UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4721
SPRINT CORPORATION
(Exact name of registrant as specified in its charter)
KANSAS 48-0457967
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
P.O. Box 11315, Kansas City, Missouri 64112
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(Address of principal executive offices)
(913) 624-3000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Shares of Common Stock Outstanding at -- September 30, 1995 --348,790,809
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SPRINT CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
INDEX
Page
Number
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Part I - Financial Information
Item 1. Financial Statements 1 - 8
Consolidated Balance Sheets 1 - 2
Consolidated Statements of Income 3
Consolidated Statements of Cash Flows 4
Consolidated Statements of Common Stock and Other Shareholders'
Equity 5
Condensed Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9 - 20
Part II - Other Information
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibits
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
As of As of
September 30, December 31,
1995 1994
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and equivalents $ 364.0 $ 123.3
Accounts receivable, net of allowance for doubtful accounts of
$198.2 million ($128.9 million in 1994) 1,616.1 1,469.8
Inventories 192.8 215.8
Deferred income taxes 41.7 54.2
Prepaid expenses 177.7 144.5
Other 185.9 180.9
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
Total current assets 2,578.2 2,188.5
Investments in equity securities 243.9 177.6
Property, plant and equipment
Long distance communications services 6,497.6 6,056.3
Local communications services 12,356.6 11,827.4
Cellular and wireless communications services 1,080.0 818.5
Other 523.1 498.6
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
20,457.3 19,200.8
Less accumulated depreciation 9,210.9 8,322.2
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
11,246.4 10,878.6
Investments in affiliates 1,403.4 500.3
Excess of cost over net assets acquired 689.2 706.7
Other assets 463.0 492.0
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
$ 16,624.1 $ 14,943.7
--- ------------------ --- ------------------
See accompanying condensed Notes to Consolidated Financial Statements.
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1
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
(In Millions)
As of As of
September 30, December 31,
1995 1994
- ---------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities
Current maturities of long-term debt $ 561.7 $ 332.4
Accounts payable 922.1 1,072.2
Accrued interconnection costs 584.4 527.6
Accrued taxes 313.2 268.5
Advance billings 172.9 167.6
Other 709.0 686.3
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,263.3 3,054.6
Long-term debt 5,473.5 4,604.8
Deferred credits and other liabilities
Deferred income taxes and investment tax credits 1,239.5 1,266.4
Postretirement and other benefit obligations 886.3 850.3
Other 678.6 605.7
- ---------------------------------------------------------------------------------------------------------------------
2,804.4 2,722.4
Redeemable preferred stock 32.7 37.1
Common stock and other shareholders' equity
Common stock, par value $2.50 per share, authorized 500.0 million
shares, issued 348.8 million (348.6 million in 1994) and
outstanding 348.8 million (348.3 million in 1994) 872.0 871.4
Capital in excess of par or stated value 947.5 942.9
Retained earnings 3,200.2 2,730.9
Other 30.5 (20.4)
- ---------------------------------------------------------------------------------------------------------------------
5,050.2 4,524.8
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$ 16,624.1 $ 14,943.7
----------------------------------------------
See accompanying condensed Notes to Consolidated Financial Statements.
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2
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
1995 1994 1995 1994
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Net operating revenues $ 3,442.3 $ 3,233.8 $ 10,079.4 $ 9,417.4
Operating expenses
Costs of services and products 1,691.7 1,615.0 5,005.0 4,717.8
Selling, general and administrative 808.9 781.7 2,377.3 2,258.7
Depreciation and amortization 398.0 366.8 1,171.8 1,085.5
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total operating expenses 2,898.6 2,763.5 8,554.1 8,062.0
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Operating income 543.7 470.3 1,525.3 1,355.4
Interest expense (98.1) (98.6) (297.3) (299.7)
Other income (expense), net (18.1) (9.3) (53.1) 10.6
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Income before income taxes 427.5 362.4 1,174.9 1,066.3
Income tax provision (159.0) (132.3) (436.4) (389.2)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Net income 268.5 230.1 738.5 677.1
Preferred stock dividends (0.6) (0.6) (1.9) (2.0)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings applicable to common stock $ 267.9 $ 229.5 $ 736.6 $ 675.1
--- ------------- -- ------------- --- ------------- -- -------------
Earnings per common share $ 0.76 $ 0.66 $ 2.10 $ 1.94
--- ------------- -- ------------- --- ------------- -- -------------
Weighted average number of common shares
350.5 349.4 350.0 348.0
--- ------------- -- ------------- --- ------------- -- -------------
Dividends per common share $ 0.25 $ 0.25 $ 0.75 $ 0.75
--- ------------- -- ------------- --- ------------- -- -------------
See accompanying condensed Notes to Consolidated Financial Statements.
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3
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
Nine Months Ended
September 30,
------------------------------
1995 1994
- ------------------------------------------------------------------------------- --- ------------- -- -------------
<S> <C> <C>
Operating activities
Net income $ 738.5 $ 677.1
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization 1,171.8 1,085.5
Deferred income taxes and investment tax credits (10.0) 20.4
Gain on sale of investment -- (34.7)
Changes in operating assets and liabilities
Accounts receivable, net (146.3) (204.9)
Inventories and other current assets (15.3) (31.9)
Accounts payable, accrued expenses and other current liabilities (15.4) 2.9
Noncurrent assets and liabilities, net 110.1 120.5
Other, net (17.1) 51.7
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash provided by operating activities 1,816.3 1,686.6
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Investing activities
Capital expenditures (1,545.6) (1,327.4)
Proceeds from sale of investment in equity securities -- 117.7
Investments in affiliates (905.0) (16.6)
Distributions from affiliates 51.0 20.4
Other, net (2.5) (34.2)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash used by investing activities (2,402.1) (1,240.1)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Financing activities
Proceeds from long-term debt 260.2 103.2
Retirements of long-term debt (259.9) (447.9)
Net increase in notes payable and commercial paper 1,097.7 109.2
Proceeds from common stock issued 7.4 41.7
Proceeds from employees stock purchase installments -- 21.1
Dividends paid (263.5) (261.6)
Other, net (15.4) 3.6
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash provided (used) by financing activities 826.5 (430.7)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Increase in cash and equivalents 240.7 15.8
Cash and equivalents at beginning of period 123.3 76.8
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Cash and equivalents at end of period $ 364.0 $ 92.6
--- ------------- -- -------------
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Supplemental cash flows information
Cash paid for interest $ 281.9 $ 302.1
Cash paid for income taxes $ 407.5 $ 326.7
Noncash activities
Common stock contributed to employee savings plans, at market $ -- $ 31.0
- ------------------------------------------------------------------------------- --- ------------- -- -------------
See accompanying condensed Notes to Consolidated Financial Statements.
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4
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY (UNAUDITED)
(In Millions)
Nine Months Ended September 30, 1995
- ------------------------------------------------------------------------------------------------------------------
Capital in
Excess of
Par or
Common Stated Retained
Stock Value Earnings Other Total
- ----------------------------------------- - ------------ - ------------- -- ----------- -- -------- -- -----------
<S> <C> <C> <C> <C> <C>
Balance as of January 1, 1995 (348.6
million shares issued and 348.3
million shares outstanding) $ 871.4 $ 942.9 $ 2,730.9 $ (20.4) $ 4,524.8
Net income -- -- 738.5 -- 738.5
Common stock dividends -- -- (261.6) -- (261.6)
Preferred stock dividends -- -- (1.9) -- (1.9)
Common stock issued 0.5 5.4 -- -- 5.9
Change in unrealized holding gains on
investments in equity securities, net -- -- -- 42.4 42.4
Other, net 0.1 (0.8) (5.7) 8.5 2.1
- ----------------------------------------- - ------------ - ------------- -- ----------- -- -------- -- -----------
Balance as of September 30, 1995 (348.8
million shares issued and
outstanding) $ 872.0 $ 947.5 $ 3,200.2 $ 30.5 $ 5,050.2
- ------------ - ------------- -- ----------- -- -------- -- -----------
See accompanying condensed Notes to Consolidated Financial Statements.
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5
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PART I.
Item 1.
SPRINT CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1995 and 1994
The information contained in this Form 10-Q for the three and nine-month interim
periods ended September 30, 1995 and 1994 has been prepared in accordance with
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of
management, all adjustments considered necessary, consisting only of normal
recurring accruals, to present fairly the consolidated financial position,
results of operations, and cash flows for such interim periods have been made.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The results of operations for the
nine months ended September 30, 1995 are not necessarily indicative of the
operating results that may be expected for the year ended December 31, 1995.
1. Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
Sprint Corporation and its wholly-owned and majority-owned subsidiaries
(Sprint). Investments in affiliates in which Sprint does not have a controlling
interest are accounted for using the equity method.
In accordance with industry practice, revenues and related net income of
non-regulated operations attributable to transactions with Sprint's regulated
local exchange telephone companies have not been eliminated in the accompanying
consolidated financial statements. Intercompany revenues of such entities
amounted to $65 million and $74 million for the three months ended September 30,
1995 and 1994, respectively, and $210 million and $224 million for the nine
months ended September 30, 1995 and 1994, respectively.
All other significant intercompany transactions have been eliminated.
Classification of Operations
The long distance communications services division provides domestic voice,
video, and data communications services across certain specified geographical
boundaries, as well as international long distance communications services. The
terms under which the division offers its services to the public are subject to
different levels of state and federal regulation, but rates are generally not
subject to rate-base regulation.
The local communications services division consists principally of the
operations of Sprint's regulated telephone companies which provide local
exchange services, access by telephone customers and other carriers to local
exchange facilities and long distance services within specified geographical
areas.
The cellular and wireless communications services division consists of
wholly-owned and majority-owned interests in partnerships and corporations
operating cellular and wireless communications properties in various
metropolitan and rural service area markets. Sprint has announced its intent to
pursue a tax-free spin-off of the cellular and wireless division to Sprint
shareholders.
The product distribution and directory publishing businesses include the
wholesale distribution of telecommunications products and the publishing and
marketing of white and yellow page telephone directories.
6
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Reclassifications
Certain amounts previously reported for prior periods have been reclassified to
conform to the current period presentation in the accompanying consolidated
financial statements. Such reclassifications had no effect on the results of
operations or shareholders' equity as previously reported.
2. Investments in Equity Securities
Investments in equity securities are classified as available for sale and
reported at fair value (estimated based on quoted market prices). As of
September 30, 1995 and December 31, 1994, the cost of such investments was $109
million, with gross unrealized holding gains of $135 million and $69 million,
respectively, reflected as additions to other shareholders' equity, net of
related income taxes.
During the nine months ended September 30, 1994, Sprint sold an investment in
equity securities, realizing a gain of $35 million, which increased net income
by $22 million ($0.06 per share).
3. Long-Term Debt
Long-term debt, including current maturities, increased $1.10 billion as of
September 30, 1995 compared to December 31, 1994, primarily reflecting
borrowings to support commitments associated with the Sprint Telecommunications
Venture. This increase in borrowings was primarily comprised of notes payable
and commercial paper which are classified as long-term debt due to Sprint's
intent and ability to refinance such borrowings on a long-term basis.
4. Income Taxes
The differences which cause the effective income tax rate to vary from the
statutory federal income tax rate of 35 percent for the nine months ended
September 30, 1995 and 1994, respectively, are as follows (in millions):
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Nine Months Ended
September 30,
------------------------------
1995 1994
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<S> <C> <C>
Income tax provision at the statutory rate $ 411.2 $ 373.2
Effect of:
Investment tax credits included in income (11.2) (16.4)
State income taxes, net of federal income tax effect 42.3 39.5
Other, net (5.9) (7.1)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Income tax provision $ 436.4 $ 389.2
--- ------------- -- -------------
Effective income tax rate 37.1% 36.5%
--- ------------- -- -------------
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7
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5. Contingencies
Litigation, Claims and Assessments
Following announcement in 1992 of Sprint's merger agreement with Centel
Corporation (Centel), class action suits were filed against Centel and certain
of its officers and directors in federal and state courts. The state suits have
been dismissed, while the federal suits have been consolidated into a single
action which seeks damages for alleged violations of securities laws.
On October 12, 1995, the New York trial court granted the motion of Centel's
financial advisors to dismiss a purported class action suit (reported in
Sprint's Annual Report on Form 10-K for the year ended December 31, 1994) filed
against them in connection with their representation of Centel in the
Sprint/Centel merger.
Various other suits arising in the ordinary course of business are pending
against Sprint. Management cannot predict the ultimate outcome of these actions
but believes they will not result in a material effect on Sprint's consolidated
financial statements.
Accounts Receivable Sold with Recourse
Under an agreement available through December 1995, Sprint may sell on a
continuous basis, with recourse, up to $600 million of undivided interests in a
designated pool of its accounts receivable. Subsequent collections of
receivables sold to investors are typically reinvested in the pool. Sprint is
required to repurchase the designated pool of accounts receivable only upon the
occurrence of specified events involving non-collectibility of accounts. As of
September 30, 1995, Sprint had not been required to repurchase receivables under
this recourse provision. Because Sprint retains credit losses associated with
its accounts receivable, any exposure related to this retention is estimated in
conjunction with Sprint's calculation of its reserve for uncollectible accounts.
On an annual basis, subject to the approval of the investors, Sprint may extend
the agreement for an additional year. Management anticipates pursuing the
extension of this agreement for an additional year prior to December 31, 1995.
Receivables sold that remained uncollected as of September 30, 1995 aggregated
$600 million.
6. Subsequent Events
In October 1995, Sprint's board of directors declared a common stock dividend of
$0.25 per share payable on December 28, 1995.
In October 1995, $282 million of 9.875 percent notes were redeemed prior to
scheduled maturities. The redemption premiums associated with these retirements
were not significant.
