Exhibit 10(a)
AMENDMENT NO. 1 TO
SPECIAL COMPENSATION AND NON-COMPETE AGREEMENT
THIS AMENDMENT is entered into as of the 14th day of May, 2001 (the "New Grant
Date"), by and between SPRINT CORPORATION, a Kansas corporation ("Sprint,"
and it, together with its Subsidiaries, the "Employer"), and ▇▇▇ ▇▇▇▇▇
("Employee").
Recitals
1. Employer and Employee entered into a Special Compensation and
Non-Compete Agreement, dated April 13, 1998 (the "Agreement" and as
amended hereby, the "Amended Agreement").
2. Employer has agreed to the grant of additional shares of restricted
stock or stock options as set forth herein as further consideration
to Employee for entering into the Agreement and this Amendment.
3. Employer and Employee agree to amend the Agreement in certain respects
as set forth in this Amendment.
Capitalized terms are defined in the Amended Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by the parties, the parties
hereby agree as follows:
1. Amendment to Agreement
1.01. Definition of Competitive Employment
Employer and Employee hereby agree to the following definition of
"Competitive Employment" to govern the Amended Agreement.
"Competitive Employment" means the performance of duties or responsibilities,
or the supervision of individuals performing such duties or responsibilities,
for a Competitor of Employer
(i) (A) that are of a similar nature or employ similar professional or
technical skills (for example, executive, managerial, marketing,
engineering, legal, etc.) to those employed by Employee in his
performance of services for Employer at any time during the two years
before the Severance Date, and
(B) that relate to products or services that are competitive with
Employer's products or services with respect to which Employee
performed services for Employer at any time during the two years
before the Severance Date,
or
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(ii) in the performance of which Proprietary Information to which Employee had
access at any time during the two-year period before the Severance Date
could be of substantial economic value to the Competitor of Employer.
1.02. Definition of Competitor of Employer.
Employer and Employee hereby agree to the following definition of
"Competitor of Employer" to govern the Amended Agreement.
Because of the highly competitive, evolving nature of Employer's industry,
the identities of companies in competition with Employer are likely to change
over time. The following tests, while not exclusive indications of what
employment may be competitive, are designed to assist the parties and any
court in evaluating whether particular employment is prohibited under this
Amended Agreement. A Sprint Affiliate shall not be a Competitor of Employer.
"Competitor of Employer" means any one or more of the following:
(i) any Person doing business in the United States or any of its Divisions
employing Employee if the Person or its Division receives at least 15% of
its gross operating revenues from providing communications services of any
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
Employee if the Person or its Division receives at least 15% of its gross
operating revenue from a line of business in which Employer receives at
least 3% of its gross operating revenues;
(iii) any Person doing business in the United States, or its Division employing
Employee, operating for less than 5 years a line of business from which
Employer derives at least 3% of its gross operating revenues,
notwithstanding such Person's or Division's lack of substantial revenues
in such line of business; or
(iv) any Person doing business in the United States, or its Division employing
Employee, if the Person or its Division receives at least 15% of its gross
operating revenue from a line of business in which Employer has operated
for less than 5 years, notwithstanding Employer's lack of substantial
revenues in such line of business.
For purposes of the foregoing, gross operating revenues of Employer and such
other Person shall be those of the Employer or such Person, together with their
Consolidated Affiliates, but those of any Division employing or proposing to
employ Employee shall be on a stand-alone basis, all measured by the most
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recent available financial information of both Employer and such other Person or
Division at the time Employee accepts, or proposes to accept, employment with
or to otherwise perform services for such Person. If financial information is
not publicly available or is inadequate for purposes of applying this
definition, the burden shall be on the Employee to demonstrate that such
Person is not a Competitor of Employer.
1.03. Definition of Change in Control
Employer and Employee hereby agree to the following definition of "Change in
Control" to govern the Amended Agreement.
