Exhibit 10.7.4
RESIGNATION AND NON-COMPETITION
AGREEMENT
THIS RESIGNATION
AND NON-COMPETITION AGREEMENT (the “ Agreement
”) is made and entered as of the 11th day of November 2003,
by and between Nextel Communications, Inc. a Delaware corporation
(the “ Company ,”), and Morgan E. O’Brien
(the “ Executive ”). This Agreement is effective
on the date hereof for purposes of Section 1, and for all
other purposes as of the Effective Date, as defined in
Section 7(b) of the Release, attached hereto as
Exhibit C.
WITNESSETH:
WHEREAS, the
Executive is an employee of the Company and serves the Company as
the Vice Chairman of the Board of Directors and a member of the
Board of Directors of the Company (the “ Board
”); and
WHEREAS, pursuant
to the Nextel Communications, Inc. Amended and Restated Incentive
Equity Plan (the “ Incentive Equity Plan ”), the
Company has granted options to the Executive as set forth on and
attached hereto as Exhibit A and each such grant is governed
and made subject to the terms and conditions of the Incentive
Equity Plan and each Nonqualified Stock Option Agreement evidencing
each such grant, as such terms and conditions are amended by
Section 2(b) herein; and
WHEREAS, the
Company and the Executive are parties to a Nextel Non-Disclosure
and Assignment of Inventions Agreement, dated August 27, 2003
(the “ Confidentiality Agreement ”, attached
hereto as Exhibit B); and
WHEREAS, as of the
date of this Agreement, the Executive is a resident of the State of
Maryland;
WHEREAS, the
Company and the Executive agree that he will resign from employment
effective on the Resignation Date (as defined in Section 1
below); and
WHEREAS, the
Company and the Executive desire to make provision for the payments
and benefits that the Executive will be entitled to receive from
the Company in consideration for the Executive’s obligations
and actions under this Agreement and in connection with such
resignation; and
WHEREAS, the
Company and the Executive wish to resolve certain matters, claims
and issues between them arising from or relating to the
Executive’s service and employment with the Company,
including resignation therefrom; and
WHEREAS, the
Company wants to ensure that the Executive will protect
Confidential Information (as defined in the Confidentiality
Agreement) and will not use the Executive’s knowledge and
experience during the Non-Compete Period (as defined below) to
compete with the Company or solicit or employ any current employee,
officer or agent of the Company during the Non-Solicitation Period
(as defined below), as set forth herein; and
NOW, THEREFORE, in
consideration of the premises and the promises and agreements
contained herein and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, and
intending to be legally bound, the Company and the Executive agree
as follows:
1.
Resignation . Effective on November 11, 2003 (the
“ Resignation Date ”), the Executive resigned
his employment with the Company and will resign from all other
offices and directorships of each of the Company’s
subsidiaries and affiliates (other than to continue to serve as a
director of Extend America Investment Corp. during his Director
Term (as defined below)), and resign from any fiduciary position
that the Executive holds at the request of the Company. From the
Resignation Date, the Executive will continue to serve as Vice
Chairman and a director of the Company during his term as director
until the Company’s May 2006 annual meeting of stockholders,
or his earlier death or resignation from the Board (the
“Director Term”).
2.
Compensation and Certain Benefits Matters . In consideration
of the promises of the Executive in this Agreement, including
without limitation Section 3, Section 4 and
Section 5 hereof, and in consideration of the
Executive’s execution and delivery of the Release, attached
hereto as Exhibit C, with all periods for revocation having
expired:
(a)
Cash Payments and Health Benefits . The Executive
will:
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(i) receive
from the Company his base salary in effect as of the Resignation
Date of five hundred twenty thousand dollars ($520,000) per annum
(the “ Base Salary ”) for a two (2) year
period commencing on the Effective Date and ending on
November 17, 2005 (the “ Severance Period
”), (a total of one million forty thousand dollars
($1,040,000.00)), which will be payable at the times and in the
manner consistent with the Company’s normal payroll
schedule;
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(ii) (i) during
the Severance Period, continue participation in the Company’s
health care plans, on the same basis as other senior executives of
the Company; provided, however, that benefits otherwise receivable
by the Executive pursuant to this Section 2(a)(ii) will be
applied against the maximum period of continuation coverage
provided under Section 4980B of the Internal Revenue Code of
1986, as amended (the “Code”);
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(iii) (A) receive
from the Company full payment of any bonus award for the bonus year
ending December 31, 2003 under the Company’s annual
bonus plan (the “ Bonus Plan ”), which will be
based on his minimum annual Target Bonus (as such term is defined
in the Bonus Plan) opportunity of 100% of his Base Salary based on
actual team and Company performance and; (B) receive from the
Company full payment of the target annual bonus award of five
hundred twenty thousand dollars ($520,000) for each of the next two
(2) fiscal years (2004 and 2005), which will be payable on or
before February 28, 2005 and 2006 respectively; and
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(iv) receive
from the Company full payment of any remaining target award
opportunity under the Nextel Long-Term Incentive Plan effective
January 1, 2002 (the “LTIP”) to which he would
otherwise be entitled for the LTIP performance
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period that
includes his Resignation Date (but not for any later performance
periods) at the greater of target or actual performance for such
LTIP performance period in accordance with the then existing terms
of the LTIP, which will not be payable until the Compensation
Committee has determined that any incentive targets have been
achieved and the subsequent designated payout date has
arrived.
