Exhibit (10)(a)
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Contingency Employment Agreement
by and between
Sprint Corporation
(the "Company")
and
...................
("you")
Dated as of ..............
(the "Effective Date")
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1. Term of Agreement.
This Agreement shall commence on the date hereof and shall continue in effect
through the end of the day immediately preceding the third anniversary of the
Effective Date; provided, however, that commencing on the third anniversary of
the Effective Date, and each successive third anniversary thereafter, the term
of this Agreement shall automatically be extended for three additional years
unless, not later than the date of such anniversary, the Company shall have
given notice that it does not wish to extend this Agreement; provided, further,
if "a change in control of the Company" (as defined in Section 13.01) shall have
occurred during the original or extended term of this Agreement, this Agreement
shall continue in effect for a period of thirty-six (36) months beyond the month
in which such change in control occurred; provided, further, this Agreement
shall terminate on the earliest of the date you reach age 65, the date you
actually retire, or the Agreement otherwise lapses as set forth in this
paragraph. The obligations of the Company to make payments hereunder shall
survive the expiration of the term of this Agreement.
2. Duties During Employment.
You agree that while you are employed by Sprint Corporation (the "Company"), you
shall devote your full time and best efforts exclusively to the business and
affairs of the Company and do your utmost to promote its interests. All
references in this Agreement to employment with the Company shall be deemed to
include employment with Sprint/United Management Company (the "Management
Company") or any other affiliate of the Company (the "Employer Company").
Related references to the Company or Employer Company shall be deemed to include
the Management Company or other employer affiliate of the Company as the context
requires, and such interpretation shall not be construed to limit the
obligations of the Company under this Agreement. It is understood that you will
receive no benefits under this Agreement unless and until there is a change in
control of the Company and your employment is terminated thereafter (other than
by reason of your death or retirement at age 65) by you for Good Reason (as
defined in Section 13.04) or by the Company without Cause (as defined in Section
13.03).
3. Rights Accrued Through Date of Termination.
This agreement shall not reduce, impede or hinder any rights which you accrue as
a result of your performance of services as an employee of the Employer Company.
If your employment is terminated following a change in control of the Company,
the Company shall pay you your salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, plus all other
amounts and benefits to which you are entitled under the Company's disability,
retirement, insurance and all other benefit and compensation programs then in
effect in accordance with the terms of such programs. "Date of Termination"
shall mean the 30th day after Notice of Termination (as defined in Section 10)
is given.
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4. Benefit Package.
Within three years following a change in control of the Company if your
employment by the Employer Company shall be terminated (in circumstances other
than normal retirement or death) (a) by the Company other than for Cause, or (b)
by you for Good Reason, then you shall be entitled to the following payments and
benefits (all as provided in Section 13.05):
(a) 35 months' salary payments at highest monthly base salary;
(b) 3 payments based on annual short-term and long-term incentive payments;
(c) The following additional benefits:
(1) Deferred Compensation: interest rate of 3% plus Xxxxx'x Index rate
(2) Benefits under Key Management Benefit Plan
(3) Savings Plan, Nonvested Company Contribution
(d) Retirement Benefits:
(1) 3 years' service credit based on the Company Pension Plan
(2) Post-retirement benefits if you are age 55 or have 10 years' service
(3) Maximum benefits under any individual Pension Supplemental Agree-
ments
(4) No Early Retirement Reduction based on the Company Pension Plan
(e) Continuation of medical, dental, life insurance and disability coverages
for 35 months, or until you are re-employed
(f) Payment of attorney fees and expenses connected with enforcing this Agree-
ment
(g) Payment of Outplacement fees
5. Time of Payments.
5.01. Timing.
The payments provided for in Sections 13.05(a) and 13.05(b) shall be made
commencing not later than the fifth day following the Date of Termination,
provided, however, that if the amount of payments to be made on the first
payment date cannot be calculated on or before such day, the Company shall pay
to you on such day an estimate, as calculated in good faith by the Company, of
the minimum amount of such payments and shall pay the remainder of such payments
due on such date (together with interest at the rate provided in Section
280G(d)(4) of the Code) as soon as the amount thereof can be calculated but in
no event later than the sixtieth day after the Date of Termination.
