<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
AMERICA ONLINE, INC.
(Name of Issuer)
Common Stock (par value $0.01 per share)
(Title of Class of Securities)
00002364J1
(CUSIP Number)
Don A. Jensen, Vice President and Secretary
Sprint Corporation
P.O. Box 11315
Kansas City, Missouri 64112
(913) 624-3326
(Name, Address, and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 21, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [ ].
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons Sprint
Communications
S.S. or I.R.S. Identification Company L.P.
Nos. of Above Persons 43-1408007
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Delaware
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person PN
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons Sprint Corporation
S.S. or I.R.S. Identification 48-0457967
Nos. of Above Persons
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Kansas
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person HC CO
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE 13D
CUSIP NO. 00002364J1
<S> <C> <C> <C>
1) Names of Reporting Persons US Telecom, Inc.
S.S. or I.R.S. Identification 48-0934012
Nos. of Above Persons
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [X]
3) SEC Use Only
4) Source of Funds OO
5) Check Box if Disclosure of [ ]
Legal Proceedings is Required
Pursuant to Items 2(d) and 2(e)
6) Citizenship or Place of Kansas
Organization
<CAPTION>
Number of shares beneficially
owned by each person with:
<S> <C> <C>
7) Sole Voting Power
8) Shared Voting Power 900,000
9) Sole Dispositive Power
10) Shared Dispositive Power 900,000
11) Aggregate Amount Beneficially
Owned by Each Reporting Person 900,000
12) Check Box if the Aggregate
Amount in Row (11) Excluded [ ]
Certain Shares
13) Percent of Class Represented 5.1%
in Row (11)
14) Type of Reporting Person HC CO
</TABLE>
This Amendment No. 1 (the "Amendment") amends the
Statement on Schedule 13D (the "Original 13D"), dated May
14, 1993, filed by Sprint Communications Company L.P.
("Sprint L.P."), US Telecom, Inc. ("US Telecom") and Sprint
Corporation ("Sprint") with respect to the Common Stock of
America Online, Inc. Certain capitalized terms used below
and not defined herein have the meanings ascribed to them in
the Original 13D.
Item 2. Identity and Background.
The revised lists of names, business addresses and
principal occupations of the directors and executive officers
of Sprint and US Telecom are set forth on Exhibit A and are
incorporated herein by reference. All of the officers and
directors are believed to be citizens of the United States.
Each of Sprint L.P., US Telecom, and Sprint has executed
a Joint Filing Agreement consenting to the joint filing by
them of this Amendment. Such Joint Filing Agreement is filed
as Exhibit B to this Amendment and is incorporated herein by
reference.
Item 4. Purpose of Transaction.
Sprint L.P. is considering entering into a set of
agreements with an affiliate of an investment bank,
currently anticipated to be Morgan Guaranty Trust Company of
New York ("Bank") pursuant to which Sprint L.P. would hedge
certain investment risks associated with its rights under the
Warrant. Among other things, the agreements would provide
that Sprint L.P. enter into a matched set of put and call
hedge transactions (the "Transactions"), to be settled in
cash, pursuant to which Sprint L.P. would purchase a put
option and sell a call option based on the price performance
of the Common Stock. Neither the call option nor the put
option would obligate either party to purchase or sell Common
Stock. Sprint L.P. has not made a final determination as to
the advisability of entering into the Transactions, and there
can be no assurance that the Transactions, if entered into,
will be entered into on the terms described herein. Sprint
L.P.'s decision on whether or not to enter into the Transactions
will depend on a variety of factors, including, without limitation,
the market price of the Common Stock, the financial terms of the
Transactions, other potential investment opportunities or
uses for Sprint L.P.'s cash, and other business considerations.
Sprint L.P. continuously reevaluates its intentions with
respect to its beneficial interest in the Common Stock and may
exercise the Warrant at any time. Sprint L.P. may retain or
dispose of some or all of any shares of Common Stock that it
acquires (either pursuant to the Warrant or otherwise). Sprint
L.P.'s decision on whether or not to exercise the Warrant, or
retain or dispose of the Common Stock, will depend on a variety
of factors, including, without limitation, the market price of
the Common Stock, other potential investment opportunities or
uses for Sprint L.P.'s cash and other business considerations.