Sprint has determined that its local telecommunications division no longer meets
the criteria necessary for the continued application of the accounting
prescribed by Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation." As a result of the
discontinued application of SFAS No. 71, Sprint will recognize a noncash,
after-tax extraordinary charge of between $550 million and $650 million in the
fourth quarter of 1995 to adjust the net carrying amount of telephone plant in
service and to eliminate regulatory assets and liabilities.
Sprint is undertaking a realignment of its local telecommunications division's
finance and network operations. This organizational realignment will result in a
work force reduction of approximately 1,600 employees over two years. A one-time
after-tax charge of between $45 million and $55 million will be incurred to
provide severance benefits to affected employees.
8
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PART I.
Item 2.
SPRINT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Sprint Corporation (Sprint), incorporated in 1938 under the laws of Kansas, is a
holding company. Sprint's principal subsidiaries provide domestic and
international long distance, local exchange and cellular and wireless
telecommunications services. Other subsidiaries are engaged in the wholesale
distribution of telecommunications products and the publishing and marketing of
white and yellow page telephone directories.
Long Distance Communications Services. The long distance division is the
nation's third largest long distance telephone company, operating a nationwide
all-digital long distance communications network utilizing state-of-the-art
fiber-optic and electronic technology. The division provides domestic and
international voice, video and data communications services. The terms under
which the division offers its services to the public are subject to different
levels of state and federal regulation, but rates are generally not subject to
rate-base regulation.
Local Communications Services. The local division is comprised of regulated
local exchange carriers (LECs) which serve approximately 6.6 million access
lines in 19 states. The companies in this division operate in geographical areas
called Local Access Transport Areas (LATAs) in which they provide basic local
exchange and intraLATA toll service. The division also is a reseller of
interexchange long distance services and provides other carriers access to
Sprint's local exchange facilities.
Cellular and Wireless Communications Services. The cellular and wireless
division, which serves over 1.3 million cellular customers, primarily consists
of Sprint Cellular Company and its subsidiaries. The division has operating
control of 87 markets in 15 states and minority interests in 53 markets.
Product Distribution and Directory Publishing. North Supply Company (North
Supply), a wholesale distributor of telecommunications, security and alarm, and
electrical products, distributes products of more than 1,200 manufacturers to
approximately 9,500 customers. Products range from basics, such as wire and
cable, telephones and repair parts, to complete private branch exchange (PBX)
systems, transmission systems and security and alarm equipment.
Sprint Publishing & Advertising along with Centel Directory Company publish and
market white and yellow page telephone directories in certain of Sprint's local
exchange territories, as well as in the greater metropolitan areas of Milwaukee,
Wisconsin and Chicago, Illinois. The companies publish approximately 331
directories in 20 states with a circulation of 16.1 million copies.
Results Of Operations
Consolidated
Each of Sprint's primary divisions -- long distance, local exchange, and
cellular and wireless -- generated improved net operating revenues and operating
income in the third quarter of 1995 as compared to the third quarter of 1994.
The long distance division generated a 6.6 percent growth in traffic volumes
over the third quarter of 1994, the number of access lines served by the local
division grew 4.7 percent during the past 12 months, and the cellular and
wireless division benefited from a 52.9 percent growth in cellular subscribers
over the past 12 months.
Consolidated net operating revenues for the quarter ended September 30, 1995
were $3.44 billion, a 6.4 percent increase over net operating revenues of $3.23
billion for the third quarter of 1994. For the quarter ended September 30, 1995,
net income was $269 million, or $0.76 per share, compared with $230 million, or
$0.66 per share, for the third quarter of 1994. For the nine months ended
September 30, 1995, consolidated net operating revenues were $10.08 billion, a
7.0 percent increase over net operating revenues of $9.42 billion for the
comparable period in 1994. Net income for the nine months ended September 30,
1995 was $739 million, or $2.10 per share, compared with $677 million, or $1.94
per share, for the nine months ended September 30, 1994. Net income for the nine
months ended September 30, 1994 included a $22 million gain ($0.06 per share)
related to the sale of an investment in equity securities.
9
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Long Distance Communications Services
Selected Operating Results
(In Millions)
----------------------------------------------------------------------
Three Months Ended
September 30, Variance
---------------------------------- -------------------------------
1995 1994 Dollar Percent
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<S> <C> <C> <C> <C>
Net operating revenues $ 1,826.9 $ 1,739.8 $ 87.1 5.0%
Operating expenses
Interconnection 777.5 741.3 36.2 4.9%
Operations 253.9 242.0 11.9 4.9%
Selling, general and administrative 463.0 451.8 11.2 2.5%
Depreciation and amortization 147.6 139.7 7.9 5.7%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 1,642.0 1,574.8 67.2 4.3%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 184.9 $ 165.0 $ 19.9 12.1%
--- ------------- -- ------------- --- -------------
Operating margin 10.1% 9.5%
--- ------------- -- -------------
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues $ 5,351.2 $ 5,095.7 $ 255.5 5.0%
Operating expenses
Interconnection 2,295.9 2,237.0 58.9 2.6%
Operations 748.8 676.8 72.0 10.6%
Selling, general and administrative 1,367.1 1,305.2 61.9 4.7%
Depreciation and amortization 428.4 410.4 18.0 4.4%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 4,840.2 4,629.4 210.8 4.6%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 511.0 $ 466.3 $ 44.7 9.6%
--- ------------- -- ------------- --- -------------
Operating margin 9.5% 9.2%
--- ------------- -- -------------
</TABLE>
Net operating revenues for the three and nine months ended September 30, 1995
increased 5.0 percent over the comparable 1994 periods while traffic volume
increased 6.6 percent and 6.2 percent over the same periods. Revenue growth for
the three and nine months ended September 30, 1995 was primarily driven by
strong performance in the data services market, which includes sales to consumer
on-line services and Internet connectivity, transaction processing such as
credit card authorizations and check guarantees, data communication for
multinational corporations, and data-intensive applications such as image
transfer and client/server exchange. Also contributing to this revenue growth
were the business market, which continued to experience growth in "800" services
and private line services, the international market, which reflects the
division's continuing efforts to target new geographic markets, and the
residential market, which reflects the success of the Sprint Sense (sm) calling
plan. Intense competition in the small business market contributed to a decline
in this market as compared to the prior year.
10
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While revenue levels for the quarter ended September 30, 1995 were the highest
ever for the long distance division, year over year rates of growth have not
returned to the levels experienced in the third quarter of 1994. This reduced
rate of growth occurred primarily in the international, "800" services,
residential and business markets. Partially offsetting this trend were the
private line services and data services markets, which have continued to
experience increasing rates of growth since the third quarter of 1994. In an
effort to achieve its goal of growing revenues at a rate in excess of the
industry, the division continues to develop various marketing initiatives, such
as providing new channels of distribution for Sprint Sense(sm) through joint
marketing efforts with certain cable partners in the Sprint Telecommunications
Venture (STV), a joint venture with certain cable companies to provide both
wireless and wireline communications services to consumers and businesses on a
broad geographic basis within the United States. Additionally, the Sprint
Sense(sm) product was introduced into the international consumer market during
the second quarter of 1995 and, at the same time, Business Sense (sm) was
introduced into the small business market.
Interconnection costs consist of amounts paid to local exchange carriers, other
domestic service providers, and foreign telephone companies for the completion
of calls made by the division's customers. Interconnection costs increased
during the three and nine months ended September 30, 1995 relative to the
comparable 1994 periods due to increases in access costs associated with the
growth in data products, international interconnection costs and increased
traffic volumes. These increases were partially offset by reduced costs of
connecting to networks domestically as a result of lower interstate access
rates. As a percentage of net operating revenues, interconnection costs were
42.6 percent and 42.9 percent in the three and nine months ended September 30,
1995, respectively, compared to 42.6 percent and 43.9 percent in the three and
nine months ended September 30, 1994, respectively.
Operations expense consists of costs related to operating and maintaining the
long distance network; costs of providing various services such as operator
services, public payphones, telecommunications services for the hearing
impaired, and video teleconferencing; and costs of data system sales. Operations
expense for the three and nine months ended September 30, 1995 increased $12
million and $72 million, respectively, from the comparable 1994 periods,
primarily due to increased costs associated with growth within the data products
market and increased international network operations costs reflecting growth in
overseas products and foreign operations. The year-to-date increase in
operations expense also included approximately $3 million of expenses associated
with a reduction in the division's work force which was substantially completed
during the first quarter of 1995.
Selling, general and administrative (SG&A) expense for the three and nine months
ended September 30, 1995 increased $11 million and $62 million, respectively,
over the comparable 1994 periods, generally reflecting the overall growth in the
division's operating activities. The increase in SG&A expense for the three
month period was due to various small increases in miscellaneous administrative
expenses. The increase in SG&A expense for the nine month period was generally
due to increased sales, marketing and advertising efforts, which are important
in the intensely competitive long distance marketplace. The year-to-date
increase also included approximately $6 million of expenses associated with a
reduction in the division's work force which was substantially completed during
the first quarter of 1995. The division has continued to focus on cost
containment of SG&A expenses in an effort to further enhance the division's
profitability. As a result, SG&A expense as a percentage of net operating
revenues decreased from 26.0 percent and 25.6 percent for the three and nine
months ended September 30, 1994, respectively, to 25.3 percent and 25.5 percent
for the comparable periods in 1995.
Depreciation and amortization in the three and nine months ended September 30,
1995 increased $8 million and $18 million, respectively, compared to 1994,
generally due to an increase in the asset base in support of data revenue growth
and SONET deployment.
11
<PAGE>
<TABLE>
<CAPTION>
Local Communications Services
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Three Months Ended
September 30, Variance
------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
<S> <C> <C> <C> <C>
Net operating revenues
Local service $ 474.7 $ 445.6 $ 29.1 6.5%
Network access 422.4 393.5 28.9 7.3%
Toll service 123.1 131.9 (8.8) (6.7)%
Other 159.7 141.2 18.5 13.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 1,179.9 1,112.2 67.7 6.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating expenses
Plant operations 335.8 326.6 9.2 2.8%
Depreciation and amortization 208.6 195.2 13.4 6.9%
Customer operations 152.3 142.6 9.7 6.8%
Other 191.6 195.7 (4.1) (2.1)%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 888.3 860.1 28.2 3.3%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 291.6 $ 252.1 $ 39.5 15.7%
--- ------------- -- ------------- --- -------------
Operating margin 24.7% 22.7%
--- ------------- -- -------------
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues
Local service $ 1,393.0 $ 1,306.1 $ 86.9 6.7%
Network access 1,251.9 1,175.6 76.3 6.5%
Toll service 367.2 398.6 (31.4) (7.9)%
Other 476.5 383.8 92.7 24.2%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 3,488.6 3,264.1 224.5 6.9%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating expenses
Plant operations 1,011.6 955.4 56.2 5.9%
Depreciation and amortization 623.1 580.1 43.0 7.4%
Customer operations 440.3 406.0 34.3 8.5%
Other 578.6 559.6 19.0 3.4%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 2,653.6 2,501.1 152.5 6.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 835.0 $ 763.0 $ 72.0 9.4%
--- ------------- -- ------------- --- -------------
Operating margin 23.9% 23.4%
--- ------------- -- -------------
</TABLE>
12
<PAGE>
The division's net operating revenues for the three and nine months ended
September 30, 1995 increased 6.5 percent and 6.7 percent, respectively, over the
comparable 1994 periods. Growth in local service revenues reflects continued
increases in the number of access lines served and growth in add-on services,
such as custom calling features. The number of access lines served grew 4.7
percent during the past twelve months.
Network access revenues, derived from interexchange long distance carriers' use
of the local network to complete calls, increased as a result of growth in
traffic volumes, a portion of which is due to a migration of traffic related to
toll service revenues as described below. The increase related to traffic
volumes was partially offset by periodic reductions in network access rates
charged. During the first quarter of 1995, the Federal Communications Commission
(FCC) announced a new interim interstate price caps plan which became effective
August 1, 1995. Under the new plan, the local division adopted a rate formula
based on the maximum productivity factors that effectively removed the earnings
cap on the division's interstate access revenues. Interstate access revenues
currently comprise approximately 60 percent of the division's network access
revenues.
Toll service revenues, related to the provision of long distance services within
specified geographical areas and the reselling of interexchange long distance
services, decreased 6.7 percent and 7.9 percent for the three and nine months
ended September 30, 1995, respectively, from the comparable periods in 1994. The
decreases primarily reflect increased competition in the intrastate long
distance market as interexchange long distance carriers are now offering
intraLATA long distance service in certain states. While toll service revenues
have declined as a result of this increased competition, this reduction is
partially recovered through the resulting increased use of the local network by
interexchange long distance carriers.
Other revenues, including revenues from directory publishing fees, billing and
collection services and sales of telecommunications equipment, increased 13.1
percent and 24.2 percent for the three and nine months ended September 30, 1995,
respectively, over the comparable 1994 periods. The increases were generally due
to growth in equipment sales and an increase in miscellaneous non-regulated
revenues.
Plant operations expense includes network operations, repair and maintenance
costs of property, plant and equipment, and other costs associated with the
provision of local exchange services. Plant operations expense increased $9
million and $56 million in the three and nine months ended September 30, 1995
over the comparable 1994 periods. These increases were primarily due to
increases in the costs of providing services resulting from access line growth
and to increases in repair and maintenance costs in the division's Florida and
Mid-Atlantic regions related to bad weather conditions, including the flooding
rains and hurricanes which have occurred in 1995.
The increases in depreciation and amortization expense for the three and nine
months ended September 30, 1995 relative to the comparable 1994 periods were
generally due to system-wide plant additions and the implementation of
depreciation rate changes ordered by the Florida public utility commission
within the division's Florida operations. These depreciation rate changes
resulted in increases in depreciation expense for the three and nine months
ended September 30, 1995 of $8 million and $24 million, respectively.
