Exhibit 99(b)
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement"), dated as of May 12, 2003, 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 WILLIAM T. ESREY (the "Executive"). Certain capitalized
terms used herein are defined in Section 8 of this Agreement.
Recitals
WHEREAS, the Company and Executive have previously entered into an
Employment Agreement dated as of February 26, 2001 (the "Prior Agreement");
WHEREAS, Executive has served as the Chief Executive Officer of Sprint
until March 19, 2003, and has been serving as the Chairman of its Board of
Directors (the "Board");
WHEREAS, the Company and Executive have agreed as hereinafter set forth
with respect to the resignation of Executive's employment with the Company and
from the Board;
WHEREAS, the Company desires to retain the benefit of Executive's knowledge
of the Company's business and industry and to retain Executive to provide
consulting services to the Company's Chief Executive Officer following the
Effective Date by establishing the arrangement set forth in this Agreement;
WHEREAS, in furtherance of the foregoing, the Company and Executive have
determined that this Agreement shall supersede and replace the Prior Agreement
in all respects;
WHEREAS, the Company and Executive have agreed as set forth herein with
respect to his compensation in connection with his resignations;
WHEREAS, in consideration for the respective benefits to be received by the
Parties under this Agreement, (i) Executive desires to release the Company from
certain current or potential liabilities, and (ii) the Company desires to
release Executive from certain current or potential liabilities, all as set
forth herein:
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 are mutually acknowledged by the parties, the
parties hereby agree as follows:
1. RESIGNATIONS
Executive confirms his resignation as an officer of the Company and as a
member of the Board, in each case effective as of the date first set forth
above. Executive hereby resigns as an employee of the Company effective May 31,
2003 (the "Effective Date"). Notwithstanding such resignations, as of the
Effective Date and subject to review by the Board in its sole discretion,
Executive will occupy the position of Chairman Emeritus of the Company.
Executive agrees to execute all documents that are reasonably necessary to
implement the resignations required under this Section 1, provided that all such
documents are consistent with the terms and conditions of this Agreement and do
not impose any greater duties or obligations on Executive than those
contemplated by this Agreement.
2. SEPARATION BENEFITS AND CONSULTING SERVICES
In consideration of Executive's agreements hereunder, the Company agrees to
make the payments and provide the compensation and benefits set forth in this
Section 2 (the "Separation Benefits"). Except as expressly provided herein, the
Separation Benefits supersede and replace any and all benefits to which
Executive might otherwise be or become entitled to under the Company's
compensation and employee benefit plans (including severance plans and
arrangements) and the Prior Agreement, other than benefit plans subject to
Section 401(a) of the Code. Executive's rights with respect to any compensation
previously deferred by him under Sprint's Executive Deferred Compensation Plan
shall be governed by the terms and conditions of that plan and neither
Executive's termination of employment nor anything provided in this Agreement
shall cause a forfeiture of Executive's rights to such deferred compensation.
(a) Accrued Obligations. Within ten business days after the Effective Date,
the Company will pay Executive's accrued and unpaid base salary and accrued and
unused vacation days, all through the Effective Date (subject to applicable
withholdings). In addition, in accordance with the Company's policies and
procedures, the Company shall promptly reimburse Executive for eligible business
expenses incurred by him on or before the Effective Date.
(b) Compensation Continuation; Pro-Rata Bonus.
(i) The Company will pay Executive (or to his estate following his
death) during the eighteen month period commencing on the Effective Date
(the "Payment Period") compensation continuation payable in eighteen equal
monthly installments of $270,833 each, the first installment to be paid
June 30, 2003, and the last installment to be paid on November 30, 2004
("Continuation Benefits").
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(ii) Executive shall be entitled to a payment in lieu of a bonus for
2003 under the Short-Term Incentive Plan of $895,833, payable in a lump sum
at the time bonuses for 2003 are otherwise payable under the Short-Term
Incentive Plan.
(c) Long-Term Incentive Plan. Executive shall not be entitled to any
benefits under the Long-Term Incentive Plan except as provided in Section 2(d).
