliate" means, with respect to any person, all
Affiliates and Subsidiaries of such person, if any, with whom the
financial statements of such person are required, under generally
accepted accounting principles, to be reported on a consolidated
basis.
6.07. Constructive Discharge.
"Constructive Discharge" means termination by the Employee of his
employment with the Employer by written notice given within 60 days
following one or more of the following events:
(i) unless Employer first offers to Employee a position having an
equal or greater grade rating, reassignment of Employee from
his then current position with Employer to a position having
a lower grade rating, in each case under Employer's methodology
of rating employment positions for its employees generally;
(ii) a reduction in Employee's targeted total compensation by more
than 10%
9
other than by an across-the-board reduction affecting
substantially all similarly situated employees of Employer; or
(iii) a change in the Employee's base employment area to anywhere
other than the Kansas City metropolitan area within one year
following a Change in Control.
6.08. Non-Compete Period.
"Non-Compete Period" means the 18-month period beginning on Employee's
Severance Date. If Employee breaches or violates any of the covenants
or provisions of this Agreement, the running of the Non-Compete
Period shall be tolled during the period the breach or violation
continues.
6.09. Person.
"Person" means any individual, corporation, partnership, association,
company, or other entity.
6.10. Proprietary Information.
"Proprietary Information" means trade secrets (such as customer
information, technical and non-technical data, a formula, pattern,
compilation, program, device, method, technique, drawing, process)
and other confidential and proprietary information concerning the
products, processes, or services of Employer or Employer's Affiliates,
including but not limited to: computer programs, unpatented or
unpatentable inventions, discoveries or improvements; marketing,
manufacturing, or organizational research and development results
and plans; business and strategic plans; sales forecasts and plans;
personnel information, including the identity of other employees
of Employer, their responsibilities, competence, abilities,
and compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning purchases of major equipment or
property; and information about potential mergers or acquisitions
which information: (i) has not been made known generally to the public;
and (ii) is useful or of value to the current or anticipated business,
or research or development activities of Employer or of any customer
or supplier of Employer, or (iii) has been identified to Employee as
confidential by Employer, either orally or in writing.
6.11. Severance Date.
"Severance Date" means the last day on which Employee actually performs
services as an employee of Employer.
6.12. Severance Period.
"Severance Period" means the 18-month period beginning on Employee's
Severance Date.
6.13. Special Compensation.
"Special Compensation" means Employee's right
(i) to continue to receive during the Severance Period periodic
compensation
10
at the same rate as his base salary in effect at the Employee's
Severance Date;
(ii) to receive bonuses under one or more of Sprint's Management
Incentive Plan, Executive Management Incentive Plan, and Sales
Incentive Compensation Plan in which Employee participated on
the Severance Date (together with other incentive compensation
plans specifically approved for this purpose by the Committee,
the "Short-Term Incentive Plans") based on the Employee's
target amount under such plans on the Severance Date,
and assuming achievement of performance targets under the
Short-Term Incentive Plans of
(A) the actual performance level for periods before the
beginning of the Severance Period and
(B) the lesser of (a) the actual performance level during the
Severance Period and (b) 100% of targeted performance
during the Severance Period,
pro-rating the foregoing performance levels under the Short-Term
Incentive Plans based on the ratio of the amount of time in
each of the foregoing time periods to the amount of time in the
whole performance period under each Short-Term Incentive Plan;
(iii) to receive an award under the Long Term Incentive Plan and the
Executive Long Term Incentive Plan (the "Long-Term Incentive
Plans"), assuming achievement of performance targets under
the Long-Term Incentive Plans of
(A) the actual performance level for periods before the
beginning of the Severance Period and
(B) 0% of targeted performance during the Severance Period,
pro-rating the foregoing performance levels under the Long-Term
Incentive Plans based on the ratio of the amount of time in
each of the foregoing time periods to the amount of time in the
whole performance period under each Long-Term Incentive Plan;
(iv) to continue to participate throughout the Severance Period in
all group health plans (as defined in Code section 106(b)(3)
or any successor provision of the Internal Revenue Code of
1986, as amended, including but not limited to any medical and
dental) that Employer continues to make available to Employer's
employees generally and that Employee was participating in
on his Severance Date, except that participation in those plans
after Employee becomes employed full-time during the Severance
Period shall immediately cease unless Employee elects to
continue coverage under the COBRA continuation provisions of
any group health plan by paying the applicable premium therefor;
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(v) to continue to participate throughout the Severance Period in all
group life insurance and qualified or non-qualified retirement
plans that Employer continues to make available to Employer's
employees generally and that Employee was participating in
on his Severance Date;
(vi) to receive out-placement counseling by a firm selected by
Employer to continue until Employee becomes employed;
(vii) to continue to receive throughout the Severance Period all
executive perquisites (including automobile allowance, long
distance services and all miscellaneous services) Employee
was entitled to receive on the Severance Date except country
club membership dues and accrual of vacation; and
(viii) to have the end of the Severance Period treated as Employee's
termination date for purposes of Sprint's employee stock
option plans and restricted stock plans.
