EX-10.1 2 dex101.htm EXHIBIT 10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on December 31, 2008 and amends and restates the Employment Agreement (the “Original Employment Agreement”), originally entered into as of December 17, 2007 (the “Effective Date”), by and between Sprint Nextel Corporation, a Kansas corporation (the “Company”) on behalf of itself and any of its subsidiaries, affiliates and related entities, and Daniel R. Hesse (the “Executive”) (the Company and the Executive, collectively, the “Parties,” and each, a “Party”). Certain capitalized terms are defined in Section 30.

WITNESSETH:

WHEREAS, the Executive serves as President and Chief Executive Officer; and

WHEREAS, the Executive and the Company desire to amend and restate the Original Employment Agreement as provided herein.

NOW, THEREFORE, in consideration of the premises and of the covenants and agreements set forth herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Company and the Executive hereby amend and restate the Original Employment Agreement as follows:

1. Employment

(a) The Company will continue to employ the Executive, and the Executive will continue to be employed by the Company upon the terms and conditions set forth herein.

(b) The employment relationship between the Company and the Executive shall be governed by the general employment policies and practices of the Company, including without limitation, those relating to the Company’s Code of Conduct, confidential information and avoidance of conflicts, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

2. Term. Subject to termination under Section 9, the Executive’s employment shall be for an initial term of 36 months commencing on the Effective Date and shall continue through the third anniversary of the Effective Date (the “Initial Employment Term”). At the end of the Initial Employment Term and on each succeeding anniversary of the Effective Date, the Employment Term will be automatically extended by an additional 12 months (each, a “Renewal Term”), unless, not less than 12 months prior to the end of the Initial Employment Term or any Renewal Term, either the Executive or the Company has given the other written notice (in accordance with Section 20) of non-renewal. The Executive shall provide the Company with written notice of his intent to terminate employment with the Company at least 30 days prior to the effective date of such termination.


3. Position and Duties of the Executive.

(a) The Executive serves as the President and Chief Executive Officer of the Company and shall have such duties and authority consistent with such position as shall be determined from time to time by the Board of Directors of the Company (the “Board”) and as is customary for the position of chief executive officer of a company of the size and nature of the business of the Company, and agrees to serve as an officer of any enterprise and/or agrees to be an employee of any Subsidiary as may be reasonably requested from time to time by the Board, or any committee of the Board. In such capacity, the Executive shall report only to the Board, shall be the highest ranking senior officer of the Company, and all employees of the Company shall report, directly or indirectly, to the Executive. The Company appointed the Executive to the Board on the Effective Date and will nominate him for election to the Board by the Company’s shareholders at future annual shareholders’ meetings.

(b) During the Employment Term, the Executive shall, except as may from time to time be otherwise agreed to in writing by the Company, during reasonable vacations (as set forth in Section 7 hereof) and authorized leave and except as may from time to time otherwise be permitted pursuant to Section 3(c), devote his best efforts, full attention and energies during his normal working time to the business of the Company, to any duties as may be delineated in the Company’s Bylaws for the Executive’s position and title and such other related duties and responsibilities as may from time to time be reasonably prescribed by the Board, or any committee of the Board, in each case, within the framework of the Company’s policies and objectives.

(c) During the Employment Term, and provided that such activities do not contravene the provisions of Section 3(a) or Sections 10, 11, 12 or 13 hereof and, provided further, the Executive does not engage in any other substantial business activity for gain, profit or other pecuniary advantage which materially interferes with the performance of his duties hereunder, the Executive may participate in any governmental, educational, charitable or other community affairs and, subject to the prior approval of the Board serve as a member of the governing board of any such organization or any private or public for-profit company. The Executive may retain all fees and other compensation from any such service, and the Company shall not reduce his compensation by the amount of such fees.

4. Compensation.

(a) Base Salary. During the Employment Term, the Company shall pay to the Executive an annual base salary of $1,200,000 (the “Base Salary”), which Base Salary shall be payable at the times and in the manner consistent with the Company’s general policies regarding compensation of the Company’s senior executives. The Base Salary will be reviewed periodically by the Compensation Committee and may be increased (but not decreased, except for across-the-board reductions generally applicable to the Company’s senior executives) from time to time in the Compensation Committee’s sole discretion.

(b) Incentive Compensation. The Executive will continue to be eligible to participate in any short-term and long-term incentive compensation plans, annual bonus plans and such other management incentive programs or arrangements of the Company approved by

 

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the Board that are generally available to the Company’s senior executives, including, but not limited to, the STIP and the LTSIP. Incentive compensation shall be paid in accordance with the terms and conditions of the applicable plans, programs and arrangements.

(i) Annual Performance Bonus. During the Employment Term, the Executive shall continue to be entitled to participate in the STIP, with such opportunities as may be determined by the Compensation Committee in its sole discretion (“Target Bonuses”); provided, however, that for the bonus year ending December 31, 2008 and thereafter during the Employment Term, the Executive will participate at an annual Target Bonus opportunity of 170% of his Base Salary, (as may be increased, but not decreased, except for across-the-board reductions generally applicable to the Company’s senior executives), and the Executive shall be entitled to receive full payment of any award under the STIP up to a maximum annual bonus of 200% of his Target Bonus, determined pursuant to the STIP (a “Bonus Award”).

(ii) Long-Term Performance Bonus. During the Employment Term, the Executive shall continue to be entitled to participate in the LTSIP with such opportunities, if any, as may be determined by the Compensation Committee (“LTSIP Target Award Opportunities”); provided, however, that the Executive’s initial LTSIP Target Award Opportunity for 2008 will be at a value of $10 million, which shall be granted in the form of equity and/or cash-based awards based on the Company’s practices under the LTSIP for its senior executives.

(iii) Incentive bonuses, if earned, shall be paid when incentive compensation is customarily paid to the Company’s senior executives in accordance with the terms of the applicable plans, programs or arrangements.

(iv) Pursuant to the Company’s applicable incentive or bonus plans as in effect from time to time, the Executive’s incentive compensation during the term of this Agreement may be determined according to criteria intended to qualify as performance-based compensation under Section 162(m) of the Code.

(c) Equity Compensation. The Executive shall continue to be eligible to participate in such equity incentive compensation plans and programs as the Company generally provides to its senior executives, including, but not limited to, the LTSIP. During the Employment Term, the Compensation Committee may, in its sole discretion, grant equity awards to the Executive, which would be subject to the terms of the award agreements evidencing such grants and the applicable plan or program.

(d) Sign-on Compensation.

(i) Sign-On Cash Bonus Award. Not later than 15 days after the Effective Date, the Company paid to the Executive a cash sign-on bonus in the amount of $2,650,000.

(ii) Sign-On Option Award. On the Effective Date the Compensation Committee granted to the Executive an option to purchase 3,275,000 shares of the

 

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Company’s Common Stock under the LTSIP (the “Sign-On Option Award”). The Sign-On Option Award is subject to the terms and conditions of the option agreement attached hereto as Exhibit A. With respect to 1 million shares underlying the Sign-On Option Award, the Option Price is equal to the Market Value Per Share on the Date of Grant (each term as defined in the LTSIP). With respect to 1 million shares underlying the Sign-On Option Award, the Option Price is equal to 120% of the Market Value Per Share on the Date of Grant. With respect to the remaining 1.275 million shares underlying the Sign-On Option Award, the Option Price is equal to 140% of the Market Value Per Share on the Date of Grant. Subject to the terms and conditions of the option agreement evidencing such grant, the Sign-On Option Award shall vest in equal annual installments on each of the first three anniversaries of the Date of Grant; provided, however, that to the extent the Sign-On Option Award is not assumed, converted or replaced with equivalent value awards by the resulting entity in the event of a Change in Control (as defined in the LTSIP), the Sign-On Option Award shall immediately vest and become fully exercisable. Except as otherwise provided in the Executive’s award agreement evidencing the Sign-On Option Award, the Sign-On Option Award will be governed by provisions of the LTSIP.

(iii) Sign-On RSU Award. On the Effective Date the Compensation Committee granted to the Executive restricted stock units (the “Sign-On RSU Award”). The Sign-On RSU Award is subject to the terms and conditions of the restricted stock unit agreement evidencing such grant attached as Exhibit A. The Sign-On RSU Award was granted at an aggregate value of $10 million based on the Market Value Per Share on the Date of Grant (each term as defined in the LTSIP) and shall vest in equal annual installments on each of the first three anniversaries of the Date of Grant; provided, however, that to the extent the Sign-On RSU Award is not assumed, converted or replaced with equivalent value awards by the resulting entity in the event of a Change in Control (as defined in the LTSIP), all restrictions with respect to any unvested portion of the Sign-On RSU Award shall immediately lapse and the Sign-On RSU Award will become vested and nonforfeitable. Except as otherwise provided in the Executive’s award agreement evidencing the Sign-On RSU Award, the Sign-On RSU Award will be governed by provisions of the LTSIP. After the Sign-On RSU Award vests, the RSUs will remain outstanding and the Executive will be entitled to delivery of the shares underlying the vested Sign-On RSU Award on the first business day of the seventh month following the Executive’s Separation from Service. On each date that the Company pays a dividend on the Common Stock underlying the Sign-On RSU Award to the extent it is not vested, the unvested Sign-On RSU Award will accrue additional whole or fractional RSUs equal to the number of shares of Common Stock the dividend would buy at the Market Value Per Share on the dividend payment date. These additional RSUs will vest and be subject to delivery at the same time as the shares originally payable under the Sign-On RSU Award. To the extent the Sign-On RSU Award is vested, on each date that the Company pays a dividend on the Common Stock, the Executive will receive an amount of cash equal to the dividends on the number of shares underlying the vested Sign-On RSU Award in cash on the dividend payment date.

 

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5. Benefits.

(a) During the Employment Term, the Company shall make available to the Executive, subject to the terms and conditions of the applicable plans, participation for the Executive and his eligible dependents in: (i) Company-sponsored group health, major medical, dental, vision, life insurance, pension and profit sharing, 401(k) and employee benefit plans, programs and arrangements (the “Employee Plans”) and such other usual and customary benefits in which senior executives of the Company participate from time to time, and (ii) such fringe benefits and perquisites as may be made available to senior executives of the Company as a group. The Executive shall be entitled to indemnification on terms and conditions no less favorable than those made available generally to the senior officers as such indemnification arrangements shall be in effect from time to time.

(b) The Executive acknowledges that the Company may change its benefit programs from time to time, which may result in certain benefit programs being amended or terminated for its senior executives generally.

6. Expenses. The Company shall pay or reimburse the Executive for reasonable and necessary business expenses incurred by the Executive in connection with his duties on behalf of the Company in accordance with the Company’s Enterprise Financial Services—Employee Travel and Expense Policy, as may be amended from time to time, or any successor policy, plan, program or arrangement thereto and any other of its expense policies applicable to senior executives of the Company, following submission by the Executive of reimbursement expense forms in a form consistent with such expense policies.

7. Vacation. In addition to such holidays, sick leave, personal leave and other paid leave as is allowed under the Company’s policies applicable to senior executives generally, the Executive shall be entitled to participate in the Company’s vacation policy at a minimum of four (4) weeks vacation per calendar year, in accordance with the Company’s policy generally applicable to senior executives.

8. Place of Performance. If the Company relocates the Executive’s place of work more than 50 miles from his place of work prior to such relocation, the Executive shall relocate to a residence within (a) 50 miles of such relocated executive offices or (b) such total miles that does not exceed the total number of miles the Executive commuted to his place of work prior to relocation of the Executive’s place of work. To the extent the Executive relocates his residence as provided in this Section 8, the Company will pay or reimburse the Executive’s relocation expenses in accordance with the Company’s relocation policy applicable to senior executives.

9. Termination.

(a) Termination by the Company for Cause or Resignation by the Executive Without Good Reason. If, during the Employment Term, the Executive’s employment is terminated by the Company for Cause, or if the Executive resigns without Good Reason, the Executive shall not be eligible to receive Base Salary or to participate in any Employee Plans with respect to future periods after the date of such termination or resignation except for the right to receive accrued but unpaid cash compensation and vested benefits under any Employee Plan in accordance with the terms of such Employee Plan and applicable law.

