Exhibit 10(bb)
Executive Agreement
This Employment Agreement (this "Agreement") is dated as of July 30, 2001 (the
"Effective Date"), by and among Sprint Corporation, a Kansas corporation
("Sprint"), Sprint/United Management Company, a Kansas corporation and
subsidiary of Sprint ("SUMC") (Sprint, SUMC and the subsidiaries of Sprint are
collectively referred to herein as the "Company"), and Xxx Xxxxx (the
"Executive").
Recitals
1. Because the Company is mindful of the Executive's substantial contributions
to the Company and of his attractiveness in the competitive marketplace,
both within and outside of the telecommunications industry, it desires to
insure his continued employment with the Company, it desires to encourage
him to maintain and increase his ownership of Company stock, and it desires
to provide him appropriate compensation arrangements that continue to
motivate him to focus on and increase shareholder value.
2. The Executive has been, and now is, serving as President--Global Markets
Group.
3. The Company desires to secure the continued long-term employment of the
Executive.
4. Executive and the Company entered into a Special Compensation and
Non-Compete Agreement, dated April 13, 1998, and an amendment to that
agreement, dated May 14, 2001 (as so amended, the "Severance Agreement").
5. The Company granted Executive certain Stock-Based Awards (the "Prior
Awards") in the Severance Agreement, both on the date of original execution
and on the date of amendment, and the Company and Executive desire to
continue the vesting, acceleration, and other terms of the Prior Awards as
set forth in the Severance Agreement but to supercede all other aspects of
the Severance Agreement by this Agreement.
6. Certain capitalized terms used herein are defined in Section 8 of this
Agreement.
Now, Therefore, in consideration of the promises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration is mutually acknowledged by the parties, the
parties hereby agree as follows:
1
1. Employment and Termination
1.01. Conditions of Employment
Subject to the terms of this Agreement, the Company hereby agrees to employ the
Executive as President--Global Markets Group, with such authority, power,
responsibilities, and duties customarily exercised by a person holding such
positions in a company of the size and nature of the Company.
1.02. Performance of Duties
The Executive shall, during his employment with the Company, owe an undivided
duty of loyalty to the Company and agrees to use his best efforts to promote and
develop the business of the Company. The Executive agrees that during his
employment with the Company, he must devote his full business time, energies,
and talents to serving as a senior executive officer of the Company and that he
shall perform his duties faithfully and efficiently subject to the directions of
the Board of Directors of Sprint (the "Board"). Notwithstanding the foregoing,
the Executive may (i) serve as a director, trustee, or officer or otherwise
participate in not-for-profit educational, welfare, social, religious, and civic
organizations; (ii) serve as a director of any for-profit business listed on
Exhibit A hereto or, with the prior consent of the Board, serve as a director of
any for-profit business that is not a Competitor, and (iii) acquire passive
investment interests in one or more entities, to the extent that the other
activities do not inhibit or interfere with the performance of the Executive's
duties under this Agreement, or to the knowledge of the Executive conflict in
any material way with the business or policies of the Company.
1.03. Term of Employment
The term of the Executive's employment under this Agreement (the "Employment
Term") begins on the Effective Date and ends on the Executive's 65th birthday
(the "End Date"). This Agreement sets forth certain terms of Executive's
employment during the Employment Term, the consequences of any termination of
employment during the Employment Term, and the terms of certain restrictive
covenants by the Executive during and after the Employment Term. The Company and
Executive agree that the employment relationship is at will, and either party
may terminate the employment relationship for any reason in accordance with the
procedures and with the consequences set forth in this Agreement.
1.04. Procedures for Termination
(a) General Procedures
Except as set forth below, any purported termination of this Agreement or of
the Executive's employment by the Company or by the Executive during the
Employment Term, other than by Executive's death, shall be communicated by a
written notice of termination to the other party hereto delivered in
accordance with Section 15 below indicating the specific termination
provision in this Agreement relied upon and setting forth in reasonable
detail
2
the facts and circumstances claimed to provide a basis for termination under
the provision so indicated. Any such termination will be effective on the
Termination Date.
(b) Cause Termination
The Company may not terminate Executive's employment for Cause during the
Employment Term until it delivers to the Executive a written notice stating
that Executive is guilty of conduct constituting Cause by reference to one
or more clauses of Section 8.05 and specifying the particulars thereof in
detail.
(c) Good Reason Termination
Executive may terminate his employment for Good Reason during the Employment
Term only within the Change in Control Protected Period, except that
Executive may not give notice of termination for Good Reason during any
period in which the Executive is unable to substantially perform his duties
with the Company due to physical or mental illness. In order to effect a
termination for Good Reason, Executive must, within 60 days following the
event giving rise to Executive's claim, deliver a written notice to the
Company that sets forth the specific event or circumstance giving rise to
Good Reason by reference to one or more clauses of the definition of Good
Reason set forth in Section 8.16 of this Agreement.
(d) Constructive Discharge
Executive may terminate his employment upon Constructive Discharge any time
during the Employment Term following written notice and an opportunity for
the Company to cure. In order to effect a termination for Constructive
Discharge, Executive must deliver a written notice to the Company within 60
days following the event giving rise to Executive's claim for Constructive
Discharge. The notice must set forth the specific event or circumstance
giving rise to Constructive Discharge by reference to one or more clauses of
the definition of Constructive Discharge set forth in Section 8.13 of this
Agreement. If, within 30 days following notice from the Executive, the
Company fully corrects the circumstances giving rise to the Executive's
claim for Constructive Discharge, the Executive shall not be entitled to
terminate his employment for Constructive Discharge by reason of such event.