(d) Stock Options. The Options granted to Executive pursuant to Section
2(b) of the Prior Agreement shall become immediately exercisable on the
Effective Date. All other Options held by Executive on the Effective Date shall
continue to vest during the Payment Period. Subject to the provisions of this
Section 2(d), all Options shall be governed following the Effective Date by the
terms thereof and the applicable plan pursuant to which such Options were
granted. For purposes of vesting and post-employment exercise of options,
Executive shall be treated as having terminated employment with the Company on
the last day of the Payment Period by reason of Normal Retirement under the
Option Plans.
(e) Retirement Benefits.
(i) Executive shall be eligible for a benefit payable under the
Retirement Plan. Executive's benefit under the Retirement Plan shall be
based on Executive's period of employment through the Effective Date and
assuming for this purpose that (1) Executive's employment continued through
the Payment Period and, therefore, Executive had 18 months additional age
and service credit, (2) all accrued benefits under the Retirement Plan are
fully vested, and (3) Executive's Continuation Benefits and Short-Term
Incentive Plan benefit payable under Section 2(b)(ii) constitute
compensation taken into account under the Retirement Plan.
(ii) In lieu of Executive's right to receive certain benefits under
the Prior Agreement, the amount of each annual benefit payment, payable as
a single life annuity, shall be increased by $700,000.
(iii) Executive may elect to begin payment of the Retirement Plan
Benefit beginning as of the first day of the month coincident with or next
following the Effective Date, without reduction for early commencement.
(iv) The normal form of the Retirement Plan Benefit shall be a single
life annuity; provided, however, that Executive may elect to receive his
entire Retirement Plan Benefit (the sum of the benefits described in
Sections 2(e)(i) and 2(e)(ii) above) in any one of the annuity forms of
benefit available under the Company's tax- qualified defined benefit plan,
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as elected by Executive pursuant to procedures established by the Company.
(v) The determination of Executive's benefit under the Retirement Plan
shall be performed by the Company's pension actuary, and the calculation
shall be binding on the parties hereto. For purposes of converting annuity
payments from one form to another actuarially equivalent form, actuarial
equivalence will be determined using the actuarial assumptions used in the
Company's tax- qualified defined benefit pension plan for such purpose.
(f) Key Management Benefit Plan. For all purposes under the KMBP Executive
shall be deemed to have terminated employment at the end of the Payment Period
and will be eligible for retirement under the KMBP at the end of the Payment
Period.
(g) Certain Welfare Benefits. During the Payment Period, the Company shall
continue to provide to Executive on the same basis the medical, dental and life
insurance benefits, other than long term- disability and short-term disability
benefits, that Executive was receiving or was entitled to receive as of the
Effective Date; provided, however, that if Executive becomes eligible to receive
any such benefits through full time employment during the Payment Period,
Executive's entitlement to benefit continuation under this Section 2(g) shall
immediately cease, subject to Executive's rights to COBRA continuation coverage
under the Company's welfare benefit plans by paying the applicable premium
therefor.
(h) Outplacement. During the Payment Period, the Company will pay for
outplacement counseling by a firm selected by the Company for the six-month
period in the Payment Period beginning on the first anniversary of the Effective
Date in an amount not to exceed $15,000, Executive's rights to which shall cease
upon his becoming employed. Executive may elect to receive a $10,000 lump sum
payment from the Company in lieu of seeking any outplacement counseling under
this Section 2(h).
(i) Automobile Allowance. During the Payment Period the Company will
provide Executive with an automobile allowance equivalent to that Executive was
receiving or was entitled to receive on the Effective Date.