Apart from the above, the Filers have no current plans or
proposals which relate to or would result in any actions
enumerated in the text of Item 4.
Item 5. Interest in Securities of the Issuer.
On November 25, 1994, the Issuer effected a 2-for-1
stock split (the "Stock Split"). As a result of the Stock
Split, the Warrant (originally relating to 450,000 pre-split
shares of Common Stock) was adjusted to entitle Sprint L.P.
to acquire 900,000 post-split shares of Common Stock. No
transaction was effected by Sprint L.P. in connection with
the Stock Split.
As of June 30, 1994, the Issuer and Sprint L.P.
executed a First Amendment to the Master Agreement for Data
Communications, dated May 24, 1993, pursuant to which, among
other things, the parties thereto agreed (a) that the
Warrant be modified to extend the term of the Warrant for an
additional three (3) years and (b) to execute an amendment
to the Warrant reflecting the revised expiration date of
March 31, 1999.
Item 6. Contracts, Arrangements, Understandings, or
Relationships with respect to Securities of the Issuer.
Sprint L.P. is considering entering into a Master Agreement
based upon the International Swap Dealers Association, Inc.
(Multicurrency-Cross Border) form (the "Master Agreement"), a
schedule to the Master Agreement (the "Schedule") and a letter
agreement constituting a confirmation to the Master Agreement
(the "Confirmation") with the Bank. The description of the
Transactions contained in Item 4 above is qualified in its
entirety by reference to Exhibit C, which contains the text
of the contemplated Confirmation.
Sprint L.P. has not made any final determination as to
the advisability of entering into the Transactions, and
there can be no assurance that Sprint L.P. will enter into
the Transactions or execute any of the documents described
in this Item 6.
Item 7. Material to be Filed as Exhibits.
A. Responses to Items 2(a), (b), and (c) with respect
to the officers and directors of US Telecom and Sprint
B. Joint Filing Agreement among the Filers
C. Confirmation to the Master Agreement between Sprint L.P.
and Morgan Guaranty Trust Company of New York
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Date: March 21, 1995
/s/ Don A. Jensen
Don A. Jensen
Vice President
Sprint Communications Company
L.P.
Date: March 21, 1995
/s/ Don A. Jensen
Don A. Jensen
Vice President and Secretary
Sprint Corporation
Date: March 21, 1995
/s/ Don A. Jensen
Don A. Jensen
Vice President and Secretary
US Telecom, Inc.
INDEX TO EXHIBITS
A. Responses to Items 2(a), (b), and (c) with
respect to the officers and directors of US Telecom
and Sprint
B. Joint Filing Agreement among the Filers
C. Confirmation to the Master Agreement between
Sprint L.P. and Morgan Guaranty Trust Company of
New York
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
DIRECTORS AND EXECUTIVE OFFICERS
OF
SPRINT CORPORATION
(a) (b) (c)
Name Address Principal
Business or
Occupation
DIRECTORS
<S> <C> <C>
DuBose Ausley Ausley, McMullen, Attorney
McGehee, et. al.
Washington Square
Building
P.O. Box 391
Tallahassee, FL 32302
Warren Batts Premark International, Chairman and CEO
Inc. of Premark
1717 Deerfield Road International, Inc.
Deerfield, IL 60015
Ruth Davis The Pymatuning Group, Chairman and CEO
Inc. of The Pymatuning
Suite 570 Group, Inc.
4900 Seminary Road
Alexandria, VA 22311
William Esrey Sprint Corporation Chairman and CEO
2330 Shawnee Mission of Sprint
Pkwy Corporation
Westwood, KS 66205
Donald Hall Hallmark Cards, Inc. Chairman of
P.O. Box 419580 Hallmark Cards, Inc.