Customer operations expense includes costs associated with business office
operations and billing services, marketing costs, and expenses related to
providing operator and directory assistance and other customer services.
Customer operations expense increased $10 million and $34 million in the three
and nine months ended September 30, 1995, respectively, over the comparable 1994
periods primarily due to increased marketing costs to promote new products and
services, increased business office operations costs as a result of the growth
in access lines, and customer service costs related to increased non-regulated
activities.
Other operating expenses decreased $4 million for the three months ended
September 30, 1995 over the comparable 1994 period primarily due to a reduction
in expenses resulting from continued efficiencies from the Sprint/Centel merger.
Other operating expenses increased $19 million for the nine months ended
September 30, 1995 over the comparable 1994 period due to the overall growth in
equipment sales.
13
<PAGE>
The division has historically accounted for the economic effects of regulation
pursuant to Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation." The application of
SFAS No. 71 requires the accounting recognition of the rate actions of
regulators where appropriate, including the recognition of depreciation and
amortization based on estimated useful lives prescribed by regulatory
commissions rather than those that might be utilized by non-regulated
enterprises.
Sprint has determined that it no longer meets the criteria necessary for the
continued application of the accounting prescribed by SFAS No. 71. Sprint's
determination was based on changes in the regulatory framework, which continues
to evolve from rate-base regulation to price regulation which does not provide
for the recovery of specific costs. In addition, with technological changes and
the convergence of competition in the telecommunications industry, the levels
and types of competition are increasing such that service and product pricing
prescribed by the regulator may no longer provide for the recovery of specific
costs.
As a result of the discontinued application of SFAS No. 71, Sprint's local
division, for financial reporting purposes, is required to eliminate its
regulatory assets and liabilities and adjust the carrying amounts of its
telephone plant in service to the extent that it determines that such amounts
are either overstated as a result of the regulatory process, or are not
recoverable. Accordingly, Sprint will recognize a non-cash, after-tax
extraordinary charge of between $550 million and $650 million in the fourth
quarter of 1995 to adjust the net carrying amounts of telephone plant in service
and to eliminate regulatory assets and liabilities.
<TABLE>
<CAPTION>
Cellular and Wireless Communications Services
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Three Months Ended
September 30, Variance
------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
<S> <C> <C> <C> <C>
Net operating revenues $ 246.0 $ 184.9 $ 61.1 33.0%
Operating expenses
Costs of services and products 77.0 57.5 19.5 33.9%
Selling, general and administrative 96.2 72.4 23.8 32.9%
Depreciation and amortization 29.4 22.6 6.8 30.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 202.6 152.5 50.1 32.9%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 43.4 $ 32.4 $ 11.0 34.0%
--- ------------- -- ------------- --- -------------
Operating margin 17.6% 17.5%
--- ------------- -- -------------
14
<PAGE>
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues $ 682.1 $ 499.8 $ 182.3 36.5%
Operating expenses
Costs of services and products 222.2 159.1 63.1 39.7%
Selling, general and administrative 262.3 203.4 58.9 29.0%
Depreciation and amortization 83.7 67.9 15.8 23.3%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 568.2 430.4 137.8 32.0%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 113.9 $ 69.4 $ 44.5 64.1%
--- ------------- -- ------------- --- -------------
Operating margin 16.7% 13.9%
--- ------------- -- -------------
</TABLE>
Sprint has announced its intent to pursue a tax-free spin-off of its cellular
and wireless division to Sprint shareholders. The proposed spin-off is subject
to a favorable ruling by the Internal Revenue Service (IRS) on the tax-free
nature of the spin-off, regulatory and other government approvals and
final approval by the Sprint Board of Directors. Subject to the receipt of the
favorable ruling by the IRS and other approvals, the proposed spin-off is
expected to be completed during the first six months of 1996.
In addition to activities comprising the above operating results, Sprint's
cellular and wireless division also owns minority interests in certain markets.
The division's pro rata share in the earnings and losses of these minority
investments is included in "Other income (expense), net" in the Consolidated
Statements of Income.
Net operating revenues for the three and nine months ended September 30, 1995
increased 33.0 percent and 36.5 percent, respectively, over the comparable 1994
periods, primarily due to growth in customer lines served of 52.9 percent over
the past twelve months. The effects of growth in the number of cellular
customers was partially offset by a decline in average monthly service revenue
per cellular customer from $68 for the quarter ended September 30, 1994, to $61
for the quarter ended September 30, 1995, and from $67 for the nine months ended
September 30, 1994, to $61 for the comparable period in 1995, reflecting an
industry-wide trend that has occurred as a result of increased general consumer
market penetration. Market penetration for the cellular and wireless division
was at 6.8 percent as of September 30, 1995 compared to 4.6 percent at September
30, 1994. Future growth rates for net operating revenues and the number of
cellular customers will be dependent on price levels and the quality of service
in the competitive cellular marketplace as well as the impact of emerging
competition such as Personal Communications Services (PCS).
Excluding the costs and revenues related to equipment sales, costs of services
and products decreased to 23.4 percent and 23.9 percent of net operating
revenues for the three and nine months ended September 30, 1995, respectively,
from 24.1 percent and 24.4 percent for the same periods in 1994. These decreases
are primarily attributable to economies of scale gained from serving additional
customers and were achieved despite an increase in costs resulting from
fraudulent usage, particularly in the first quarter of 1995. The impact of such
costs was lessened during the second and third quarters due to the effective
implementation of added fraud prevention and detection measures. These measures
include the use of clone detectors at switching stations to monitor for patterns
of fraud such as calls to unusual locations, more use than expected, and calls
from two or more locations in a short period of time. If such usage is detected,
customers are notified that their cellular phone number may have been cloned,
and a decision is reached whether to reprogram the phone.
15
<PAGE>
The increase in selling, general and administrative expense for the three and
nine months ended September 30, 1995 resulted principally from increased
commissions and customer service expenses, as well as increased advertising
costs related to the growth in the number of cellular customers. Despite the
increases in the amount of SG&A expense, such costs as a percentage of net
operating revenues (excluding revenues from equipment sales) declined to 40.8
percent and 40.5 percent in the three and nine months ended September 30, 1995
from 42.0 percent and 43.9 percent in the comparable periods in 1994. The
improvements resulted primarily from additional economies realized from
providing service and support to a larger customer base. However, the division's
total per unit cost to acquire customers, including equipment sales discounts,
increased 6 percent for the nine months ended September 30, 1995 as compared to
the same period in 1994, reflecting the intensely competitive marketplace for
acquiring new customers as well as increased costs associated with the retention
of a larger existing customer base.
Depreciation and amortization increased primarily due to the additional
investment in property, plant and equipment required to accommodate the growth
in customer lines.
<TABLE>
<CAPTION>
Product Distribution and Directory Publishing Businesses
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Three Months Ended
September 30, Variance
------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
<S> <C> <C> <C> <C>
Net operating revenues $ 295.1 $ 290.5 $ 4.6 1.6%
Operating expenses
Costs of services and products 247.1 246.5 0.6 0.2%
Selling, general and administrative 22.3 21.5 0.8 3.7%
Depreciation and amortization 1.9 1.7 0.2 11.8%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 271.3 269.7 1.6 0.6%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 23.8 $ 20.8 $ 3.0 14.4%
--- ------------- -- ------------- --- -------------
Operating margin 8.1% 7.2%
--- ------------- -- -------------
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1995 1994 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues $ 870.4 $ 830.5 $ 39.9 4.8%
Operating expenses
Costs of services and products 733.8 705.2 28.6 4.1%
Selling, general and administrative 65.7 63.5 2.2 3.5%
Depreciation and amortization 5.5 5.1 0.4 7.8%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 805.0 773.8 31.2 4.0%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 65.4 $ 56.7 $ 8.7 15.3%
--- ------------- -- ------------- --- -------------
Operating margin 7.5% 6.8%
--- ------------- -- -------------
</TABLE>
16
<PAGE>
North Supply, Sprint's product distribution subsidiary, had net operating
revenues of $222 million and $654 million for the three and nine months ended
September 30, 1995, respectively, increasing $1 million and $29 million from the
comparable 1994 periods due to growth in sales to non-affiliates as well as
price increases which have occurred throughout 1995. For the three months ended
September 30, 1995, these increases were partially offset by decreased sales to
affiliates. North Supply's costs of services and products decreased from $191
million for the three months ended September 30, 1994 to $189 million for the
three months ended September 30, 1995 primarily due to the decrease in sales to
affiliates. The cost of services and products increased from $540 million for
the nine months ended September 30, 1994 to $560 million for the comparable
period in 1995 as a result of the overall increase in sales.
Sprint Publishing & Advertising, Sprint's directory publishing subsidiary, had
net operating revenues of $73 million and $216 million for the three and nine
months ended September 30, 1995, respectively, compared to $69 million and $205
million for the same periods in 1994. Sprint Publishing & Advertising
experienced an increase in costs of services and products from $56 million and
$165 million for the three and nine months ended September 30, 1994,
respectively, to $58 million and $174 million in the comparable periods in 1995.
Non-Operating Items
Interest Expense
Interest expense for the three months ended September 30, 1995 was consistent
with the comparable period in 1994. For the nine months ended September 30,
1995, interest expense decreased $2 million from the comparable 1994 period.
Sprint's average debt outstanding for the three and nine months ended September
30, 1995 increased $1.12 billion and $643 million, respectively, from the
comparable 1994 periods. These increases in average debt outstanding were
primarily from short-term borrowings incurred to fund investments in STV (see
"Liquidity and Capital Resources -- Capital Requirements - Associated with
Sprint Telecommunications Venture"). Because the interest costs on the
borrowings associated with Sprint's investment in this venture are being
capitalized in accordance with SFAS No. 58, "Capitalization of Interest Cost in
Financial Statements That Include Investments Accounted for by the Equity
Method", interest expense did not increase proportionately to the increase in
average debt outstanding. Sprint's effective interest rate decreased by 45 and
41 basis points, respectively, over the same three- and nine-month periods
primarily due to the increase in notes payable and commercial paper as a percent
of total borrowings.
Other Income (Expense), Net
The components of other income (expense), net are as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--- ------------------------------ --- ------------------------------
1995 1994 1995 1994
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Equity in net earnings of affiliates $ 1.7 $ 8.4 $ 3.2 $ 21.3
Loss on sales of accounts receivable (9.7) (7.6) (29.3) (20.1)
Minority interests (8.8) (7.6) (25.0) (17.1)
Gain on sale of investment in equity
securities -- -- -- 34.7
Other (1.3) (2.5) (2.0) (8.2)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total other income (expense), net $ (18.1) $ (9.3) $ (53.1) $ 10.6
--- ------------- -- ------------- --- ------------- -- -------------
</TABLE>
17
<PAGE>
Income Tax Provision
See Note 4 of condensed Notes to Consolidated Financial Statements for
information regarding the differences which cause the effective income tax rate
to vary from the statutory federal income tax rate.
Financial Condition
Sprint's consolidated assets totaled $16.62 billion at September 30, 1995
compared to $14.94 billion at December 31, 1994. Cash and equivalents increased
$241 million as of September 30, 1995 as a result of funds deposited in escrow
to support the retirement of $250 million of debt in October 1995. Accounts
receivable increased $146 million as of September 30, 1995 compared to December
31, 1994 generally due to a 7 percent increase in consolidated net operating
revenues. Sprint's allowance for doubtful accounts as a percentage of accounts
receivable increased from 8.8 percent at December 31, 1994 to 12.3 percent at
September 30, 1995. The increased percentage generally reflects the timing of
sales and customer payments as well as reserves established during 1995 relative
to certain of the long distance division's reseller customers. The reseller
market has experienced significant competition, which has had a negative impact
on these customers' repayment patterns. This increase has not had a significant
impact on the revenue growth for the long distance division. Property, plant and
equipment, net of accumulated depreciation, increased $368 million over the same
period. This increase was primarily a result of increased capital expenditures
to upgrade Sprint's networks, to expand service capabilities and increase
productivity.
Accounts payable decreased $150 million as of September 30, 1995 compared to
December 31, 1994 primarily because the December 31, 1994 balance reflects
increased construction expenditures which generally occur in the fourth quarter
and are paid in subsequent periods. Current maturities of long-term debt as of
September 30, 1995 increased $229 million compared to December 31, 1994 due to
the early retirement of debt during October 1995, partially offset by scheduled
debt payments during the nine months ended September 30, 1995. Long-term debt
increased $869 million as of September 30, 1995 compared to December 31, 1994
primarily reflecting borrowings to support commitments associated with STV. As
of September 30, 1995, Sprint's total capitalization aggregated $11.12 billion,
consisting of long-term debt (including current maturities), redeemable
preferred stock, and common stock and other shareholders' equity. Long-term debt
(including current maturities) comprised 54.3 percent and 52.0 percent of total
capitalization as of September 30, 1995 and December 31, 1994, respectively.
Liquidity and Capital Resources
Cash Flows - Operating Activities
Cash flows from operating activities, which are Sprint's primary source of
liquidity, were $1.82 billion during the first nine months of 1995, compared to
$1.69 billion during the first nine months of 1994. The increase in operating
cash flows generally reflects improved operating results in all divisions and
reduced working capital requirements.