 

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(b) Termination by the Company Without Cause or Resignation by the Executive for Good Reason outside of the CIC Severance Protection Period. If, during the Employment Term, the Executive’s employment is terminated by the Company without Cause or the Executive terminates for Good Reason prior to or following expiration of the CIC Severance Protection Period and such termination constitutes a Separation from Service or the Executive is entitled to severance compensation and benefits under this Section 9(b) pursuant to the provisions of Section 9(c), the Executive shall be entitled to receive from the Company: (1) the Executive’s accrued, but unpaid, Base Salary through the date of termination of employment, payable in accordance with the Company’s normal payroll practices, and (2) conditioned upon the Executive executing a Release within the Release Consideration Period and delivering it to the Company with the Release Revocation Period expired without revocation, and in full satisfaction of the Executive’s rights and any benefits the Executive might be entitled to under the Separation Plan and this Agreement, unless otherwise specified herein:

(i) periodic payments equal to his Base Salary in effect prior to the termination of his employment, which payments shall be paid to the Executive in equal installments on the regular payroll dates under the Company’s payroll practices applicable to the Executive on the date of this Agreement for the Payment Period except that (A) if the Release Consideration and Revocation Period ends on or after December 15th of the calendar year of the Executive’s Separation from Service, such installments that are otherwise payable in the calendar year of the Executive’s Separation from Service shall be paid in a lump sum on the first business day of the following calendar year or (B) if the Executive is a Specified Employee, with respect to any amount payable by reason of the Separation from Service that constitutes deferred compensation within the meaning of Section 409A of the Code, such installments shall not commence until after the end of the six continuous month period following the date of the Executive’s Separation from Service, in which case, the Executive shall be paid a lump-sum cash payment equal to the aggregate amount of missed installments during such period on the first day of the seventh month following the date of the Executive’s Separation from Service;

(ii) (A) receive a pro rata payment of the Bonus Award for the portion of the Company’s current fiscal year prior to the date of termination of his employment; (B) receive a pro rata payment of the Capped Bonus Award for the portion of the Company’s current fiscal year following the date of termination of his employment; (C) receive for the next fiscal year following the fiscal year during which termination of his employment occurs, the Capped Bonus Award; and (D) receive payment of a pro rata portion of the Capped Bonus Award for the second year following the fiscal year during which the Executive’s employment terminates (for purposes of this Section 9(b)(ii), any pro rata payment shall be determined based on the methodology for determining pro rated awards under the STIP, each such payment shall be payable in accordance with the provisions of the STIP in the calendar year in which the Bonus Award or each Capped Bonus

 

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Award, as applicable, is determined), and in all events, not later than December 31st of the year in which each such award is determined; provided, however, that to the extent the Executive’s employment is terminated for Good Reason due to a reduction of the Executive’s Target Bonus, in accordance with Section 30(y)(ii), the Executive’s Target Bonus for the purposes of this Section 9(b)(ii) shall be the Executive’s Target Bonus immediately prior to such reduction;

(iii) from the date of Separation from Service continue participation in the Company’s group health plans at then-existing participation and coverage levels for the number of months equal to the period of continuation coverage the Executive would be entitled to pursuant to Section 4980B of the Code, in accordance with Section 409A of the Code, comparable to the terms in effect from time to time for the Company’s senior executives, including any co-payment and premium payment requirements and the Company shall deduct from each payment payable to the Executive pursuant to Section 9(b)(i), the amount of any employee contributions necessary to maintain such coverage for such period, except that subject to Section 9(b)(iv), (A) following such period, the Executive shall retain any rights to continue coverage under the Company’s group health plans under the benefits continuation provisions pursuant to Section 4980B of the Code by paying the applicable premiums of such plans; and (B) the Executive shall no longer be eligible to receive the benefits otherwise receivable pursuant to this Section 9(b)(iii) as of the date that the Executive becomes eligible to receive comparable benefits from a new employer;

(iv) continued participation at the Executive’s sole cost in the Company’s group health plans at then-existing participation and coverage levels for the remainder of the Payment Period following the period of continuation coverage the Executive would be entitled to, if any, pursuant to Section 9(b)(iii) above, in accordance with Section 409A of the Code, comparable to the terms in effect from time to time for the Company’s senior executives, but only to the extent that the Executive makes a payment to the Company in an amount equal to the monthly premium payments (both the employee and employer portions) required to maintain such comparable coverage on or before the first day of each calendar month commencing with the first calendar month of the six-month period following the period of continuation coverage specified in Section 9(b)(iii), and the Company shall reimburse the Executive, in accordance with the terms of Section 6 hereof, for the amount of such premiums, if any, in excess of any employee contributions necessary to maintain such coverage, except that (A) following such period, the Executive shall retain any rights to continue coverage under the Company’s group health plans under the benefits continuation provisions pursuant to Section 4980B of the Code by paying the applicable premiums of such plans; and (B) the Executive shall no longer be eligible to receive the benefits otherwise receivable pursuant to this Section 9(b)(iv) as of the date that the Executive becomes eligible to receive comparable benefits from a new employer;

 

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(v) continue participation in the Company’s employee life insurance plans at then-existing participation and coverage levels for the Payment Period, comparable to the terms in effect from time to time for the Company’s senior executives, including any co-payment and premium payment requirements and the Company shall deduct from each payment payable to the Executive pursuant to Section 9(b)(i), the amount of any employee contributions necessary to maintain such coverage for such period, except that the Executive shall no longer be eligible to receive the benefits otherwise receivable pursuant to this Section 9(b)(v) as of the date that the Executive becomes eligible to receive comparable benefits from a new employer;

(vi) accelerated vesting of any unvested portion of the Sign-On Option Award;

(vii) all restrictions with respect to any unvested portion of the Sign-On RSU Award shall immediately lapse and the Sign-On RSU Award will become vested and nonforfeitable, and the Executive will be entitled to payment on the first business day of the seventh month following the Executive’s Separation from Service; and

(viii) receive outplacement services by a firm selected by the Company at its expense in an amount not to exceed $35,000; provided, however, that all such outplacement services must be completed, and all payments by the Company must be made, by December 31st of the second calendar year following the calendar year in which the Executive’s Separation from Service occurs.

Notwithstanding anything in this Section 9(b) to the contrary, to the extent the Executive has not executed the Release within the Release Consideration Period and delivered it to the Company, or has revoked the executed Release within the Release Revocation Period, as determined at the end of such Release Revocation Period, the Executive will forfeit any right to receive the payments and benefits specified in this Section 9(b).

(c) Termination by the Company Without Cause or Resignation by the Executive for Good Reason During the CIC Severance Protection Period. Subject to (i)-(iv) below, if the Executive’s employment is terminated by the Company without Cause, or the Executive terminates employment for Good Reason, before the Employment Term expires and during the CIC Severance Protection Period, and the termination constitutes a Separation from Service, subject to the terms of the CIC Severance Plan, the Executive will become entitled to severance compensation and benefits under the CIC Severance Plan as of (x) the date the Separation from Service occurs, or (y) in the event of a Pre-CIC Termination, the date the Change in Control occurs, as of which date all rights to severance benefits under this Agreement will cease.

(i) The CIC Severance Plan will not apply and the Executive will be entitled to severance compensation and benefits under Section 9(b) of this Agreement if (x) as of his Separation from Service, the Executive is not a Participant in, or (y) the Executive is otherwise not entitled to severance compensation and benefits under, the CIC Severance Plan.

 

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(ii) If the Executive is entitled to severance benefits under the CIC Severance Plan as a result of a Pre-CIC Termination, any benefits payable before the Change in Control will be paid under this Agreement and any additional benefits payable after the Change in Control will be paid under the CIC Severance Plan.

(iii) In no event may there be duplication of benefits under this Agreement and the CIC Severance Plan.

(iv) The terms “Change in Control” and “Pre-CIC Termination” are defined in the CIC Severance Plan.

Furthermore, the Executive will be entitled to accelerated vesting of any unvested portion of the Sign-On Option Award, and all restrictions with respect to any unvested portion of the Sign-On RSU Award shall immediately lapse and the Sign-On RSU Award will become vested and nonforfeitable, and the Executive will be entitled to payment on the first business day of the seventh month following the Executive’s Separation from Service.

(d) Termination by Death. If the Executive dies during the Employment Term, the Executive’s employment will terminate and the Executive’s beneficiary or if none, the Executive’s estate, shall be entitled to receive from the Company, the Executive’s accrued, but unpaid, Base Salary through the date of termination of employment and any vested benefits under any Employee Plan in accordance with the terms of such Employee Plan and applicable law. Upon the Executive’s death, any unvested portion of the Sign-On Option Award shall immediately vest, and all restrictions with respect to any unvested portion of the Sign-On RSU Award shall immediately lapse and the Sign-On RSU Award will become vested, nonforfeitable and payable upon the Executive’s death.

(e) Termination by Disability. If the Executive becomes Disabled, prior to the expiration of the Employment Term, the Executive’s employment will terminate, and provided that such termination constitutes a Separation from Service, the Executive shall be entitled to:

(i) receive periodic payments equal to his Base Salary in effect prior to the termination of his employment, which payments shall be paid to the Executive in equal installments on the regular payroll dates under the Company’s payroll practices applicable to the Executive on the date of this Agreement for the longer of 12 months or the applicable waiting period under the Company’s long-term disability plan (the “LTD Plan”) (reduced by any amounts paid under the LTD Plan) now or hereafter sponsored by the Company (calculated on a monthly basis) commencing on the Separation from Service date; provided, however, that in the event that the Executive is a Specified Employee, any such payments that constitute deferred compensation within the meaning of Section 409A of the Code will not commence until earliest to occur of (A) the first business day of the seventh month following the date of the Executive’s Separation from Service or (B) death, except that the Executive on such date will be paid a lump-sum cash payment equal to the aggregate amount of any such payments that constitute deferred compensation within the meaning of Section 409A of the Code that the

 

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Executive would have been entitled to receive during the six-month period following the Executive’s Separation from Service, and the Executive shall receive the remaining payments for six months payable in equal installments on the regular payroll dates under the Company’s payroll practices applicable to the Executive on the date of this Agreement commencing on the first business day of the seventh month following the date of the Executive’s Separation from Service as specified in this Section 9(e)(i); and

(ii) continue participation in the Company’s group health plans at then-existing participation and coverage levels for the longer of 12 months (measured from the Executive’s Separation from Service) or the waiting period under the LTD Plan, comparable to the terms in effect from time to time for the Company’s senior executives, including any co-payment and premium payment requirements; provided, however, that if the Executive would not be eligible for participation under the Company’s group health plans but for this Section 9(e)(ii), such continued participation will be at the Executive’s sole cost and only to the extent the Executive makes a payment to the Company in an amount equal to the monthly premium payments (both the employee and employer portions) required to maintain such comparable coverage on or before the first day of each calendar month of such coverage, and the Company shall reimburse the Executive, in accordance with the terms of Section 6 hereof, for the amount of such premiums;

(iii) accelerated vesting of any unvested portion of the Sign-On Option Award; and

(iv) all restrictions with respect to any unvested portion of the Sign-On RSU Award shall immediately lapse and the Sign-On RSU Award will become vested and nonforfeitable, and the Executive will be entitled to payment on the first business day of the seventh month following the Executive’s Separation from Service.

(f) No Mitigation Obligation. No amounts paid under Section 9 will be reduced by any earnings that the Executive may receive from any other source. The Executive’s coverage under the Company’s medical, dental, vision and employee life insurance plans will terminate as of the date that the Executive is eligible for comparable benefits from a new employer. The Executive shall notify the Company within 30 days after becoming eligible for coverage of any such benefits.

(g) Forfeiture. Notwithstanding the foregoing, any right of the Executive to receive termination payments and benefits hereunder shall be forfeited to the extent of any amounts payable after any breach of Section 10, 11, 12, 13 or 15 by the Executive.

10. Confidential Information; Statements to Third Parties.

(a) During the Employment Term and on a permanent basis upon and following termination of the Executive’s employment, the Executive acknowledges that:

 

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(i) all information, whether or not reduced to writing (or in a form from which information can be obtained, translated, or derived into reasonably usable form) and whether compiled or created by the Company, any of its Subsidiaries or any affiliates of the Company or its Subsidiaries (collectively, the “Company Group”), which derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from the disclosure or use of such information, of a proprietary, private, secret or confidential (including, without exception, inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, developments, sales strategies, plans, research data, clinical data, financial data, personnel data, computer programs, customer and supplier lists, trademarks, service marks, copyrights (whether registered or unregistered), artwork, and contacts at or knowledge of customers or prospective customers) nature concerning the Company Group’s business, business relationships or financial affairs (collectively, “Proprietary Information”) shall be the exclusive property of the Company Group.

(ii) reasonable efforts have been put forth by the Company Group to maintain the secrecy of its Proprietary Information;

(iii) such Proprietary Information is and will remain the sole property of the Company Group; and

(iv) any retention or use by the Executive of Proprietary Information after the termination of the Executive’s services for the Company Group will constitute a misappropriation of the Company Group’s Proprietary Information.

(b) The Executive further acknowledges and agrees that he will take all affirmative steps reasonably necessary or required by the Company to protect the Proprietary Information from inappropriate disclosure during and after his employment with the Company.

(c) All materials or copies thereof and all tangible things and other property of the Company Group that constitute Proprietary Information in the Executive’s custody or possession shall be delivered to the Company (to the extent the Executive has not already returned) in good condition, on or before five business days subsequent to the earlier of: (i) a request by the Company or (ii) the Executive’s termination of employment for any reason or Cause, including for nonrenewal of this Agreement, Disability, termination by the Company or termination by the Executive. After such delivery, the Executive shall not retain any such materials or portions or copies thereof or any such tangible things and other property and shall execute any statements or affirmations of compliance under oath that the Company may require.

(d) The Executive further agrees that his obligation not to disclose or to use information and materials of the types set forth in Sections 10(a), 10(b) and 10(c) above, and his obligation to return materials and tangible property, set forth in Section 10(c) above, also extends to such types of information, materials and tangible property of customers of the Company Group, consultants for the Company Group, suppliers to the Company Group, or other third parties who may have disclosed or entrusted the same to the Company Group or to the Executive.

 

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(e) The Executive further acknowledges and agrees that he will continue to keep in strict confidence, and will not, directly or indirectly, at any time, disclose, furnish, disseminate, make available, use or suffer to be used in any manner any Proprietary Information of the Company Group without limitation as to when or how the Executive may have acquired such Proprietary Information and that he will not disclose any Proprietary Information to any person or entity other than appropriate employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without written approval of the Board, either during or after his employment with the Company.

(f) Further the Executive acknowledges that his obligation of confidentiality will survive, regardless of any other breach of this Agreement or any other agreement, by any party hereto, until and unless such Proprietary Information of the Company Group has become, through no fault of the Executive, generally known to the public. In the event that the Executive is required by law, regulation, or court order to disclose any of the Company Group’s Proprietary Information, the Executive will promptly notify the Company prior to making any such disclosure to facilitate the Company seeking a protective order or other appropriate remedy from the proper authority. The Executive further agrees to cooperate with the Company in seeking such order or other remedy and that, if the Company is not successful in precluding the requesting legal body from requiring the disclosure of the Proprietary Information, the Executive will furnish only that portion of the Proprietary Information that is legally required, and the Executive will exercise all legal efforts to obtain reliable assurances that confidential treatment will be accorded to the Proprietary Information.

(g) The Executive’s obligations under this Section 10 are in addition to, and not in limitation of, all other obligations of confidentiality under the Company’s policies, general legal or equitable principles or statutes.

(h) During the Employment Term and following his termination of employment:

(i) Executive agrees to refrain from making any statements about the Company or its officers or directors that would disparage, or reflect unfavorably upon the image or reputation of the Company or any such officer or director;

(ii) the Company shall refrain from making any statements about Executive that would disparage, or reflect unfavorably upon the image or reputation of Executive; provided, however, that the foregoing shall not prohibit the Company from complying with its policies regarding public statements with respect to the Executive, or otherwise complying with applicable law, and any such statements shall be deemed to be made by the Company only if made or authorized by a member of the Board or a senior executive officer of the Company; and

 

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(iii) nothing herein precludes honest and good faith reporting by the Executive to appropriate Company or legal enforcement authorities or otherwise complying with applicable law.