(j) Consulting Services
(i) When and as requested by the Chief Executive Officer of the
Company during the Consulting Period, the Executive will provide consulting
and advice ("Consulting Services") to the Company and will participate in
various external activities and events for the benefit of the
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Company on the terms and conditions provided in this Section 2(j). The
Executive agrees to make himself available to the Company for such
services; provided, however, that after the first anniversary of the
Effective Date such required availability shall not exceed thirty (30) days
per year. The Executive will perform Consulting Services under this Section
2(j) as an independent contractor. The Company agrees that Executive will
be considered an agent of the Company while performing Consulting Services
under this Section 2(j) for purposes of indemnification under the
Indemnification Agreement between the Executive and the Company and under
the Company's charter and by-laws and applicable insurance coverages.
(ii) The Company will pay the Executive a per diem consulting fee of
$4,400 for each day the Executive renders Consulting Services to the
Company during that portion of the Consulting Period beginning on the first
anniversary of the Effective Date. During the Consulting Period the Company
will also provide Executive access to appropriate office facilities at a
mutually agreeable site, including office and secretarial support,
communications support, two club memberships (which shall not include any
initiation fees or charges), and a "miscellaneous services" allowance as
provided in 6.0 of Sprint Executive Perquisites, E00/E07, in each case
comparable to those previously provided to Executive. In addition, during
the Consulting Period, the Company will pay for an annual physical
examination for Executive from a physician of Executive's choice in an
annual amount not to exceed $2,000, adjusted annually for any increase in
the Consumer Price Index - "All Urban Consumers, Medical Care Services."
Following the end of the Consulting Period, the Company will continue to
provide such an office and secretarial support for Executive's lifetime and
will provide to Executive such communication services comparable to those
communications services that are normally made available to retired senior
executive officers of the Company. The Company will also reimburse
Executive, upon the receipt of appropriate documentation, for reasonable
travel and living expenses that he incurs in providing Consulting Services
at the request of the Company's Chief Executive Officer or, pursuant to
Section 2(j)(iii) at the request of the Executive Steering Committee.
Subject only to Executive's compliance, to the best of his ability, with
his commitments set forth in Sections 2(j)(i) and (ii), the Company's
obligations set forth in this Section 2(j)(ii) are unconditional and
irrevocable and shall apply irrespective of the Executive's incapacitation,
before or after his retirement, to perform services hereunder. Executive
hereby renounces and waives in all respect any and all rights or
entitlements to private aircraft usage provided by or paid for by the
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Company, except when such usage is offered or provided by the Company in
its sole discretion.
(iii) During the first 12 months following the Effective Date,
Executive agrees that as part of his consulting services, he will make
himself available at the request of the Company to provide service to the
Company on its Executive Steering Committee for purposes of considering
certain transactions and ensuring compliance by the Company's CEO with
restrictions on his ability to do so, all in accordance with the Executive
Steering Committee's "Rules of Engagement." As additional consideration for
Executive's agreement and services during this 12-month period and only for
so long as Executive is able to perform consulting services in accordance
with this Section 2(j)(iii), the Company agrees to pay Executive a monthly
consulting fee of $270,833 per month, payable on the last day of each
month, with the first payment due on June 30, 2003, and the last payment
due on May 31, 2004. During this time, Executive will not be entitled to
receive the per diem fee set forth in clause 2(j)(ii) above. Should
Executive die or become disabled (as determined under the Company's long
term disability plan then applicable to senior executives of the Company)
during such 12-month period, as consideration for Executive's agreement to
provide such consulting services the Company shall pay to the Executive or
his estate, as the case may be, a lump sum amount in cash equal to the sum
of (x) the full consulting fee for the month in which such death or
disability occurs, and (y) one half of the sum of the remaining monthly
consulting fee payments that would have otherwise been payable to Executive
under this Section 2(j)(iii).
(k) Benefits to Cease upon Breach of Restrictive Covenants. In all events,
notwithstanding anything herein to the contrary, if Executive breaches any of
the Restrictive Covenants (i) Executive shall cease to have any rights to: (A)
any unpaid Continuation Benefits; (B) any unpaid benefits under Section
2(b)(ii); (C) the Options granted to Executive pursuant to Section 2(b) of the
Prior Agreement and all other Options not vested on the Effective Date shall
immediately terminate and be cancelled; and (D) any unpaid compensation and
benefits to be provided or paid to Executive, as the case may be, under Sections
2(g) (except with respect to COBRA continuation), (h), (i) and (j) hereof and
(ii) the unpaid Retirement Plan Benefit will be reduced by the incremental
Retirement Plan benefits provided to Executive pursuant Sections 2(e)(i)(1)-(3),
(ii) and (iii) hereof. In all cases, the Company's rights under Section 7(a)
shall continue.