(e) Payment of Compensation Earned Through Termination Date
Upon a termination of the Executive's employment hereunder for any reason,
the Executive or, in the event of his death, the Executive's estate, in
addition to any other payments or benefits to which the Executive may be
entitled hereunder, is entitled to
(i) the Executive's Base Salary pro-rated through the Termination Date,
(ii) any payment under the Incentive Plans for Performance Periods ending
before the Termination Date, unless eliminated or reduced, and
3
then only to the extent that such payments are eliminated or reduced,
for all Senior Officers continuing employment with the Company, and
(iii) any vacation pay for vacation accrued by the Executive in the calendar
year of termination but not taken at the Termination Date.
Except as otherwise provided herein, the Company must pay any other employee
benefits to which the Executive is entitled by reason of his employment to
the Executive or his estate at the time or times required by the terms of
the applicable Company plan or policy.
(f) Effect of Termination on Other Positions
If, on the Termination Date, the Executive (i) is a member of the Board of
Sprint or any of its subsidiaries, (ii) serves on the board of directors of
any other corporation by nomination, appointment, or designation by Sprint
or any of its subsidiaries, or (iii) holds any other position with Sprint or
any of its subsidiaries, the Executive shall, unless otherwise agreed to by
the Company, be deemed to have resigned from all such positions as of the
Termination Date. Executive agrees to execute such documents and take such
other actions as the Company may request to reflect such resignations.
(g) Condition to Certain Payments
Payments under Section 4 are conditioned on Executive's compliance with the
requirements of Section 4.03(b).
(h) Exit Interview
At the Company's request, Executive 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 the Company'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. Compensation
Subject to the terms of this Agreement, during the Employment Term, while the
Executive is employed by the Company, the Company will compensate him for his
services as follows:
2.01. Base Salary
The Executive shall receive an annual base salary in an amount not less than his
annual salary on the Effective Date, payable in monthly or more frequent
installments in accordance with the Company's payroll policies (such annual base
salary as adjusted pursuant to this Section 2.01 shall hereinafter be referred
to as the "Base Salary"). The Executive's Base Salary shall be reviewed, and may
be increased but not decreased below the rate in effect on the Effective Date
(other than across-the-board reductions similarly affecting all Senior
Officers), by the Board in a manner that is fair and pursuant to its normal
performance review policies for Senior Officers.
4
2.02. Prior Awards Remain Outstanding
The Prior Awards shall remain outstanding, and the terms and conditions of the
Prior Awards shall continue to be governed by the provisions of the Severance
Agreement pertaining to the vesting and acceleration of the Prior Awards, and
the Prior Awards shall be considered continuing partial consideration for the
execution of this Agreement.
2.03. Incentive Payments
The Executive will continue to participate in the Incentive Plans, subject to
the terms and conditions of the Incentive Plans as they may from time to time be
established, amended, or terminated in accordance with the Company's plans or
policies governing such benefits to the Company's Senior Officers generally. The
Executive's Targeted Compensation under the Incentive Plans shall be reviewed,
and may be increased but not decreased below his highest Targeted Compensation
in effect in 2001 (other than across-the-board reductions similarly affecting
all Senior Officers), by the Board in a manner that is fair and pursuant to its
normal performance review policies for Senior Officers.
2.04. Employee Benefits, Fringe Benefits and Perquisites
The Company will provide the Executive with employee benefits, fringe benefits,
and perquisites (including, without limitation, miscellaneous services, life,
disability, medical and dental insurance coverages, and participation in the
Company's Executive Deferred Compensation Plan, Key Management Benefit Plan,
Savings Plan, and the Pension Plan) that are no less favorable in the aggregate
to the Executive than those provided to him as of the Effective Date, subject to
amendment, modification, or termination in accordance with the Company's plans
or policies governing such benefits to Senior Officers generally.
2.05. Expense Reimbursement
The Company will reimburse the Executive for reasonable expenses incurred and
accounted for in accordance with the policies and procedures of the Company for
Senior Officers generally, as they may from time to time be established,
amended, or terminated.
2.06. Supplemental Retirement Benefits
The Company acknowledges that the Executive has previously been credited with 19
years of service as a Mid-Career Pension Enhancement under the Company's
Supplemental Executive Retirement Plan ("SERP"). It is further agreed that the
terms of the Pension Plan and the terms of the SERP, including any amendments
hereafter adopted for the plans, shall be deemed to be incorporated by reference
in this Agreement except to the extent any provisions in the plans would be
inconsistent with the specific terms of this Agreement.
2.07. Elimination of Section 280G Limitations
If during the Employment Term, a Change in Control or other change in the equity
structure of the Company occurs that would result in the acceleration of
5
benefits under the Company's stock option plans, restricted stock plans, or
other benefit plans of the Company, except for the fact that such plans or
agreements under such plans limit acceleration to amounts deductible by the
Company under Code Section 280G (or any successor provision), then such
limitations shall not apply to the Executive.
3. Executive Covenants
3.01. Principles of Business Conduct
The Executive shall adhere in all respects to the Company's Principles of
Business Conduct (or any successor code of conduct) as in effect on the
Effective Date and as they may from time to time be established, amended, or
terminated.
3.02. Proprietary Information
The Executive acknowledges that during the course of his employment he has
learned or will learn or develop Proprietary Information. The Executive further
acknowledges that unauthorized disclosure or use of such Proprietary
Information, other than in discharge of the Executive's duties, will cause the
Company irreparable harm.
Except in the course of his employment with the Company under this Agreement, in
the pursuit of the business of the Company, or as otherwise required in
employment with the Company, the Executive 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 the
Executive has any questions about whether particular information is Proprietary
Information he shall consult with the Company's General Counsel.
The Executive also agrees to promptly disclose to the Company any information,
ideas, or inventions made or conceived by him that result from or are suggested
by services performed by him for the Company under this Agreement, and to assign
to the Company all rights pertaining to such information, ideas, or inventions.
Knowledge or information of any kind disclosed by the Executive to the Company
shall be deemed to have been disclosed without obligation on the part of the
Company to hold the same in confidence, and the Company shall have the full
right to use and disclose such knowledge and information without compensation to
the Executive beyond that specifically provided in this Agreement.