(i) The Executive acknowledges and agrees that a violation of the foregoing provisions of this Section 10 would cause irreparable harm to the Company Group, and that the Company’s remedy at law for any such violation would be inadequate. In recognition of the foregoing, the Executive agrees that, in addition to any other relief afforded by law or this Agreement, including damages sustained by a breach of this Agreement and any forfeitures under Section 9(g), and without the necessity or proof of actual damages, the Company shall have the right to enforce this Agreement by specific remedies, which shall include, among other things, temporary and permanent injunctions, it being the understanding of the undersigned parties hereto that damages, the forfeitures described above and injunctions shall all be proper modes of relief and are not to be considered as alternative remedies.

11. Non-Competition. In consideration of the Company entering into this Agreement, for a period commencing on the Effective Date and ending on the expiration of the Restricted Period:

(a) The Executive covenants and agrees that the Executive will not, directly or indirectly, engage in any activities on behalf of or have an interest in any Competitor of the Company Group, whether as an owner, investor, executive, manager, employee, independent consultant, contractor, advisor, or otherwise. The Executive’s ownership of less than one percent (1%) of any class of stock in a publicly traded corporation shall not be a breach of this paragraph.

(b) “Competitor” means, at the time of Executive’s termination of employment for any reason, any individual, corporation, partnership, association, joint venture, or trust (a “Person”) or any of such Person’s Divisions doing business in the United States including any territory of the United States (the “Territory”) or any of such Person’s Divisions employing the Executive if such Person or its Division: (i) receives at least 15% of its gross operating revenues from providing communications services of any type (for example, voice, data, including Internet, and video), which services are transmitted via 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); (ii) receives at least 15% of its gross operating revenue from a line of business in which the Company Group receives at least 3% of its operating revenues; (iii) is operating for less than 5 years a line of business from which the Company Group derives at least 3% of gross operating revenues, notwithstanding such Person’s or Division’s lack of substantial revenues in such line of business; (iv) receives at least 15% of its gross operating revenue from a line of business in which the Company Group has operated for less than 5 years, notwithstanding the Company Group’s lack of substantial revenues in such line of business; or (v) is engaged in any activity or has an interest in any activity in which Proprietary Information to which the Executive had access at any time during the two-year period before his termination of employment could be of substantial economic value to the Person or its Division. For this purpose, “Division” means any distinct group, subsidiary, 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.

 

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For purposes of the foregoing, gross operating revenues of the Company Group and such other Person shall be those of the Company Group or such Person, together with their Company Group, but those of any Division employing or proposing to employ Executive shall be on a stand-alone basis, all measured by the most recent available financial information of both the Company Group and such other Person or Division at the time Executive accepts, or proposes to accept, employment with or to otherwise perform services for such Person or Division. If financial information is not publicly available or is inadequate for purposes of applying this definition, the ultimate burden shall be on Executive to present information that such Person or Division is not a Competitor.

(c) The Executive acknowledges and agrees that, for purposes of this Section 11, due to the continually evolving nature of the Company Group’s industry, the scope of its business and/or the identities of Competitors may change over time and that breach of this Agreement by accepting employment with a Competitor would irreparably injure the Company Group. The Parties further acknowledge and agree that the Company Group currently markets its products and services on a nationwide basis, encompassing the Territory, and may expand such Territory to include any international and foreign markets, in which case the Parties acknowledge that the terms and provisions of this Section 11 shall apply to such expanded markets.

(d) The Executive covenants and agrees that should a court at any time determine that any restriction or limitation in this Section 11 is unreasonable or unenforceable, it will be deemed amended so as to provide the maximum protection to the Company Group and be deemed reasonable and enforceable by the court.

12. Non-Solicitation. In consideration of the Company entering into this Agreement, for a period commencing on the Effective Date and ending on the expiration of the Restricted Period, the Executive hereby covenants and agrees that he shall not individually or in cooperation with any other person or entity do or suffer any of the following:

(a) solicit, aid, induce or persuade, directly or indirectly, any person who is an employee, representative, or agent of any member of the Company Group to leave his or her employment with any member of the Company Group to accept employment with any other person or entity;

(b) induce any person who is an employee, officer or agent of the Company Group, or any of its affiliated, related or subsidiary entities to terminate such relationship;

(c) solicit any customer of the Company Group, or any person or entity whose business the Company Group had solicited during the 180-day period prior to termination of the Executive’s employment for purposes of business which is competitive to the Company Group within the Territory; or

 

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(d) solicit, aid, induce, persuade or attempt to solicit, aid, induce or persuade any person or entity to take any action that would result in a Change in Control of the Company or to seek to control the Board in a material manner without prior written consent.

(e) For purposes of this Section 12 the term “solicit or persuade” includes, but is not limited to, (i) initiating communications with an employee of the Company Group relating to possible employment, (ii) offering bonuses or additional compensation to encourage an employee of the Company Group to terminate his employment, and (iii) initiating communications with any person or entity relating to a possible Change in Control.

13. Developments.

(a) The Executive acknowledges and agrees that he will make full and prompt disclosure to the Company of all inventions, improvements, discoveries, methods, developments, software, mask works, and works of authorship, whether patentable or copyrightable or not, (i) which relate to the Company’s business and have heretofore been created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others, and not assigned to prior employers, or (ii) which have utility in or relate to the Company’s business and are created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others during his employment with the Company, whether or not during normal working hours or on the premises of the Company (all of the foregoing of which are collectively referred to in this Agreement as “Developments”).

(b) The Executive further agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all of the Executive’s rights, title and interest worldwide in and to all Developments and all related patents, patent applications, copyrights and copyright applications, and any other applications for registration of a proprietary right. This Section 13(b) shall not apply to Developments that the Executive developed entirely on his own time without using the Company’s equipment, supplies, facilities, or Proprietary Information and that does not, at the time of conception or reduction to practice, have utility in or relate to the Company’s business, or actual or demonstrably anticipated research or development. The Executive understands that, to the extent this Agreement shall be construed in accordance with the laws of any Territory which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this Section 13(b) shall be interpreted not to apply to any invention which a court rules or the Company agrees falls within such classes.

(c) The Executive further agrees to cooperate fully with the Company, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and other countries) relating to Developments. The Executive shall not be required to incur or pay any costs or expenses in connection with the rendering of such cooperation. The Executive will sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, and do all things that the Company may reasonably deem necessary or desirable in order to protect its rights and interests in any Development.

 

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(d) The Executive further acknowledges and agrees that if the Company is unable, after reasonable effort, to secure the Executive’s signature on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the Executive’s agent and attorney-in-fact, and the Executive hereby irrevocably designates and appoints each executive officer of the Company as his agent and attorney-in-fact to execute any such papers on the Executive’s behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development, under the conditions described in this sentence.

14. Remedies. The Executive and the Company agree that the covenants contained in Sections 10, 11, 12 and 13 are reasonable under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction any such covenant is not reasonable in any respect, such court will have the right, power and authority to sever or modify any provision or provisions of such covenants as to the court will appear not reasonable and to enforce the remainder of the covenants as so amended. The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of the Executive’s obligations under Sections 10, 11, 12 and 13 would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms. Accordingly, the Executive acknowledges, consents and agrees that, in addition to any other rights or remedies that the Company may have at law, in equity or under this Agreement, upon adequate proof of the Executive’s violation of any such provision of this Agreement, the Company will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage. Without limiting the applicability of this Section 14 or in any way affecting the right of the Company to seek equitable remedies hereunder, in the event that the Executive materially and willfully breaches any of the provisions of Sections 10, 11, 12 or 13 or engages in any activity that would constitute a material and willful breach save for the Executive’s action being in a state where any of the provisions of Sections 10, 11, 12, 13 or this Section 14 is not enforceable as a matter of law, then the Company’s obligation to pay any remaining severance compensation and benefits that has not already been paid to Executive pursuant to Section 9 shall be terminated.

15. Continued Availability and Cooperation.

(a) Following termination of the Executive’s employment, the Executive agrees that, consistent with the Executive’s business and personal affairs, he will cooperate fully with the Company and with the Company’s counsel in connection with any present and future actual or threatened litigation, administrative proceeding or investigation involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment by the Company. Cooperation will include, but is not limited to:

(i) making himself reasonably available for interviews and discussions with the Company’s counsel as well as for depositions and trial testimony;

 

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(ii) if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefore, as and to the extent that the Company or the Company’s counsel reasonably requests;

(iii) refraining from impeding in any way the Company’s prosecution or defense of such litigation or administrative proceeding; and

(iv) cooperating fully in the development and presentation of the Company’s prosecution or defense of such litigation or administrative proceeding.

(b) The Company will reimburse the Executive for reasonable travel, lodging, telephone and similar expenses, as well as reasonable attorneys’ fees (if independent legal counsel is necessary), incurred in connection with any cooperation, consultation and advice rendered under this Agreement after the Executive’s termination of employment.

16. Dispute Resolution.

(a) In the event that the Parties are unable to resolve any controversy or claim arising out of or in connection with this Agreement or breach thereof, either Party shall refer the dispute to binding arbitration, which shall be the exclusive forum for resolving such claims. Such arbitration will be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Employment Arbitration Rules and Procedures and governed by Kansas law. The arbitration shall be conducted by a single arbitrator selected by the Parties according to the rules of JAMS. In the event that the Parties fail to agree on the selection of the arbitrator within 30 days after either Party’s request for arbitration, the arbitrator will be chosen by JAMS. The arbitration proceeding shall commence on a mutually agreeable date within 90 days after the request for arbitration, unless otherwise agreed by the Parties, and in the location where the Executive worked during the six months immediately prior to the request for arbitration if that location is in Kansas or Virginia, and if not, the location will be Kansas, unless the Parties agree otherwise.

(b) The Parties agree that each will bear their own costs and attorneys’ fees. The arbitrator shall not have authority to award attorneys’ fees or costs to any Party.

(c) The arbitrator shall have no power or authority to make awards or orders granting relief that would not be available to a Party in a court of law. The arbitrator’s award is limited by and must comply with this Agreement and applicable federal, state, and local laws. The decision of the arbitrator shall be final and binding on the Parties.

(d) Notwithstanding the foregoing, no claim or controversy for injunctive or equitable relief contemplated by or allowed under applicable law pursuant to Sections 10, 11, 12 and 13 of this Agreement will be subject to arbitration under this Section 16, but will instead be subject to determination in a court of competent jurisdiction in Kansas, which court shall apply Kansas law consistent with Section 21 of this Agreement, where either Party may seek injunctive or equitable relief.

17. Other Agreements. No agreements (other than the agreements evidencing any grants of equity awards) or representations, oral or otherwise, express or implied, with respect to

 

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the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or other agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, pertaining to the subject matter hereof, which are not embodied herein, and that no prior and/or contemporaneous agreement, statement or promise pertaining to the subject matter hereof that is not contained in this Agreement shall be valid or binding on either party.

18. Withholding of Taxes. The Company will withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any law or government regulation or ruling.

19. Successors and Binding Agreement.

(a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company, except that the Company may assign and transfer this Agreement and delegate its duties thereunder to a wholly owned Subsidiary.

(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 19(a) and 19(b). Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 19(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

20. Notices. All communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as Federal Express or UPS, addressed to the Company (to the attention of the General Counsel of the Company) at its

 

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principal executive offices and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

21. Governing Law and Choice of Forum.

(a) This Agreement will be construed and enforced according to the laws of the State of Kansas, without giving effect to the conflict of laws principles thereof.

(b) To the extent not otherwise provided for by Section 16 of this Agreement, the Executive and the Company consent to the jurisdiction of all state and federal courts located in Overland Park, Johnson County, Kansas, as well as to the jurisdiction of all courts of which an appeal may be taken from such courts, for the purpose of any suit, action, or other proceeding arising out of, or in connection with, this Agreement or that otherwise arise out of the employment relationship. Each party hereby expressly waives any and all rights to bring any suit, action, or other proceeding in or before any court or tribunal other than the courts described above and covenants that it shall not seek in any manner to resolve any dispute other than as set forth in this paragraph. Further, the Executive and the Company hereby expressly waive any and all objections either may have to venue, including, without limitation, the inconvenience of such forum, in any of such courts. In addition, each of the Parties consents to the service of process by personal service or any manner in which notices may be delivered hereunder in accordance with this Agreement.

22. Validity/Severability. If any provision of this Agreement or the application of any provision is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal. To the extent any provisions held to be invalid, unenforceable or otherwise illegal cannot be reformed, such provisions are to be stricken herefrom and the remainder of this Agreement will be binding on the parties and their successors and assigns as if such invalid or illegal provisions were never included in this Agreement from the first instance.

23. Survival of Provisions. Notwithstanding any other provision of this Agreement, the parties’ respective rights and obligations under Sections 10, 11, 12, 13, 14, 15, 16, 18, 22 and 26, and the indemnification arrangement according to its terms, will survive any termination or expiration of this Agreement or the termination of the Executive’s employment.

24. Representations and Acknowledgements.

(a) The Executive hereby represents that, except as he has disclosed to the Company, he is not subject to any restriction on his ability to enter into this Agreement or to perform his duties and responsibilities hereunder, including, but not limited to, any covenant not to compete with any former employer.

(b) The Executive further represents that, to the best of his knowledge, his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement with another party, including without limitation any agreement to

 

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keep in confidence proprietary information, knowledge or data the Executive acquired in confidence or in trust prior to his employment with the Company, and that he will not knowingly disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.

(c) The Executive hereby represents and agrees that, during the Restricted Period, if the Executive is offered employment or the opportunity to enter into any business activity, whether as owner, investor, executive, manager, employee, independent consultant, contractor, advisor or otherwise, the Executive will inform the offeror of the existence of Sections 10, 11, 12 and 13 of this Agreement and provide the offeror a copy thereof. The Executive authorizes the Company to provide a copy of the relevant provisions of this Agreement to any of the persons or entities described in this Section 24(c) and to make such persons aware of the Executive’s obligations under this Agreement.