(l) Other Provisions Regarding Payments and Benefits.
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(i) Executive shall be under no obligation to seek other employment
and, except as expressly provided herein, there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain.
(ii) If, for any period during which Executive is entitled to
continued benefits under Section 2, the Company reasonably determines that
Executive cannot participate in any Company sponsored welfare 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 increased,
on a fully tax-adjusted basis, by the amount of all income taxes incurred
by Executive and Executive's dependents as the case may be to Executive
and, if applicable, Executive's dependents through other arrangements.
(iii) Executive's rights under this Agreement shall be in lieu of any
benefits that may be otherwise payable to or on behalf of 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.
(m) The Company shall reimburse Executive for reasonable legal and other
professional fees and expenses incurred by him in connection with the
negotiation and execution of this Agreement in an aggregate amount not to exceed
$100,000.
3. RELEASE AND WAIVER OF CLAIMS.
(a) In exchange for this Agreement, Executive (on behalf of Executive and
anyone claiming through or on behalf of Executive), releases the Company and
each of the Company's subsidiaries and other Affiliates (as the term
"Affiliates" is defined by Rule 12b-2 under the Exchange Act), its and their
successors and assigns and all of their past and present employees, officers,
directors, stockholders (the "Company Group") and their agents and attorneys
from any and all claims and potential claims, whether known or unknown and
whether or not matured or contingent, demands and causes of action that
Executive has or may have had against any of them arising out of, related to or
concerning Executive's service or employment with the Company and the
termination thereof, including claims not currently known to or contemplated by
the parties, to the maximum extent permitted by law. This release includes, but
is not limited to, any and all claims, demands and causes of action which are
related to or concern: the Prior Agreement; service as a director or officer of
the Company; Executive's acquisition or ownership of Company securities or
options
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thereon; Executive's employment and the prospective termination thereof as
contemplated hereby; Tax Liabilities; attorneys' fees or costs; discrimination
under local, state or federal law; the Missouri Service Letter Statute; the Age
Discrimination in Employment Act; Title VII of the Civil Rights Act of 1964; the
Civil Rights Act of 1991; the Americans With Disabilities Act; the Employee
Retirement Income Security Act; the Family and Medical Leave Act; severance pay;
tort claims including invasion of privacy, defamation, fraud, and infliction of
emotional distress; disputed wage claims; and all other claims, demands, and
causes of action, whether they arise in the United States of America or
elsewhere, to the maximum extent permitted by law. This release does not apply
to (a) any rights or benefits as set forth in this Agreement or (b) any rights
to indemnification to which Executive is entitled under the Company's
Certificate of Incorporation, Bylaws, the Indemnification Agreement or any other
applicable insurance or agreement now in effect relating to directors',
officers' and consultant's liability or (c) any claims Executive may have
against any parties other than the Company Group related to or arising out of
any Tax Liabilities, tax planning, tax preparation or any personal financial
advice.