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5.02. Excess Payments Constitute Loan.
In the event that any estimated payment is determined to be in excess of the
amount due, such excess shall constitute a loan by the Company to you, payable
on the 90th day after demand by the Company (together with interest at the rate
provided in Section 280G(d)(4) of the Code).
6. Lump Sum Election.
You shall have the right to elect to have all or a portion of the payments to be
made pursuant to Sections 13.05(a) and 13.05(b) paid in a lump sum. If you make
this election, the amount paid to you shall equal the present value of the
payments or portion thereof, as calculated by the Company's independent auditors
using the discount rate specified in Section 280G(d)(4) of the Code.
7. No Mitigation or Offsets.
You shall not be required to mitigate the amount of any payment by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for be reduced by any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by you to the Company, or otherwise, except as specifically provided
in this Agreement.
8. Successor Assumption of Agreement.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement as of the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms hereunder
as if you had terminated your employment for Good Reason following a change in
control of the Company, provided you give Notice of Termination within 90 days
after the effective date of such succession. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
9. Benefits to Personal Representatives.
This Agreement shall inure to the benefit of and be enforceable by your personal
or legal representatives, executors, administrators, successors, heirs,
distribu- tees, devisees and legatees. All benefits hereunder shall be subject
to your beneficiary designations in effect under the appropriate benefit plan
with reference to which you have elected to receive benefits; such designations
are incorporated by reference as if fully set forth in this Agreement. If you
should die, all amounts payable to you hereunder shall be paid in accordance
with the terms
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of this Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate.
10. Notice.
Any purported termination of this Agreement or of your employment by the
Employer Company or by you shall be communicated by written Notice of
Termination to the other party hereto. "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated.
Notices and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Company shall be directed to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
11. Resolution of Controversies.
You shall be entitled to seek specific performance of your right to be paid to
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement. All other disputes, claims
or controversies arising under or in connection with this Agreement shall be
settled exclusively by binding arbitration in the greater Kansas City area in
accordance with the rules of the American Arbitration Association then in
effect; provided, however, that three arbitrators shall be appointed, one by the
Company, one by you and the third of whom shall be appointed by the first two
arbitrators.
12. Miscellaneous.
12.01. Written Modification.
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing.
12.02. Waivers.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or in compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
12.03. No Prior Representations.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
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12.04. Governing Law.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Kansas.
12.05. Successor Laws and Plans.
All references to sections of the Securities Exchange Act of 1934 ("Exchange
Act") or the Internal Revenue Code ("Code") shall be deemed also to refer to any
successor provisions to such sections. All references to provisions of the
Company's Pension Plan and all other Company benefit plans shall be deemed also
to refer to amended provisions of such plans and to provisions of successor or
substitute plans.
12.06. Payments Net of Withholding.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law.
12.07. Captions.
Captions are intended for reference only and shall not constitute a part of this
Agreement.
12.08. Partial Invalidity.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
12.09. Counterparts.
This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
12.10. Further Undertaking.
The Company shall take every reasonable step necessary to maximize the payments
and benefits received or to be received by you in connection with a change in
control of the Company (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, with any person whose
actions result in a change in control or with any person affiliated with the
Company or such person) (collectively "Total Payments").
13. Definitions and Detailed Provisions.
13.01. Change in Control of the Company.
For purposes of this Agreement, a "change in control of the Company" means a
"Change in Control" as defined at the time of any such event by the Company's
1990 Stock Option Plans or any successor plan thereto. If no such plan is at
anytime in effect, the definition as set forth in the last such plan to be in
effect shall control this Agreement.
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13.02. Retirement.