25. Compliance with Code Section 409A. With respect to reimbursements or in-kind benefits provided under this Agreement: (a) the Company will not provide for cash in lieu of a right to reimbursement or in-kind benefits to which the Executive has a right under this Agreement, (b) any reimbursement of provision of in-kind benefits made during the Executive’s lifetime (or such shorter period prescribed by a specific provision of this Agreement) shall be made not later than December 31st of the year following the year in which the Executive incurs the expense, and (c) in no event will the amount of expenses so reimbursed, or in-kind benefits provided, by the Company in one year affect the amount of expenses eligible for reimbursement or in-kind benefits to be provided, in any other taxable year. Each payment, reimbursement or in-kind benefit made pursuant to the provisions of this Agreement shall be regarded as a separate payment and not one of a series of payments for purposes of Section 409A of the Code. It is intended that any amounts payable under this Agreement and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A of the Code and the treasury regulations relating thereto so as not to subject the Executive to the payment of the additional tax, interest and any tax penalty which may be imposed under Code Section 409A. In furtherance of this interest, to the extent that any provision hereof would result in the Executive being subject to payment of the additional tax, interest and tax penalty under Code Section 409A, the parties agree to amend this Agreement in order to bring this Agreement into compliance with Code Section 409A; and thereafter interpret its provisions in a manner that complies with Section 409A of the Code. Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of Treasury or the Internal Revenue Service. Notwithstanding the foregoing, no particular tax result for the Executive with respect to any income recognized by the Executive in connection with the Agreement is guaranteed, and the Executive shall be responsible for any taxes, penalties and interest imposed on him under or as a result of Section 409A of the Code in connection with the Agreement.

26. Amendment; Waiver. Except as otherwise provided herein, this Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both Parties hereto. No waiver by either Party at any time of any breach by the other Party hereto or compliance with any condition or provision of this Agreement to be performed by such other Party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

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27. Legal Fees. The Executive shall be entitled reimbursement of reasonable legal fees and expenses incurred in connection with the negotiation and execution of this Agreement in an amount not to exceed twenty-five thousand dollars ($25,000).

28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

29. Headings. Unless otherwise noted, the headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

30. Defined Terms.

(a) “Agreement” has the meaning set forth in the preamble.

(b) “Base Salary” has the meaning set forth in Section 4(a).

(c) “Board” has the meaning set forth in Section 3(a).

(d) “Bonus Award” has the meaning set forth in Section 4(b)(i).

(e) “Bylaws” means the Amended and Restated Sprint Nextel Corporation Bylaws, as may be amended from time to time.

(f) “Capped Bonus Award” shall mean the lesser of the annual Target Bonus or actual performance for such fiscal year in accordance with the then existing terms of the STIP, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout date has arrived.

(g) “Cause” shall mean:

(i) any act or omission constituting a material and intentional breach by the Executive of any provisions of this Agreement after notice is delivered by the Company that identifies the manner in which the breach occurred, if within 30 days of such notice, the Executive fails to cure any such failure capable of being cured;

(ii) the willful and continued failure by the Executive to substantially perform his duties hereunder (other than any such failure resulting from the Executive’s Disability), after demand for performance is delivered by the Company that identifies the manner in which the Company believes the Executive has not performed his duties, if, within 30 days of such demand, the Executive fails to cure any such failure capable of being cured;

 

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(iii) any intentional misconduct materially injurious to the Company or any Subsidiary, financial or otherwise, or including, but not limited to, misappropriation, fraud including with respect to the Company’s accounting and financial statements, embezzlement or conversion by the Executive of the Company’s or any of its Subsidiary’s property in connection with the Executive’s duties or in the course of the Executive’s employment with the Company;

(iv) the conviction (or plea of no contest) of the Executive for any felony or the indictment of the Executive for any felony including, but not limited to, any felony involving fraud, moral turpitude, embezzlement or theft in connection with the Executive’s duties or in the course of the Executive’s employment with the Company; provided, however, that if such indictment is resolved without resulting in a conviction, the Executive shall be entitled to the benefits under Section 9(b);

(v) the commission of any intentional or knowing violation of any antifraud provision of the federal or state securities laws;

(vi) there is a final, non-appealable order in a proceeding before a court of competent jurisdiction or a final order in an administrative proceeding finding that the Executive committed any willful misconduct or criminal activity (excluding minor traffic violations or other minor offenses) which commission is materially inimical to the interests of the Company or any Subsidiary, whether for his personal benefit or in connection with his duties for the Company or any Subsidiary;

(vii) current alcohol or prescription drug abuse affecting work performance;

(viii) current illegal use of drugs; or

(ix) violation of the Company’s Code of Conduct, with written notice of termination by the Company for Cause in each case provided under this Section 30(g).

For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed “intentional” or “willful” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” or “willful” only if done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company. Failure to meet performance expectations, unless willful, continuing, and substantial, shall not be considered “Cause.”

(h) “Change in Control” has the meaning set forth in the CIC Severance Plan.

(i) “Chief Executive Officer” has the meaning set forth in Section 3(a).

 

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(j) “CIC Severance Plan” means the Company’s Change in Control Severance Plan, as may be amended from time to time, or any successor plan, program or arrangement thereto.

(k) “CIC Severance Protection Period” has the meaning set forth in the CIC Severance Plan.

(l) “Certificate of Incorporation” means the Amended and Restated Articles of Incorporation of Sprint Nextel Corporation, as may be amended from time to time.

(m) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including any rules and regulations promulgated thereunder, along with Treasury and IRS Interpretations thereof. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

(n) “Common Stock” means common stock of the Company, Series 1, par value $2.00 per share.

(o) “Company” has the meaning set forth in the preamble.

(p) “Company Group” has the meaning set forth in Section 10(a)(i).

(q) “Compensation Committee” means the Human Capital and Compensation Committee of the Board.

(r) “Competitor” has the meaning set forth in Section 11(b).

(s) “Developments” has the meaning set forth in Section 13(a).

(t) “Disability” or “Disabled” shall mean:

(i) the Executive’s incapacity due to physical or mental illness to substantially perform his duties and the essential functions of his position, with or without reasonable accommodation, on a full-time basis for six months, and within 30 days after a notice of termination is thereafter given by the Company, the Executive shall not have returned to the full-time performance of the Executive’s duties; and, further,

(ii) the Executive becomes eligible to receive benefits under the LTD Plan;

provided, however, if the Executive shall not agree with a determination to terminate his employment because of Disability, the question of the Executive’s disability shall be subject to the certification of a qualified medical doctor agreed to by the Company and the Executive. The costs of such qualified medical doctor shall be paid for by the Company.

 

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(u) “Effective Date” has the meaning set forth in the preamble.

(v) “Employee Plans” has the meaning set forth in Section 5(a).

(w) “Employment Term” means the Initial Employment Term and any Renewal Term.

(x) “Executive” has the meaning set forth in the preamble.

(y) “Good Reason” means the occurrence of any of the following without the Executive’s written consent, unless within 30 days of the Executive’s written notice of termination of employment for Good Reason, the Company cures any such occurrence:

(i) the Company’s material breach of this Agreement;

(ii) a material reduction in the Executive’s Base Salary, as set forth in Section 4(a), or Target Bonus, as set forth in Section 4(b)(i) (that is not in either case agreed to by the Executive), as compared to the corresponding circumstances in place on the Effective Date as may be increased pursuant to Section 4, except for across-the-board reductions generally applicable to all senior executives or

(iii) relocation of the Executive’s principal place of work more than 50 miles without the Executive’s consent; provided, however, that relocation of the Executive to the principal executive offices of the Company in the vicinity of Fairfax County, Virginia, or to the operational offices on the Company in the vicinity of Overland Park, Kansas, shall not constitute Good Reason.

Any occurrence of Good Reason shall be deemed to be waived by the Executive unless the Executive provides the Company written notice of termination of employment for Good Reason within 90 days of the event giving rise to Good Reason.

(z) “Initial Employment Term” has the meaning set forth in Section 2.

(aa) “JAMS” has the meaning set forth in Section 16.

(bb) “LTD Plan” has the meaning set forth in Section 9(e).

(cc) “LTSIP” means the Company’s 2007 Omnibus Incentive Plan, effective May 8, 2007, as may be amended from time to time, or any successor plan, program or arrangement thereto.

(dd) “LTSIP Target Award Opportunities” has the meaning set forth in Section 4(b)(ii).

(ee) “Participant” has the meaning set forth in the CIC Severance Plan.

(ff) “Parties” has the meaning set forth in the preamble.

(gg) “Party” has the meaning set forth in the preamble.

 

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(hh) “Payment Period” means the period of 24 continuous months, as measured from the Executive’s Separation from Service.

(ii) “Proprietary Information” has the meaning set forth in Section 10(a)(i).

(jj) “Release” means a release of claims in a form provided to the Executive by the Company in connection with the payment of benefits under this Agreement.

(kk) “Release Consideration and Revocation Period” means the combined total of the Release Consideration Period and the Release Revocation Period.

(ll) “Release Consideration Period” means the period of time pursuant to the terms of the Release afforded the Executive to consider whether to sign it.

(mm) “Release Revocation Period” means the period pursuant to the terms of an executed Release in which it may be revoked by the Executive.

(nn) “Renewal Term” has the meaning set forth in Section 2.

(oo) “Restricted Period” means the 24-month period following the Executive’s date of termination of employment with the Company for any reason or Cause, Disability, termination by the Company or termination by the Executive. If termination occurs after non-renewal of this Agreement by the Company, however, the Restricted Period will mean the 12-month period following the Executive’s date of termination of employment.

(pp) “Separation from Service” means “separation from service” from the Company and its subsidiaries as described under Section 409A of the Code and the guidance and Treasury regulations issued thereunder. Separation from Service will occur on the date on which the Executive’s level of services to the Company decreases to 21 percent or less of the average level of services performed by the Executive over the immediately preceding 36-month period (or if providing services for less than 36 months, such lesser period) after taking into account any services that the Executive provided prior to such date or that the Company and the Executive reasonably anticipate the Executive may provide (whether as an employee or as an independent contractor) after such date. For purposes of the determination of whether the Executive has had a Separation from Service, the term “Company” shall mean the Company and any affiliate with which the Company would be considered a single employer under Section 414(b) or 414(c) of the Code, provided that in applying Sections 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Sections 1563(a)(1), (2) and (3) of the Code, and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2. In addition, where the use of such definition of “Company” for purposes of determining a Separation from Service is based upon legitimate business criteria, in applying Sections 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 20 percent” is used instead of “at least 80 percent” at each place it appears in Sections 1563(a)(1), (2) and (3) of the Code,

 

- 25 -


and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 20 percent” is used instead of “at least 80 percent” at each place it appears in Treasury Regulation Section 1.414(c)-2.

(qq) “Separation Plan” means the Company’s Separation Plan Amended and Restated Effective August 13, 2006, as may be amended from time to time or any successor plan, program, arrangement or agreement thereto.

(rr) “Specified Employee” shall mean an Executive who is a “specified employee” for purposes of Section 409A of the Code, as administratively determined by the Board in accordance with the guidance and Treasury regulations issued under Section 409A of the Code.

(ss) “STIP” means the Company’s short-term incentive plan under Section 8 of the Company’s 2007 Omnibus Incentive Plan, effective May 8, 2007, as may be amended from time to time, or any successor plan, program or arrangement thereto.

(tt) “Subsidiary” shall mean any entity, corporation, partnership (general or limited), limited liability company, entity, firm, business organization, enterprise, association or joint venture in which the Company directly or indirectly controls ten percent (10%) or more of the voting interest. Notwithstanding the foregoing, for purposes of Section 3(a), “Subsidiary” shall mean any affiliate with which the Company would be considered a single employer as described in the definition of Separation from Service.

(uu) “Target Bonuses” has the meaning set forth in Section 4(b)(i).

(vv) “Territory” has the meaning set forth in Section 11(b).

 

 

Signature Page Follows

 

- 26 -


IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by an officer pursuant to the authority of its Board, and the Executive has executed this Agreement, as of the day and year first written above.

 

SPRINT NEXTEL CORPORATION

By:

 

/s/ Sandra J. Price

/s/ Daniel R. Hesse

Daniel R. Hesse

 

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Sign-On Awards – Exhibit A

Evidence of Award

Daniel R. Hesse

Throughout this Evidence of Award we sometimes refer to Sprint Nextel Corporation and its subsidiaries as “we” or “us.”

Option Right

1. Award of Option Right

The Human Capital and Compensation Committee of the Board of Directors of Sprint Nextel has granted you an Option Right to purchase from us 3,275,000 shares of Series 1 common stock, par value $2.00 per share of Sprint Nextel (the “Common Stock”) at Option Prices as follows:

 

Shares Underlying

  

Option
Price

  

Percent of Date
of Grant
Market Price
Per Share

 

1,000,000

  

$

13.91

  

100

%

1,000,000

  

$

16.69

  

120

%

1,275,000

  

$

19.47

  

140

%

The Option Right is governed by the terms of the Sprint Nextel Corporation 2007 Omnibus Incentive Plan (the “Plan”) and is subject to the terms and conditions described in this Evidence of Award. The Option Right is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986 (the “Code”).

2. When the Option Right Becomes Exercisable

Your Option Right becomes exercisable at a rate of  1/3rd of the total number of shares subject to purchase on each of the first three anniversaries of the Date of Grant, conditioned upon you continuously serving as our employee through those vesting dates. You will forfeit the unvested shares under your Option Right if your service with us ends for any reason, unless vesting accelerates as described in paragraph 3 below. These rules, and the post-termination exercise periods are described in Section 6 of this Evidence of Award below.

3. Acceleration of Vesting

Unvested shares under your Option Right may become vested before the time at which they would normally become vested by the passage of time — that is, the vesting may accelerate. Accelerated vesting occurs upon (1) your termination of service because of your death or Disability, (2) your Termination Date (as defined in paragraph 6 below) if your

 

- 28 -


employment is terminated by the Company without Cause or if you resign with Good Reason or (3) under the conditions described in Section 13(a) of the Plan in connection with a Change in Control of Sprint Nextel in which the Option Right is not assumed, converted or replaced by the resulting entity.