3.03. Non-Competition
During the Executive's employment with the Company and during the Non-Compete
Period, Executive shall not 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) the Company terminates Executive's employment with Employer for any
reason other than Termination for Cause or Total Disability; or
6
(ii) Executive terminates his employment with the Company upon Constructive
Discharge.
If the Executive ceases to be employed by the Company because of the sale,
spin-off, divestiture, or other disposition by the Company of a subsidiary,
division, or other divested unit employing the Executive, this provision shall
continue to apply during the Non-Compete Period, except that the Executive's
continued employment for the subsidiary, division, or other divested unit
disposed of by the Company shall not be deemed a violation of this provision.
The Executive agrees that because of the worldwide nature of the Company's
business, breach of this Agreement by accepting Competitive Employment would
irreparably injure the Company and that, therefore, a limited geographic
restriction is neither feasible nor appropriate to protect the Company's
interests.
3.04. Inducement of Employees, Customers and Others
During the Executive's employment with the Company and during the Non-Compete
Period, Executive may not directly or indirectly solicit, induce, or encourage
any employee, consultant, agent, customer, vendor, or other parties doing
business with the Company to terminate their employment, agency, or other
relationship with the Company or to render services for or transfer business to
any Competitor, and the Executive shall not initiate discussion with any such
person for any such purpose or authorize or knowingly cooperate with the taking
of any such actions by any other individual or entity on behalf of the
Competitor.
3.05. No Adverse Actions
During the Non-Compete Period, the Executive shall not, without the prior
written consent of the Company, in any manner, solicit, request, advise, or
assist any other person or entity to (a) undertake any action that would be
reasonably likely to, or is intended to, result in a Change in Control, or (b)
seek to control in any material manner the Board.
3.06. Return of Property
The Executive shall, upon his Termination Date, return to the Company all
property of the Company in his possession, including all notes, reports,
sketches, plans, published memoranda, or other documents, whether in hard copy
or in electronic form, created, developed, generated, received, or held by the
Executive during his employment, concerning or related to the Company's
business, whether containing or relating to Proprietary Information or not. The
Executive 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 the
Company's premises without the Company's written consent.
3.07. Mutual Non-disparagement
The Executive agrees to refrain from making any statements about the Company or
its officers or directors that would disparage, or re ect unfavorably upon the
image or reputation of the Company or any such officer or director. The
7
Company agrees to refrain from making any statements about the Executive that
would disparage, or reflect unfavorably upon the image or reputation of the
Executive.
3.08. Assistance with Claims
Executive agrees that, consistent with the Executive's business and personal
affairs, during and after his employment by the Company, he will assist the
Company in the defense of any claims or potential claims that may be made or
threatened to be made against it in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative ("Proceeding") and will assist
the Company in the prosecution of any claims that may be made by the Company in
any Proceeding, to the extent that such claims may relate to the Executive's
services provided under this Agreement.
Executive agrees, unless precluded by law, to promptly inform the Company if
Executive is asked to participate (or otherwise become involved) in any
Proceeding involving such claims or potential claims.
Executive also agrees, unless precluded by law, to promptly inform the Company
if Executive is asked to assist in any investigation (whether governmental or
private) of the Company (or its actions), regardless of whether a lawsuit has
then been filed against the Company with respect to such investigation. The
Company agrees to reimburse Executive for all of Executive's reasonable
out-of-pocket expenses associated with such assistance, including travel
expenses and any attorneys' fees and shall pay a reasonable per diem fee (equal
to 1/250 th of his Base Salary rate at his Termination Date) for Executive's
services.
3.09. Key Man Life Insurance
The Company may, at its discretion, purchase for its own benefit and at its own
expense, key man life insurance on the life of the Executive, and the Executive
shall not have any right, title, or interest in or to such insurance. The
Executive agrees to cooperate with the life insurance company and the Company in
the insurance underwriting process, including submitting to a physical
examination and other tests necessary to secure coverage, and signing all
appropriate applications and written forms as may be required by the insurance
company.
4. Payments On Certain Terminations
4.01. Payments on Certain Terminations Not in Connection with Change in Control
If, during the Employment Term but not within a Change in Control Protected
Period, (a) the Company terminates Executive's employment with the Company for
any reason other than (x) Cause or (y) Executive's Total Disability or (b) the
Executive terminates his employment with the Company upon Constructive
Discharge, then the Executive shall, subject to the other provisions of this
Section 4, be entitled to the following payments and benefits (the "Non-Change
in Control benefits") in lieu of any payments or benefits available under any
and all Company separation plans or policies:
8
(i) The Company will pay Executive his Base Salary, in equal installments in
arrears and on the same schedule as paid before his Termination Date, for
a period (the "Non-Change in Control Severance Period") commencing on the
Termination Date and ending on the earlier to occur of (A) the date 18
months after the Termination Date, or (B) the End Date, at the rate in
effect on his Termination Date;
(ii) For the Performance Period in which the Termination Date occurs, the
Company will pay the Executive, at the time when payouts are made for that
Performance Period under the Short-Term Incentive Plan, an amount equal to
the Termination Period Incentive Payout. In addition, the Company will pay
Executive an amount equal to 1/12th (adjusted appropriately if the
Performance Period in which the Termination Date occurs is other than a
12-month period) of the Termination Period Incentive Payout at the end of
each month that (1) follows the Performance Period in which the
Termination Date occurs and (2) ends with or within the Non-Change in
Control Severance Period. In determining the number of months, for
purposes of this clause (ii), both the Termination Date and the end of the
Non-Change in Control Severance Period will be rounded to the nearest
month boundary by rounding to the beginning of the month if the date falls
on or before the 15th of the month and to the beginning of the following
month if the date falls after the 15th of the month.