"Change in Control" means the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person" or "group" (as
those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder, including, without limitation, Rule 13d-5(b)) of "beneficial
ownership" (as determined pursuant to Rule 13d-3 under the Exchange Act)
of securities entitled to vote generally in the election of directors
("voting securities") of Sprint that represent 30% or more of the combined
voting power of Sprint's then outstanding voting securities, other than
(A) an acquisition by a trustee or other fiduciary holding securities
under any employee benefit plan (or related trust) sponsored or
maintained by Sprint or any person controlled by Sprint or by any
employee benefit plan (or related trust) sponsored or maintained by
Sprint or any person controlled by Sprint, or
(B) an acquisition of voting securities by Sprint or a corporation owned,
directly or indirectly, by the stockholders of Sprint in
substantially the same proportions as their ownership of the stock of
Sprint, or
(C) an acquisition of voting securities pursuant to a transaction
described in clause (iii) below that would not be a Change in Control
under clause (iii);
(ii) a change in the composition of the Board that causes less than a majority
of the directors of Sprint to be directors that meet one or more of
the following descriptions:
(A) a director who has been a director of Sprint for a continuous period
of at least 24 months, or
(B) a director whose election or nomination as director was approved
by a vote of at least 2/3's of the then directors described in
clauses (ii)(A), (B), or (C) by prior nomination or election, but
excluding, for the purpose of this subclause (B), any director whose
initial assumption of office occurred as a result of an actual or
threatened (y) election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on be-half of a person or group other
than the Board or (z) tender offer,
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merger, sale of substantially all of Sprint's assets, consolidation,
reorganization, or business combination that would be a Change in
Control under clause (iii) on consummation thereof, or
(C) who were serving on the Board as a result of the consummation of a
transaction described in clause (iii) that would not be a Change in
Control under clause (iii);
(iii) the consummation by Sprint (whether directly involving Sprint or
indirectly involving Sprint through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of Sprint's
assets or (z) the acquisition of assets or stock of another entity, in
each case, other than in a transaction
(A) that results in Sprint's voting securities outstanding immediately
before the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of Sprint or
the person that, as a result of the transaction, controls, directly
or indirectly, Sprint or owns, directly or indirectly, all or
substantially all of Sprint's assets or otherwise succeeds to the
business of Sprint (Sprint or such person, the "Successor Entity"))
directly or indirectly, at least 50% of the combined voting power of
the Successor Entity's outstanding voting securities immediately
after the transaction, and
(B) after which more than 50% of the members of the board of directors of
the Successor Entity were members of the Board at the time of the
Board's approval of the agreement providing for the transaction or
other action of the Board approving the transaction (or whose
election or nomination was approved by a vote of at least 2/3's of
the members who were members of the Board at that time), and
(C) after which no person or group beneficially owns voting securities
representing 30% or more of the combined voting power of the
Successor Entity; provided, however, no person or group shall be
treated for purposes of this clause (C) as beneficially owning 30% or
more of combined voting power of the Successor Entity solely as a
result of the voting power held in Sprint prior to the consummation
of the transaction; or
(iv) a liquidation or dissolution of Sprint.
For purposes of clarification, (x) a change in the voting power of Sprint voting
securities based on the relative trading values of Sprint's then outstanding
securities as determined pursuant to Sprint's Articles of Incorporation or (y)
an acquisition of Sprint securities by Sprint that, in either case, by
itself (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
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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.
1.04. Definition of Division
Employer and Employee hereby agree to the following definition of
"Division" to govern the Amended Agreement.
"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.
1.05. Use of Restricted Stock
The first sentence of Section 3.01(a) of the Agreement is amended to read as
follows:
Employee may not sell, transfer, assign, pledge, or otherwise encumber
or dispose of shares of restricted stock or use those shares in payment
of the exercise price of stock options until the restrictions on the
shares lapse.
1.06. Notices
Employee's and Employer's addresses for purposes of Notice under Section
7.06 of the Agreement are changed to the following:
If to Employee: If to Employer:
▇▇▇ ▇▇▇▇▇ Sprint Corporation
2927 Verona Attn: Corporate Secretary
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number as any party may designate by
written notice in accordance with the Amended Agreement, or with respect to
Employee, such address as Employee may provide Employer for purposes of
its human resources database.
2. Alternative Stock-Based Awards
As partial consideration for Employee's agreements hereunder, Employee
shall be granted one of the two Stock-Based Awards, at the election of
Employee, on the terms set forth in this section. Employee must
indicate which of the two forms of compensation he elects to receive
by checking the corresponding box above his signature line at the bottom of
this Agreement. If Employee signs this
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Agreement but checks neither box or both boxes, Employee shall be considered to
have elected to receive restricted stock.
2.01. Alternative Award of Restricted Stock
If Employee elects to receive Restricted Stock, this Section 2.01 shall be
considered a part of this Agreement, otherwise it shall not be considered a part
of this Agreement.
Employer hereby grants to Employee, as of the New Grant Date an award of (a)
10,200 shares of restricted stock of Sprint's FON Common Stock, Series 1,
and (b) 6,000 shares of restricted stock of Sprint's PCS Common Stock, Series
1, under Sprint's 1990 Restricted Stock Plan, the terms of which, to the
extent not in conflict with this Agreement, are hereby incorporated into
this Agreement by this reference.
Notwithstanding the terms of the 1990 Restricted Stock Plan, the definition of
a Change in Control set forth in this Agreement shall apply for all purposes.
(a) Lapse of Restrictions
Employee may not sell, transfer, assign, pledge, or otherwise encumber
or dispose of shares of restricted stock or use those shares in payment
of the exercise price of stock options until the restrictions on the
shares lapse. Restrictions on the shares covered by this award shall
lapse, with respect to 25% of the total shares granted, on each of
the first four anniversary dates of the New Grant Date.