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(b)
Stock Options . Any provision in the Incentive Equity Plan
and the Nonqualified Stock Option Agreements to the contrary
notwithstanding:
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(i) (A) during
the Director Term, the Executive will continue to receive service
credit for vesting in the currently unvested stock options granted
to the Executive by the Company and described on Exhibit A-1
attached hereto and, except as provided in (B) below, any such
vested options will remain outstanding and exercisable for the
duration of the Director Term and for 30 days thereafter,
(B) if the Director Term ends by reason of the
Executive’s death, all stock options will vest immediately
(to the extent not previously vested) and all such stock options
described on Exhibit A-1 will remain outstanding and
exercisable until the later of one year following the
Executive’s death or the end of the Director Term, and
(C) stock options vested and exercisable under (A) or
(B) above will terminate automatically and without further
notice upon the expiration of such respective exercise
periods;
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(ii) (A) except
as provided in (B) below, all vested options described on
Exhibit A-2 attached hereto will remain outstanding and
exercisable for the duration of Director Term and for 30 days
thereafter, (B) if the Director Term ends by reason of the
Executive’s death, all stock options described on
Exhibit A-2 will remain outstanding and exercisable until the
later of one year following the Executive’s death or the end
of the Director Term, and (C) stock options exercisable under
(A) or (B) above will terminate automatically and without
further notice upon the expiration of such respective exercise
periods; and
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(iii) all
other vested options not identified on Exhibit A-2 will
remain, in accordance with their terms, outstanding and exercisable
for 30 days following the Resignation Date and will terminate
automatically and without further notice in accordance with their
terms.
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(c)
Office Furniture . The Company hereby transfers ownership
and title of the office furniture moved from the Nextel offices to
Executive’s offices as of the date of this
Agreement.
(d)
Wireless Phone . During his Director Term, the Company will
provide the Executive with the use of a wireless phone on the same
basis as other non-employee directors of the Board.
(e)
Reimbursement of Business Expenses . The Company will
reimburse the Executive for all reasonable business expenses
properly incurred on or prior to the Resignation Date and submitted
in accordance with the Company’s policies.
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(f)
Excess Parachute Payment . In the event the Company treats
any portion of the Executive’s payments or benefits hereunder
as an “excess parachute payment” within the meaning of
Section 280G of the Code and such payments or benefits would
be subject to the excise tax imposed by Section 4999 of the
Code (or any successor thereto), or any interest or penalties with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred as the “
Excise Tax ”), the Executive will be entitled to
receive an additional payment or payments. Such additional payment
or payments will be an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax imposed upon
such payment or payments equal to the Excise Tax, the Executive
retains a portion of the payment or payments equal to the Excise
Tax imposed on such payment or payments.
(g)
The receipt of payments and benefits under this Section 2 will
have no effect on the Executive’s right, if any, to any
benefits under other employee benefit plan of the Company in which
the Executive was an active participant on or before the
Resignation Date, other than The Nextel Severance Benefits Plan
(the “ Severance Plan ”), the Bonus Plan, the
LTIP and the Incentive Equity Plan and related Nonqualified Stock
Option Agreements.
(h)
In the event a “Change of Control” (as such term is
defined in the Incentive Equity Plan) occurs, then (i) all of
the cash payments payable to the Executive under
Section 2(a)(i), (iii) and (iv) shall, at the
election of the Executive, be paid to the Executive in a lump sum
as soon as practicable following the Change of Control, and
(ii) such of the Executive’s outstanding but unvested
options described on Exhibit A-1 that would vest during the
Director Term if the Director Term ended on the Company’s May
2006 annual meeting of stockholders shall vest immediately in
accordance with Section 4(g)(ii)(A) of the Incentive Equity
Plan.
3.
Non-Competition . In consideration of the compensation and
benefits payable to the Executive under Section 2, the
Executive agrees to the promises, terms and conditions set forth in
this Section 3.