Any stock options granted in lieu of Targeted Compensation under the
Short-Term Incentive Plan will continue to vest during the Non-Change in
Control Severance Period;
(iii) (A) For Performance Periods in which the Termination Date occurs and in
which the Long-Term Incentive Plan awards are to be measured in cash, the
Company will pay the award with respect to each Performance Period at the
time payment would be made under the plan for the Performance Period,
without regard to any participation requirement, and, with respect to each
Performance Period, will pay an amount equal to the Termination Period
Incentive Payout; (B) for Performance Periods in which the Termination
Date occurs and in which the Long-Term Incentive Plan awards are to be
measured in stock options, the options granted with respect to each
Performance Period will continue to vest during the Non-Change in Control
Severance Period;
(iv) During the Non-Change in Control Severance Period, the Company will
provide any executive medical, dental, life, and qualified or nonqualified
retirement benefits that the Executive was receiving or was entitled to
receive as of the Termination Date, except that long term-disability and
short-term disability benefits shall cease on the Executive's last day
worked as an employee of the Company, but if the Executive becomes
employed full-time during the Non-Change in Control Severance Period, the
Executive's entitlement to continuation of these benefits shall
immediately cease, except that the Executive shall retain any rights to
continue cover-
9
age under the COBRA continuation provisions of the Company's welfare
benefit plans by paying the applicable premium therefor;
(v) During the Non-Change in Control Severance Period, the Company will pay
outplacement counseling by a firm selected by the Company to continue
until such time as Executive becomes re-employed;
(vi) During the Non-Change in Control Severance Period, the Company will
provide Executive with all applicable executive perquisites that the
Executive was receiving or was entitled to receive on the Termination Date
(including automobile allowance, communications services and all
miscellaneous services) other than country club membership dues and
accrual of vacation; and
(vii) The end of the Non-Change in Control Severance Period will be treated as
Employee's termination date for purposes of Sprint's employee stock option
plans and restricted stock plans.
In all events, the Executive's right to receive the Non-Change in Control
benefits shall cease immediately if the Executive is re-employed by the Company
or an affiliate of the Company or if the Executive breaches the Restrictive
Covenants. In all cases, the Company's rights under Section 7.01 shall continue.
4.02. Payments on Certain Terminations in Connection with a Change in Control
If a Change in Control occurs during the Employment Term and, within the Change
in Control Protected Period, the Executive's employment with the Company is
terminated (a) by the Company for any reason other than (x) Cause or (y)
Executive's Total Disability, or (b) by the Executive for Good Reason, the
Executive shall be entitled to the following payments and benefits (the "Change
in Control benefits") in lieu of any payments or benefits available under
Section 4.01 above or under any and all Company separation plans or policies:
(i) In lieu of any further salary payments to the Executive for periods after
the Termination Date, the Company will pay to the Executive monthly (for a
period (the "Change in Control Severance Period") beginning on the
Termination Date and ending on the earlier to occur of (A) the date 35
months after the Termination Date or (B) the End Date) a payment equal to
the Executive's highest monthly Base Salary (without regard to any
deferred amounts) paid during the 36-month period ending on the
Termination Date;
(ii) In lieu of any payments under, and notwithstanding any provisions of the
Incentive Plans, the Company shall pay to the Executive an amount (the
"Maximum Payout Amount") up to three times the sum of
(1) the highest short-term incentive payment (without regard to any
deferred amounts and without regard to any amounts with respect to
10
which Executive elected to purchase options under the Management
Incentive Stock Option Plan) and
(2) the highest long-term incentive payment
received by the Executive under the Incentive Plans with respect to the
three Performance Periods ending most recently on or before the
Termination Date.
The payments will be made in up to three installments on the first day of
the 13th, 25th, and 35th month following the Termination Date, and each
installment shall be one-third of the Maximum Payout Amount, or a lesser
amount until the cumulative amount of all payments is equal to the
Maximum Payout Amount times a fraction, the numerator of which is the
number of months in the Change in Control Severance Period and the
denominator of which is 35. For purposes of the foregoing, payments under
the Long-Term Incentive Plan for Performance Periods with respect to
which payments were not made in cash, but in vesting of stock options,
the "payment" will be deemed to be equal to the Executive's Targeted
Compensation for that Performance Period multiplied by the Performance
Period Stock Appreciation for that Performance Period. Any stock options
granted with respect to Performance Periods under the Long-Term Incentive
Plan beginning before the Termination Date will continue to vest during
the Change in Control Severance Period;
(iii) For purposes of the Company's Executive Deferred Compensation Plan,
notwithstanding any provision to the contrary in such plan, the rate at
which interest shall be credited to the Executive's Deferred Compensation
Account A and AA (as defined in such plan) shall be equal to the maximum
interest rate allowed for the account under such plan if and as amended;
(iv) For purposes of the Company's Key Management Benefit Plan, even if the
Executive is not 60 years of age on the Termination Date, the Executive
shall be deemed to have remained a Key Executive (as defined in such
plan) until age 60;
(v) Notwithstanding anything in the Sprint Retirement Savings Plan, the
Executive shall be entitled to receive a cash payment in an amount equal
to the value of the unvested portion of his Company Contribution Account
(as defined in such plan) as of the Termination Date;
(vi) In addition to the retirement benefits to which the Executive is entitled
under the Sprint Retirement Pension Plan (the "Pension Plan") or any
successor plans thereto, (1) the Executive shall be credited with three
years of additional service at the Executive's highest annual
compensation rate during the Employment Term for purposes of determining
the amount of the Executive's pension, (2) the Executive shall, at the
time of the Executive's retirement, receive the life and medical
post-retirement benefits that would be due to a retiree under the Pension
Plan, (3) for purposes of the Executive's supplemental retirement
benefits, if any under the SERP, the
11
Executive shall be credited as of the Termination Date with the maximum
number of years of service at the Executive's highest annual compensation
rate during the Employment Term potentially available to the Executive
under the SERP; and (4) if the Executive takes early retirement, the
Company shall supplement the Executive's pension so that the Executive
is, notwithstanding the Pension Plan early retirement provisions, not
subject to any early retirement pension reduction;
(vii) During the Change in Control Severance Period, the Company will arrange
to provide the Executive with or reimburse the Executive for life,
disability, medical and dental insurance coverages substantially similar
to and at the same cost to the Executive as the cost to the Senior
Officers during such period, but the coverages shall cease immediately if
the Executive obtains subsequent employment; and
(viii) During the Change in Control Severance Period, the Company will pay
outplacement counseling by a firm selected by the Company to continue
until such time as Executive becomes re-employed.