(b) In exchange for this Agreement, the Company (on behalf of the Company
and the Company's subsidiaries and other Affiliates, their successors and
assigns and anyone claiming through or on behalf of the Company or any of the
Company's subsidiaries or other Affiliates, their successors and assigns)
releases Executive, Executive's heirs, executors, personal representatives,
attorneys, agents, successors and assigns, from any and all claims and potential
claims, known or unknown and whether or not matured or contingent, demands and
causes of action that they have or may have had against Executive or them
arising out of, related to, or concerning Executive's service or employment with
the Company and the termination thereof, including claims, demands, and causes
of action not currently known or contemplated by the parties, in each case, to
the maximum extent permitted by law. This release includes, but is not limited
to, any and all claims, demands and causes of action that are related to or
concern: Executive's service as a director or officer of the Company;
Executive's acquisition or ownership of the Company's securities or options
thereon, the Prior Agreement; and Executive's employment and the prospective
termination thereof as contemplated herein, except that this Release does not
release Executive from Executive's obligations under this Agreement. This
release does not apply to any claim, right or cause of action that is (i)
asserted in, relates to or arises from the subject matter at issue in, the
derivative action styled Amalgamated Bank v. LeMay, et al., No. 00-CV-230077
(such subject matter, the "Issues") or (ii) related to any Tax Liabilities, all
of which claims, rights or causes of action are expressly preserved.
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4. EXECUTIVE COVENANTS
(a) Proprietary Information. Executive acknowledges that during the course
of his employment and while providing Consulting Services he has learned or
developed and will learn or develop Proprietary Information. Executive further
acknowledges that unauthorized disclosure or use of such Proprietary Information
will cause the Company irreparable harm. Except as required by the Company,
Executive shall not at any time following the date hereof directly or
indirectly, disclose, publish, communicate, or use on his behalf or another's
behalf, any Proprietary Information, and Executive shall cause each of his
employees or agents, including any employees or agents providing secretarial or
other support in connection with Executive's performance of Consulting Services,
if any, to comply with the terms of this Section 4(a) and to execute a
non-disclosure agreement satisfactory to the Company. If Executive has any
questions about whether particular information is Proprietary Information or
subject to a non-disclosure agreement, he shall consult with the Company's
General Counsel.
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 during his employment or under this
Agreement and to assign to the Company all his rights pertaining to such
information, ideas, or inventions. Knowledge or information of any kind
disclosed by 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 Executive beyond that specifically provided
in this Agreement.
(b) Non-Competition. During the Non-Compete Period, Executive shall not
engage in Competitive Employment, whether paid or unpaid and whether as a
consultant, employee, or otherwise. 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.
In the event that during the Non-Compete Period Executive wishes to engage
in any activities or enter into any relationship, whether paid or unpaid, as a
consultant, employee or otherwise, which might constitute Competitive
Employment, Executive shall be entitled to submit to the Company a written
description of such activities or relationship, as the case may be. As soon as
is reasonably commercially practicable after the Company's receipt of such
description, the Company shall advise Executive in writing as to whether or not
the Company regards such engagement or activity as constituting Competitive
Employment under this Agreement.
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(c) Inducement of Employees, Customers and Others. During the Non-Compete
Period and Consulting 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 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.
(d) No Adverse Actions. During the Non-Compete Period and Consulting
Period, 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
(i) undertake any action that would be reasonably likely to, or is intended to,
result in a change in control of the Company, or (ii) seek to control in any
material manner the Board.
(e) Return of Property. Executive shall, upon his Effective Date, return to
the Company all property of the Company in his possession not necessary to his
services during the Consulting Period, 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 Executive
during his employment, concerning or related to the Company's business, whether
containing or relating to Proprietary Information or not. 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. At the end of the Consulting Period,
Executive shall return to the Company all other property of the Company in his
possession.
(f) Mutual Nondisparagement. Executive agrees to refrain from making at any
time after the Effective Date any statements about the Company or its employees,
officers, or directors that would disparage or reflect unfavorably upon the
image or reputation of the Company or any such employee, officer, or director.
The Company agrees to refrain from making at any time after the Effective Date
any statements about Executive that would disparage or reflect unfavorably upon
the image or reputation of the Executive. Notwithstanding the foregoing, no
statement made by either party in the context of any legal proceeding including,
without limitation, any arbitration, administrative or other legal proceeding,
shall be deemed to violate the provisions of this Section 4(f).
(g) Assistance with Claims. Executive agrees that, consistent with
Executive's business and personal affairs, he will assist the Company in the
defense of any claims or potential claims that are pending or may be made or
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threatened to be made against it in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (a "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
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. After the Effective Date 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' or
consultant's fees and shall, after the first anniversary of the Effective Date,
pay for Executive's services hereunder as consulting services provided pursuant
to Section 2(j)(ii) of this Agreement.