Cash Flows - Investing Activities
Sprint's investing activities used cash of $2.40 billion and $1.24 billion
during the first nine months of 1995 and 1994, respectively. Capital
expenditures were $1.55 billion and $1.33 billion during the first nine months
of 1995 and 1994, respectively. Long distance capital expenditures totaled $528
million for the first nine months of 1995 compared to $425 million for the same
period in 1994. The 1995 expenditures were incurred primarily to enhance network
reliability, to upgrade capabilities for providing new products and services and
to meet increased demand for data related services. Capital expenditures for the
local division totaled $728 million for the first nine months of 1995 compared
to $707 million for the same period in 1994. The 1995 expenditures were made to
accommodate access line growth, to continue the conversion to digital
technologies, and to expand the division's capabilities for providing enhanced
telecommunications services. Capital expenditures for the cellular and wireless
division totaled $265 million for the first nine months of 1995 compared to $164
million for the same period in 1994. The 1995 expenditures were made to support
the increase in the number of cellular subscribers served as the division
constructed 248 cell sites during the first nine months of 1995.
18
<PAGE>
During the first nine months of 1995, Sprint contributed $892 million to STV, of
which $840 million was used to fund Sprint's portion of payments to the FCC for
licenses acquired in the PCS auction. The remaining amount of this contribution
was primarily used to fund Sprint's portion of the venture's acquisition of a
limited partnership interest in American Personal Communications (APC), as well
as related capital and operating requirements. APC has the pioneer preference
license for the Washington D.C. MTA.
Investing activities in the first nine months of 1994 included $118 million
received in connection with the sale of an investment in equity securities.
Cash Flows - Financing Activities
Cash flows provided by financing activities were $827 million in the first nine
months of 1995 compared to cash used by financing activities of $431 million in
the comparable 1994 period. During January 1995, $70 million of long-term debt
securities were issued under a shelf registration statement in order to reduce
commercial paper outstanding. During March 1995, Sprint issued $138 million of 8
1/4% Exchangeable Notes due March 31, 2000 in the form of 4.3 million DECS(sm)
(Debt Exchangeable for Common Stock) exchangeable into shares of Common Stock of
Southern New England Telecommunications Corporation. In August 1995, $50 million
was received under long-term notes payable. The remaining increase in cash
provided by financing activities consisted of proceeds from short-term
borrowings. The proceeds received from the DECS(sm) issuance, the notes payable
and the short-term borrowings were primarily used to fund commitments associated
with the STV and to repay scheduled long-term debt maturities. Long-term debt
retirements during the first nine months of 1994 included the redemption of $102
million of debt called, prior to scheduled maturity, in 1993.
In October 1995, $282 million of 9.875 percent notes were redeemed prior to
scheduled maturities. The redemption premiums associated with these retirements
were not significant.
Also in October 1995, Sprint renewed its revolving credit agreement with a
syndicate of domestic and international banks for five years, through October
2000. In addition to the extension, the revolving credit agreement was increased
to $1.5 billion from $1.1 billion.
Capital Requirements - Exclusive of Sprint Telecommunications Venture
Sprint continues to anticipate that cash flows from operating activities will be
sufficient to fund capital expenditures and dividends for the year ended
December 31, 1995. Sprint currently expects annual capital expenditures for 1995
to be approximately $2.2 billion. Sprint expects its external cash requirements
for the remainder of 1995 to be approximately $50 million to $150 million, which
is generally required to repay scheduled long-term debt maturities and to
refinance notes payable and commercial paper. Long-term debt outstanding as of
September 30, 1995 includes notes payable and commercial paper which are
classified as long-term debt due to Sprint's intent and ability to refinance
such borrowings on a long-term basis. Amounts which are not refinanced through
the issuance of long-term debt will continue to be financed under existing
credit facilities or may be reduced through free cash flows. Free cash flow is
an internal measurement utilized by Sprint to assess the coverage of capital
expenditures and dividends paid by cash provided from operating activities.
External cash requirements will be financed primarily with debt, the source of
which will depend upon prevailing market conditions during the year.
Capital Requirements - Associated with Sprint Telecommunications Venture
Sprint's cash commitment associated with the PCS licenses acquired through STV
and its affiliates was approximately $890 million, of which approximately $50
million was paid in 1994 and the remainder was paid in the first half of 1995.
Sprint estimates that its total cash contributions to the venture will be
approximately $2 billion over the first three years of operation. Sprint has
negotiated an interim revolving credit facility of $1.3 billion to support
anticipated cash commitments associated with its investment in STV, and had
borrowed $819 million under this facility as of September 30, 1995. A portion of
the cash proceeds from the anticipated investment in Sprint equity securities by
Deutsche Telekom and France Telecom would be used to ultimately fund commitments
associated with the venture's activities.
19
<PAGE>
Liquidity
As of September 30, 1995, Sprint had the ability to borrow $607 million under
revolving credit agreements with syndicates of domestic and international banks
and other bank commitments. Other available financing sources include a
Medium-Term Note program, under which Sprint may offer for sale up to $175
million of unsecured senior debt securities. In addition, Sprint may offer for
sale approximately $1.0 billion of debt securities pursuant to shelf
registration statements filed with the Securities and Exchange Commission.
The aggregate amount of additional borrowings which can be incurred is
ultimately limited by certain covenants contained in existing debt agreements.
As of September 30, 1995, Sprint had borrowing capacity of approximately $4.0
billion under the most restrictive of its debt covenants.
The most restrictive covenant applicable to dividends results from Sprint's
revolving credit agreements. Among other restrictions, the agreements require
Sprint to maintain specified levels of consolidated net worth, as defined. As a
result of these requirements, $1.9 billion of Sprint's $3.20 billion
consolidated retained earnings were effectively restricted from the payment of
dividends as of September 30, 1995.
General Hedging Policies
Sprint utilizes certain derivative instruments in an effort to manage exposure
to interest rate risk and foreign exchange risk. Sprint's utilization of such
derivative instruments related to hedging activities is limited to interest rate
swap agreements, interest rate caps and forward contracts and options in foreign
currencies. As is customary for these types of derivative instruments, Sprint
does not require collateral or other security from the counterparties to such
agreements. However, because Sprint controls its exposure to credit risk through
credit approvals, credit limits, and internal monitoring procedures, Sprint
believes that its credit risk exposure is limited.
Sprint will in no circumstance take speculative positions and create an exposure
to benefit from market fluctuations. All hedging activity is in accordance with
board-approved policies. Any exposure related to Sprint's use of derivative
instruments is immaterial to its overall operations, financial condition and
liquidity.
20
<PAGE>
PART II.
Other Information
Item 1. Legal Proceedings
On October 12, 1995, the New York trial court granted the motion of
Centel Corporation's financial advisors to dismiss a purported class
action suit (reported in Sprint's Annual Report on Form 10-K for the
year ended December 31, 1994) filed against them in connection with
their representation of Centel in the Sprint/Centel merger.
Item 2. Changes in Securities
In connection with the anticipated investment in Sprint Class A Stock
by France Telecom and Deutsche Telekom, Sprint's Rights Plan was
amended to provide for Rights to attach to the Class A Common Stock and
to assure that the investment will not cause the Rights to detach and
become exercisable. Under the Rights Plan, one-half of a Right is
attached to each share of Sprint common stock. Each Right, which is
detachable and exercisable only upon the occurrence of certain takeover
events, entitles shareholders to buy units consisting of one
one-hundredth of a newly issued share of Preferred Stock-Fourth Series,
Junior Participating at a price of $235 per unit or, in certain
circumstances, common stock. The amendment to the Rights Plan provides
generally that actions of France Telecom, Deutsche Telekom and their
respective affiliates which would otherwise cause the Rights to detach
and become exercisable will not do so unless such actions also violate
the Standstill Agreement entered into among Sprint, France Telecom and
Deutsche Telekom.
Item 3. Defaults Upon Senior Securities
There were no reportable events during the quarter ended September 30,
1995.
Item 4. Submission of Matters to a Vote of Security Holders
There were no reportable events during the quarter ended September 30,
1995.
Item 5. Other Information
Sprint's ratios of earnings to fixed charges were 3.68 and 3.76 for the
three months ended September 30, 1995 and 1994, respectively, and 3.68
and 3.71 for the nine months ended September 30, 1995 and 1994,
respectively. These ratios have been computed by dividing fixed charges
into the sum of (a) net income less capitalized interest included in
income, (b) income taxes, and (c) fixed charges. Fixed charges consist
of interest on all indebtedness (including amortization of debt
issuance expenses), the interest factor of operating rents and the
pre-tax cost of preferred stock dividends of subsidiaries. In the
absence of the gain on the sale of an investment in equity securities
of $22 million for the nine months ended September 30, 1994, the ratio
of earnings to fixed charges would have been 3.63 for that period.
21
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(4) Instruments Defining the Rights of Security Holders
(a) Rights Agreement dated as of August 8, 1989, between Sprint
Corporation (formerly United Telecommunications, Inc.) and
UMB Bank, n.a. (formerly United Missouri Bank of Kansas
City, N.A.) as Rights Agent (filed as Exhibit 2(b) to Sprint
Corporation Registration Statement on Form 8-A dated August
11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(b) Amendment and Supplement dated June 4, 1992 to Rights
Agreement dated as of August 8, 1989 (filed as Exhibit 2(c)
to Amendment No. 1 on Form 8 dated June 8, 1992 to Sprint
Corporation Registration Statement on Form 8-A dated August
11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(c) Second Amendment to Rights Agreement dated as of July 31,
1995 between Sprint Corporation and UMB Bank, n.a. (filed as
Exhibit 2(d) to Form 8-A/A-2 dated October 20, 1995 amending
Sprint Corporation Registration Statement on Form 8-A dated
August 11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(d) Standstill Agreement dated as of July 31, 1995, by and among
Sprint Corporation, France Telecom and Deutsche Telekom AG
(filed as Exhibit (10)(c) to Sprint Corporation Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 and
incorporated herein by reference).
(e) Articles of Incorporation of Sprint Corporation, as amended
(filed as Exhibit 4 to Sprint Corporation Current Report on
Form 8-K dated March 9, 1993 and incorporated herein by
reference).
(10) Executive Compensation Plans and Arrangements:
(a) 1978 Stock Option Plan, as amended.
(b) 1981 Stock Option Plan, as amended.
(c) 1985 Stock Option Plan, as amended.
(d) 1990 Stock Option Plan, as amended.
(e) 1990 Restricted Stock Plan, as amended.
(f) Executive Deferred Compensation Plan, as amended.
(g) Management Incentive Stock Option Plan, as amended.
(h) Long-Term Stock Incentive Program, as amended.
(i) Sprint Supplemental Executive Retirement Plan.
(j) Amended and Restated Centel Directors Deferred Compensation
Plan.
(11) Computation of Earnings Per Common Share.
(12) Computation of Ratio of Earnings to Fixed Charges.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
22
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPRINT CORPORATION
(Registrant)
By /s/ John P. Meyer
John P. Meyer
Senior Vice President -- Controller
Principal Accounting Officer
Dated: November 14, 1995
23
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER
(4) Instruments Defining the Rights of Security Holders
(a) Rights Agreement dated as of August 8, 1989, between Sprint
Corporation (formerly United Telecommunications, Inc.) and
UMB Bank, n.a. (formerly United Missouri Bank of Kansas
City, N.A.) as Rights Agent (filed as Exhibit 2(b) to Sprint
Corporation Registration Statement on Form 8-A dated August
11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(b) Amendment and Supplement dated June 4, 1992 to Rights
Agreement dated as of August 8, 1989 (filed as Exhibit 2(c)
to Amendment No. 1 on Form 8 dated June 8, 1992 to Sprint
Corporation Registration Statement on Form 8-A dated August
11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(c) Second Amendment to Rights Agreement dated as of July 31,
1995 between Sprint Corporation and UMB Bank, n.a. (filed as
Exhibit 2(d) to Form 8-A/A-2 dated October 20, 1995 amending
Sprint Corporation Registration Statement on Form 8-A dated
August 11, 1989 (File No. 1-4721) and incorporated herein by
reference).
(d) Standstill Agreement dated as of July 31, 1995, by and among
Sprint Corporation, France Telecom and Deutsche Telekom AG
(filed as Exhibit (10)(c) to Sprint Corporation Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 and
incorporated herein by reference).
(e) Articles of Incorporation of Sprint Corporation, as amended
(filed as Exhibit 4 to Sprint Corporation Current Report on
Form 8-K dated March 9, 1993 and incorporated herein by
reference).
(10) Executive Compensation Plans and Arrangements:
(a) 1978 Stock Option Plan, as amended.
(b) 1981 Stock Option Plan, as amended.
(c) 1985 Stock Option Plan, as amended.
(d) 1990 Stock Option Plan, as amended.
(e) 1990 Restricted Stock Plan, as amended.
(f) Executive Deferred Compensation Plan, as amended.
(g) Management Incentive Stock Option Plan, as amended.
(h) Long-Term Stock Incentive Program, as amended.
(i) Sprint Supplemental Executive Retirement Plan.
(j) Amended and Restated Centel Directors Deferred Compensation
Plan.
(11) Computation of Earnings Per Common Share.
(12) Computation of Ratio of Earnings to Fixed Charges.
(27) Financial Data Schedule.
<PAGE>
Exhibit 10(a)
1978 STOCK OPTION PLAN
(as amended on April 27, 1982, April 23, 1985,
February 7, 1987, August 11, 1987, April 12, 1988,
December 12, 1989, April 16, 1991, August 13, 1991,
February 18, 1995, April 18, 1995 and August 8, 1995)
Section 1. Establishment.
United Telecommunications, Inc., a Kansas corporation
("Company"), hereby establishes a stock option plan to be
named the United Telecommunications, Inc. 1978 Stock Option
Plan ("Plan"), for officers and key employees of the Company
and its Subsidiaries.
Section 2. Purpose.
The purpose of the Plan is to induce officers and key
employees of the Company and its subsidiaries, who are in a
position to contribute materially to the prosperity thereof,
to remain with the Company or its subsidiaries, to offer
them incentives and reward in recognition of their share in
the Company's progress, and to encourage them to continue to
promote the best interest of the Company and its
subsidiaries. The Plan will also aid the Company and its
subsidiaries in competing with other enterprises for the
services of new key personnel needed to help insure their
continued development.