Kansas City, MO 64141
Paul Henson Suite 210 Chairman of the
4200 Somerset Board of Kansas
Prairie Village, KS City Southern
66208 Industries, Inc.
Harold Hook American General Chairman and CEO
Corporation of American
P.O. Box 3247 General Corporation
Houston, TX 77253
Robert Huntley Hunton & Williams Attorney
Riverfront Plaza,
East Tower
17th Floor
951 East Byrd Street
Richmond, VA 23219
Ronald LeMay Sprint Corporation President and
2330 Shawnee Mission COO--Long-Distance
Pkwy Division of
Westwood, KS 66205 Sprint Corporation
Linda Lorimer Office of the Secretary Secretary of the
Yale University University, Yale
P.O. Box 1303A University
Yale Station
New Haven, CT 06520
Charles Price II Suite 300 Chairman of the
One West Armour Blvd. Board of
Kansas City, MO 64111 Mercantile Bank
of Kansas City
Frank Reed Philadelphia National President and
Bank CEO of
FC 1-1-2-2 Philadelphia
P.O. Box 7618 National Bank
Philadelphia, PA 19101
Charles Rice Barnett Banks, Inc. Chairman and CEO
P.O. Box 40789 of Barnett Banks
Jacksonville, FL 32203
Stewart Turley Jack Eckerd Corporation Chairman and CEO
P.O. Box 4689 of Jack Eckerd
Clearwater, Florida Corporation
34618
<CAPTION>
(a) (b) (c)
Name Address Principal
Business or
Occupation
EXECUTIVE
OFFICERS
<S> <C> <C>
Gene Betts Sprint Corporation Senior Vice
2330 Shawnee Mission President,
Pkwy Sprint Corporation
Westwood, KS 66205
J. Richard Devlin Sprint Corporation Executive Vice
2330 Shawnee Mission President--Law
Pkwy and External
Westwood, KS 66205 Affairs, Sprint
Corporation
William Esrey Sprint Corporation Chairman and
2330 Shawnee Mission CEO, Sprint
Pkwy Corporation
Westwood, KS 66205
Dennis Foster Sprint Corporation President--
2330 Shawnee Mission Cellular and
Pkwy Wireless
Westwood, KS 66205 Division, Sprint
Corporation
John Hoffman Sprint Corporation Senior Vice
2330 Shawnee Mission President,
Pkwy Sprint Corporation
Westwood, KS 66205
Don Jensen Sprint Corporation Vice President
2330 Shawnee Mission and Secretary,
Pkwy Sprint Corporation
Westwood, KS 66205
Arthur Krause Sprint Corporation Executive Vice
2330 Shawnee Mission President--Chief
Pkwy Financial
Westwood, KS 66205 Officer, Sprint
Corporation
Ronald LeMay Sprint Corporation President &
2330 Shawnee Mission Chief Operating
Pkwy Officer--Long-
Westwood, KS 66205 Distance Division,
Sprint Corporation
John Meyer Sprint Corporation Senior Vice
2330 Shawnee Mission President and
Pkwy Controller, Sprint
Westwood, KS 66205 Corporation
D. Wayne Peterson Sprint Corporation President--Local
2330 Shawnee Mission Telecommunications
Pkwy Division, Sprint
Westwood, KS 66205 Corporation
Theodore Schell Sprint Corporation Senior Vice
2330 Shawnee Mission President, Sprint
Pkwy Corporation
Westwood, KS 66205
Richard C. Smith, Jr. Sprint Corporation Senior Vice
2330 Shawnee Mission President, Sprint
Pkwy Corporation
Westwood, KS 66205
M. Jeannine Strandjord Sprint Corporation Senior Vice
2330 Shawnee Mission President and
Pkwy Treasurer, Sprint
Westwood, KS 66205 Corporation
I. Benjamin Watson Sprint Corporation Senior Vice
2330 Shawnee Mission President,
Pkwy Sprint
Westwood, KS 66205 Corporation
<CAPTION>
EXHIBIT A
(cont'd)
DIRECTORS AND EXECUTIVE OFFICERS
OF
US TELECOM, INC.