4. Exercise of Option Right

To the extent it has vested, you may exercise your Option Right under this Award in whole or in part at the time or times as permitted by the Plan if the Option Right has not otherwise expired, been forfeited or terminated. You exercise by delivering a written election under procedures established by the Treasurer of Sprint Nextel (including by approved electronic medium) and paying the Option Price. You may pay the Option Price by

 

 

 

check or by wire transfer of immediately available funds,

 

 

 

actual or constructive transfer of shares of Common Stock you have owned for at least six months having a Fair Market Value on the Exercise Date equal to the total Option Price,

or by any combination of cash, shares of Common Stock and other consideration as the Committee may permit.

To the extent permitted by law, you may pay the Option Price from the proceeds of a sale through a broker designated by the Treasurer of Sprint Nextel. The Market Value Per Share for purposes of determining your taxable income from such an exercise will be the actual price at which the broker sold the shares.

5. Expiration of Option Right

Unless terminated earlier in accordance with the terms of this Evidence of Award or the Plan, the Option Right granted herein will expire at 4:00 P.M., U.S. Eastern Time, on the tenth anniversary of the Grant Date (the “Expiration Date”). If the tenth anniversary of the Grant Date, however, is a Saturday, Sunday or any other day on which the market on which our Common Stock trades is closed (a “Non-Business Day”), then the Expiration Date will occur at 4:00 P.M., U.S. Eastern Time, on the first business day before the tenth anniversary of the Grant Date.

6. Effect of your Termination of Employment

If you cease to be an employee of Sprint Nextel for any reason, the effect on your Option Right is described below. In no event may your Option Right be exercised after the Expiration Date. If, after your termination by the Company without Cause or your resignation with Good Reason, you receive salary continuation paid according to the payroll cycle (i.e., not in a lump sum), Termination Date for purpose of this table means the last day of your severance pay period.

 

- 29 -


Termination Event

  

Exercisable Options

  

Unexercisable Options

Resignation (not with Good Reason)

  

May exercise up to 90 days after Termination Date

  

Expire on Termination Date

Termination by the Company Without Cause or Resignation by Executive with Good Reason

  

May exercise up to 90 days after Termination Date

  

Vest on Termination Date; May exercise up to 90 days after Termination Date

For Cause

  

Forfeited

  

Forfeited

Disability or Death

  

May exercise up to 12 months after Termination Date

  

Vest on Termination Date; May exercise up to 12 months after Termination Date

If the last day to exercise according to this schedule is a “Non-Business Day”, then the last day to exercise will occur at 4:00 P.M., U.S. Eastern Time, on the first business day before that day.

Restricted Stock Units

7. Award of Restricted Stock Units

The Human Capital and Compensation Committee of the Board of Directors of Sprint Nextel has granted you an Award of 718,907 Restricted Stock Units (RSUs) under the terms of the Plan as of the Date of Grant. Each RSU represents the right for you to receive from us one share of Common Stock on the delivery date. In addition, each RSU gives you the right to dividend equivalents as described in paragraph 11 below. Your right to receive shares of Common Stock under the RSUs is a contractual right between you and us and does not give you a preferred claim to any particular assets or shares of Sprint Nextel.

8. Restriction Period and Payment

Your RSUs are subject to the restrictions and conditions in this Evidence of Award. Your RSUs vest at a rate of l/3rd of the total number of shares subject to RSUs on each of the first three anniversaries of the Date of Grant. However, vesting of your RSUs may accelerate as described in paragraph 10 below. RSUs that are subject to forfeiture on your termination of service as an employee are called “unvested RSUs,” and RSUs no longer subject to forfeiture or restrictions on transfer are called “vested RSUs.” The date on which the RSU becomes vested is its “vesting date.” You will be entitled to receive payment on your vested RSUs in accordance with the terms of your Employment Agreement.

9. Forfeiture of RSUs

You will forfeit unvested RSUs if you terminate your service with Sprint Nextel for any reason (unless vesting of your RSUs accelerates under paragraph 10).

 

- 30 -


10. Acceleration of Vesting

Unvested RSUs may become vested RSUs before the time at which they would normally become vested by the passage of time — that is, the vesting of RSUs may accelerate. Accelerated vesting occurs upon (1) your Separation from Service because of your death or Disability, (2) your Separation from Service if your employment is terminated in accordance with the terms of your Employment Agreement following your Separation from Service resulting from your termination by the Company without Cause or if you resign with Good Reason or (3) under the conditions described in Section 13(a) of the Plan in connection with a Change in Control of Sprint Nextel in which the RSUs are not assumed, converted or replaced by the resulting entity.

11. Dividend Equivalents

Uninvested RSUs. If cash dividends are paid on the Common Stock underlying your unvested RSUs, and you hold those RSUs on the dividend record date, you will accrue additional whole or fractional RSUs equal to the number of shares of Common Stock the dividend would buy at the Market Value Per Share on the dividend payment date. These additional RSUs will vest and be subject to delivery at the same time, and have the same terms, as the original RSU award.

Vested RSUs. If cash dividends are paid on the Common Stock underlying your vested RSUs, and you hold those RSUs on the dividend record date, you will receive on the dividend payment date a cash payment equal to the amount of the dividend paid on the underlying stock.

Provisions Applicable to Option Right and RSUs

12. Transfer of your Option Right and RSUs and Designation of Beneficiaries

Your Option Right and RSUs represent a contract between Sprint Nextel and you, and your rights under the contract are not assignable to any other party during your lifetime. Upon your death, your Option Right may be exercised in accordance with the terms of the Award by any beneficiary you name in a beneficiary designation or, if you make no designation, by your estate. Also upon your death, shares of Common Stock underlying your RSUs will be delivered in accordance with the terms of the Award to any beneficiaries you name in a beneficiary designation or, if you make no designation, to your estate.

13. Plan Terms

All capitalized terms used in this Evidence of Award that are not defined in this Evidence of Award have the same meaning as those terms have in the Plan. The terms of the Plan are hereby incorporated by this reference. A copy of the Plan will be furnished upon request. “Cause” and “Good Reason” have the meanings set forth in your Employment Agreement.

 

- 31 -


14. Adjustment

In the event of any change in the number or kind of outstanding shares of our Common Stock by reason of a recapitalization, merger, consolidation, reorganization, separation, liquidation, stock split, stock dividend, combination of shares or any other change in our corporate structure or shares of our Common Stock, an appropriate adjustment will be made consistent with the Plan, applicable provisions of the Code and applicable Treasury Department rulings and regulations in the number and kind of shares subject to outstanding Awards and any other adjustments as the Board deems appropriate.

15. Amendment

This Evidence of Award is subject to the terms of the Plan, as may be amended from time to time, except that the Award which is the subject of this Evidence of Award may not be materially impaired by any amendment or termination of the Plan approved after the Date of Grant without your written consent.

16. Data Privacy

By entering into this agreement, you (i) authorize us, and any agent of ours administering the Plan or providing Plan recordkeeping services, to disclose to us or our subsidiaries such information and data as we or our subsidiaries request in order to facilitate the grant of the Option Right and the RSU and the administration of the Plan; (ii) waive any data privacy rights you may have with respect to such information; and (iii) authorize us to store and transmit such information in electronic form.

17. Governing Law

This Evidence of Award will be governed by the laws of the State of Kansas.

18. Severability

The various provisions of this Evidence of Award are severable, and any determination of invalidity or unenforceability of any one provision shall have no effect on the remaining provisions.

19. Entire Agreement

This Evidence of Award contains the entire understanding of the parties. This Evidence of Award may not be modified or amended except in writing duly signed by the parties, except that we may adopt a modification or amendment to the Evidence of Award that is not materially adverse to you. Any waiver or any right or failure to perform under this Evidence of Award must be in writing signed by the party granting the waiver and will not be deemed a waiver of any subsequent failure to perform.

 

- 32 -


Sprint Nextel Corporation

By:

 

/s/ Sandra J. Price

/s/ Daniel R. Hesse

Daniel R. Hesse

This document constitutes part of a prospectus covering securities that have been

registered under the Securities Act of 1933

 

Hesse Employment Agreement




EX-10.1 2 dex101.htm AMENDED AND RESTATED SPRINT NEXTEL CORPORATION CHANGE IN CONTROL SEVERANCE PLAN

Exhibit 10.1

SPRINT NEXTEL CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

(Effective January 1, 2007 and

Amended and Restated Effective January 1, 2008)


SPRINT NEXTEL CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

(Amended and Restated Effective January 1, 2008)

TABLE OF CONTENTS

 

Article

  

 

  

Page

ARTICLE ONE

  

INTRODUCTION

  

1

ARTICLE TWO

  

DEFINITIONS

  

3

ARTICLE THREE

  

ELIGIBILITY AND PARTICIPATION

  

11

ARTICLE FOUR

  

SEVERANCE BENEFITS

  

12

ARTICLE FIVE

  

AMENDMENT AND TERMINATION

  

18

ARTICLE SIX

  

MISCELLANEOUS

  

19

APPENDIX I

  

PLAN PARTICIPANTS

  

26

APPENDIX II

  

APPLICABLE BENEFITS AND PERIODS

  

27

APPENDIX III

  

PARTICIPATING EMPLOYERS

  

28

 

- i -


ARTICLE ONE

INTRODUCTION

 

1.01

Purpose of the Plan

The Sprint Nextel Corporation Change in Control Severance Plan (the “Plan”) provides primarily for severance compensation benefits for certain key employees following termination of employment in connection with and/or following a Change in Control. Given the level of acquisition and change in control activity in today’s business environment, the Board recognizes and understands that many key employees face uncertainty with respect to their job security. In addition, the Board believes that the concerns of key employees regarding a possible Change in Control transaction may cause them to consider career changes in an effort to assure financial security for themselves and their families. Consequently, the Corporation desires to increase the willingness of its key employees to remain with the Corporation (or its Subsidiaries) notwithstanding the employment uncertainties related to a possible Change in Control by providing certain economic benefits in the event of a Change in Control, thus allowing such key employees to make career decisions without undue time pressure and financial uncertainty.

The Plan is intended to provide severance compensation and benefits pursuant to the Plan if a Change in Control of the Corporation has occurred and the Participant’s employment is either (a) terminated by a Company without Cause or (b) voluntarily terminated by the Participant for Good Reason in accordance with the terms of this Plan. The purpose and intent of the Plan is to help the Corporation attract and retain key employees and reduce distractions resulting from a potential Change in Control. The Board has considered the effect that a Change in Control of the Corporation may have on key employees of the Corporation and its Subsidiaries, and has found that such a Plan is in the best interest of the Corporation and its stockholders.

Capitalized terms used throughout the Plan have the meanings set forth in Article Two, except as otherwise defined in the Plan or where the context clearly requires otherwise.

 

1.02

Plan Status

The Plan is intended to be a plan providing Severance Benefits following a Change in Control. The Plan is intended to be a top hat plan for a select group of management or highly compensated executives, subject only to the administration and enforcement provisions of ERISA.

 

1.03

Entire Plan

This document, including any Appendix hereto, and any documents incorporated herein by reference set forth the provisions of the Plan effective as of the date of this current amendment and restatement of the Plan.

 

1


1.04

Administration

The Human Capital and Compensation Committee of the Board (the “Compensation Committee”) shall administer the Plan; provided, however, that none of the members of the Compensation Committee will be a Participant. The powers and duties of the Compensation Committee in administering the Plan are set forth in Section 6.02.

 

2


ARTICLE TWO

DEFINITIONS

 

2.01

Defined Terms. For purposes of this Plan the following terms shall have the following meanings:

 

 

(a)

Accounting Firm” means a nationally recognized accounting firm, or actuarial, benefits or compensation consulting firm (with experience in performing the calculations regarding the applicability Section 280G of the Code and of the tax imposed by Section 4999 of the Code) selected by the Corporation.

 

 

(b)

Applicable Multiple” means the number specified under the heading “Applicable Multiple” on Appendix II for the Participant’s designated Severance Benefit Classification.

 

 

(c)

Applicable Period” means the period specified under the heading “Applicable Period” on Appendix II for the Participant’s designated Severance Benefits Classification.

 

 

(d)

Base Salary” means the annual base salary of any Participant, exclusive of any bonus, special pay or other benefits a Participant may receive, and for purposes of Article Four means such annual base salary in effect (i) on the date immediately preceding the date of the relevant Change in Control or (ii) on the date of the Participant’s termination of employment with a Company, whichever is higher.

 

 

(e)

Board” means the Board of Directors of the Corporation.

 

 

(f)

Business Transaction” has the meaning set forth in Section 2.01(h)(ii).

 

 

(g)

Cause” means a termination of a Participant’s employment due to the Participant’s:

 

 

(i)

conviction of, or entering into a plea of either guilty or nolo contendere to, any felony, including, but not limited to, a felony involving moral turpitude, embezzlement, theft or similar act that occurred during or in the course of the Participant’s employment with a Company;

 

 

(ii)

willful and continued failure to substantially perform his duties for a Company, after receiving written notice from or on behalf of such Company and having had a thirty (30) day opportunity to cure the deficiency;

 

 

(iii)

willful misconduct or gross negligence that results in material harm to a Company; or

 

 

(iv)

willful violation of the Corporation’s policies that results in material harm to a Company.

 

3


For purposes of this Plan, an act, or failure to act, shall not be deemed to be “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without a reasonable belief that the action or omission was in the best interests of a Company.