(b) Rights as Stockholder and Issuance of Shares
Except as set forth in the 1990 Restricted Stock Plan, Employee shall have
all rights of a stockholder with respect to the shares of restricted
stock, including the right to vote the shares of stock and the right to
dividends on the shares. The shares of restricted stock shall be registered
in the name of the Employee and the certificates evidencing the shares
shall, at Employer's sole election, either (i) bear an appropriate
legend referring to the terms, conditions, and restrictions applicable
to the award or (ii) be held in escrow by the Company. Within 60 days of
the New Grant Date of this Agreement, the Employee shall execute a
stock power or powers assigning the shares of restricted stock to
Sprint, and Sprint shall hold the stock power and the certificate in
escrow and may use the stock power to effect forfeiture of the
restricted stock to the extent the shares are forfeited under the terms
of this Agreement. Sprint shall cause the certificate evidencing
unrestricted shares of common stock to be issued to the Employee as soon
as practicable after the restrictions lapse on the restricted shares.
2.02. Alternative Award of Stock Options
If Employee elects to receive Stock Options, this Section 2.02 shall be
considered a part of this Agreement, otherwise it shall not be considered a part
of this Agreement.
Sprint hereby grants to Employee, under Sprint's 1990 Stock Option Plan, as of
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the New Grant Date (a) an option to purchase 21,500 shares of Sprint's FON
Stock, Series 1 and (b) an option to purchase 14,300 shares of Sprint's PCS
Common Stock, Series 1, both at a strike price equal to the Fair Market Value
of one share of the respective stock on the New Grant Date. The options shall
become exercisable, with respect to 25% of the total shares granted, on each
of the first four anniversaries of the New Grant Date. The options shall
expire on the 10th anniversary of the New Grant Date. The terms of the 1990
Stock Option Plan, to the extent not in conflict with the terms of this
Agreement, are hereby incorporated into this Agreement by reference.
Notwithstanding the terms of the 1990 Stock Option Plan, the definition of a
Change in Control set forth in this Agreement shall apply for all purposes.
2.03. Provisions Applicable to Awards of both Restricted Stock and Stock
Options.
(a) Acceleration of Stock-Based Awards.
(1) Conditions to Acceleration.
The restrictions on all shares of restricted stock that have not
otherwise lapsed shall lapse or the stock options shall become
immediately exercisable, as the case may be, if Employee is not
in breach of this Agreement and
(i) Employer terminates Employee's employment with Employer for any
reason other than Termination for Cause or
(ii) Employee terminates his employment with Employer by reason of
Employee's Constructive Discharge or
(iii) Employee ceases to be employed by Employer because of a sale,
merger, divestiture, or other transaction entered into by
Employer.
For purposes of the Stock-Based Awards, the definition of Change in
Control set forth in this Agreement shall control, notwithstanding
terms of the 1990 Restricted Stock Plan or the 1990 Stock Option Plan.
(2) No Acceleration on Transfer of Employment to Affiliates.
In no event shall the restrictions lapse on restricted stock nor the
exercisability of stock options be accelerated as provided in
the prior section upon Employee's ceasing employment with Employer
to commence employment with an Affiliate of Sprint.
(3) Section 280G Limits on Acceleration.
If the acceleration of the vesting of restricted stock or the
exercisability of the stock option award hereunder, together with all
other payments or benefits contingent on a change in control within
the meaning of Internal Revenue Code Section 280G or any successor
pro-vision ("280G"), results in any portion of such payments or
benefits to the Employee not being deductible by the Employer or its
successor
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as a result of the application of 280G, the Employee's benefits
shall be reduced until the entire amount of the benefits is
deductible. The reduction shall be effected by the exclusion of
grants of options, restricted stock, or other benefits not
deductible by Sprint under 280G in reverse chronological order of
grant date from the application of this or other acceleration
provision, until no portion of such benefits is rendered non-
deductible by application of Code Section 280G.
(b) Forfeiture of Stock-Based Award on Transfer to Affiliates and on
Termination of Employment in Certain Circumstances.
Employee shall not be entitled to sell or continue to own any unvested
shares of restricted stock or exercise or continue to own any
unexercisable stock options, as the case may be, if before such
restricted shares vest or before such stock options become exercisable
(i) Employee ceases employment with Employer and begins employment with
an Affiliate of Employer,
(ii) Employer terminates Employee's employment with Employer for any
reason constituting Termination for Cause, or
(iii) Employee terminates his employment with Employer for any reason other
than Employee's Constructive Discharge.
(c) Tax Withholding
Employer may withhold the amount of any tax attributable to any amount
payable or shares issuable under this Agreement.
3. Ratification of Agreement
In all other respects, the parties confirm and ratify the terms of the
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Amendment
to be duly executed and effective as of May 14, 2001.
SPRINT CORPORATION
by: /s/ I. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
I. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice
President-Human Resources
/s/ ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, Employee