(a) (b) (c)
Name Address Principal
Business or
Occupation
DIRECTORS
<S> <C> <C>
William Esrey Sprint Corporation Chairman and CEO,
2330 Shawnee Mission Sprint Corporation
Pkwy
Westwood, KS 66205
Ronald LeMay Sprint Corporation President & Chief
2330 Shawnee Mission Operating Officer--
Pkwy Long-Distance
Westwood, KS 66205 Division, Sprint
Corporation
Arthur Krause Sprint Corporation Executive Vice
2330 Shawnee Mission President--Chief
Pkwy Financial Officer,
Westwood, KS 66205 Sprint Corporation
<CAPTION>
(a) (b) (c)
Name Address Principal
Business or
Occupation
EXECUTIVE OFFICERS
<S> <C> <C>
William T. Esrey Sprint Corporation Chairman and CEO,
2330 Shawnee Mission Sprint Corporation;
Pkwy President, US
Westwood, KS 66205 Telecom, Inc.
Arthur Krause Sprint Corporation Executive Vice
2330 Shawnee Mission President--Chief
Pkwy Financial Officer,
Westwood, KS 66205 Sprint Corporation;
Executive Vice
President, CEO, and
Treasurer, US
Telecom, Inc.
Gene M. Betts Sprint Corporation Senior Vice
2330 Shawnee Mission President, Sprint
Pkwy Corporation; Vice
Westwood, KS 66205 President, US
Telecom, Inc.
John P. Meyer Sprint Corporation Senior Vice
2330 Shawnee Mission President and
Pkwy Controller, Sprint
Westwood, KS 66205 Corporation; Vice
President and
Controller, US
Telecom, Inc.
Don A. Jensen Sprint Corporation Vice President and
2330 Shawnee Mission Secretary, Sprint
Pkwy Corporation; Vice
Westwood, KS 66205 President and
Secretary, US
Telecom, Inc.
M. Jeannine Strandjord Sprint Corporation Senior Vice
2330 Shawnee Mission President and
Pkwy Treasurer, Sprint
Westwood, KS 66205 Corporation; Vice
President and
Assistant
Treasurer, US
Telecom, Inc.
</TABLE>
<PAGE>
EXHIBIT B
JOINT FILING AGREEMENT
DATED MARCH 21, 1995,
AMONG SPRINT CORPORATION,
US TELECOM, INC., AND
SPRINT COMMUNICATIONS COMPANY L.P.
JOINT FILING AGREEMENT
The undersigned (each, a "Filer" and collectively, the
"Filers") for purposes of filing an amendment to a statement
on Schedule 13D pursuant to Securities and Exchange
Commission Rule 13d-1(f)(i) each hereby agree:
(a) each Filer is individually responsible for the
timely filing of any further amendments to the Schedule 13D,
and for the completeness and accuracy of the information
concerning themselves, but is not responsible for the
completeness and accuracy of any of the information
contained in the Schedule 13D as to any other Filer, unless
such Filer knows or has reason to believe that the
information is inaccurate;
(b) this Schedule 13D contains the required
information with regard to each Filer and indicates that it
is filed on behalf of all Filers;
(c) each Filer agrees that the Schedule 13D, as
amended, to which this Joint Filing Agreement is attached
as Exhibit B is filed on its behalf ; and
(d) this Joint Filing Agreement may be executed in
counterparts.
Dated: March 21, 1995
SPRINT CORPORATION
By: /s/ Don A. Jensen
Don A. Jensen
Vice President and Secretary
US TELECOM, INC.
By: /s/ Don A. Jensen
Don A. Jensen
Vice President and Secretary
SPRINT COMMUNICATIONS COMPANY
L.P.
By: /s/ Don A. Jensen
Don A. Jensen
Vice President
<PAGE>
EXHIBIT C
Confirmation to
the Master Agreement
between
Sprint Communications Company L.P.
and Morgan Guaranty Trust Company of New York
March __, 1995
Sprint Communications Company L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Manager - Financial Risk Management
Re: Equity Option Transaction
The purpose of this letter is to confirm the terms and
conditions of the Equity Option Transaction (the
"Transaction") entered into between us on March __, 1995
(the "Trade Date"). This Transaction shall become effective
on the Effective Date.
This letter constitutes a "Confirmation" as referred to in
the Master Agreement entered into between the parties and
dated as of March __, 1995 (the "Agreement") and
incorporates by reference the 1991 ISDA Definitions (as
published by the International Swap Dealers Association,
Inc.) (the "1991 Definitions").