 

 

(h)

Change in Control” means the occurrence of any of the following events:

 

 

(i)

any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the then-outstanding Voting Stock of the Corporation; except, that:

 

 

(A)

for purposes of this Section 2.01(h)(i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of Voting Stock of the Corporation directly from the Corporation that is approved by a majority of the Incumbent Directors, (2) any acquisition of Voting Stock of the Corporation by the Corporation or any Subsidiary, (3) any acquisition of Voting Stock of the Corporation by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary, and (4) any acquisition of Voting Stock of the Corporation by any Person pursuant to a Business Transaction that complies with clauses (A), (B) and (C) of Section 2.01(h)(ii);

 

 

(B)

if any Person becomes the beneficial owner of thirty percent (30%) or more of combined voting power of the then-outstanding Voting Stock of the Corporation as a result of a transaction or series of transactions described in clause (1) of Section 2.01(h)(i)(A) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Corporation representing one percent (1%) or more of the then-outstanding Voting Stock of the Corporation, other than as a result of (x) a transaction described in clause (1) of Section 2.01(h)(i)(A) above, or (y) a stock dividend, stock split or similar transaction effected by the Corporation in which all holders of Voting Stock are treated equally then such subsequent acquisition shall be treated as a Change in Control;

 

 

(C)

a Change in Control will not be deemed to have occurred if a Person becomes the beneficial owner of thirty percent (30%) or more of the Voting Stock of the Corporation as a result of a reduction in the number of shares of Voting Stock of the Corporation outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Incumbent Directors unless and until such Person thereafter becomes the beneficial owner of additional shares of Voting Stock of the Corporation representing one percent (1%) or more of the then-outstanding Voting Stock of the Corporation, other than as a result

 

4


 

of a stock dividend, stock split or similar transaction effected by the Corporation in which all holders of Voting Stock are treated equally; and

 

 

(D)

if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired beneficial ownership of thirty percent (30%) or more of the Voting Stock of the Corporation inadvertently, and such Person divests as promptly as practicable, but no later than the date, if any, set by the Incumbent Directors a sufficient number of shares so that such Person beneficially owns less than thirty percent (30%) of the Voting Stock of the Corporation, then no Change in Control shall have occurred as a result of such Person’s acquisition; or

 

 

(ii)

the consummation of a reorganization, merger or consolidation of the Corporation with, or the acquisition of the stock or assets of the Corporation by, another Person, or similar transaction (each, a “Business Transaction”), unless, in each case, immediately following such Business Transaction (A) the Voting Stock of the Corporation outstanding immediately prior to such Business Transaction continues to represent, directly or indirectly, (either by remaining outstanding or by being converted into Voting Stock of the surviving entity or any parent thereof), more than fifty percent (50%) of the combined voting power of the then outstanding shares of Voting Stock or comparable equity interests of the entity resulting from such Business Transaction (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Corporation, such entity resulting from such Business Transaction, or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or such entity resulting from such Business Transaction) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Transaction, and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Transaction were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Transaction; or

 

 

(iii)

during any consecutive eighteen (18) month period, more than thirty percent (30%) of the Board ceases to be comprised of Incumbent Directors; or

 

 

(iv)

consummation of a transaction that implements in whole or in part a resolution of the stockholders of the Corporation authorizing a sale of all or substantially all of Corporation’s assets or a complete liquidation or dissolution of the Corporation, except pursuant to a Business Transaction that complies with clauses (A), (B) and (C) of Section 2.01(h)(ii).

 

5


 

(i)

Chief Executive Officer” means the Chief Executive Officer of the Corporation.

 

 

(j)

CIC Severance Protection Period” means the time period commencing on the date of the first occurrence of a Change in Control and continuing until the earlier of (i) the 18-month anniversary of such date or (ii) the Participant’s death. A CIC Severance Protection Period shall also include the time period before the occurrence of a Change in Control for Participants who are subject to a Pre-CIC Termination with respect to the affected Participant.

 

 

(k)

Code” means the Internal Revenue Code of 1986, as amended and the proposed, temporary and final regulations promulgated thereunder. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

 

 

(l)

Company” means as the context requires, the Corporation, any Participating Employer, or any entity to which a Participant’s employment is transferred, at the direction of the Corporation, and with which the Corporation would be considered a single employer as described in the definition of Separation from Service.

 

 

(m)

Compensation Committee” has the meaning set forth in Section 1.04.

 

 

(n)

Corporation” means Sprint Nextel Corporation, a Kansas corporation, or any successor company.

 

 

(o)

Director” means a member of the Board.

 

 

(p)

Effective Date” means January 1, 2007.

 

 

(q)

Employment Agreement” means any written employment agreement between a Company and a Participant.

 

 

(r)

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

 

 

(s)

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Reference to any section or subsection of the Exchange Act includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

 

 

(t)

Excise Tax” shall mean, collectively, (i) the tax imposed by Section 4999 of the Code by reason of being “contingent on a change in ownership or control” of the Corporation, within the meaning of Section 280G of the Code, or (ii) any similar tax imposed by state or local law, or (iii) any interest or penalties with respect to any excise tax described in clause (i) or (ii).

 

6


 

(u)

Good Reason” means a Participant’s resignation from employment with a Company in accordance with Section 6.15(b) after any of the actions listed below are directed at the Participant without the Participant’s written consent (unless cured prior to such resignation):

 

 

(i)

Such Company’s material breach of an Employment Agreement with the Participant, if any;

 

 

(ii)

significant and adverse change in duties and responsibilities which results in a change in a Participant’s tier (and adjusting as appropriate for any changes to the Corporation’s system of classifying employees implemented subsequent to the Effective Date) as compared with a Participant’s responsibilities or duties immediately prior to the Change in Control;

 

 

(iii)

reduction in a Participant’s Base Salary as compared with the Participant’s Base Salary immediately prior to the Change in Control, except for across-the-board reductions generally applicable to all senior executives;

 

 

(iv)

reduction in a Participant’s Target Bonus as compared with the Participant’s Target Bonus in effect immediately prior to the Change in Control, except for across-the-board reductions generally applicable to all senior executives;

 

 

(v)

the failure to provide long-term incentive opportunities to the Participant at a level that is generally comparable to all senior executives;

 

 

(vi)

reduction in the aggregate value of Section 2.01(u)(iii), (iv) and (v) as compared with such benefits in effect immediately prior to the Change in Control, except for across-the-board reductions of not more than ten percent (10%) generally applicable to all senior executives;

 

 

(vii)

reduction in aggregate employee benefits provided to the Participant as compared to the value of aggregate employee benefits provided immediately prior to the Change in Control, except for across-the-board reductions generally applicable to all senior executives;

 

 

(viii)

a Company requires the Participant to have the Participant’s principal location of work changed to a location more than fifty (50) miles from the location thereof immediately prior to the Change in Control; or

 

 

(ix)

failure of any successor to a Company to assume the Participant’s Employment Agreement or this Plan, as applicable;

provided, however, that a Participant’s right to resign his employment for Good Reason will lapse unless such resignation occurs within sixty (60) days of the event giving rise to Good Reason in accordance with Section 6.15(b) (the “Good Reason Period”). Notwithstanding the foregoing, the lapse of such Participant’s right to resign for Good Reason will only apply to the event giving rise to Good Reason. For the avoidance of

 

7


doubt, the Participant shall have the right to resign for Good Reason, as provided in this Section 2.01(u), upon the occurrence of a subsequent and independent event giving rise to Good Reason.

 

 

(v)

Good Reason Period” has the meaning set forth in Section 2.01(u).

 

 

(w)

Incumbent Directors” means the individuals who, as of the Effective Date, are Directors of the Corporation, and any individual becoming a Director after the Effective Date whose election, nomination for election by the Corporation’s stockholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

 

(x)

Initial Term” has the meaning set forth in Section 5.02.

 

 

(y)

JAMS” has the meaning set forth in Section 6.08(a).

 

 

(z)

Parties” has the meaning set fourth in Section 6.08(a).

 

 

(aa)

Participant” means each full-time employee of a Company who is recommended to the Compensation Committee by the Chief Executive Officer for participation in the Plan and whose participation in the Plan has been approved by the Compensation Committee as provided in Article Three and who continues to remain employed by a Company either up through a Change in Control or up to a termination of employment that qualifies as a Pre-CIC Termination, except as otherwise removed from Participation pursuant to Article Three.

 

 

(bb)

Participating Employer” means the Corporation and any Subsidiary of the Corporation that is designated as a Participating Employer under the Plan by the Board, excluding, however, any division of the Corporation or of a Subsidiary or affiliate of the Corporation that is designated by the Board as ineligible to participate in the Plan. Appendix III contains a list of the Participating Employers currently participating in the Plan that have adopted the Plan pursuant to Article Six.

 

 

(cc)

Payment” has the meaning set forth in Section 4.05.

 

 

(dd)

Person” has the meaning set forth in Section 2.01(h)(i).

 

 

(ee)

Plan” has the meaning set forth in Section 1.01, as such may be amended from time to time, or any successor plan, program or arrangement thereto.

 

 

(ff)

Pre-CIC Termination” means the termination of a Participant without Cause if (i) the termination occurs in the six-month period before a Change in Control at the

 

8


 

request of a third party in contemplation of a Change in Control, (ii) the Change in Control occurs, and (iii) the termination constitutes a Separation from Service.

 

 

(gg)

Release” means a release of claims and a non-compete agreement and other restrictive covenants in a form provided to the Participant by the Corporation in connection with the payment of benefits under this Plan.

 

 

(hh)

Release Consideration and Revocation Period” means the combined total of the Release Consideration Period and the Release Revocation Period.

 

 

(ii)

Release Consideration Period” means the period of time pursuant to the terms of a Release afforded a Participant to consider whether to sign it.

 

 

(jj)

Release Revocation Period” means the period pursuant to the terms of an executed Release in which it may be revoked by a Participant.

 

 

(kk)

Renewal Term” has the meaning set forth in Section 5.02.

 

 

(ll)

Separation from Service” means “separation from service” from an Employer as described under Code Section 409A and any governing Internal Revenue Service guidance and Treasury regulations. A Participant who is a Board member does not have a Separation from Service until he or she has a Separation from Service with respect to both his or her employment and his or her Board membership. “Employer” means the Corporation and any affiliate with which the Corporation is treated as a single employer under Code Section 414(b) or 414(c), as modified in (i) and (ii) below.

 

 

(i)

50 Percent-Owned Entities. In applying Code Sections 1563(a)(1), (2), and (3) to Code Section 414(b), the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears. In applying Treasury Regulation Section 1.414(c)-2 to trades or businesses (whether or not incorporated) that are under common control under Code Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears.

 

 

(ii)

20 Percent-Owned Entities. In addition to (i) above, where the Compensation Committee determines that legitimate business criteria exist with respect to a particular entity, in applying Code Sections 1563(a)(1), (2), and (3) under Code Section 414(b), the language “at least 20 percent” is used instead of “at least 80 percent” each place it appears. In applying Treasury Regulation Section 1.414(c)-2 to trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 20 percent” is used instead of “at least 80 percent” each place it appears.

 

 

(iii)

Service Level. A Separation from Service occurs when the Participant’s level of services drops to 21 percent or less of the average level of service provided by the Participant over the immediately preceding 36-month period (or if providing services for less than 36 months, that lesser period).

 

9


 

If a Participant’s status changes from an employee to an independent contractor, or from an independent contractor to an employee, services provided in both capacities are taken into account.

 

 

(mm)

Separation Plan” means the Corporation’s Separation Plan as may be amended from time to time or any successor plan, program, arrangement or agreement thereto.

 

 

(nn)

Severance Benefits” means Severance Pay and the other benefits payable to a Participant pursuant to Article Four of the Plan.

 

 

(oo)

Severance Benefits Classification” means a Participant’s severance benefits classification, as specified for the Participant on Appendix I and as set forth on Appendix II.

 

 

(pp)

Severance Pay” means the cash severance payments payable to a Participant pursuant to Section 4.01 of the Plan.

 

 

(qq)

Specified Employee” means a Participant who is a “specified employee” of the Corporation for purposes of Code Section 409A, as administratively determined by the Board of Directors of the Corporation in accordance with the guidance and Treasury regulations issued under Code Section 409A.

 

 

(rr)

STIP” means the Corporation’s short term incentive plan, under Section 8 of the Corporation’s Omnibus Incentive Plan, effective May 8, 2007, as may be amended from time to time, or any successor plan, program or arrangement thereto.

 

 

(ss)

Subsidiary” means any entity in which the Corporation, directly or indirectly, beneficially owns more than fifty percent (50%) of such entity’s equity interest by vote and value.

 

 

(tt)

Target Bonus” means a Participant’s target (i.e., based on 100% attainment of stated objectives) short-term incentive opportunity under the STIP.

 

 

(uu)

Voting Stock” means securities entitled to vote generally in the election of directors.

 

10


ARTICLE THREE

ELIGIBILITY AND PARTICIPATION

 

3.01

Eligibility on the Effective Date

Each full-time employee of the Corporation or a Participating Employer who has been recommended to the Compensation Committee to be a Tier I or Tier II Executive by the Chief Executive Officer and whose participation in the Plan has been approved by the Compensation Committee, as of the Effective Date will be a Participant in the Plan.

 

3.02

Future Eligibility

Except as provided in the next sentence, each full-time employee of the Corporation or a Participating Employer who is recommended to the Compensation Committee to be a Tier I or Tier II Executive by the Chief Executive Officer will be a Participant in the Plan only if the Compensation Committee approves his or her participation after the Effective Date and before a Change in Control.

 

3.03

Plan Participants

Appendix I lists, as of the date of this current amendment and restatement of the Plan, the individuals whom the Compensation Committee has designated as Participants in accordance with Sections 3.01 and 3.02.

 

3.04

End of Participation

At any time prior to the six (6) month period preceding the occurrence of a Change in Control, the Compensation Committee may authorize a Company to provide a Participant with written notice of termination of the Participant’s designation as a Participant in the Plan.

 

11


ARTICLE FOUR

SEVERANCE BENEFITS

 

4.01

Severance Benefits

 

 

(a)

Eligibility. A Participant will be eligible for the Severance Benefits described in this Section, subject to the remainder of this paragraph and Section 4.02, if a Change in Control occurs and, during the CIC Severance Protection Period, (a) a Company terminates the Participant’s employment without Cause (b) the Participant voluntarily terminates employment for Good Reason during the applicable Good Reason Period or (c) the Company that employs the Participant ceases to constitute a single employer with the Corporation, as described in the definition of Separation from Service, and such termination of employment or change in status constitutes a Separation from Service. In addition, as a condition of receiving Severance Benefits, the Participant must execute a Release within the Release Consideration Period and deliver it to the Company with the Release Revocation Period expired without revocation.

 

 

(b)

Amount, Time, and Form of Benefit. A Participant described in (a) above will be entitled to the following benefits, subject to the conditions described below.