(h) Tax Considerations. Executive acknowledges that no representations have
been made to him by the Company, its Affiliates, or other agents or legal
counsel regarding the tax implications of any payments made pursuant to this
Agreement. All liability for Executive's share of federal, state, and local
taxes (including FICA) remains with Executive, unless otherwise agreed to in
writing by the Company, and the Company shall deduct withholdings in the minimum
amount required under applicable tax laws, rules or regulations from the
consideration payable under this Agreement.
5. NO ADMISSION OF WRONGDOING.
This Agreement is not an admission of wrongdoing or liability by Executive,
the Company, or any of the individuals or entities referenced in Section 3 above
and any and all such wrongdoing or liability is expressly denied. Further,
neither the existence of this Agreement nor the terms and conditions hereof may
be deemed or construed as a conclusion that Executive has engaged in any
wrongdoing.
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.
7. ENFORCEMENT AND REMEDIES
(a) Equitable Remedies. Executive acknowledges that the Company would be
irreparably injured by a violation of Sections 4(a) through 4(g) (the
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"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 Executive from any actual or threatened
breach of any Restrictive Covenant. 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.
(b) Resolution of Disputes. Section 11 notwithstanding, all disputes,
claims, or controversies arising under or in connection with this Agreement,
other than those contemplated by Section 7(a) above, shall be settled
exclusively by binding arbitration pursuant to the Federal Arbitration Act
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
it is determined 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.
(c) 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.
"Affiliate" has the meaning accorded such term in Section 3.
"Agreement" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Applicable Federal Rate" means the applicable Federal rate within the
meaning of Section 7872 of the Code.
"Board" has the meaning accorded such term in the Recitals.
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"Code" means the Internal Revenue Code of 1986, as amended, and references
to sections of the Code include any successor provision.
"Committee" means the Compensation Committee of the Board or any successor
committee primarily responsible for executive compensation.
"Company" has the meaning accorded such term in the introductory paragraph
of this Agreement.
"Company Group" has the meaning accorded such term in Section 3.
"Competitive Employment" means the performance of duties or
responsibilities, or the supervision of individuals performing such duties or
responsibilities, for a Competitor (i) 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 Executive in his
performance of services for the Company at any time during the two years before
the Effective Date, (ii) that relate to products or services that are
competitive with the Company's products or services with respect to which
Executive performed services for the Company at any time during the two years
before the Effective Date, or (iii) in the performance of which Proprietary
Information to which Executive had access at any time during the two-year period
before the Effective Date could be of substantial economic value to the
Competitor.
"Competitor" has the meaning as hereinafter set forth.
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 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,
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 Internet Protocol), or
services or capabilities ancillary to such communications services (for example,
web hosting and network security services); (ii) any Person doing business in
the United States or its Division employing 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 operating revenues;
(iii) any Person doing business in
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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.
"Consolidated Affiliate" means, with respect to any person or entity, all
affiliates 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.
"Consulting Period" means the 10 year period beginning on the Effective
Date.
"Consulting Services" has the meaning accorded such term in Section 2.
"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.
"Effective Date" has the meaning accorded such term in Section 1.
"Exchange Act" means the Securities Exchange of 1934, as amended.
"Executive" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"FON Common Stock" means the Company's FON Common Stock, Series 1, $2.00
par value per share.
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"Indemnification Agreement" means that certain Indemnification Agreement
dated April 14, 1987 between United Telecommunications, Inc., a Kansas
corporation and a predecessor of the Company, and Executive.
"Incentive Plans" means the Long-Term Incentive Plan and the Short-Term
Incentive Plan.
"Issues" has the meaning accorded such term in Section 3.
"KMBP" has the meaning accorded such term in Section 2.
"Long-Term Incentive Plan" means the Company's Long-Term Incentive Plan,
together with successor or other plans specifically approved for this purpose by
the Committee.