(a)
The Executive covenants and agrees that for the period commencing
on the Resignation Date and ending on the later of the termination
of the Director Term and November 17, 2005 (the “
Non-Compete Period ”), he shall not directly or
indirectly, individually or on behalf of any other person or entity
do or suffer any of the following, engage or be interested in
(whether as owner, stockholder, investor, partner, lender,
consultant, employee, agent, director or otherwise):
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(i) any
business, activity or enterprise which offers mobile, wireless
telecommunications or services (including voice and data) in any
state or United States Territory in which any division or operation
of the Company, any of its subsidiaries or any affiliate of the
Company or its subsidiaries (collectively, the “ Company
Group ”), or any other company in which the Company Group
owns an interest of 10% or more (the “ Company Affiliated
Group ”) is actively planning to or is providing wireless
telecommunications services (such geographic area, the “
Territory ”);
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(ii) any
business, activity or enterprise which offers or is planning to
offer local area network services (e.g., “ 802.11
” or
“ Wi-Fi ” wireless services) or engage in any
other activity authorized by the Federal Communications Commission
(“FCC”) to provide “commercial mobile radio
service” as that term is defined by the FCC (47 C.F.R. §
20.3), “multichannel multipoint distribution service”
or “multipoint distribution service” as those terms are
defined by the FCC (47 C.F.R. § 21.2), “instructional
television fixed station” service as that term is defined by
the FCC (47 C.F.R. § 74.901), satellite devices,
“private land mobile radio services,” which include
public safety radio channels, as defined by the FCC (47 C.F.R.
§ 90.15), “industrial/business radio” channels as
defined by the FCC (47 C.F.R. § 90.31) and “specialized
mobile radio” systems as defined by the FCC (47 C.F.R. §
90.7) in the Territory; and
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(iii) any
business, activity or enterprise which is then competing with or
planning to compete with any business, product or service conducted
or offered by any member of the Company Group or the Company
Affiliated Group in any part of the Territory;
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provided
, however , that 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 Section 3.
(b)
the Executive acknowledges that during his employment with the
Company and his tenure as a director he was and will continue to be
privy to trade secrets and confidential information regarding the
business of the Company Group and Company Affiliated Group, which
provides the Company Group and Company Affiliated Group with a
competitive advantage. Due to his unique and special contributions
to the Company Group in his positions as specified in
Section 1, he has been privy to, has assisted in creating and
has been ultimately responsible for every type of Confidential
Information (as defined in Section 5(b) below) generated by
the Company Group and Company Affiliated Group, so that his
employment in any capacity for a competing business will create an
unreasonable and real risk of disclosure, inevitable or otherwise,
of Confidential Information; and
(c)
the Executive further acknowledges that due to his valuable and
unique talents, skills and experience, the restrictions contained
herein are reasonable and will not deprive him of his ability to
obtain commensurate employment or work in a non-competing business
activity or enterprise, and will not impose an undue hardship on
him; and
(d)
the Executive further acknowledges that due to his senior executive
status at the Company and his valuable and unique talents, skills
and experience, he had access to and the right to control a broad
range of Confidential Information that would render it inevitable
that his involvement in a competing business (as set forth in
Section 3(a) above) would require that he use or disclose such
Confidential Information in the performance of his duties and would
provide an unfair advantage to such competing business.
(e) The
Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon
the Company under this Section 3 and this Agreement, and
hereby acknowledges and agrees that the same are
reasonably
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required to protect the
legitimate interests of the Company and do not confer a benefit
upon the Company disproportionate to the detriment to the
Executive, and that the new consideration received by the Executive
under this Agreement is adequate. The Executive acknowledges and
agrees that the nature of Company Group’s business is such
that a nationwide restraint is reasonable and necessary to the
protection of the Company’s goodwill and confidential
information.
4.
Non-Solicitation. In consideration of the compensation and
benefits payable to the Executive under Section 2, the
Executive agrees to the promises, terms and conditions set forth in
this Section 4.
(a)
The Executive covenants and agrees that for the period commencing
on the Resignation Date and ending on the later of the termination
of the Director Term and November 17, 2005 (the “
Non-Solicitation Period ”), he will not, directly or
indirectly, individually or on behalf of any other person or entity
do or suffer any of the following:
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(i) hire
or employ, assist in hiring or employing, or otherwise associate in
business or assist in planning of any business with any person who
presently or at the Resignation Date is or has been in the
immediately preceding six months an employee, officer,
representative or agent of any member of the Company Group or
solicit, aid, induce or attempt to solicit, aid, induce or
persuade, directly or indirectly, such person to leave his or her
employment with any member of the Company Group to accept
employment with any other person or entity; or
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(ii) directly
or indirectly induce any person who is an employee, officer or
agent of the Company Group to terminate such
relationship;
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provided
, however , that the
provisions of this Section 4(a) shall not apply to conduct of
the Executive with respect to his assistant, Gary Smith.