 

 

(i)

Pro Rata Target Bonus for Performance Periods Beginning on or Before January 1, 2009. In lieu of any benefit that may be paid under the STIP, the prorated portion of the Participant’s Target Bonus for the year in which the Participant’s Separation from Service occurs (prorated for the portion of the performance period before the Separation from Service date in accordance with the terms of the STIP and related administrative guidelines under the STIP). This amount is payable in a lump sum on the Separation from Service date. A resignation for Good Reason under this Plan is deemed to be a termination without Cause under the STIP.

 

 

(ii)

Pro Rata Bonus for Performance Periods Beginning After January 1, 2009. In lieu of any benefit that may be paid under the STIP, a prorated portion of the Participant’s bonus (determined as described below) for the year in which the Participant’s Separation from Service occurs (prorated for the portion of the performance period before Separation from Service date in accordance with the terms of the STIP and related administrative guidelines under the STIP). If the Separation from Service occurs in the same calendar year in which the Change in Control occurs, the prorated bonus will be based on a prorated portion of the Participant’s Target Bonus payable in a lump sum on the Separation from Service date. If the Separation from Service occurs after the calendar year in which the Change in Control occurs, the prorated bonus will be based on a prorated portion of the Participant’s actual bonus for the performance period, based on satisfaction of the pre-established performance targets, payable in a lump sum on the date payments under the STIP are paid to Executives who remain employed but no later than March 15 of the year following the Separation from Service date.

 

12


 

(iii)

CIC Severance Amount. Except as provided in the next sentence, an amount—payable in accordance with (iv) below—equal to: the Participant’s Applicable Multiple (based on the Participant’s Severance Benefits Classification) multiplied by the sum of the Participant’s (x) Base Salary and (y) Target Bonus, in each case, for the year in which the Participant’s termination occurs (“CIC Severance Amount”). If, however, the Participant’s Separation from Service is for Good Reason due to a reduction of the Participant’s Target Bonus under Section 2.01(u)(iv), the Participant’s Target Bonus under this subsection will be the Participant’s Target Bonus in effect immediately before the reduction.

 

 

(iv)

Form and Timing of Payment. The CIC Severance Amount under (iii) above is payable at the time and in the form provided in this subsection, subject to the six-month delay for Specified Employees under Section 4.02(b). This amount is composed of two parts: the amount to which the Participant would otherwise be entitled under an Employment Agreement or Separation Plan with respect to Base Salary and annual short term incentive compensation in the absence of this Plan, assuming the conditions resulting in entitlement to such benefits has occurred, (“Base Severance Amount”), and the additional amount, if any, provided under (iii) above (“CIC Enhancement”). These amounts are payable as follows, depending for each individual Participant upon whether the Change in Control is a “change in control event” as defined in the applicable Section 409A Treasury Regulations (“409A CIC”) or not (“Non-409A CIC”).

 

 

(A)

409A CIC. All CIC Severance Amounts payable as a result of a 409A CIC are payable in a lump sum. For any Participant whose Separation from Service occurs before a Change in Control under circumstances constituting a Pre-CIC Termination, any CIC Severance Amount payable under this Plan is reduced by amounts previously paid with respect to Base Salary and annual short term incentive compensation under an Employment Agreement or Separation Plan to the Participant for any period after the Separation from Service. The CIC Severance Amount is payable on (x) the Executive’s Separation from Service date; or (y) for a Pre-CIC Termination, the closing date of the 409A CIC, except that if the Release Consideration and Revocation Period ends on or after December 15 of the calendar year in which the Participant incurs a Separation from Service, the CIC Severance Amount is payable on the first business day in the following calendar year.

 

 

(B)

Non-409A CIC. All CIC Enhancements payable as a result of a Non-409A CIC are payable in a lump sum. All Base Severance Amounts payable as a result of a Separation from Service in connection with a Non-409A CIC are payable in the form provided under the applicable Employment Agreement or Separation Plan. For any Participant whose Separation from Service occurs before a Change in Control under circumstances constituting a Pre-CIC

 

13


 

Termination, any Base Severance Amount payable under this Plan is reduced by amounts previously paid with respect to Base Salary and annual short term incentive compensation under an Employment Agreement or Separation Plan to the Participant for any period after the Separation from Service. The CIC Severance Amounts are payable (or installment payments will commence) on (x) the Executive’s Separation from Service date; or (y) for a Pre-CIC Termination, the closing date of the Non-409ACIC, except that if the Release Consideration and Revocation Period ends on or after December 15 of the calendar year in which the Participant incurs a Separation from Service, any payments under this section 4.01(b)(iv)(B) that are otherwise payable in the calendar year of the Participant’s Separation from Service shall be paid in a lump sum on the first business day of the following calendar year.

 

 

(v)

Health Coverage. A Participant may continue participation at then-existing participation and coverage levels for the Applicable Period following the Separation from Service in the Corporation’s group health and life insurance plans comparable to the terms in effect from time to time for the Corporation’s senior executives, including any co-payment and premium payment requirements, except that: (A) after the Applicable Period expires, the Participant will retain any rights to continue coverage under the group health plans under the benefits continuation provisions pursuant to Section 4980B of the Code and to continue coverage under any life insurance plans by paying the applicable premiums of such plans; (B) the Participant will no longer be eligible to receive the benefits otherwise receivable under this subsection as of the date that the Participant becomes eligible to receive comparable benefits from a new employer or otherwise; and (C) no Company may provide a cash payment in lieu of the benefits provided under this subsection.

 

 

(vi)

Outplacement. For a period ending on the last day of the second calendar year following the year in which the Participant’s Separation from Service occurred, the Participant will receive outplacement services from a firm selected by the applicable Company, at the Company’s expense, in an amount not to exceed $35,000. No Company may provide a cash payment in lieu of this outplacement benefit.

 

 

(c)

Equity and Long-Term Incentives. This Plan does not affect the vesting or payment of any equity or long-term incentive grants or awards. Unvested equity and other long-term incentives as specified in individual award agreements, if applicable, shall vest and pay with respect to each Participant in accordance with their terms.

 

 

(d)

Reimbursements. Any reimbursements by a Company to a Participant of any eligible expenses under this Plan that are not otherwise exempt from Code Section 409A (“Reimbursements”) will be made promptly and, in any event, on or before the last day of the Participant’s taxable year following the taxable year in which the expense was incurred. The amount of any Reimbursements, and the value of

 

14


 

any in-kind benefits not otherwise exempt from Code Section 409A to be provided during any taxable year of a Participant will not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other of taxable years of such Participant, except for any limit on the amount of expenses that may be reimbursed under an arrangement described in Code Section 105(b). The right to Reimbursements, or in-kind benefits, will not be subject to liquidation or exchange for another benefit.

 

 

(e)

Benefits in Lieu of Other Severance. Any Severance Benefits payable under this Section 4.01 will be paid solely in lieu of, not in addition to, any severance amounts payable under an Employment Agreement or Separation Plan on account of the Participant’s termination from employment, except to the extent that the Employment Agreement provides greater benefits than the Severance Benefits under this Plan. If the Employment Agreement provides a greater benefit, that excess amount will be paid in accordance with the Employment Agreement. In no event may there be duplication of benefits under this Plan and any Employment Agreement or Separation Plan.

 

4.02

Section 409A

 

 

(a)

In General. The Company intends that benefits provided under the Plan will not be subject to tax under Code Section 409A. Notwithstanding any provision of the Plan to the contrary, the Plan is to be interpreted and construed consistent with this intent. To the extent that any provision of the Plan were to conflict with section 409A or that the administration of the Plan were to fail to satisfy the requirements of section 409A, that provision will be deemed null and void to the extent permitted by applicable law.

 

 

(b)

Distributions. Notwithstanding any provision of the Plan to the contrary, distributions under the Plan may only be made upon an event and in a manner permitted under Code Section 409A. In no event may a Participant, directly or indirectly, designate the calendar year of payment, except as permitted by Code Section 409A. The right to a series of payments under the Plan will be treated as a right to a series of separate payments. If a distribution or benefit subject to Code Section 409A is being made to a Specified Employee due to the Participant’s Separation from Service, distribution or payment will be delayed until the earlier to occur of the Participant’s death or the day that is six months and one day following the Participant’s Separation from Service (the “Delay Period”). The postponed payments will be paid to the Participant on the last day of the Delay Period.

 

 

(c)

No Representations or Warranties. The Corporation does not, however, assume any economic burdens associated with Code Section 409A. Although the Corporation intends to administer the Plan to prevent taxation under Code Section 409A, it does not represent or warrant that the Plan complies with any provision of federal, state, local, or non-United States law. The Corporation, its subsidiaries, and their respective directors, officers, employees and advisers will not be liable to any Participant (or any other individual claiming a benefit through the Participant) for any tax, interest, or penalties the Participant may owe as a result

 

15


 

of participation in the Plan. And neither the Corporation nor its subsidiaries or affiliates have any obligation to indemnify or otherwise protect any Participant from any obligation to pay taxes under Code Section 409A.

 

4.03

Forfeiture

Any right of the Participant to receive Severance Benefits hereunder shall be forfeited to the extent of any amounts payable or benefits due after any breach of Section 6.09 by the Participant.

 

4.04

Legal Fees

All expenses of a Participant incurred in enforcing the Participant’s rights and/or to recover the Participant’s benefits under this Article Four, including but not limited to, attorneys’ fees, court costs, arbitration costs, and other expenses shall be paid by the Corporation. The Corporation shall pay, or reimburse the Participant for such fees, costs and expenses, promptly upon presentment of appropriate documentation, but only if, to the extent and at the earliest date(s) such payment or reimbursement does not violate Code Section 409A.

 

4.05

Applicable Provisions if Excise Tax Applies

Anything in the Plan to the contrary notwithstanding, if it is determined (as hereafter provided) that any payment or distribution by or on behalf of a Company to or for the benefit of the Participant, whether paid or payable or distributed or distributable pursuant to the terms of the Plan or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the Excise Tax, but for the application of this sentence, then the Payment shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such Payment, as so reduced, constitutes an “Excess Parachute Payment” within the meaning of Section 280G of the Code; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate Payment to be provided, determined on an after-tax basis (taking into account the Excise Tax imposed, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income taxes). The fact that the Participant’s right to a Payment may be reduced by reason of the limitations contained in this Section 4.05 shall not of itself limit or otherwise affect any other rights of the Participant other than under the Plan. In the event that a Payment intended to be provided under the Plan is required to be reduced pursuant to this Section 4.05, the Corporation may effect such reduction in any manner it deems appropriate.

 

 

(a)

All determinations required to be made under this Section 4.05, including whether an Excise Tax is payable by the Participant and the amount of such Excise Tax, shall be made by the Accounting Firm. The Corporation shall direct the Accounting Firm to submit its determination and detailed supporting calculations to the relevant Company and the Participant within fifteen (15) calendar days after the date of the Participant’s termination, if applicable, and any other such time or

 

16


 

times as may be requested by such Company or the Participant. If the Accounting Firm determines that no Excise Tax is payable by the Participant, it shall, at the same time as it makes such determination, furnish the Participant with an opinion that the Participant has substantial authority not to report any Excise Tax on the Participant’s federal, state, local income or other tax return.

 

 

(b)

The Corporation and the Participant shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Corporation or the Participant, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 4.05(a). Any reasonable determination by the Accounting Firm of the type contemplated by Section 4.05(a) (and supported by the calculations done by the Accounting Firm) shall be binding upon such Company and the Participant.

 

 

(c)

The federal, state and local income or other tax returns filed by the Participant shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax, if any, payable by the Participant. The Participant shall make proper payment of the amount of any Excise Tax, and upon request, provide to the Corporation true and correct copies (with any amendments) of the Participant’s federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Corporation, evidencing such filing and payment.

 

 

(d)

The Corporation will pay the fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Section 4.05(a) and Section 4.05(c). If such fees and expenses are initially paid by the Participant, subject to Section 4.02, the Corporation shall reimburse the Participant the full amount of such fees and expenses within ten (10) business days after receipt from the Participant of reasonable evidence of payment.

 

17


ARTICLE FIVE

AMENDMENT AND TERMINATION

 

5.01

Amendment

The Corporation reserves the right to amend, modify or change the Plan, at any time without any Participant’s consent; provided, however, that any amendment, modification or change that adversely affects a Participant’s severance benefits and/or rights will not apply to a Participant if the revision is made within six (6) months prior to, the occurrence of a Change in Control without the Participant’s written consent (and before all payments and benefits hereunder or at or following the occurrence of such Change in Control associated with such Change in Control are paid or made available as set forth herein), except as may be otherwise required to comply with changes in applicable laws or regulations, including as set forth in Section 4.02.

 

5.02

Termination

The term of the Plan shall be for an initial term of two (2) years commencing on the Effective Date and shall continue through December 31, 2008 (the “Initial Term”); provided, however, that at the end of the Initial Term and on each succeeding anniversary of the Effective Date, the Plan will be automatically extended by an additional one (1) year (each, a “Renewal Term”), unless, not less than one (1) year prior to the end of the Initial Term or any Renewal Term, a Company has given the Participants written notice of nonrenewal. Notwithstanding the foregoing, following the commencement of any discussions with a third party that result in a Change in Control, the Plan shall continue subject to Section 5.01, until the applicable Participating Employer has fully performed all of such Participating Employer’s obligations under the Plan with respect to all Participants, and shall have paid all Severance Benefits under the Plan in full to all Participants.

 

18


ARTICLE SIX

MISCELLANEOUS

 

6.01

Participant Rights

Each Company intends this Plan to constitute a legally enforceable obligation between (A) such Company and (B) each Participant.

It is also intended that the Plan shall confer vested and non-forfeitable rights for each Participant to receive benefits to which the Participant is entitled under the terms of the Plan with Participants being third party beneficiaries.

Except as provided in the definitions of Cause and Good Reason, nothing in this Plan shall be construed to confer on any Participant any right to continue in the employ of any Company or a Subsidiary or affiliate of the Corporation or to affect in any way the right of the Corporation or a Subsidiary or affiliate of the Corporation to terminate a Participant’s employment without prior notice at any time for any reason or no reason.