Employee shall not be entitled to participate in Sprint's long-
and short-term disability plan after the Severance Date.
6.14. Stock-Based Award.
"Stock-Based Award" means the award of restricted stock or stock
options as elected by Employee under Section 3 of this Agreement.
6.15. Subsidiary.
"Subsidiary" means, with respect to any Person (the "Controlling
Person"), all other Persons (the "Controlled Persons") in whom the
Controlling Person, alone or in combination with one or more of its
Subsidiaries, owns or controls more than 50% of the management or
voting rights, together with all Subsidiaries of such Controlled
Persons.
6.16. Termination for Cause.
"Termination for Cause" means termination by Employer of Employee's
employment because of
(i) conduct by the Employee that violates the Employers code of
ethics or reflects adversely on the Employee's honesty or
(ii) Employee's willful engagement in conduct that is materially
injurious to the Employer.
Termination for failure to meet performance expectations, unless
willful, continuing, and substantial, shall not be deemed a
Termination for Cause.
6.17. Total Disability.
"Total Disability" shall have the same meaning as in Sprint's Long
Term Disability Plan, as amended from time to time.
7. General Provisions.
7.01. Obligations to Survive Termination of Employment.
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Employee's obligations under this Agreement shall survive his
termination of employment with Employer.
7.02. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
Employee's executors, administrators, legal representatives, heirs,
and legatees and to Employer's successors and assigns.
7.03. Partial Invalidity.
The various provisions of this Agreement are intended to be severable
and to constitute independent and distinct binding obligations.
Should any provision of this Agreement be determined to be void and
unenforceable, in whole or in part, it shall not be deemed to affect
or impair the validity of any other provision or part thereof, and
such provision or part thereof shall be deemed modified to the extent
required to permit enforcement. Without limiting the generality
of the foregoing, if the scope of any provision contained in this
Agreement is too broad to permit enforcement to its full extent, but
may be enforceable by limitations thereon, such provision shall be
enforced to the maximum extent permitted by law, and Employee hereby
agrees that such scope may be judicially modified accordingly.
7.04. Waiver.
The waiver by either party of a breach of any provision of this
Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
7.05. Prior Agreements Merged into Agreement.
This Agreement represents the entire understanding of the parties
and, to the extent that there is any conflict, supersedes all other
agreements with respect to the subject matter hereof.
7.06. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be determined to have been duly given to any party
(i) upon actual receipt at the address of such party specified
below if delivered personally or by regular U.S. mail;
(ii) upon receipt by the sender of a "GOOD" or "OK" confirmation
of transmission if transmitted by facsimile, but only if
a copy is also sent by regular mail or courier;
(iii) when delivery is certified if sent as certified mail, return
receipt requested, addressed, in any case to the party at
the following addresses:
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If to Employee: If to Employer:
Xxxxxxx Xxxxx Sprint Corporation
Attn: Corporate Secretary
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
FAX: (000) 000-0000
or to such other address or telecopy number as any party
may designate by written notice in the aforesaid manner,
or with respect to Employee, such address as Employee may
provide Employer for purposes of its human resources database.
7.07. Governing Law.
Because Employer's business is headquartered in Kansas, and to
ensure uniformity of enforcement of this Agreement, the validity,
interpretation, and enforcement of this Agreement shall be governed
by the laws of the State of Kansas.
7.08. Number and Gender.
Wherever the context requires, each term stated in either the singular
or plural shall include the singular and the plural, and the pronouns
stated in either the masculine, the feminine, or the neuter gender
shall include the masculine, feminine, or neuter as appropriate.
7.09. Headings.
The headings of the Sections of this Agreement are for reference
purposes only and do not define or limit, and shall not be used to
interpret or construe the contents of this Agreement.
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In Witness Whereof, the parties have caused this Agreement to be duly
executed and effective as of February 8, 1999.
Sprint Corporation
by: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx,
Vice President and Secretary
I hereby elect to receive the following as the Stock-Based Award (check one):
_____ Restricted Stock
__X__ Stock Options
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxx, Employee
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