All options granted pursuant to the Plan prior to April
27, 1982, and outstanding as of such date shall be
nonstatutory stock options.
Options granted to an optionee shall be either
Incentive Stock Options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended, or
nonstatutory stock options, provided that no Incentive Stock
Options shall be granted which would permit options first
exercisable in any calendar year to exceed the limitations
set forth in Section 5A(a) hereof. Options which become
first exercisable in any calendar year in excess of said
limitations shall be nonstatutory stock options. Options
designated "Nonqualified" or "Nonstatutory" Stock Options
shall not be restricted by the limitations of said Section
5(A)(a) and shall not be treated as Incentive Stock Options.
<PAGE>
Section 3. Administration.
The Plan shall be administered by a Stock Option
Committee (the "Committee") consisting of three or more
persons who shall be members of the Board of Directors of
the Company. The Committee shall be elected by the Board of
Directors of the Company which may from time to time appoint
members of the Committee in substitution for members
previously appointed and may fill vacancies, however caused,
in the Committee. The Committee shall select one of its
members as its chairman, and shall hold its meetings at such
times and places as it may determine. A majority of the
Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority
of the Committee, shall be deemed the acts of the Committee.
The Company shall grant options and related stock
appreciation rights under the Plan in accordance with
determinations made by the Committee pursuant to the
provisions of the Plan. Members of the Committee shall be
disinterested persons as defined in regulations issued under
Section 16 of the Securities Exchange Act of 1934. The
Committee from time to time may adopt (and thereafter amend
and rescind) such rules and regulations for carrying out the
Plan and take such action in the administration of the Plan,
not inconsistent with the provisions hereof, as it shall
deem proper. The interpretation and construction of any
provisions of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the
Company, be final and conclusive. No member of the Board of
Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or
any option granted under it.
Section 4. Total Number of Shares to be Optioned.
The maximum number of shares of common stock ($2.50 par
value) of the Company which may be issued upon exercise of
options under the Plan shall not exceed 800,000 (f1) (subject to
adjustment as provided in Section 10 hereof). The shares
sold under the Plan may be either issued shares reacquired
by the Company at any time or authorized but unissued
shares, as the Board of Directors from time to time may
determine.
(f1) The initial number of shares authorized was doubled due
to the December 1989 two-for-one stock split.
<PAGE>
In the event that any outstanding options under the
Plan for any reason expire or are terminated, the shares of
common stock of the Company allocable to the unexercised
portion of all of such options may again be subject to an
option under the Plan.
Section 5. Eligibility.
Options shall be granted only to officers and key
employees of the Company or its subsidiaries. The Committee
will, in its discretion, determine the officers and key
employees to be granted options, the time or times at which
options shall be granted, the number of shares subject to
each option, whether the options are Incentive Stock Options
or nonstatutory stock options, and the manner in which
options may be exercised. In making such determination, the
Committee may take into consideration the value of the
services rendered by the respective individuals, their
present and potential contributions to the success of the
Company and its subsidiaries and such other factors which
the Committee may deem relevant in accomplishing the purpose
of the Plan.
No option may be granted to any individual who
immediately after the option grant owns directly or
indirectly stock possessing more than five percent (5%) of
the total combined voting power or value of all classes of
stock of the Company or any subsidiary.
An individual may be granted more than one option but
only on the terms and subject to the restrictions hereinafter
set forth. No person shall be eligible to receive an option for
a larger number of shares than is recommended for such
individual by the Committee.
Section 5A. Limitation on Incentive Stock Options.
(a) General Rule. For options granted after December
31, 1986, the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first
time during any calendar year by the optionee under all
plans of the Company and its subsidiaries shall not exceed
$100,000.
(b) Fair Market Value. Fair market value shall be
deemed to be the average of the high and low prices of the
common stock of the Company for composite transactions as
published by major newspapers for the date the Incentive
<PAGE>
Stock Option is granted or, if no sale of the Company's
stock shall have been made on that day, the next preceding
day on which there was a sale of such stock; provided,
however, that fair market value in the case of Incentive
Stock Options granted prior to April 23, 1985, shall be
deemed to be the closing price of the common stock of the
Company on the New York Stock Exchange on the date the
Incentive Stock Option was granted.
Section 6. Terms and Conditions of Options.
Each option granted on or after April 27, 1982, under
the Plan shall be evidenced by a Stock Option Agreement in
such form not inconsistent with the Plan as the Committee
shall determine, provided that such Stock Option Agreement
clearly and separately identifies nonstatutory stock options
and Incentive Stock Options and that the substance of the
following terms and conditions be included therein:
(a) Option Price. The price at which each share of
common stock covered by such option may be purchased shall
be determined by the Committee and shall be no less than one
hundred percent (100%) of the fair market value of the stock
on the date the option is granted. Fair market value shall
be deemed to be the average of the high and low prices of
the common stock of the Company for composite transactions
as published by major newspapers for the date the option is
granted or, if no sale of the Company's stock shall have
been made on that day, the next preceding day on which there
was a sale of such stock; provided, however, that fair
market value in the case of options granted prior to April
23, 1985, was deemed to be the closing price of the common
stock of the Company on the New York Stock Exchange on the
date the option was granted.
(b) Nontransferable. The option and any related SAR
shall not be transferable by the optionee otherwise than by
will or by the laws of descent and distribution; provided
that, if so determined by the Committee, an optionee may, in
the manner established by the Committee, designate a
beneficiary to exercise:
(i) any incentive stock option granted on or after the
effective date of the Committee's approval of
applicable procedures; and
(ii) any nonqualified options or SAR
upon the death of the optionee. During the optionee's
lifetime, the option and any related SAR may be exercised
<PAGE>
only by the optionee or, if permissible under applicable
law, by the guardian or representative of the optionee.
(c) Exercise of Option. The option and any right
related thereto, if exercised by the optionee, may be
exercised (subject, however, to the provisions of Section
8, and if applicable, Section 9) only if the optionee has
been an employee of the Company or of any subsidiary thereof
at all times during the period beginning with the date of
the granting of the option and ending on the day three (3)
months before the date of such exercise; provided, however,
that in the case of an optionee who is a retiree of the
Company or of any subsidiary thereof or who becomes
permanently and totally disabled, the three (3) months shall
be extended to five (5) years for options designated
"Nonqualified" or "Nonstatutory" options. (For this
purpose, a retiree is a person who is entitled to receive
pension benefits in accordance with the United System
Employee Retirement Plan immediately upon termination of
employment.) Options granted under the Plan shall not be
affected by any change of duties or position so long as the
optionee continues to be an employee of the Company or of a
subsidiary. Only those options exercisable at the date the
optionee's employment is terminated may be exercised during
the period following such termination, whether such
termination is by retirement or otherwise.
(d) Term of Option. The option and any right related
thereto shall not be exercisable after the expiration of ten
(10) years from the date the option was granted.
(e) Death of Optionee. In the event of the death of
an optionee during the period in which an option is
exercisable (as set forth in Subsection (c) above), the
option theretofore granted to such person and any related
SAR shall be exercisable only within the twelve (12) months
next succeeding such death, and then only (i) by the
executor or administrator of the optionee's estate, by the
person or persons to whom the optionee's rights under the
option shall pass by the optionee's will or the laws of
descent and distribution, or, if a beneficiary has been
designated in accordance with Subsection (b) above, by the
beneficiary, and (ii) if and to the extent that the optionee
was entitled to exercise the option at the date of the
optionee's death, provided that in no event shall the option
be exercisable more than ten (10) years after the date it
was granted.
(f) Sequential Exercise of Incentive Stock Options.
No Incentive Stock Option granted prior to January 1, 1987,
<PAGE>
shall be exercisable while there is outstanding any other
Incentive Stock Option which was granted to the optionee at
an earlier time to purchase stock in the Company or in any
corporation which (at the time of the granting of such
Incentive Stock Option) is a subsidiary of the Company, or
in any predecessor of any of such corporations. For the
purpose of this Section 6(f), an Incentive Stock Option
which has not been exercised in full is outstanding until
the expiration of the period during which, under its initial
terms, it could have been exercised. The cancellation of an
earlier Incentive Stock Option will not enable a subsequent
Incentive Stock Option to be exercised any sooner.
Section 7. Consideration for Options.
Each optionee shall, as consideration for the grant of
the option, agree in writing to remain in the employ of the
Company or of one of its subsidiaries, at the pleasure of
the Company or of such subsidiary, for at least one (1) year
from the date of the granting of such option or until
earlier termination of the optionee's employment effected or
approved by the Company or by such subsidiary. In the event
of a violation by the optionee of such agreement, any
options still held by such person at the time of such
violation shall automatically terminate. The Committee may
waive this requirement in the case of any optionee. Nothing
contained in the Plan, or in any option granted pursuant to
the Plan, nor in any agreement made pursuant to the
provisions of this Section 7, shall confer upon any optionee
any right with respect to continuance of employment by the
Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate
the optionee's employment or change the optionee's
compensation at any time.
Section 8. Exercise of Options - Purchase of Shares.
Unless otherwise determined by the Committee, 25% of
the total number of shares subject to an option granted
under the Plan shall become exercisable one year from date
of grant and 25% on each of the three succeeding
anniversaries. An optionee's right to purchase shares with
respect to shares which become exercisable shall be
cumulative during the term of the option. An option shall
be exercisable by purchase of shares only upon payment to
the Company of the full purchase price of the shares with
respect to which the option is exercised; provided, however,
that the Company shall not be required to issue or deliver
any certificates for shares of common stock purchased upon
<PAGE>
the exercise of an option prior to (i) if requested by the
Company, the filing with the Company by the optionee or
purchaser acting under Section 6(e) hereof of a
representation in writing that at the time of such exercise
it is the optionee's then present intention to acquire the
shares being purchased for investment and not for resale, or
(ii) the completion of any registration or other
qualification of such shares under any state or federal laws
or rulings or regulations of any government regulatory body,
which the Company shall determine to be necessary or
advisable.
Payment for the shares shall be either in United States
dollars, payable in cash or by check, or by surrender of
stock certificates representing like common stock of the
Company having an aggregate fair market value, determined as
of the date of exercise, equal to the number of shares with
respect to which such option is exercised multiplied by the
option price per share; provided that the Committee may
impose whatever restrictions it deems necessary or desirable
with respect to the payment for shares by the surrender of
stock certificates representing like common stock of the
Company. The fair market value of common stock on the date
of exercise of an option shall be determined in the same
manner as the fair market value of common stock on the date
of grant of such option was determined pursuant to Section
6(a). Such payment shall be accompanied by a written
request for the shares purchased. An option shall be deemed
exercised on the date such payment and written request are
received by the Secretary of the Company.
In addition, for all nonqualified options outstanding
on February 17, 1995, or issued thereafter, certain
optionees, as determined by the Committee, may elect to
receive restricted shares upon payment for the exercise of
an option in the form of unrestricted common stock. The
optionee will receive the same number of unrestricted shares
as the number of shares surrendered to pay the exercise
price, while the shares received in excess of the number
surrendered to pay the exercise price may be restricted.
Such optionees may also elect to deliver restricted shares
of the Company's common stock in payment of the exercise
price notwithstanding restrictions on transferability to
which such shares are subject. The Company shall be
authorized to issue restricted shares of common stock upon
such exercises of stock options, subject to the following
conditions:
(a) The optionee shall elect a vesting period for the
restricted common stock to be received upon exercise of the
option of between six (6) months and ten (10) years, but in
<PAGE>
no event may an optionee elect a vesting period shorter than
the period provided in paragraph (c) hereof.
(b) Restricted common stock issued upon an exercise
shall include the right to have stock withheld for taxes on
the lapse of the restrictions. Notwithstanding any other
provisions to the contrary in the Plan, no reload option
shall be granted for shares withheld or delivered in payment
of taxes upon the lapse of restrictions.
(c) Restricted common stock received in such an
exercise or from an election to receive a Long-Term
Incentive Plan payout in restricted stock, or any Restricted
Stock Award granted pursuant to the Long-Term Stock
Incentive Program, shall be eligible for use in payment of
the exercise price of a stock option, so long as all the
shares received as a result of such an exercise are
restricted for a period at least as long as, and with terms
at least as restrictive as the terms of, the restricted
common stock used in payment. Any such restricted common
stock so delivered in payment of the exercise price shall
have an aggregate fair market value (determined as of the
date of exercise and in the same manner as the fair market
value of unrestricted common stock of the Company on the
date of exercise of an option is determined pursuant to
Section 6(a)) equal to the number of shares with respect to
which such option is exercised, multiplied by the exercise
price per share.
(d) Shares of restricted common stock received in an
exercise of a stock option that continue to be restricted
shall be forfeited in the event that vesting conditions are
not satisfied, subject to the discretion of the Committee,
except in the case of death, disability, normal retirement,
or involuntary termination for reasons other than cause, in
which case all restrictions lapse; provided, however, that
in no event shall restrictions lapse if the restrictions on
shares used to pay for the exercise would not have lapsed
under the same conditions.