This Confirmation supplements, forms a part of, and is
subject to, the Agreement. All provisions set forth in the
1991 Definitions or contained or incorporated by reference
in the Agreement shall govern this Confirmation except as
expressly modified below. It is our intention to have this
Confirmation serve as the final documentation for this trade
and, accordingly, no later Confirmation will follow.
The terms of the Transaction to which this Confirmation
relates are as follows:
1. Parties
The parties are:
(1) MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("Morgan").
Office through which this Transaction is booked and
address for notices:
Morgan Guaranty Trust Company of New York
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
Attention: MGT Swap Operations
Telex: 8954804
Answerback: MGTLD G
Telecopy No.: (071) 325-8210
Telephone No.: (071) 325-3227
Account for
Payments: [To be advised.]
(2) SPRINT COMMUNICATIONS COMPANY L.P.
(the "Counterparty")
Office through which this Transaction is booked and
address for notices:
Sprint Communications Company L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Manager - Financial Risk Management
Telecopy No.: (913) 624-3088
Telephone No.: (913) 624-3105
Account for
Payments: [To be advised.]
2. Payments
(a) Counterparty Payment Amounts. If on the final
Trading Day in the Valuation Period, the Final Equity Value
of the Underlying Security is greater than the Call Strike
Price, the Counterparty shall pay in U.S. Dollars to Morgan,
the Call Cash Settlement Amount, if any, on the Cash
Settlement Payment Date. Where:
(i) "Call Strike Price" means ____ (as may be adjusted
in accordance with Section 4(a) hereof);
(ii) "Number of Options" means 900,000 (as may be
adjusted in accordance with Section 4(a) hereof);
(iii) "Call Strike Price Differential" means an amount
equal to the greater of (A) the excess remaining after
subtracting the Call Strike Price from the Final Equity
Value of the Underlying Security and (B) zero; and
(iv) "Call Cash Settlement Amount" means an amount, as
calculated by the Calculation Agent, equal to the Number
of Options multiplied by the Call Strike Price
Differential.
(b) Morgan Payment Amounts. If on the final Trading Day
in the Valuation Period, the Final Equity Value of the
Underlying Security is less than the Put Strike
Price, Morgan shall pay in U.S. Dollars to the Counterparty,
the Put Cash Settlement Amount, if any, on the Cash Settlement
Payment Date. Where:
(i) "Put Strike Price" means ____ (as may be adjusted
in accordance with Section 4(a) hereof);
(ii) "Number of Options" means 900,000 (as may be
adjusted in accordance with Section 4(a) hereof);
(iii) "Put Strike Price Differential" means an amount
equal to the greater of (A) the excess remaining after
subtracting the Final Equity Value of the Underlying
Security from the Put Strike Price and (B) zero; and
(iv) "Put Cash Settlement Amount" means an amount, as
calculated by the Calculation Agent, equal to the Number
of Options multiplied by the Put Strike Price
Differential.
3. Definitions
"Option Style" means European.
"Business Day" means any day, other than a Saturday
or Sunday, on which commercial banks are open for
business in the City of New York.
"Calculation Agent" means Morgan, the determinations
and calculations of which shall be binding in the
absence of manifest error.
"Cash Settlement Payment Date" means that day which
is the Business Day immediately following the final
Trading Day in the Valuation Period.
"Closing Price" on any date of determination for any
security means the closing sale price (or if no closing
price is reported, the last reported sale price) on the
New York Stock Exchange ("NYSE") on such date or, if the
security is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for
the principal United States securities exchange on which
the security is so listed, or if the security is not so
listed on a United States national or regional
securities exchange, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System, or if such security is not so
reported, the last quoted bid price for the security in
the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or if such bid
price is not available, the market value of the security
as determined by a nationally recognized independent
investment banking firm retained for this purpose by the
Calculation Agent.
"Effective Date" means __________.
"Expiration Date" means April 30, 1999.
"Final Equity Value" means, as determined by the
Calculation Agent, the average Closing Price per share
for the Underlying Security during the Valuation Period.
"Strike Price" means the Put Strike Price and the
Call Strike Price.