In all events, the Executive's right to receive the Change in Control benefits
shall cease immediately if the Executive is re-employed by the Company or an
affiliate of the Company or if the Executive breaches the Restrictive Covenants.
In all cases, the Company's rights under Section 7.01 shall continue.
4.03. Other Provisions Regarding Payments and Benefits
(a) No Mitigation; No Offset
In the event of any termination of employment resulting in payments under
this Section 4, the Executive need not seek other employment and, except
as expressly provided herein, there shall be no offset against amounts
due the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain.
(b) Settlement and Release
The payments and benefits provided for hereunder shall be in full
settlement and satisfaction of all of Executive's claims and demands
relating to or arising out of his employment with the Company or the
termination thereof, and the Company's obligation to provide such
payments and benefits is expressly made subject to and conditioned upon
(i) the Executive's execution, within forty-five (45) days after the
Termination Date, of a release of such claims and demands in such form as
the Company may reasonably determine and (ii) the Executive's
non-revocation of such release in accordance with the terms thereof.
(c) Nature of Payments
Any amounts due under this Section 4 are in the nature of severance
payments considered to be reasonable by the parties and are not in the
nature of a penalty.
12
(d) Benefit Plans
If, for any period during which the Executive is entitled to continued
benefits under this Section 4, the Company reasonably determines that the
Executive cannot participate in any benefit plan because he is not actively
performing services for the Company, then, in lieu of providing benefits
under any such plan, the Company shall provide comparable benefits or the
cash equivalent of the cost thereof (after taking into account incremental
payroll and income tax consequences thereof to the Executive and the
Executive's dependents as the case may be) to the Executive and, if
applicable, the Executive's dependents through other arrangements.
(e) Other Severance Arrangements
Except as may be otherwise specifically provided in an amendment of this
Section 4.03(e) adopted in accordance with this Agreement, the Executive's
rights under Section 4 shall be in lieu of any benefits that may be
otherwise payable to or on behalf of the Executive pursuant to the terms of
any severance pay arrangement of the Company or any other similar
arrangement of the Company providing benefits upon termination of
employment.
(f) Time of Payments
If the amount of any payment provided for in Section 4.02 cannot be
calculated on or before the date on which such payment is due, the Company
shall pay to the Executive on such day an estimate, as calculated in good
faith by the Company, of the minimum amount of such payment and shall pay
the remainder of such payments when calculable.
5. Tax Reimbursement
If the benefits provided under this Agreement together with other benefits, if
any, the Executive receives from the Company constitute "excess parachute
payments," (the "Affected benefits") as defined in Section 280G of the Code, the
Company shall pay the Executive an additional amount such that the net amount
retained by the Executive after payment of any excise tax that would be imposed
by Section 4999 of the Code (the "Excise Tax") and any federal, state, and local
income tax, FICA tax and Excise Tax payable with respect to the payment provided
for in this Section 5, shall equal the amount the Affected benefits would have
been in the absence of the Excise Tax. For the purpose of determining the amount
of the payment provided for in this Section 5, the Executive shall be deemed to
pay federal, state, and local income taxes at the highest marginal rates in
effect as of the payment date and the calculation shall take into account, as
applicable, the deduction of any state, federal, or local income taxes.
6. Interest On Payments
If the Company fails to pay any amounts due to Executive under this Agreement as
they come due, the Company agrees to pay interest on such amounts at the
Applicable Federal Rate plus two percent (2%) per annum. If any payment is in
13
excess of the amount due, the excess shall constitute a loan by the Company to
the Executive, payable on the 90th day after demand by the Company, together
with interest at the Applicable Federal Rate.
7. Enforcement and Remedies
7.01. Equitable Remedies
The Executive acknowledges that the Company would be irreparably injured by a
violation of Sections 3.02 through 3.05 (the "Restrictive Covenants"), and he
agrees that the Company, in addition to any other remedies available to it for
any breach or threatened breach, shall be entitled to a preliminary or permanent
injunction, temporary restraining order, or other equivalent relief, restraining
the Executive from any actual or threatened breach of the Restrictive Covenants.
If a bond is required to be posted in order for the Company to secure an
injunction or other equitable remedy, the parties agree that the bond need not
be more than a nominal sum. The Executive shall be entitled to seek specific
performance of his right to be paid amounts earned through the Termination Date
pursuant to Section 1.04(e) during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
7.02. Resolution of Disputes
All disputes, claims, or controversies arising under or in connection with this
Agreement, other than those contemplated by Section 7.01 above, shall be settled
exclusively by binding arbitration administered by JAMS/Endispute in the greater
Kansas City area in accordance with the then existing JAMS/Endispute Arbitration
Rules and Procedures for Employment Disputes, except that the parties agree that
the arbitrator is not authorized or empowered to impose punitive damages on
either of the parties. If the arbitrator determines that any term or other
provision of this Agreement is invalid, illegal, or incapable of being enforced,
the arbitrator shall have the authority to modify the provision or term to the
minimum extent required to permit enforcement. In the event of such an
arbitration proceeding, the Administrator of JAMS/Endispute will appoint the
arbitrator.