(e) The optionee who receives restricted stock may not
sell, transfer, assign, pledge or otherwise encumber or
dispose of shares of restricted stock until such time as all
restrictions on such stock have lapsed except: (i) to the
Company in payment of the exercise price of a stock option
issued by the Company under any employee stock option plan
adopted by the Company that provides for payment of the
exercise price in the form of restricted stock, provided
that such payment is made in accordance with the terms of
such plan; or (ii) to a trust of which the optionee, the
<PAGE>
optionee's spouse, or descendants of the optionee are the
primary beneficiaries and which is a grantor trust treated
as owned by the optionee under Subchapter J of the Internal
Revenue Code, upon the following terms:
(A) the Company receives, prior to such transfer, an
opinion from optionee's counsel (1) that the trust will
be treated as a grantor trust and will be treated as
being owned by the optionee at all times until the
restrictions on such stock lapse or the stock is
forfeited under the terms of its grant, (2) with
respect to any trust structured as a grantor retained
annuity trust, that the annuity period ends after the
last date on which restrictions on such stock can
lapse, (3) that the terms of the trust provide that
upon the forfeiture of the restricted stock under the
terms of its grant or the earlier termination of the
trust for whatever reason, ownership of the restricted
stock shall revert to the optionee or to the Company,
(4) that the trustee of such trust may not, prior to
the lapsing of restrictions on such stock, sell,
transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock except to the
Company or to the optionee, subject to the restrictions
provided for in this Plan, and (5) that the trustee is
not authorized to incur liabilities on behalf of the
trust, other than to the beneficiaries of the trust;
and
(B) the optionee and the trustee of the trust shall
execute stock powers in blank to be held in the custody
of the Company; and
(C) the Corporate Secretary of the Company may, in his
discretion, enforce the foregoing transfer restrictions
by maintaining physical custody of the certificate or
certificates representing such shares of restricted
stock, by placing a restrictive legend on such
certificates, by requiring the optionee and the trustee
to execute other documents as a pre-condition to such
transfer, or otherwise.
(f) The optionee will have all the rights of a
stockholder with respect to shares of restricted stock
received upon the exercise of an option, including the right
to vote the shares of stock and the right to dividends on
the stock. Unless the Corporate Secretary establishes
alternative procedures, the shares of restricted stock will
be registered in the name of the optionee and the
certificates evidencing such shares shall bear an
<PAGE>
appropriate legend referring to the terms, conditions and
restrictions applicable to the award and shall be held in
escrow by the Company. The optionee shall execute a stock
power or powers assigning the shares of restricted stock
back to the Company, which stock powers shall be held in
escrow by the Company and used only in the event of the
forfeiture of any of the shares of restricted stock. A
certificate evidencing unrestricted shares of common stock
shall be issued to the optionee promptly after the
restrictions lapse on any restricted shares.
(g) The Corporate Secretary shall have the discretion
and authority to establish any and all procedures, including
the requirement of election forms, which he deems necessary
or desirable for the orderly administration of such
exercises.
No optionee or optionee's executor or administrator,
legatees or distributees, as the case may be, will be, or
will be deemed to be, a holder of any shares subject to an
option unless and until a stock certificate or certificates
for such shares are issued to such person or them under the
terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other
rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section
10 hereof.
In the event that any optionee shall be dismissed from
the employ of the Company or any of its subsidiaries for any
reason which in the opinion of the Committee shall
constitute good cause for dismissal, any option still held
by such person at such time shall automatically terminate.
The decision of the Committee as to what shall constitute
good cause for dismissal shall be final and binding upon all
concerned.
Section 9. Exercise of Options - Stock Appreciation Rights.
In addition to providing for the exercise of an option
as set forth in Section 8, at the time of grant of such
option the Committee may by separate agreement, in
conjunction with all or part of any option granted under the
Plan, permit an optionee to exercise the option in an
alternative manner based on the appreciated value of the
common stock subject to option ("Stock Appreciation Right");
provided, however, that no Stock Appreciation Right granted
to an optionee who is an officer of the Company shall be
exercisable during the six-month period following the date
<PAGE>
of grant, except that such limitation shall not apply in the
event of death or physical disability of such optionee
occurring prior to the expiration of such six-month period.
Stock Appreciation Rights may be exercised by an optionee by
surrendering the related option or applicable portion
thereof. Upon such exercise and surrender, the optionee
shall be entitled to receive the value of such Stock
Appreciation Rights determined in the manner prescribed in
this Section 9. Options which have been so surrendered, in
whole or in part, shall no longer be exercisable.
Each agreement evidencing Stock Appreciation Rights
granted on or after April 27, 1982, shall clearly and
separately identify the nonstatutory stock options and
Incentive Stock Options to which it relates and shall
contain such terms and conditions not inconsistent with
other provisions of the Plan as shall be determined from
time to time by the Committee, which shall include the
following:
(a) Stock Appreciation Rights shall expire no later
than the expiration of the related option.
(b) Stock Appreciation Rights shall be transferable
only when and to the extent that the related option is
transferable.
(c) Stock Appreciation Rights shall be exercisable at
such time or times and only to the extent that the related
option is exercisable.
(d) Stock Appreciation Rights shall be exercisable
only when there is a positive spread, that is, when the
market price of the stock subject to the related option
exceeds the exercise price of such option.
(e) Upon the exercise of Stock Appreciation Rights, an
optionee shall be entitled to receive the value thereof,
which value shall be equal to the excess of the fair market
value on the date of exercise of one share of common stock
over the option price per share specified in the related
option multiplied by the number of shares in respect of
which the Stock Appreciation Rights shall have been
exercised. The fair market value of common stock on the
date of exercise of Stock Appreciation Rights shall be
determined in the same manner as the fair market value of
common stock on the date of grant of the related option was
determined pursuant to Section 6(a).
<PAGE>
(f) Upon an exercise of Stock Appreciation Rights, the
optionee shall notify the Company of the form in which
payment of the value thereof will be made (i.e., cash,
common stock, or any combination thereof); provided,
however, in the case of optionees who are officers of the
Company or other persons subject to Section 16(b) of the
Securities Exchange Act of 1934, (i) payment of the value of
Stock Appreciation Rights related to Incentive Stock Options
may be elected in common stock only insofar as the issuance
of such common stock to the optionee would be subject to the
Internal Revenue Code of 1954, Section 83 Income Inclusion
Rule, as in effect on the date of exercise of the Stock
Appreciation Rights, and (ii) the Committee may at any time
impose any other limitations upon the exercise of Stock
Appreciation Rights which, in the Committee's sole
discretion, are necessary or desirable in order to comply
with Section 16(b) and the rules and regulations thereunder,
or in order to obtain any exemption therefrom.
Upon the exercise of Stock Appreciation Rights, the
option or part thereof to which such Stock Appreciation
Rights is related shall be deemed to have been exercised for
the purpose of the limitation of the number of shares of
common stock to be issued under the Plan as set forth in
Section 4 and the requirement of sequential exercise of
Incentive Stock Options as set forth in Section 6(f). Stock
Appreciation Rights shall be deemed exercised on the date
written notice of exercise is received by the Secretary of
the Company.
Section 10. Change in Stock, Adjustments, Etc.
In the event that the outstanding shares of common
stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number of shares
or kind of shares or other securities of the Company or of
another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock
split up, combination of shares, or a dividend payable in
capital stock, appropriate adjustment shall be made by the
Committee in the number and kind of shares for the purchase
of which options may be granted under the Plan including the
maximum number that may be granted to any one person. In
addition, the Committee shall make appropriate adjustment in
the number and kind of shares as to which outstanding
options, or portions thereof then unexercised, shall be
exercisable, to the end that the optionee's proportionate
interest shall be maintained as before the occurrence of
such event, and such adjustment and outstanding options
shall be made without change of the total price applicable
<PAGE>
to the unexercised portion of the option and with a
corresponding adjustment in the option price per share;
provided, however, that each such adjustment in the number
and kind of shares subject to outstanding options, including
any adjustment in the option price, shall be made in such
manner as not to constitute a modification as defined in
Section 425 of the Internal Revenue Code of 1986, as
amended. Any such adjustment made by the Committee shall be
conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
Section 11. Duration, Amendment and Termination.
The Board of Directors of the Company may at any time
terminate the Plan or make such amendments thereof as it
shall deem advisable and in the best interests of the
Company, without further action on the part of the
stockholders of the Company; provided, however, that no such
termination or amendment shall, without the consent of the
individual to whom any option shall theretofore have been
granted, affect or impair the rights of such individual
under such option, and provided further, that unless the
stockholders of the Company shall have first approved
thereof, no amendment of this Plan shall be made whereby (a)
the total number of shares which may be optioned under the
Plan to all individuals, or any of them, shall be increased,
except by operation of the adjustment provisions of Section
10 hereof, (b) the authority to administer the Plan by a
committee consisting of directors of the Company not
eligible to receive options granted under the Plan shall be
withdrawn, (c) the term of the options shall be extended,
(d) the minimum option price shall be decreased, or (e) the
class of employees to whom options may be granted shall be
changed.
No Incentive Stock Option shall be granted under the
Plan after December 31, 1987, but Incentive Stock Options
granted prior to or as of such date may extend beyond such
date in accordance with the provisions hereof.
Section 12. Effectiveness of Plan.
This Plan shall not become effective unless and until
the following conditions shall have been met:
<PAGE>
(a) The Plan shall have been adopted by the
affirmative vote of a majority of the outstanding shares of
the Company at a meeting of the stockholders within one (1)
year of its approval by the Board of Directors.
(b) The Committee shall have been advised by counsel
that all other applicable legal requirements incident to the
establishment and operation of the Plan have been complied
with.
Section 13. Date of Granting of Options.
The granting of an option pursuant to the Plan shall
take place on the date the Committee decides to grant the
option. Within thirty (30) days of the granting of the
option, the Company shall notify the optionee of the grant
of the option, and submit to the optionee a Stock Option
Agreement and, if applicable, an agreement respecting Stock
Appreciation Rights, duly executed by and on behalf of the
Company, with the request that the optionee execute the
agreement or agreements within thirty (30) days after the
mailing by the Company of the notice to the optionee. If
the optionee shall fail to execute the written option
agreement and, if applicable, the agreement respecting Stock
Appreciation Rights within said 30-day period, such person's
option shall be automatically terminated.
Section 14. Application of Funds.
The proceeds received by the Company from the sale of
stock subject to option are to be added to the general funds
of the Company and used for its corporate purposes as the
Board of Directors shall determine.
Section 15. No Obligation to Exercise Option.
Granting of an option shall impose no obligation on the
optionee to exercise such option.
Section 16. Stock Withholding Election.
When taxes are withheld in connection with the exercise
of a stock option by delivering shares of stock in payment
of the exercise price, or an exercise of an SAR for stock,
or upon the lapse of restrictions on restricted stock
received upon the exercise of an option (the date on which
such exercise occurs or such restrictions lapse hereinafter
<PAGE>
referred to as the "Tax Date"), the optionee may elect to
make payment for the withholding of federal, state and local
taxes, including Social Security and Medicare ("FICA")
taxes, up to the optionee's marginal tax rate, by one or
both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at fair
market, as defined herein, on the Tax Date) which
shares, if acquired from the Company, must have been
held for at least six months;
(ii) requesting the Company to withhold from those
shares that would otherwise be received upon exercise
of the option, upon exercise of an SAR for stock, or
upon the lapse of restrictions, a number of shares
having a fair market value (as defined herein) on the
Tax Date equal to the amount to be withheld. The
amount of tax with-holding to be satisfied by
withholding shares from the option exercise is limited
to the minimum amount of taxes, including FICA taxes,
required to be withheld under federal, state and local
law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in cash. If
no timely election is made, cash must be delivered to
satisfy all tax withholding requirements.
Optionees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders") making an
election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) after February 8, 1996,
for FICA taxes; (b) at least six months after the date of
grant of the option or SAR; and (c) either within a "window
period" as defined in Rule 16b-3(e)(3) under the Securities
Exchange Act of 1934 or at least six months in advance of
the Tax Date. An election by an Insider to have stock
withheld to satisfy tax obligations is subject to the
approval of the Committee and to such rules as the Committee
may from time to time adopt.
<PAGE>
Exhibit 10(b)
1981 STOCK OPTION PLAN
(as amended on April 27, 1982, April 23, 1985,
February 7, 1987, August 11, 1987, April 12, 1988,
December 12, 1989, April 16, 1991, August 13, 1991,
February 18, 1995, April 18, 1995 and August 8, 1995)
Section 1. Establishment.
United Telecommunications, Inc., a Kansas corporation
("Company"), hereby establishes a stock option plan to be
named the United Telecommunications, Inc. 1981 Stock Option
Plan ("Plan"), for officers and key employees of the Company
and its subsidiaries.
Section 2. Purpose.
The purpose of the Plan is to induce officers and key
employees of the Company and its subsidiaries, who are in a
position to contribute materially to the prosperity thereof,
to remain with the Company or its subsidiaries, to offer
them incentives and reward in recognition of their share in
the Company's progress, and to encourage them to continue to
promote the best interest of the Company and its
subsidiaries. The Plan will also aid the Company and its
subsidiaries in competing with other enterprises for the
services of new key personnel needed to help insure their
continued development.
All options granted pursuant to the Plan prior to April
27, 1982, and outstanding as of such date shall be
nonstatutory stock options.
Options granted to an optionee shall be either
Incentive Stock Options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended, or
nonstatutory stock options, provided that no Incentive Stock
Options shall be granted which would permit options first
exercisable in any calendar year to exceed the limitations
set forth in Section 5A(a) hereof. Options which become
first exercisable in any calendar year in excess of said
limitations shall be nonstatutory stock options. Options
designated "Nonqualified" or "Nonstatutory" Stock Options
shall not be restricted by the limitations of said Section
5(A)(a) and shall not be treated as Incentive Stock Options.
<PAGE>
Section 3. Administration.
The Plan shall be administered by a Stock Option
Committee (the "Committee") consisting of three or more
persons who shall be members of the Board of Directors of
the Company. The Committee shall be elected by the Board of
Directors of the Company which may from time to time appoint
members of the Committee in substitution for members
previously appointed and may fill vacancies, however caused,
in the Committee. The Committee shall select one of its
members as its chairman, and shall hold its meetings at such
times and places as it may determine. A majority of the
Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority
of the Committee, shall be deemed the acts of the Committee.