"Trading Day" means a day on which the Closing Price
of a security being determined (i) is not suspended for
trading on any national or regional securities exchange
or association or over-the-counter market at the close
of business and (ii) has traded at least once on the
national or regional securities exchange or association
or over-the-counter market that is the primary market
for the trading of such security.
"Underlying Security" means the shares of common
stock, par value $0.01 (the "Common Stock"), of America
Online, Inc., a Delaware corporation (the "Company").
"Valuation Period" means the 15 Trading Days
immediately prior to (but not including) the Expiration
Date.
"Warrant" means the common stock warrant dated May
14, 1993 granted by the Company to the Counterparty.
4. Other Provisions
(a) Adjustment to Strike Prices and Number of Options.
In the event of any change affecting the Underlying
Security, including without limitation, a capitalization
issue, rights issue, share split, extraordinary dividend,
merger, consolidation, amalgamation, sub-division,
recapitalization, reclassification, dissolution,
liquidation, winding up or other similar event, which occurs
after the Trade Date but before the Expiration Date, the
Calculation Agent shall (after consultation with the
Counterparty) adjust the Strike Prices and/or the Number of
Options in the manner described in subclauses (i) to (iv)
below.
(i) In the case of a stock dividend, stock
distribution or stock split in respect of the
outstanding shares of Common Stock of the Company shall
have occurred, the Number of Options immediately prior
to such event shall be increased, and, conversely, in
the case of a reverse stock split or combination of
Common Stock of the Company, the Number of Options
immediately prior to such event shall be decreased. In
the event the Number of Options are increased or
decreased in accordance with this subclause (iii), the
Strike Price in effect immediately prior to such event
shall be decreased or increased accordingly in inverse
proportion.
(ii) The Strike Prices are subject to adjustment if
the Company shall (A) issue by reclassification of its
shares of Common Stock any shares of common stock of the
Company, (B) issue rights or warrants to all holders of
its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share
less than the market price of its Common Stock
(other than rights to purchase shares of Common Stock
pursuant to a plan for the reinvestment of
dividends or interest) or (C) pay a dividend or make a
distribution to all holders of its Common Stock of evidence
of its indebtedness or other assets (excluding any dividends
or distributions referred to in subclause (i) above or any
cash dividends other than any Extraordinary Cash
Dividends) or issue to all holders of its Common Stock
rights or warrants to subscribe for or purchase any of
its securities (other than those referred to in clause (B)
above). An "Extraordinary Cash Dividend" means, with
respect to any one-year period, all cash dividends on the
Company's Common Stock during such period to the extent such
dividends exceed on a per share basis 10% of the average
price of the Company's Common Stock over such period
(less any such dividends for which a prior adjustment to
the Strike Price was previously made). All adjustments
to the Strike Price will be calculated to the nearest
1/100th of a cent (or if there is not a nearest 1/100th
of a cent to the next lower 1/100th of a cent). No
adjustment in the Strike Price shall be required unless
such adjustment would require an increase or decrease of
at least one cent; provided, however, that any
adjustments which by reason of the foregoing are not
required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(iii) In the event of (A) any consolidation or
merger of the Company, or any surviving entity or
subsequent surviving entity of the Company (an "AMER
Successor"), with or into another entity (other than a
merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock of
the Company outstanding immediately prior to the merger
or consolidation is not exchanged for cash, securities
or other property of the Company or another
corporation), (B) any sale, transfer, lease or
conveyance to another corporation of the property of the
Company or any AMER Successor as an entirety or
substantially as an entirety, (C) any statutory exchange
of securities of the Company or any AMER Successor with
another corporation (other than in connection with a
merger or acquisition) or (D) any liquidation,
dissolution or winding up of the Company or any AMER
Successor (any such event, a "Reorganization Event"),
the securities to which the Number of Options shall
relate will be adjusted to provide that the Final Equity
Value shall be deemed to be the Transaction Value.
"Transaction Value" means (i) for any cash received in
any such Reorganization Event, the amount of cash
received per share of Common Stock of the Company, (ii)
for any property other than cash or securities received
in any such Reorganization Event, an amount equal to the
market value at the Expiration Date of such property
received per share of Common Stock of the Company as
determined by a nationally organized investment banking
firm retained for this purpose by Morgan (which may
include J.P. Morgan Securities Inc.) and (iii) for any
securities received in any such Reorganization Event, an
amount equal to the average Closing Price per share of
such securities on the 15 Trading Days immediately prior
to the Expiration Date multiplied by the number of
securities received for each share of Common Stock of
the Company.