7.03. Attorney Fees
If either party seeks to enforce this Agreement and prevails on the merits, the
losing party agrees to pay to the prevailing party all reasonable legal fees and
expenses incurred by the prevailing party in seeking such enforcement. Such
payments shall be made within five (5) days after the prevailing party's request
for payment accompanied by such evidence of fees and expenses incurred as the
losing party reasonably may require.
8. Definitions
As used in the Agreement, the following terms shall have the meanings set forth
below.
8.01. Actual Incentive Payout
14
"Actual Incentive Payout" means, with respect to a Performance Period, the
product of (1) the Performance Measure for the Performance Period and (2) the
Executive's Targeted Compensation for the Performance Period, less any
deductions in payment for options under the Company's stock option plans or any
other amounts chargeable against Executive's payout under the Incentive Plans.
8.02. 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.
8.03. Applicable Federal Rate
"Applicable Federal Rate" means the applicable Federal rate within the meaning
of Section 7872 of the Code.
8.04. Capped Incentive Payout
"Capped Incentive Payout" means (i) with respect to a Performance Period under
the Short-Term Incentive Plan, the product of (1) the lesser of (a) 100% and (b)
the Performance Measure for the Performance Period and (2) the Executive's
Targeted Compensation for the Performance Period, and (ii) with respect to a
Performance Period under the Long-Term Incentive Plan, zero dollars.
8.05. Cause
Termination by the Company of the Executive's employment for "Cause" means
termination upon
(i) the willful and continued failure by the Executive to substantially
perform his duties with the Company (other than any such failure
resulting from the Executive's incapacity due to physical or mental
illness) after a written demand for substantial performance is delivered
to the Executive by the Company, which demand specifically identifies the
manner in which the Company believes that the Executive has not
substantially performed his duties, or
(ii) the willful engaging by the Executive in conduct that is a serious
violation of the Company's Principles of Business Conduct, or
(iii) the willful engaging by the Executive in conduct that is demonstrably and
materially injurious to the Company.
For purposes of this definition, no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Company. Failure to meet
performance expectations, unless willful, continuing, and substantial shall not
be considered
15
"Cause."
8.06. 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 two-thirds 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);
16
(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 two-thirds 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
(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.
8.07. Change in Control Protected Period
17
"Change in Control Protected Period" means a period commencing on the date of a
Change in Control and ending on the earlier to occur of (A) the three year
anniversary of the date of the Change in Control or (B) the day before the End
Date.
8.08. Code
"Code" means the Internal Revenue Code of 1986, as amended, and references to
sections of the Code include any successor provision.
8.09. Committee
"Committee" means the Organization, Compensation, and Nominating Committee of
the Board or any successor committee primarily responsible for executive
compensation.
8.10. Competitive Employment
"Competitive Employment" means the performance of duties or responsibilities, or
the supervision of individuals performing such duties or responsibilities, for a
Competitor
(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 the Executive in his
performance of services for the Company at any time during the two
years before the Termination Date, and
(B) that relate to products or services that are competitive with the
Company's products or services with respect to which the Executive
performed services for the Company at any time during the two years
before the Termination Date,
or
(ii) in the performance of which Proprietary Information to which the Executive
had access at any time during the two-year period before the Termination
Date could be of substantial economic value to the Competitor.
8.11. Competitor
Because of the highly competitive, evolving nature of the Company's industry,
the identities of companies in competition with the Company 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.
"Competitor" means any one or more of the following
(i) any person or entity "Person" doing business in the United States or any
of its Divisions employing the Executive 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,
18
wireline, wireless, or any other technology), over any distance (for
example, local, long-distance, and distance insensitive services), using
any protocol (for example, circuit-switched, or packet-based, such as
Inter-net 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
the Executive if the Person or its Division receives at least 15% of its
gross operating revenue from a line of business in which the Company
receives at least 3% of its gross operating revenues;
(iii) any Person doing business in the United States, or its Division employing
the Executive, operating for less than 5 years a line of business from
which the Company 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; and
(iv) any Person doing business in the United States, or its Division employing
the Executive, if the Person or its Division receives at least 15% of its
gross operating revenue from a line of business in which the Company has
operated for less than 5 years, notwithstanding the Company's lack of
substantial revenues in such line of business.
For purposes of the foregoing, gross operating revenues of the Company and such
other Person shall be those of the Company or such Person, together with their
Consolidated Affiliates, but those of any Division employing or proposing to
employ the Executive shall be on a stand-alone basis, all measured by the most
recent available financial information of both the Company and such other Person
or Division at the time the Executive 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 Executive to demonstrate that such Person
is not a Competitor.
8.12. Consolidated Affiliate
"Consolidated Affiliate" means, with respect to any person or entity, all
Affliates and Subsidiaries of such person or entity, if any, with whom the
financial statements of such person or entity are required, under generally
accepted accounting principles, to be reported on a consolidated basis.
8.13. Constructive Discharge
"Constructive Discharge" means termination by the Executive of his employment
with the Company following the occurrence of any of the following circumstances
without the Executive's prior written consent unless the circumstances are fully
corrected before the Termination Date specified in the notice of termination
given in respect thereof:
(i) unless the Company first offers to Executive a position having an equal or
greater grade rating, reassignment of Executive from his then current
19
position with the Company to a position having a lower grade rating, in
each case under the Company's methodology of rating employment positions
for its employees generally;
(ii) Executive ceases to report directly to the Board, the Chief Executive
Officer (or a comparable successor position), or the Chief Operating
Officer (or a comparable successor position) of the Company, or
(iii) a reduction within any 24-month period (other than an across-the-board
reduction similarly affecting all Senior Officers) of the Executive's
Targeted Total Compensation to an amount that is less than 90% of the
Executive's highest Targeted Total Compensation during the 24-month
period.
(iv) a change in the Executive's base employment area to anywhere other than
the Kansas City metropolitan area.
8.14. 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.