The Company shall grant options and related stock
appreciation rights under the Plan in accordance with
determinations made by the Committee pursuant to the
provisions of the Plan. Members of the Committee shall be
disinterested persons as defined in regulations issued under
Section 16 of the Securities Exchange Act of 1934. The
Committee from time to time may adopt (and thereafter amend
and rescind) such rules and regulations for carrying out the
Plan and take such action in the administration of the Plan,
not inconsistent with the provisions hereof, as it shall
deem proper. The interpretation and construction of any
provisions of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the
Company, be final and conclusive. No member of the Board of
Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or
any option granted under it.
Section 4. Total Number of Shares to be Optioned.
The maximum number of shares of common stock ($2.50 par
value) of the Company which may be issued upon exercise of
options under the Plan shall not exceed 1,400,000 (f1) (subject
to adjustment as provided in Section 10 hereof). The shares
sold under the Plan may be either issued shares reacquired
by the Company at any time or authorized but unissued
shares, as the Board of Directors from time to time may
determine.
(f1) The initial number of shares authorized was doubled due
to the December, 1989 two-for-one stock split.
<PAGE>
In the event that any outstanding options under the
Plan for any reason expire or are terminated, the shares of
common stock of the Company allocable to the unexercised
portion of all of such options may again be subject to an
option under the Plan.
Section 5. Eligibility.
Options shall be granted only to officers and key
employees of the Company or its subsidiaries. The Committee
will, in its discretion, determine the officers and key
employees to be granted options, the time or times at which
options shall be granted, the number of shares subject to
each option, whether the options are Incentive Stock Options
or nonstatutory stock options, and the manner in which
options may be exercised. In making such determination, the
Committee may take into consideration the value of the
services rendered by the respective individuals, their
present and potential contributions to the success of the
Company and its subsidiaries and such other factors which
the Committee may deem relevant in accomplishing the purpose
of the Plan.
No option may be granted to any individual who
immediately after the option grant owns directly or
indirectly stock possessing more than five percent (5%) of
the total combined voting power or value of all classes of
stock of the Company or any subsidiary.
An individual may be granted more than one option but
only on the terms and subject to the restrictions
hereinafter set forth. No person shall be eligible to
receive an option for a larger number of shares than is
recommended for such individual by the Committee.
Section 5A. Limitation on Incentive Stock Options.
(a) General Rule. For options granted after December
31, 1986, the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first
time during any calendar year by the optionee under all
plans of the Company and its subsidiaries shall not exceed
$100,000.
(b) Fair Market Value. Fair market value shall be
deemed to be the average of the high and low prices of the
common stock of the Company for composite transactions as
published by major newspapers for the date the Incentive
Stock Option is granted or, if no sale of the Company's
<PAGE>
stock shall have been made on that day, the next preceding
day on which there was a sale of such stock; provided,
however, that fair market value in the case of Incentive
Stock Options granted prior to April 23, 1985, shall be
deemed to be the closing price of the common stock of the
Company on the New York Stock Exchange on the date the
Incentive Stock Option was granted.
Section 6. Terms and Conditions of Options.
Each option granted on or after April 27, 1982, under
the Plan shall be evidenced by a Stock Option Agreement in
such form not inconsistent with the Plan as the Committee
shall determine, provided that such Stock Option Agreement
clearly and separately identifies nonstatutory stock options
and Incentive Stock Options and that the substance of the
following terms and conditions be included therein:
(a) Option Price. The price at which each share of
common stock covered by such option may be purchased shall
be determined by the Committee and shall be no less than one
hundred percent (100%) of the fair market value of the stock
on the date the option is granted. Fair market value shall
be deemed to be the average of the high and low prices of
the common stock of the Company for composite transactions
as published by major newspapers for the date the option is
granted or, if no sale of the Company's stock shall have
been made on that day, the next preceding day on which there
was a sale of such stock; provided, however, that fair
market value in the case of options granted prior to April
23, 1985, was deemed to be the closing price of the common
stock of the Company on the New York Stock Exchange on the
date the option was granted.
(b) Nontransferable. The option and any related SAR
shall not be transferable by the optionee otherwise than by
will or by the laws of descent and distribution; provided
that, if so determined by the Committee, an optionee may, in
the manner established by the Committee, designate a
beneficiary to exercise:
(i) any incentive stock option granted on or after the
effective date of the Committee's approval of
applicable procedures; and
(ii) any nonqualified options or SAR
upon the death of the optionee. During the optionee's
lifetime, the option and any related SAR may be exercised
<PAGE>
only by the optionee or, if permissible under applicable
law, by the guardian or representative of the optionee.
(c) Exercise of Option. The option and any right
related thereto, if exercised by the optionee, may be
exercised (subject, however, to the provisions of Section 8,
and if applicable, Section 9) only if the optionee has been
an employee of the Company or of any subsidiary thereof at
all times during the period beginning with the date of the
granting of the option and ending on the day three (3)
months before the date of such exercise; provided, however,
that in the case of an optionee who is a retiree of the
Company or of any subsidiary thereof or who becomes
permanently and totally disabled, the three (3) months shall
be extended to five (5) years for options designated
"Nonqualified" or "Nonstatutory" options. (For this
purpose, a retiree is a person who is entitled to receive
pension benefits in accordance with the United System
Employee Retirement Plan immediately upon termination of
employment.) Options granted under the Plan shall not be
affected by any change of duties or position so long as the
optionee continues to be an employee of the Company or of a
subsidiary. Only those options exercisable at the date the
optionee's employment is terminated may be exercised during
the period following such termination, whether such
termination is by retirement or otherwise.
(d) Term of Option. The option and any right related
thereto shall not be exercisable after the expiration of ten
(10) years from the date the option was granted.
(e) Death of Optionee. In the event of the death of
an optionee during the period in which an option is
exercisable (as set forth in Subsection (c) above), the
option theretofore granted to such person and any related
SAR shall be exercisable only within the twelve (12) months
next succeeding such death, and then only (i) by the
executor or administrator of the optionee's estate, by the
person or persons to whom the optionee's rights under the
option shall pass by the optionee's will or the laws of
descent and distribution, or, if a beneficiary has been
designated in accordance with Subsection (b) above, by the
beneficiary, and (ii) if and to the extent that the optionee
was entitled to exercise the option at the date of the
optionee's death, provided that in no event shall the option
be exercisable more than ten (10) years after the date it
was granted.
(f) Sequential Exercise of Incentive Stock Options.
No Incentive Stock Option granted prior to January 1, 1987,
<PAGE>
shall be exercisable while there is outstanding any other
Incentive Stock Option which was granted to the optionee at
an earlier time to purchase stock in the Company or in any
corporation which (at the time of the granting of such
Incentive Stock Option) is a subsidiary of the Company, or
in any predecessor of any of such corporations. For the
purpose of this Section 6(f), an Incentive Stock Option
which has not been exercised in full is outstanding until
the expiration of the period during which, under its initial
terms, it could have been exercised. The cancellation of an
earlier Incentive Stock Option will not enable a subsequent
Incentive Stock Option to be exercised any sooner.
Section 7. Consideration for Options.
Each optionee shall, as consideration for the grant of
the option, agree in writing to remain in the employ of the
Company or of one of its subsidiaries, at the pleasure of
the Company or of such subsidiary, for at least one (1) year
from the date of the granting of such option or until
earlier termination of the optionee's employment effected or
approved by the Company or by such subsidiary. In the event
of a violation by the optionee of such agreement, any
options still held by such person at the time of such
violation shall automatically terminate. The Committee may
waive this requirement in the case of any optionee. Nothing
contained in the Plan, or in any option granted pursuant to
the Plan, nor in any agreement made pursuant to the
provisions of this Section 7, shall confer upon any optionee
any right with respect to continuance of employment by the
Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate
the optionee's employment or change the optionee's
compensation at any time.
Section 8. Exercise of Options - Purchase of Shares.
Unless otherwise determined by the Committee, 25% of
the total number of shares subject to an option granted
under the Plan shall become exercisable one year from date
of grant and 25% on each of the three succeeding
anniversaries. An optionee's right to purchase shares with
respect to shares which become exercisable shall be
cumulative during the term of the option. An option shall
be exercisable by purchase of shares only upon payment to
the Company of the full purchase price of the shares with
respect to which the option is exercised; provided, however,
that the Company shall not be required to issue or deliver
any certificates for shares of common stock purchased upon
the exercise of an option prior to (i) if requested by the
<PAGE>
Company, the filing with the Company by the optionee or
purchaser acting under Section 6(e) hereof of a
representation in writing that at the time of such exercise
it is the optionee's then present intention to acquire the
shares being purchased for investment and not for resale, or
(ii) the completion of any registration or other
qualification of such shares under any state or federal laws
or rulings or regulations of any government regulatory body,
which the Company shall determine to be necessary or
advisable.
Payment for the shares shall be either in United States
dollars, payable in cash or by check, or by surrender of
stock certificates representing like common stock of the
Company having an aggregate fair market value, determined as
of the date of exercise, equal to the number of shares with
respect to which such option is exercised multiplied by the
option price per share; provided that the Committee may
impose whatever restrictions it deems necessary or desirable
with respect to the payment for shares by the surrender of
stock certificates representing like common stock of the
Company. The fair market value of common stock on the date
of exercise of an option shall be determined in the same
manner as the fair market value of common stock on the date
of grant of such option was determined pursuant to Section
6(a). Such payment shall be accompanied by a written
request for the shares purchased. An option shall be deemed
exercised on the date such payment and written request are
received by the Secretary of the Company.
In addition, for all nonqualified options outstanding
on February 17, 1995, or issued thereafter, certain
optionees, as determined by the Committee, may elect to
receive restricted shares upon payment for the exercise of
an option in the form of unrestricted common stock. The
optionee will receive the same number of unrestricted shares
as the number of shares surrendered to pay the exercise
price, while the shares received in excess of the number
surrendered to pay the exercise price may be restricted.
Such optionees may also elect to deliver restricted shares
of the Company's common stock in payment of the exercise
price notwithstanding restrictions on transferability to
which such shares are subject. The Company shall be
authorized to issue restricted shares of common stock upon
such exercises of stock options, subject to the following
conditions:
(a) The optionee shall elect a vesting period for the
restricted common stock to be received upon exercise of the
option of between six (6) months and ten (10) years, but in
<PAGE>
no event may an optionee elect a vesting period shorter than
the period provided in paragraph (c) hereof.
(b) Restricted common stock issued upon an exercise
shall include the right to have stock withheld for taxes on
the lapse of the restrictions. Notwithstanding any other
provisions to the contrary in the Plan, no reload option
shall be granted for shares withheld or delivered in payment
of taxes upon the lapse of restrictions.
(c) Restricted common stock received in such an
exercise or from an election to receive a Long-Term
Incentive Plan payout in restricted stock, or any Restricted
Stock Award granted pursuant to the Long-Term Stock
Incentive Program, shall be eligible for use in payment of
the exercise price of a stock option, so long as all the
shares received as a result of such an exercise are
restricted for a period at least as long as, and with terms
at least as restrictive as the terms of, the restricted
common stock used in payment. Any such restricted common
stock so delivered in payment of the exercise price shall
have an aggregate fair market value (determined as of the
date of exercise and in the same manner as the fair market
value of unrestricted common stock of the Company on the
date of exercise of an option is determined pursuant to
Section 6(a)) equal to the number of shares with respect to
which such option is exercised, multiplied by the exercise
price per share.
(d) Shares of restricted common stock received in an
exercise of a stock option shall be forfeited in the event
that vesting conditions are not satisfied, subject to the
discretion of the Committee, except in the case of death,
disability, normal retirement, or involuntary termination
for reasons other than cause, in which case all restrictions
lapse; provided, however, that in no event shall
restrictions lapse if the restrictions on shares used to pay
for the exercise would not have lapsed under the same
conditions.
(e) The optionee who receives restricted stock may not
sell, transfer, assign, pledge or otherwise encumber or
dispose of shares of restricted stock until such time as all
restrictions on such stock have lapsed except: (i) to the
Company in payment of the exercise price of a stock option
issued by the Company under any employee stock option plan
adopted by the Company that provides for payment of the
exercise price in the form of restricted stock, provided
that such payment is made in accordance with the terms of
such plan; or (ii) to a trust of which the optionee, the
<PAGE>
optionee's spouse, or descendants of the optionee are the
primary beneficiaries and which is a grantor trust treated
as owned by the optionee under Subchapter J of the Internal
Revenue Code, upon the following terms:
(A) the Company receives, prior to such transfer, an
opinion from optionee's counsel (1) that the trust will
be treated as a grantor trust and will be treated as
being owned by the optionee at all times until the
restrictions on such stock lapse or the stock is
forfeited under the terms of its grant, (2) with
respect to any trust structured as a grantor retained
annuity trust, that the annuity period ends after the
last date on which restrictions on such stock can
lapse, (3) that the terms of the trust provide that
upon the forfeiture of the restricted stock under the
terms of its grant or the earlier termination of the
trust for whatever reason, ownership of the restricted
stock shall revert to the optionee or to the Company,
(4) that the trustee of such trust may not, prior to
the lapsing of restrictions on such stock, sell,
transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock except to the
Company or to the optionee, subject to the restrictions
provided for in this Plan, and (5) that the trustee is
not authorized to incur liabilities on behalf of the
trust, other than to the beneficiaries of the trust;
and
(B) the optionee and the trustee of the trust shall
execute stock powers in blank to be held in the custody
of the Company; and
(C) the Corporate Secretary of the Company may, in his
discretion, enforce the foregoing transfer restrictions
by maintaining physical custody of the certificate or
certificates representing such shares of restricted
stock, by placing a restrictive legend on such
certificates, by requiring the optionee and the trustee
to execute other documents as a pre-condition to such
transfer, or otherwise.