(b)
For purposes of this Section 4, the term “solicit or
induce” 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 or her employment, and (iii) referring employees
of the Company Group to personnel, representatives or agents
employed by competitors, suppliers or customers of the Company
Group.
5.
Confidential Information; Statements to Third
Parties.
(a) The
Executive acknowledges that he remains subject to the
Confidentiality Agreement. The Executive agrees that
notwithstanding anything in the Confidentiality Agreement to the
contrary, Section 1(a) (“ Nondisclosure ”)
of the Confidentiality Agreement shall be in effect on a permanent
basis. The Executive further acknowledges and agrees that the
Confidential Information of the Company Group and Company
Affiliated Group gained by the Executive during the
Executive’s association with the Company Group and Company
Affiliated Group was or will be developed by and/or for the Company
Group and Company Affiliated Group through substantial expenditure
of time, effort and money and constitutes valuable and unique
property of the Company Group and Company Affiliated
Group.
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(b)
The Executive 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 Confidential Information of the Company
Group and Company Affiliated Group without limitation as to when or
how the Executive may have acquired such Confidential Information.
The Executive specifically acknowledges that Confidential
Information includes any and all technical and research data,
confidential business data and other information (including any and
all Proprietary Information (as defined in the Confidentiality
Agreement)), whether reduced to writing (or in a form from which
information can be obtained, translated, or derived into reasonably
usable form), or maintained in the mind or memory of the Executive
and whether compiled or created by the Company Group and Company
Affiliated 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, that reasonable efforts have been put forth by the
Company Group and Company Affiliated Group to maintain the secrecy
of Confidential Information, that such Confidential Information is
and will remain the sole property of the Company Group and Company
Affiliated Group, and that any use, or tangible or electronic
retention by the Executive of Confidential Information after the
termination of the Executive’s services for the Company will
constitute a misappropriation of those Companies’
Confidential Information.
(c)
The Executive expressly covenants and agrees that he shall not at
any time, whether prior to or after the Resignation Date, directly
or indirectly, on any basis for any reason, use or permit third
parties within his control or authority or under his supervision
the use of any trade secrets, Confidential Information or
proprietary information of, or relating to, the Company Group and
Company Affiliated Group, including, without limitation, data and
other information relating to any of their processes, apparatus,
products, software, packages, programs, trends in research, product
development techniques or plans, research and development programs
and plans or any works and all secrets, customer lists, lists of
employees, sales representatives and their territories, mailing
lists, details of consultant contracts, pricing policies,
operational methods, marketing plans or strategies, business
acquisition plans, new personnel acquisition plans, designs and
design projects and other confidential business affairs concerning
the Company Group and Company Affiliated Group, in connection with
any activity or business, whether for his own account or otherwise,
and will not divulge such trade secrets, Confidential Information
or proprietary information to any person, firm, corporation or
other entity whatsoever.
(d) The
Executive shall not be prohibited from divulging information deemed
to be trade secret or confidential or proprietary information of
the Company Group and Company Affiliated Group if: (i) the
specific item of information becomes generally available to the
public without violation of this Agreement, the Confidentiality
Agreement or any other duty of confidentiality by either the
Executive or any other person causing the public disclosure of the
Confidential Information, (ii) if such disclosure is compelled
by law, in which event the Executive agrees to give the Company
Group and Company Affiliated Group prior written notice of any
disclosure to be made pursuant to this subsection (ii), and the
Executive, at the Company’s expense, shall cooperate fully
with the Company Group and Company Affiliated Group to obtain
protective orders, confidential treatment or other such protective
action as may be available to preserve the confidentiality of the
information required to be disclosed, or (iii) to enforce any
rights of the Executive hereunder.
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(e)
The Executive further agrees that the Executive will return (to the
extent the Executive has not already returned on or before the
Resignation Date), in good condition, all tangible things and other
property of the Company Group and Company Affiliated Group,
including, without limitation, (i) confidential memoranda, notes,
notebooks, drawings, lists (including, without limitation, mailing
and customer lists), records and other confidential documents,
property, documents and/or all other materials (including copies,
reproductions, summaries and/or analyses) which constitute, refer
or relate to Confidential Information of the Company,
(ii) keys to the Company Group and Company Affiliated Group
property, (iii) files, (iv) computer programs and files,
and (v) blueprints or other drawings. The Executive further
agrees that he will purge any electronic copies of any property
belonging to the Company Group and Company Affiliated Group which
has become intermingled with or stored with any personally owned or
controlled devices or files, and that by executing this Agreement
he is aff