Termination of your employment based on "Retirement" shall mean termination in
accordance with the Company's Pension Plan or in accordance with any retirement
arrangement established with your written consent with respect to you.
13.03. Cause.
Termination by the Employer Company of your employment for "Cause"
shall
mean termination upon
(i) the willful and continued failure by you to substantially
perform your duties with the Employer Company (other than any such
failure resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a Notice
of Termination by you for Good Reason) after a written demand for
substantial performance is delivered to you, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, or
(ii) the willful engaging by you in conduct which is demonstrably and mate-
rially injurious to the Company, monetarily or otherwise.
For purposes of this Subsection, no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-fourths of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice to you
and an opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of
conduct set forth above in the first sentence of this subsection and specifying
the particulars thereof in detail. Delivery of such Resolution shall constitute
Notice of Termination for cause by the Company.
13.04. Good Reason.
You shall be entitled to terminate your employment for Good Reason, except that
you shall not be entitled to give Notice of Termination during any period in
which you are unable to substantially perform your duties with the Employer
Company due to physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the occurrence of any
of the following circumstances unless such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:
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(i) the assignment to you of any duties inconsistent with your
status as an officer of the Company or a substantial adverse
alteration in the nature or status of your responsibilities
from those in effect immediately prior to the change in control
of the Company or any downgrading of your position from that in
effect immediately prior to the change in control of the Company;
(ii) a reduction by the Company in your annual base salary as in effect on
the date hereof 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 or Employer Company, without your consent,
to pay to you any portion of your current compensation within
seven (7) days of the date such compensation 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;
(iv) the relocation of the Company's principal executive offices to a
location outside the metropolitan area in which such offices are
located immediately prior to the change in control of the Company; or
(v) the Company's requiring you to be based anywhere other than the Com-
pany's principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
your present business travel obligations; or
(vi) the Company's requiring you to travel to an extent substantially
inconsistent with your present business travel obligations;
(vii) a substantial adverse alteration in the physical conditions under or in
which you are expected to perform your duties other than an
alteration similarly affecting all officers of the Company and all
officers of any person in control of the Company;
(viii) the failure by the Company to continue in effect any compensation plan
in which you participate immediately prior to the change in
control of the Company which is material to your total compensation,
including but not limited to the Company's Short-term and Long-term
Incentive Plans or any substitute plans adopted prior to the change in
control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue your
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 your participation relative to other
participants, as existed at the time of the change in control;
(ix) the failure by the Company to continue to provide you with benefits sub-
stantially similar to those enjoyed by you under any of the
Company's
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plans, including but not limited to the Company's Pension Plan,
Stock Option Plan, Savings Plan, Supplemental Employee Retirement
Agreement, Key Management Benefit Plan, Executive Deferred Compensation
Plan, life insurance, medical, health and accident, or disability
plans in which you were participating at the time of the change in
control of the Company; the taking of any action by the Company which
would directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the time of
the change in control of the Company; or the failure by the Company to
provide you with the number of paid vacation days to which you are
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 of the Company; unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such benefits;
(x) the failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated
in Section 8 hereof; or
(xi) any attempted termination of your employment which is not effected pur-
suant to a Notice of Termination satisfying the requirements of Sections
10 and 13.03 above; for purposes of this Agreement, no such attempted
termination shall be effective.
13.05. Benefit Package.
(a) Payments in Lieu of Salary.
In lieu of any further salary payments to you for periods subsequent to
the Date of Termination, the Company shall pay to you monthly (for a
period of 35 months or until the month in which you reach 65
years of age, whichever first occurs) a monthly payment equal to your
highest monthly base salary (including any deferred amounts) paid during
the 36-month period prior to the Date of Termination.
(b) Payments in Lieu of Incentive Compensation.