"Non-Compete Period" means the 36-month period beginning on the Effective
Date. If 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.
"Option Plans" means Sprint's 1990 Stock Option Plan and Sprint's
Management Incentive Stock Option Plan.
"Options" means all the options previously granted to Executive to purchase
shares of FON Common Stock or PCS Common Stock under any of Sprint's stock
option plans or programs.
"Payment Period" has the meaning accorded such term in Section 2.
"PCS Common Stock" means the Company's PCS Common Stock, Series 1, $1.00
par value per share.
"Person" means an individual, corporation, partnership, association, trust
or any other entity or organization.
"Proceeding" has the meaning accorded such term in Section 4.
"Prior Agreement" has the meaning accorded such term in the Recitals.
"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
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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 Executive as confidential by the
Company, either orally or in writing.
"Restrictive Covenants" has the meaning accorded such term in Section 7.
"Retirement Plan" means the Sprint Supplemental Executive Retirement Plan
and the Sprint Retirement Pension Plan.
"Retirement Plan Benefit" means the benefit described in Section 2(e).
"Separation Benefits" has the meaning accorded such term in Section 2.
"Short-Term Incentive Plan" means the Company's Management Incentive Plan,
together with successor or other plans specifically approved for this purpose by
the Committee.
"SPRINT" has the meaning accorded such term in the introductory paragraph
of this Agreement.
"SUMC" has the meaning accorded such term in the introductory paragraph of
this Agreement.
"Tax Liabilities" means any federal, state or local taxes, including income
and withholding taxes and interests and penalties thereon, relating to any
compensation paid or deemed paid by the Company or any of its Affiliates to
Executive.
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 Executive), and
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
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
16
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 Executive under this Agreement may be assigned or transferred by
Executive other than his rights to compensation and benefits, which may be
transferred only in connection with 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. SEVERABILITY
The various provisions of this Agreement are intended 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 such 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.
13. WAIVER OF BREACH
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
17
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.
14. 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 such other addresses
as shall be specified by the parties by like notice), with a copy of such notice
also sent via electronic mail (email):
If to the Company: 6200 Sprint Parkway
Overland Park, KS 66251
Fax: 913-523-7700
Attn: General Counsel
email: thomas.a.gerke@mail.sprint.com
Copies to: Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Fax: 212-450-4800
Attn: Lewis B. Kaden
email: kaden@dpw.com
If to Executive: William T. Esrey
1314 Spraddle Creek Road
Vail, CO 81657
email: billesrey@mail.sprint.com
(or to the latest address
furnished by Executive to
Company for purposes of
general communications).
Copies to: O'Melveny & Myers Ltd.
610 Newport Center Drive,
17th Floor
Newport Beach, CA 92660
Attn: Stephen Pepe
email: spepe@omm.com
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
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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.
15. ENTIRE AGREEMENT
Except as otherwise noted herein, this Agreement constitutes the entire
agreement between the parties concerning the subject matter specifically
addressed herein, and, except for the terms and provisions of any other employee
benefit or other compensation plans (or any agreements or awards thereunder) to
the extent referred to herein or contemplated hereby, this Agreement supersedes
all prior and contemporaneous oral agreements, if any, between the parties
relating to the subject matter specifically addressed herein including, without
limitation, the Prior Agreement and the Term Sheet dated May 12, 2003. The
Company agrees to take such actions as may be necessary or appropriate to carry
out its obligations under this Agreement.
16. HEADINGS
The headings in this Agreement are for convenience of reference only and
will not affect the construction of any of its provisions.
17. 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, to
be effective as of the date first set forth above.
/s/ W. T. Esrey SPRINT CORPORATION
- ----------------------------
WILLIAM T. ESREY
By: /s/ Gary D. Forsee
Name: Gary D. Forsee
Title: Chief Executive Officer
SPRINT/UNITED MANAGEMENT
COMPANY
By: /s/ Gary D. Forsee
Name: Gary D. Forsee
Title: Chief Executive Officer