 

6.02

Authority of the Compensation Committee

 

 

(a)

The Compensation Committee will administer the Plan and have the full authority and discretion necessary to accomplish that purpose, including, without limitation, the authority and discretion to:

 

 

(i)

resolve all questions relating to the eligibility of Participants;

 

 

(ii)

determine the amount of benefits, if any, payable to Participants under the Plan and determine the time and manner in which such benefits are to be paid;

 

 

(iii)

engage any administrative, legal, tax, actuarial, accounting, clerical, or other services it deems appropriate in administering the Plan;

 

 

(iv)

construe and interpret the Plan, supply omissions from, correct deficiencies in and resolve inconsistencies or ambiguities in the language of the Plan, resolve inconsistencies or ambiguities between the provisions of this document, and adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan document;

 

 

(v)

compile and maintain all records it determines to be necessary, appropriate or convenient in connection with the administration of the Plan; and

 

 

(vi)

resolve all questions of fact relating to any matter for which it has administrative responsibility.

 

 

(b)

The Compensation Committee shall perform all of the duties and may exercise all of the powers and discretion that the Compensation Committee deems necessary or appropriate for the proper administration of the Plan, including, but not limited

 

19


 

to, delegation of any of its duties to one or more authorized officers, and shall do so in a uniform, nondiscriminatory manner.

 

 

(c)

Any failure by the Compensation Committee to apply any provisions of this Plan to any particular situation shall not represent a waiver of the Compensation Committee’s authority to apply such provisions thereafter. Every interpretation, choice, determination or other exercise of any power or discretion given either expressly or by implication to the Compensation Committee shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan or otherwise directly or indirectly affected by such action, without restriction, however, on the right of the Compensation Committee to reconsider and redetermine such action.

 

 

(d)

Any decision rendered by the Compensation Committee and any review of such decision shall be limited to determining whether the decision was so arbitrary and capricious as to be an abuse of discretion. The Compensation Committee may adopt such rules and procedures for the administration of the Plan as are consistent with the terms hereof.

 

6.03

Claims Procedure

 

 

(a)

With respect to any claim for benefits which are provided exclusively under this Plan, the claim shall be approved or denied by the Compensation Committee within sixty (60) days following the receipt of the information necessary to process the claim. If the Compensation Committee denies a claim for benefits in whole or in part, it will give written notice of the decision to the claimant or the claimant’s authorized representative, which notice will set forth in a manner calculated to be understood by the claimant, stating the specific reasons for such denial, make specific reference to the pertinent Plan provisions on which the decision was based, and provide any other additional information, as applicable, required by 29 Code of Federal Regulations Section 2560.503-1 applicable to the Plan.

 

 

(b)

With respect to any claim for benefits which, under the terms of the Plan, are provided under another employee benefit plan maintained by a Company, the Compensation Committee shall determine claims regarding the Participant’s eligibility under the Plan in accordance with the preceding paragraph, but the administration of any other claim with respect to such benefits (including the amount of such benefits) shall be subject to the claims procedure specified in such other employee benefit plan or program.

Appeals with respect to any claim for benefits which, under the terms of the Plan, are provided under another employee benefit plan maintained by a Company (e.g., group health, life insurance, etc.), shall be subject to the claims and appeals procedure specified in such other employee benefit plan.

 

20


6.04

Records and Reports

The Compensation Committee will maintain adequate records of all of their proceedings and acts and all such books of account, records, and other data as may be necessary for administration of the Plan. The Compensation Committee will make available to each Participant upon the Participant’s request such of the Plan’s records as pertain to him for examination at reasonable times during normal business hours.

 

6.05

Reliance on Tables, Etc.

In administering the Plan, the Compensation Committee is entitled to the extent permitted by law to rely conclusively upon all tables, valuations, certificates, opinions and reports which are furnished by accountants, legal counsel or other experts employed or engaged by the Compensation Committee. The Compensation Committee will be fully protected in respect of any action taken or suffered by the Compensation Committee in good faith reliance upon all such tables, valuations, certificates, reports, opinions or other advice. The Compensation Committee is also entitled to rely upon any data or information furnished by a Participating Employer or by a Participant as to any information pertinent to any calculation or determination to be made under the provisions of the Plan, and, as a condition to payment of any benefit under the Plan the Compensation Committee may request a Participant to furnish such information as it deems necessary or desirable in administering the Plan.

 

6.06

Availability of Plan Information and Documents

Any Participant having a question concerning the administration of the Plan or the Participant’s eligibility for participation in the Plan or for the payment of benefits under the Plan may contact the Compensation Committee and request a copy of the Plan document. Each Participating Employer will keep copies of this Plan document, exhibits and amendments hereto, and any related documents on file in its administrative offices, and such documents will be available for review by a Participant or a designated representative of the Participant at any reasonable time during regular business hours. Reasonable copying charges for such documents will be paid by the party requesting copies.

 

6.07

Expenses

All Plan administration expenses incurred by the Compensation Committee shall be paid by the Corporation and all other administration expenses incurred by a Company shall be paid by such Company.

 

6.08

Dispute Resolution

 

 

(a)

If the Participant and any Company (collectively, the “Parties”) are unable to resolve any controversy or claim arising out of or in connection with this Plan or breach thereof, either Party shall refer the dispute to binding arbitration, which shall be the exclusive forum of resolving such claims. Such arbitration will be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Employment Arbitration Rules and Procedures and governed by

 

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Kansas law. The arbitration shall be conducted by a single arbitrator selected by the Parties according to the rules of JAMS. If the Parties fail to agree on the selection of the arbitrator within thirty (30) days after either the Participant or such Company’s request for arbitration, the arbitrator will be chosen by JAMS. The arbitration proceeding shall commence on a mutually agreeable date within ninety (90) days after the request for arbitration, unless otherwise agreed by the Parties, and in the location where the Participant worked during the six (6) months immediately prior to the request for arbitration to the extent such location is Kansas or Virginia, and if not, the location will be Kansas, unless the Parties agree otherwise.

 

 

(b)

Such Company shall reimburse the Participant for legal fees and expenses incurred in connection with a dispute resolved under this Section 6.08. The arbitrator shall not have authority to award attorneys’ fees or costs to either of the Parties in any manner not consistent with this Section 6.08(b).

 

 

(c)

The arbitrator shall have no power or authority to make awards or orders granting relief that would not be available to a party in a court of law. The arbitrator’s award is limited by and must comply with the terms of the Plan, including without limitation, Section 6.02(d) and applicable federal, state, and local laws. The decision of the arbitrator shall be final and binding on the Parties.

 

6.09

Continued Cooperation

 

 

(a)

Following termination of the Participant’s employment, the Participant shall cooperate fully with the Corporation and with the Corporation’s counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving any Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Participant’s employment by any Company. This cooperation by the Participant will include, but not be limited to:

 

 

(i)

making himself reasonably available for interviews and discussions with the Corporation’s counsel as well as for depositions and trial testimony;

 

 

(ii)

if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefore as and to the extent that the Corporation or the Corporation’s counsel reasonably requests;

 

 

(iii)

refraining from impeding in any way the Corporation’s prosecution or defense of such litigation or administrative proceeding; and

 

 

(iv)

cooperating fully in the development and presentation of the Corporation’s prosecution or defense of such litigation or administrative proceeding.

 

 

(b)

The Participant will be reimbursed by the Corporation for reasonable travel, lodging, telephone and similar expenses, as well as reasonable attorneys’ fees (if independent legal counsel is necessary), incurred in connection with any cooperation, consultation and advice rendered under this Section 6.09. The

 

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Participant shall not unreasonably withhold the Participant’s availability for such cooperation, consultation and advice.

 

6.10

Adoption Procedure for Participating Employer

 

 

(a)

Any Subsidiary of the Corporation may become a Participating Employer under the Plan provided that (i) the Board approves the adoption of the Plan by such Subsidiary and designates such Subsidiary as a Participating Employer in the Plan and (ii) by appropriate resolutions of the board of directors or other governing body of such Subsidiary, such Subsidiary agrees to become a Participating Employer under the Plan and also agrees to be bound by any other terms and conditions which may be required by the Board or the Compensation Committee, provided that such terms and conditions are not inconsistent with the purposes of the Plan.

 

 

(b)

A Participating Employer may withdraw from participation in the Plan, subject to approval by the Compensation Committee, by providing written notice to the Compensation Committee that withdrawal has been approved by the board of directors or other governing body of the Participating Employer; provided, however, following the commencement of any discussion with a third party that ultimately results in a Change in Control, the Compensation Committee shall have no authority to approve the withdrawal of any Participating Employer until such time as the Corporation and each Subsidiary of the Corporation (as appropriate) shall have fully performed all of their obligations under the Plan with respect to all Participants, and shall have paid all Severance Benefits under the Plan in full to all Participants. The Board may at any time remove a Participating Employer from participation in the Plan by providing written notice to the Participating Employer that it has approved removal; provided, however, following the commencement of any discussion with a third party that ultimately results in a Change in Control, the Board shall have no authority to remove or approve the withdrawal of any Participating Employer until such time as the Corporation and each Subsidiary of the Corporation (as appropriate) shall have fully performed all of their obligations under the Plan with respect to all Participants, and shall have paid all Severance Benefits under the Plan in full to all Participants. The Board will act in accordance with this Article pursuant to unanimous written consent or by majority vote at a meeting.

 

6.11

Effect on Other Benefits

Except as otherwise provided herein, the Plan shall not affect any Participant’s rights or entitlement under any other retirement or employee benefit plan offered to him by the Corporation or a Subsidiary or affiliate of the Corporation (as appropriate) as of the date of the Participant’s termination of employment.

 

6.12

Successors

The Plan shall be binding upon any successor in interest of any Company and shall inure to the benefit of, and be enforceable by, the Participant’s assigns or heirs.

 

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6.13

Construction

In determining the meaning of the Plan, words imparting the masculine gender shall include the feminine and the singular shall include the plural, unless the context requires otherwise. Headings of sections and subsections of the Plan are for convenience only and are not intended to modify or affect the meaning of the substantive provisions of the Plan. Unless otherwise stated, references to Sections are references to Sections of this Plan.

 

6.14

References to Other Plans and Programs

Each reference in the Plan to any plan, policy or program, the Plan or document of the Corporation or a Subsidiary or affiliate of the Corporation shall include any amendments or successor provisions thereto without the necessity of amending the Plan for such changes.

 

6.15

Notices

 

 

(a)

General. Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Participant, (i) mailed notices shall be addressed to the Participant at the Participant’s home address which was most recently communicated to the Corporation in writing or (ii) in the case of a Participant who is an employee, distributed to the employee at his or her place of employment in compliance with 29 Code of Federal Regulations Section 2520.104b-1(c). In the case of any Company, mailed notices shall be addressed to the Corporation’s corporate headquarters, and all notices shall be directed to the attention of its General Counsel.

 

 

(b)

Notice of Termination. Any notice of Cause by a Company or by the Participant for Good Reason shall be communicated by a notice of termination to the other party given in accordance with this Section 6.15. Such notice shall indicate the specific termination provision in this Plan relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide the basis for termination under the provision so indicated, and shall specify the Participant’s date of termination.

 

6.16

No Duty to Mitigate

The Participant shall not be required to mitigate the amount of any payment contemplated under this Plan, nor shall such payment be reduced by any earnings that the Participant may receive from any other source, except as provided in this Plan. The Participant’s coverage under any medical, dental, vision and employee life insurance plans will terminate as of the date that the Participant becomes eligible for comparable benefits of another employer.

 

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6.17

Withholding of Taxes

Any Company will withhold from any amounts payable under this Plan all federal, state and local tax or other taxes as such Company is required to withhold pursuant to any law or government regulation or rule.

 

6.18

Governing Law and Choice of Forum

 

 

(a)

Except to the extent that the Plan may be subject to the provisions of ERISA, the Plan will be construed and enforced according to the laws of the State of Kansas, without giving effect to the conflict of laws principles thereof.

 

 

(b)

Except as otherwise required by ERISA, every right of action by a Participant with respect to the Plan shall be barred after the expiration of three (3) years from the date of termination of employment or the date of receipt of the notice of denial of a claim for benefits or eligibility, if earlier. If ERISA’s limitation on legal action does not apply, the laws of the State of Kansas with respect to the limitations of legal actions shall apply and the cause of action must be brought within the limitations provided under the laws of the State of Kansas.

 

6.19

Validity/Severability

If any provision of this Plan or the application of any provision to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Plan and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid or unenforceable will be reformed to the extent (and only to the extent) necessary to make it enforceable or valid. To the extent any provisions held to be invalid or unenforceable cannot be reformed, such provisions are to be stricken herefrom and the remainder of this Plan will be binding on the Parties and their successors and assigns as if such invalid or illegal provisions were never included in this Plan from the first instance.

 

6.20

Survival of Provisions.

Notwithstanding any other provision of this Plan, the Parties’ respective rights and obligations under Sections 4.02, 6.01, 6.08, 6.09 and 6.10 will survive any termination or expiration of this Plan or the termination of the Participant’s employment for any reason whatsoever.

 

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APPENDIX I

PLAN PARTICIPANTS

As of December 15, 2008

The list of Participants and Tier Level is on file with Sprint Nextel’s Human Resources department.

 

NAME

  

SEVERANCE BENEFIT
CLASSIFICATION

 

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APPENDIX II

APPLICABLE BENEFITS AND PERIODS

As of December 15, 2008

 

Severance Benefits

Classification

  

Applicable Multiple

  

Applicable Period

Tier I Executive

  

2

  

2 Years

Tier II Executive

  

1.5

  

1.5 Years

 

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APPENDIX III

PARTICIPATING EMPLOYERS

As of December 15, 2008

 

Nextel Communications, Inc.

Nextel South Corp.

Nextel of Texas, Inc.

Nextel Communications of the Mid-Atlantic, Inc.

Nextel West Corp.

Nextel West Services LLC

Nextel of California, Inc.

Nextel of New York, Inc.

Nextel Systems Corp.

US Telecom, Inc.

UCOM, Inc.

AirGate PCS, Inc.

Alamosa Missouri, LLC

Alamosa Wisconsin Limited Partnership

Southwest PCS, L.P.

SPCS Caribe Inc.

Sprint International Caribe, Inc.

Sprint/United Management Company

Sprint Nextel Corporation

Texas Telecommunications, LP

UbiquiTel Operating Company

Washington Oregon Wireless, LLC

 

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