(iv) In the event of any other change affecting
the Underlying Security, including without limitation, a
capitalization issue, rights issue, share split,
extraordinary dividend, merger, consolidation,
amalgamation, sub-division, recapitalization,
reclassification, dissolution, liquidation, winding up
or other similar event of which is not described above in
subclauses (i) through (iii) above, which occurs after the
Trade Date but before the Expiration Date, the Calculation
Agent shall (after consultation with the Counterparty)
adjust the Strike Price and/or the Number of Options to
preserve as nearly as practicable, the economic equivalent
of the obligations of the parties hereunder prior to such
change.
(b) Representations of the Counterparty. The
Counterparty represents and warrants to Morgan as of the
date hereof:
(i) The Counterparty is not an "affiliate" of the
Company as such term is defined in Rule 144 of the
Securities Act of 1933, as amended.
(ii) The Counterparty does not have any special
access to, and does not possess, any non-public material
information relating to the Company, nor does the
Counterparty have any ability or right to perform any
investigation as to the business or financial condition
of the Company.
(iii) The Counterparty acquired the Warrant in a
private transaction on May 14, 1993, full consideration
for the Warrant was given on such date, such Warrant is
in full force and effect, and the Counterparty has not
exercised such Warrant.
(iv) The Counterparty is not entering into this
Transaction with Morgan (A) in anticipation of a sale of
the Warrant prior to May 14, 1996, (B) in anticipation
of a sale of the underlying shares of Common Stock of
the Company issuable upon exercise of the Warrant prior
to three years following such exercise for cash or other
consideration or (C) with the present intention of
exercising the Warrant within six months from the
Effective Date of this Transaction.
(c) Representations of Morgan. Morgan represents and
warrants to the Counterparty as of the date hereof:
(i) Morgan is not an "affiliate" of the Company as
such term is defined in Rule 144 of the Securities Act
of 1933, as amended.
(ii) Morgan does not have any special access to,
and does not possess, any non-public material
information relating to the Company, nor does Morgan
have any ability or right to perform any investigation
as to the business or financial condition of the
Company.
(iii) Morgan acknowledges that the Counterparty has
not participated in the preparation of any disclosure
documents relating to the offer and sale of securities
based on the value of the Common Stock of the Company
issued by an Affiliate of Morgan and that the
Counterparty is not liable to Morgan or any Affiliate of
Morgan for any material misstatements or omissions
contained in such disclosure documents; provided,
however, that the foregoing is without prejudice to any
of the Counterparty's rights in respect of the
Counterparty's representations and warranties herein.
(d) No Reliance, etc. Each party represents that
(i) it is entering into the Transaction evidenced hereby
as principal (and not as agent or in any other capacity);
(ii) the other party is not acting as a fiduciary for it;
(iii) it is not relying upon any representations
except those expressly set forth in the Agreement or
this Confirmation; (iv) it has consulted with its own legal,
regulatory, tax, business, investment, financial,
and accounting advisors to the extent it has deemed necessary,
and it has made its own investment, hedging, and trading
decisions based upon its own judgment and upon any advice from
such advisors as it has deemed necessary and not upon any view
expressed by the other party; and (v) it is entering into this
Transaction with a full understanding of the terms, conditions
and risks thereof and it is capable of and willing to assume
those risks.
(e) Private Placement. The parties hereto each
acknowledge that this Transaction will not be registered
under the Securities Act of 1933, as amended (the
"Securities Act"), and is being entered into in reliance
upon the exemption for private placement pursuant to Section
4(2) of the Securities Act.
Please confirm your agreement to be bound by the terms of
the foregoing by executing the copy of this Confirmation
enclosed for that purpose and returning it to us.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: _________________________
Name:
Title:
Accepted and confirmed as of
the date first above written:
SPRINT COMMUNICATIONS COMPANY L.P.
By: _____________________
Name:
Title:
