Employment Agreement (174K)
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of February 26, 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 WILLIAM T. ESREY (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 as Chairman and Chief Executive Officer of
Sprint until the time of his retirement, 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 Company and the Executive have previously entered into a Contingency
Employment Agreement, dated as of June 5, 1986, and amended as of January
1, 1990, and February 18, 1995 (the "Contingency Employment Agreement").
3. The Company and the Executive have previously entered into an Agreement
Regarding Special Compensation and Post-Employment Restrictive Covenants,
dated as of August 8, 1994 (the "Severance Agreement").
4. The Company and the Executive have previously entered into a Restated
Memorandum Agreement, dated January 17, 1987 (the "Memorandum Agreement"),
providing Executive a 15-year mid-career pension enhancement.
5. The Company and the Executive have previously entered into an Employment
and Post-Retirement Consulting Agreement, dated as of August 7, 2000 (the
"Consulting Agreement," and together with the Contingency Employment
Agreement, the Severance Agreement, and the Memorandum Agreement, the
"Prior Agreements").
6. The Executive has been, and now is serving as the Chief Executive Officer
of Sprint and the Chairman of its Board of Directors (the "Board").
7. The Company desires to secure the continued long-term employment of the
Executive and the Executive's services as a consultant to the Company
following the termination of his employment.
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8. In furtherance of the foregoing, the Company and the Executive desire to
amend, combine, and restate the Prior Agreements in the form of this
Agreement.
9. Certain capitalized terms used herein are defined in Section 10 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 are mutually acknowledged by the parties, the
parties hereby agree as follows:
1. Employment and Termination
(a) Conditions of Employment
Subject to the terms of this Agreement, the Company hereby agrees to employ
the Executive as the Chief Executive Officer of Sprint and, provided that the
Executive continues to be so nominated and elected, the Executive shall also
serve as Chairman of the Sprint Board, in each case 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.
(b) 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 its Chairman and Chief Executive Officer and
that he shall perform his duties faithfully and efficiently subject to the
directions of 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 such 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.
(c) 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 earlier of (i)
May 1, 2005, or (ii) the date of the Company's first annual shareholders meeting
following the Executive's 65th birthday (the earlier of (i) and (ii), the "End
Date").
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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, the terms of certain restrictive covenants by the Executive
during and after the Employment Term, and the terms of certain services to be
provided by Executive if he terminates his employment after the second
anniversary of the Effective Date or if his employment terminates under certain
other circumstances described herein. 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.
(d) 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 37 below indicating the specific termination provision in this
Agreement relied upon and setting forth in reasonable detail 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 copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board, excluding Executive, at a meeting of the Board (after
reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, the Executive is guilty of conduct constituting
Cause and specifying the particulars thereof in detail. The subject of
Executive's termination for Cause must be included in the agenda in the notice
of the meeting sent to members of the Board. Delivery of the resolution
constitutes notice of termination for Cause by the Company.
(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 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 portions of the definition of Good Reason set forth in Section 30
of this Agreement.
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(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 portions of the definition of
Constructive Discharge set forth in Section 30 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.
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