8.15. FON Common Stock
"FON Common Stock" means the Company's FON Common Stock, Series 1, $2.00 par
value per share.
8.16. Good Reason
"Good Reason" means termination by the Executive of his employment with the
Company following the occurrence of any of the following circumstances, without
the Executive's express written consent:
(i) a substantial adverse alteration in the nature or status of the
Executive's responsibilities or organizational reporting relationships
from those in effect immediately before the Change in Control or any
downgrading of the Executive's title or position from that in effect
immediately before the Change in Control;
(ii) a reduction by the Company in the Executive's Base Salary as in effect on
the Effective Date or as the same may be increased from time to time,
except for across-the-board salary reductions similarly affecting all
officers of the Company and all officers of any business entity or
entities in control of the Company;
(iii) the failure by the Company, without the Executive's consent, to pay to the
Executive any portion of the Executive's current compensation within 7
days of the date it is due, except pursuant to an across-the-board
compensation deferral similarly affecting all officers of the Company and
all officers of any business entity or entities in control of the Company;
20
(iv) (A) the relocation of the Company's principal executive offices to a
location outside the metropolitan area in which such offices are located
immediately before the Change in Control; or (B) the Company's requiring
the Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's business to
an extent substantially consistent with the Executive's present business
travel obligations; or (C) the Company's requiring the Executive to
travel to an extent substantially inconsistent with the Executive's
business travel obligations as in effect immediately before the Change in
Control;
(v) a substantial adverse alteration in the physical conditions under or in
which the Executive is expected to perform the Executive's duties, other
than an alteration similarly affecting all officers of the Company and
all officers of any person in control of the Company;
(vi) the Company's failure to continue in effect any compensation plan in
which the Executive participated immediately before the Change in Control
and that is material to the Executive's total compensation, including but
not limited to the Incentive Plans or any substitute plans adopted before
the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to the
plan, or the Company's failure to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to other
Senior Officers, as existed at the time of the Change in Control;
(vii) the Company's failure to continue to provide the Executive with benefits
substantially similar in the aggregate to those he enjoyed under any of
the Company's plans, including but not limited to the Pension Plan, stock
option plans, savings plan, supplemental employee retirement agreement,
the Key Management Benefit Plan, the Executive Deferred Compensation
Plan, life insurance, medical, health and accident, or disability plans
in which the Executive was participating at the time of the Change in
Control; the taking of any action by the Company that would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the
time of the Change in Control; or the failure by the Company to provide
the Executive with the number of paid vacation days to which the
Executive is entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in effect at the
time of the Change in Control; unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made with respect
to such benefits;
(viii) the Company's failure to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated
in Section 9 hereof; or
21
(ix) the Company's attempt to terminate the Executive's employment without
complying with the procedures set forth in Section 1.04; any such attempt
shall not be effective.
8.17. Incentive Plans
"Incentive Plans" means the Long-Term Incentive Plan and the Short-Term
Incentive Plan.
8.18. Long-Term Incentive Plan
"Long-Term Incentive Plan" means the Company's Long-Term Incentive Plan,
together with other incentive compensation plans specifically approved for this
purpose by the Committee.
8.19. Non-Compete Period
"Non-Compete Period" means the 18-month period beginning on the Termination
Date. If the Executive 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.
8.20. Option Plans
"Option Plans" means the 1990 Plan and Sprint's 1997 Long-Term Stock Incentive
Program.
8.21. Performance Measure
"Performance Measure" means, with respect to any Performance Period, a measure,
expressed as a percentage, of the extent to which the performance goals were
achieved, as determined by the Committee, during the Performance Period.
8.22. Performance Period
"Performance Period" means a period of time under the Short-Term Incentive Plan
or Long-Term Incentive Plan (1) for which the Committee establishes performance
goals for the Company's business units and authorizes payment of incentive
compensation based on a measure of the extent to which those goals were achieved
during the period or (2) with respect to which the Committee grants employee
stock options in lieu of such performance goals, the period beginning on the
first day of the year in which the options are granted and ending on the first
date on which the options become exercisable in full, without regard to any
acceleration of vesting.
8.23. Performance Period Stock Appreciation
"Performance Period Stock Appreciation" means, with respect to any Performance
Period, 1.52 times the ratio of (1) the stock price on the last trading day of
the Performance Period to (2) the stock price on the first trading day of the
Performance Period. For this purpose, the stock price on any day is (1) for days
before November 24, 1998, the market price of the Company's common stock, par
value, $2.50 per share, on that day and (2) for days on or after November
22
24, 1998, an amount equal to the sum of the market price of one share of FON
Common Stock and one-half the market price of one share of PCS Common Stock on
that day. The market price of a stock on any day is the average of the high and
low prices on that day. This definition shall be adjusted to equitably reflect
changes in Sprint's capital structure after the Effective Date.
8.24. PCS Common Stock
"PCS Common Stock" means the Company's PCS Common Stock, Series 1, $1.00 par
value per share.
8.25. 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 the
Company or the Company'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 the Company, 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 the Company or of any customer or supplier of the
Company, or (iii) has been identified to the Executive as confidential by the
Company, either orally or in writing.
8.26. Senior Officer
"Senior Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended (or any
successor statute or statutes thereto), and the rules and regulations
promulgated thereunder.
8.27. Short-Term Incentive Plan
"Short-Term Incentive Plan" means the Company's Management Incentive Plan,
together with other incentive compensation plans specifically approved for this
purpose by the Committee.
8.28. 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
23
such Controlled Persons.
8.29. Targeted Compensation
"Targeted Compensation" means, (1) with respect to any Performance Period in
which the award is measured in cash, the amount established by the Committee
that would be the payout under the Short-Term Incentive Plan or the Long-Term
Incentive Plan, as the case may be, if the Performance Measure for the
Performance Period were 100% and (2) with respect to any Performance Period in
which the award is measured in stock options, the dollar amount on which the
number of options to grant was based.