In lieu of any payments under, and notwithstanding any provisions of the
long-term and short-term incentive plans, the Company shall pay
to you in three equal installments on the first day of
the 13th, 25th and 35th months following the Date of Termination an
amount equal to the sum of (i) the highest short-term incentive payment
and (ii) the highest long-term incentive payment received by you during
the 36-month period prior to the Date of Termination under the long-term
and short-term incentive plans.
(c) Savings, Deferred Compensation and Other Plans.
(1) Deferred Compensation Interest Rate For purposes of the Executive.
Deferred Compensation Plan, notwithstanding any provision to
the contrary in such plan, the rate at which interest will be
credited to your
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Deferred Compensation Account AA (as defined in such plan) will be
equal to the Xxxxx'x Index plus 3% (as defined in such plan) or the
maximum interest rate allowed under such Plan if and as amended.
(2) Key Management Benefit Plan Benefits.
For purposes of the Key Management Benefit Plan, even if you are
not 60 years of age on the Date of Termination, you shall
be deemed to have remained a Key Executive (as defined in such
plan) until age 60.
(3) Savings Plan, Nonvested Company Contribution.
Notwithstanding anything in the Company Savings Plan, you shall be
entitled to receive the nonvested portion of your Company Contribu-
tion Account as of the Date of Termination.
(d) Retirement Benefits.
In addition to the retirement benefits to which you are entitled under
the Company's Pension Plan or any successor plans thereto:
(i) you will be credited with three years of additional service
at your highest annual compensation rate during the term of
this Agreement for purposes of determining the amount of your
pension;
(ii) if you are at least 55 years of age or have 10 years of credited
pension service at the Date of Termination, you will, at
the time of your retirement, receive the life and medical post-
retirement benefits that would be due to a retiree under the
Company's Pension Plan;
(iii) for purposes of any Supplemental Employee Retirement Agreement,
if applicable, you shall be credited as of the Date of Termination
with the maximum number of years of service at your highest annual
compensation rate during the term of this Agreement potentially
available to you under such agreement; and
(iv) if you take early retirement, the Company shall supplement your
pension so that you are, notwithstanding the Company's
Pension Plan early retirement provisions, not subject to any
early retirement pension reduction.
(e) Medical, Dental, Insurance, Disability Insurance.
For a thirty-five (35) month period after Termination, the Company shall
arrange to provide you with or reimburse you for life,
disability, medical and dental insurance coverages substantially similar
and at the same cost to you as those which active employees at the same
grade level receive during such period, provided, however, such
coverages shall cease immediately if you obtain subsequent employment.
(f) Attorney Fees and Expenses.
The Company also shall pay to you all reasonable legal fees and expenses
incurred by you in seeking to obtain or enforce any right or benefit
provided by this Agreement. Such payments shall be made
within five (5) days
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after your request for payment accompanied with such evidence of fees and
expenses incurred as the Company reasonably may require.
(g) Outplacement Fees.
The Company shall also pay to you all fees and expenses incurred by you
for the services of a recognized outplacement firm of your selection.
Such payments shall be made within five (5) days after
your request for payment accompanied with such evidence of fees and
expenses incurred as the Company reasonably may require.
(h) Tax Reimbursement.
If the benefits provided under this Agreement, either alone or together
with other benefits you receive from the Company, would constitute an
"excess parachute payment," as defined in Section 280G of the Code,
the Company shall pay you an additional amount such that the net amount
retained by you after payment of any excise tax that would be imposed
by Section 4999 of the Code (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 subsection 13.05(h), shall be equal to
the benefits provided for under this Agreement. For the purpose of
determining the amount of the payment provided for in this subsection,
you shall be deemed to pay federal, state and local income taxes
at the highest marginal rates in effect as of the Date of
Termination and the calculation of federal income tax shall take
into account the deduction of any state and local income taxes.
In Witness Whereof, you and the Company have executed this Agreement as
of April 20, 1999.
Sprint Corporation
by: . . . . . . . . . . . . . . .
, Vice President
and Secretary
. . . . . . . . . . . . . .
Executive
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