8.30. Targeted Total Compensation
"Targeted Total Compensation" means, as of any time, the sum of the Executive's
(1) Base Salary, (2) Targeted Compensation for the Short-Term Incentive Plan,
(3) Targeted Compensation for the Long-Term Incentive Plan, and (4) targeted
value of his annual stock option award (ignoring the value of the options
granted before the Effective Date) as adopted by the Committee.
8.31. Termination Date
"Termination Date" means (i) in the case of a termination of the Executive's
employment by reason of the Executive's death, the Executive's date of death,
(ii) in the case of a termination of the Executive's employment by reason of a
Constructive Discharge, the date which is thirty (30) days after the notice of
termination is given, and (iii) in all other cases, the date of any notice of
termination or the date, if any, on which the notice declares itself to be
effective (but in no event later than the 60th day after the date on which such
notice is given).
8.32. Termination Period Incentive Payout
"Termination Period Incentive Payout" means an amount equal to the weighted
average of (1) the Actual Incentive Payout for the Performance Period in which
the Termination Date occurs and (2) the Capped Incentive Payout for the
Performance Period in which the Termination Date occurs. The weights in the
weighted average will be for the amount in clause (1), the number of months in
the Performance Period occurring before the Termination Date, and, for clause
(2), the number of months in the Performance Period occurring after the
Termination Date, in each case divided by the number of months in the
Performance Period. In determining the number of months, the Termination Date
will be rounded to the nearest month, rounding to the beginning of the month if
the Termination Date falls on or before the 15th of the month and to the
beginning of the following month if the Termination Date falls after the 15th of
the month.
9. Assignability, Binding Nature
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs (in the case of the Executive), and as-
24
signs. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that they may be assigned or
transferred to any subsidiary of Sprint or pursuant to a merger or consolidation
in which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, but only if the assignee
or transferee becomes the successor to all or substantially all of the assets of
the Company and assumes the liabilities, obligations, and duties of the Company,
as contained in this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it will take whatever action it legally can
in order to cause the assignee or transferee to expressly assume the
liabilities, obligations, and duties of the Company hereunder. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only in connection with the Executive's estate planning
objectives or by will or operation of law.
10. Amendment
This Agreement may be amended, modified, or canceled only by mutual agreement of
the parties in writing.
11. Applicable Law
The provisions of this Agreement shall be construed in accordance with the
internal laws of the State of Kansas, without regard to the conflict of law
provisions of any state.
12. Tax Withholding
All payments made pursuant to this Agreement shall be subject to applicable
federal and state income and to other withholding taxes.
13. Severability
The parties intend the various provisions of this Agreement to be severable and
to constitute independent and distinct binding obligations. If any provision of
this Agreement is determined to be invalid, illegal, or incapable of being
enforced, in whole or in part, it shall not affect or impair the validity of any
other provision or part of this Agreement, and the provision or part shall be
deemed modified to the minimum extent required to permit enforcement. Upon such
a determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the court or arbitrator, as applicable, shall have
the authority to so modify the provision or term. If the provision or term is
not modified by the court or arbitrator, the parties must negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
provisions of this Agreement are preserved to the greatest extent possible.
14. Waiver of Breach
25
No waiver by any party hereto of a breach of any provision of this Agreement by
any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a
waiver of any subsequent breach by the other party of any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time. The
failure of either party to take any action by reason of such breach will not
deprive the party of the right to take action at any time while the breach
continues.
15. Notices
Notices and all other communications provided for in this Agreement shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid, or prepaid overnight courier to
the parties at the addresses set forth below or at such other addresses as shall
be specified by the parties by like notice:
If to Executive: If to Company:
Xxx Xxxxx Sprint Corporation
2927 Verona Attn: General Counsel
Xxxxxxx Xxxxx, XX 00000 0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
or to the latest address furnished by Executive to Company for purposes of
general communications.
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, but any notice of change of address shall be
effective only upon receipt. Such notices, demands, claims and other
communications shall be deemed given in the case of delivery by overnight
service with guaranteed next day delivery, the next day or the day designated
for delivery; or in the case of certified or registered U.S. mail, five days
after deposit in the U.S. mail, but in no event will any such communications be
deemed to be given later than the date they are actually received.
16. Survivorship
Upon the expiration or other termination of this Agreement, the respective
rights and obligations of the parties shall survive the expiration or other
termination to the extent necessary to carry out the intentions of the parties
under this Agreement. In particular, without limiting the generality of the
preceding sentence, any obligation of the Company to make payments or provide
services under Section 4 shall continue beyond the end of the Employment Term
and the obligations and covenants of Executive set forth in Section 3 shall
continue beyond the Employment Term.
17. Entire Agreement
Except as otherwise noted herein, this Agreement constitutes the entire
agreement between the parties concerning the subject matter specifically
addressed
26
herein and, except for the terms and provisions of any other employee benefit or
other compensation plans (or any agreements or awards thereunder) referred to
herein or contemplated hereby, this Agreement supersedes
(i) all prior and contemporaneous oral agreements, if any, between the parties
relating to the subject matter specifically addressed herein; and
(ii) the Severance Agreement, except as set forth in Section 2.02 with respect
to the Prior Awards.
18. Headings
The headings in this Agreement are for convenience of reference only and will
not affect the construction of any of its provisions.
19. Counterparts
This Agreement may be executed in separate counterparts, each of which is deemed
to be an original and all of which taken together constitute one and the same
agreement.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed as of the date set forth above.
Sprint Corporation
by: /s/ Xxx Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Vice President,
Corporate Secretary, and
Associate General Counsel
Sprint/United Management Company
by: /s/ Xxx Xxxxxx
-----------------------------------
I. Xxxxxxxx Xxxxxx, Senior Vice
President--Human Resources
/s/ Xxx X. Xxxxx
--------------------------------------
Xxx Xxxxx, "Executive"
27