(g) The optionee will have all the rights of a
stockholder with respect to shares of restricted stock
received upon the exercise of an option, including the right
to vote the shares of stock and the right to dividends on
the stock. Unless the Corporate Secretary establishes
alternative procedures, the shares of restricted stock will
be registered in the name of the optionee and the
certificates evidencing such shares shall bear an
<PAGE>
appropriate legend referring to the terms, conditions and
restrictions applicable to the award and shall be held in
escrow by the Company. The optionee shall execute a stock
power or powers assigning the shares of restricted stock
back to the Company, which stock powers shall be held in
escrow by the Company and used only in the event of the
forfeiture of any of the shares of restricted stock. A
certificate evidencing unrestricted shares of common stock
shall be issued to the optionee promptly after the
restrictions lapse on any restricted shares.
(f) The Corporate Secretary shall have the discretion
and authority to establish any and all procedures, including
the requirement of election forms, which he deems necessary
or desirable for the orderly administration of such
exercises.
No optionee or optionee's executor or administrator,
legatees or distributees, as the case may be, will be, or
will be deemed to be, a holder of any shares subject to an
option unless and until a stock certificate or certificates
for such shares are issued to such person or them under the
terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other
rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section
10 hereof.
In the event that any optionee shall be dismissed from
the employ of the Company or any of its subsidiaries for any
reason which in the opinion of the Committee shall
constitute good cause for dismissal, any option still held
by such person at such time shall automatically terminate.
The decision of the Committee as to what shall constitute
good cause for dismissal shall be final and binding upon all
concerned.
Section 9. Exercise of Options - Stock Appreciation Rights.
In addition to providing for the exercise of an option
as set forth in Section 8, at the time of grant of such
option the Committee may by separate agreement, in
conjunction with all or part of any option granted under the
Plan, permit an optionee to exercise the option in an
alternative manner based on the appreciated value of the
common stock subject to option ("Stock Appreciation Right");
provided, however, that no Stock Appreciation Right granted
to an optionee who is an officer of the Company shall be
exercisable during the six-month period following the date
<PAGE>
of grant, except that such limitation shall not apply in the
event of death or physical disability of such optionee
occurring prior to the expiration of such six-month period.
Stock Appreciation Rights may be exercised by an optionee by
surrendering the related option or applicable portion
thereof. Upon such exercise and surrender, the optionee
shall be entitled to receive the value of such Stock
Appreciation Rights determined in the manner prescribed in
this Section 9. Options which have been so surrendered, in
whole or in part, shall no longer be exercisable.
Each agreement evidencing Stock Appreciation Rights
granted on or after April 27, 1982, shall clearly and
separately identify the nonstatutory stock options and
Incentive Stock Options to which it relates and shall
contain such terms and conditions not inconsistent with
other provisions of the Plan as shall be determined from
time to time by the Committee, which
shall include the following:
(a) Stock Appreciation Rights shall expire no later
than the expiration of the related option.
(b) Stock Appreciation Rights shall be transferable
only when and to the extent that the related option is
transferable.
(c) Stock Appreciation Rights shall be exercisable at
such time or times and only to the extent that the related
option is exercisable.
(d) Stock Appreciation Rights shall be exercisable
only when there is a positive spread, that is, when the
market price of the stock subject to the related option
exceeds the exercise price of such option.
(e) Upon the exercise of Stock Appreciation Rights, an
optionee shall be entitled to receive the value thereof,
which value shall be equal to the excess of the fair market
value on the date of exercise of one share of common stock
over the option price per share specified in the related
option multiplied by the number of shares in respect of
which the Stock Appreciation Rights shall have been
exercised. The fair market value of common stock on the
date of exercise of Stock Appreciation Rights shall be
determined in the same manner as the fair market value of
common stock on the date of grant of the related option was
determined pursuant to Section 6(a).
<PAGE>
(f) Upon an exercise of Stock Appreciation Rights, the
optionee shall notify the Company of the form in which
payment of the value thereof will be made (i.e., cash,
common stock, or any combination thereof); provided,
however, in the case of optionees who are officers of the
Company or other persons subject to Section 16(b) of the
Securities Exchange Act of 1934, (i) payment of the value of
Stock Appreciation Rights related to Incentive Stock Options
may be elected in common stock only insofar as the issuance
of such common stock to the optionee would be subject to the
Internal Revenue Code of 1954, Section 83 Income Inclusion
Rule, as in effect on the date of exercise of the Stock
Appreciation Rights, and (ii) the Committee may at any time
impose any other limitations upon the exercise of Stock
Appreciation Rights which, in the Committee's sole
discretion, are necessary or desirable in order to comply
with Section 16(b) and the rules and regulations thereunder,
or in order to obtain any exemption therefrom.
Upon the exercise of Stock Appreciation Rights, the
option or part thereof to which such Stock Appreciation
Rights is related shall be deemed to have been exercised for
the purpose of the limitation of the number of shares of
common stock to be issued under the Plan as set forth in
Section 4 and the requirement of sequential exercise of
Incentive Stock Options as set forth in Section 6(f). Stock
Appreciation Rights shall be deemed exercised on the date
written notice of exercise is received by the Secretary of
the Company.
Section 10. Change in Stock, Adjustments, Etc.
In the event that the outstanding shares of common
stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number of shares
or kind of shares or other securities of the Company or of
another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock
split up, combination of shares, or a dividend payable in
capital stock, appropriate adjustment shall be made by the
Committee in the number and kind of shares for the purchase
of which options may be granted under the Plan including the
maximum number that may be granted to any one person. In
addition, the Committee shall make appropriate adjustment in
the number and kind of shares as to which outstanding
options, or portions thereof then unexercised, shall be
exercisable, to the end that the optionee's proportionate
interest shall be maintained as before the occurrence of
such event, and such adjustment and outstanding options
shall be made without change of the total price applicable
<PAGE>
to the unexercised portion of the option and with a
corresponding adjustment in the option price per share;
provided, however, that each such adjustment in the number
and kind of shares subject to outstanding options, including
any adjustment in the option price, shall be made in such
manner as not to constitute a modification as defined in
Section 425 of the Internal Revenue Code of 1986, as
amended. Any such adjustment made by the Committee shall be
conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
Section 11. Duration, Amendment and Termination.
The Board of Directors of the Company may at any time
terminate the Plan or make such amendments thereof as it
shall deem advisable and in the best interests of the
Company, without further action on the part of the
stockholders of the Company; provided, however, that no such
termination or amendment shall, without the consent of the
individual to whom any option shall theretofore have been
granted, affect or impair the rights of such individual
under such option, and provided further, that unless the
stockholders of the Company shall have first approved
thereof, no amendment of this Plan shall be made whereby (a)
the total number of shares which may be optioned under the
Plan to all individuals, or any of them, shall be increased,
except by operation of the adjustment provisions of Section
10 hereof, (b) the authority to administer the Plan by a
committee consisting of directors of the Company not
eligible to receive options granted under the Plan shall be
withdrawn, (c) the term of the options shall be extended,
(d) the minimum option price shall be decreased, or (e) the
class of employees to whom options may be granted shall be
changed.
No Incentive Stock Option shall be granted under the
Plan after September 30, 1990, but Incentive Stock Options
granted prior to or as of such date may extend beyond such
date in accordance with the provisions hereof.
Section 12. Effectiveness of Plan.
This Plan shall not become effective unless and until
the following conditions shall have been met:
<PAGE>
(a) The Plan shall have been adopted by the
affirmative vote of a majority of the outstanding shares of
the Company at a meeting of the stockholders within one (1)
year of its approval by the Board of Directors.
(b) The Committee shall have been advised by counsel
that all other applicable legal requirements incident to the
establishment and operation of the Plan have been complied
with.
Section 13. Date of Granting of Options.
The granting of an option pursuant to the Plan shall
take place on the date the Committee decides to grant the
option. Within thirty (30) days of the granting of the
option, the Company shall notify the optionee of the grant
of the option, and submit to the optionee a Stock Option
Agreement and, if applicable, an agreement respecting Stock
Appreciation Rights, duly executed by and on behalf of the
Company, with the request that the optionee execute the
agreement or agreements within thirty (30) days after the
mailing by the Company of the notice to the optionee. If
the optionee shall fail to execute the written option
agreement and, if applicable, the agreement respecting Stock
Appreciation Rights within said 30-day period, such person's
option shall be automatically terminated.
Section 14. Application of Funds.
The proceeds received by the Company from the sale of
stock subject to option are to be added to the general funds
of the Company and used for its corporate purposes as the
Board of Directors shall determine.
Section 15. No Obligation to Exercise Option.
Granting of an option shall impose no obligation on the
optionee to exercise such option.
Section 16. Stock Withholding Election.
When taxes are withheld in connection with the exercise
of a stock option by delivering shares of stock in payment
of the exercise price, or an exercise of an SAR for stock,
or upon the lapse of restrictions on restricted stock
<PAGE>
received upon the exercise of an option (the date on which
such exercise occurs or such restrictions lapse hereinafter
referred to as the "Tax Date"), the optionee may elect to
make payment for the withholding of federal, state and local
taxes, including Social Security and Medicare ("FICA")
taxes, up to the optionee's marginal tax rate, by one or
both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at fair
market, as defined herein, on the Tax Date) which
shares, if acquired from the Company, must have been
held for at least six months;
(ii) requesting the Company to withhold from those
shares that would otherwise be received upon exercise
of the option, upon exercise of an SAR for stock, or
upon the lapse of restrictions, a number of shares
having a fair market value (as defined herein) on the
Tax Date equal to the amount to be withheld. The
amount of tax with-holding to be satisfied by
withholding shares from the option exercise is limited
to the minimum amount of taxes, including FICA taxes,
required to be withheld under federal, state and local
law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in cash. If
no timely election is made, cash must be delivered to
satisfy all tax withholding requirements.
Optionees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders") making an
election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) after February 8, 1996,
for FICA taxes; (b) at least six months after the date of
grant of the option or SAR; and (c) either within a "window
period" as defined in Rule 16b-3(e)(3) under the Securities
Exchange Act of 1934 or at least six months in advance of
the Tax Date. An election by an Insider to have stock
withheld to satisfy tax obligations is subject to the
approval of the Committee and to such rules as the Committee
may from time to time adopt.
<PAGE>
Exhibit 10(c)
1985 STOCK OPTION PLAN
(as amended on February 7, 1987, August 11, 1987,
April 12, 1988, December 12, 1989, April 16, 1991,
August 13, 1991, April 18, 1995 and August 8, 1995)
Section 1. Establishment.
United Telecommunications, Inc., a Kansas corporation
("Company"), hereby establishes a stock option plan to be
named the United Telecommunications, Inc. 1985 Stock Option
Plan ("Plan"), for officers and key employees of the Company
and its subsidiaries.
Section 2. Purpose.
The purpose of the Plan is to induce officers and key
employees of the Company and its subsidiaries, who are in a
position to contribute materially to the prosperity thereof,
to remain with the Company or its subsidiaries, to offer
them incentives and reward in recognition of their share in
the Company's progress, and to encourage them to continue to
promote the best interests of the Company and its
subsidiaries. The Plan will also aid the Company and its
subsidiaries in competing with other enterprises for the
services of new key personnel needed to help insure their
continued development.
Options granted to an optionee shall be either
Incentive Stock Options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended, or
nonstatutory stock options, provided that no Incentive Stock
Options shall be granted which would permit options first
exercisable in any calendar year to exceed the limitations
set forth in Section 6(a) hereof. Options which become
first exercisable in any calendar year in excess of said
limitations shall be nonstatutory stock options. Options
designated "Nonqualified" or "Nonstatutory" Stock Options
shall not be restricted by the limitations of said Section
6(a) and shall not be treated as Incentive Stock Options.
Section 3. Administration.
The Plan shall be administered by a Stock Option
Committee (the "Committee") consisting of three or more
persons who shall be members of the Board of Directors of
the Company. The Committee shall be elected by the Board of
Directors of the Company which may from time to time appoint
members of the Committee in substitution for members
<PAGE>
previously appointed and may fill vacancies, however caused,
in the Committee. The Committee shall hold its meetings at
such times and places as it may determine. A majority of
the Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority
of the Committee, shall be deemed the acts of the Committee.
The Company shall grant options and related stock
appreciation rights under the Plan in accordance with
determinations made by the Committee pursuant to the
provisions of the Plan. Members of the Committee shall be
disinterested persons as defined in regulations issued under
Section 16 of the Securities Exchange Act of 1934 ("Exchange
Act"). The Committee from time to time may adopt (and
thereafter amend and rescind) such rules and regulations for
carrying out the Plan and take such action in the
administration of the Plan, not inconsistent with the
provisions hereof, as it shall deem proper. The
interpretation and construction of any provisions of the
Plan by the Committee shall, unless otherwise determined by
the Board of Directors of the Company, be final and
conclusive. No member of the Board of Directors or the
Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any option
granted under it.
Section 4. Total Number of Shares to be Optioned.
The maximum number of shares of common stock ($2.50 par
value) of the Company which may be issued upon exercise of
options under the Plan shall not exceed 3,000,000 (f1) (subject
to adjustment as provided in Section 11 hereof). The shares
sold under the Plan may be either issued shares reacquired
by the Company at any time or authorized but unissued
shares, as the Board of Directors from time to time may
determine.
In the event that any outstanding options under the
Plan for any reason expire or are terminated, the shares of
common stock of the Company allocable to the unexercised
portion of all of such options may again be subject to an
option under the Plan.
Section 5. Eligibility.
Options shall be granted only to officers and key
employees of the Company or its subsidiaries. The Committee
(f1) The initial number of shares authorized was doubled due
to the December, 1989 two-for-one stock split.
<PAGE>
will, in its discretion, determine the officers and key
employees to be granted options, the time or times at which
options shall be granted, the number of shares subject to
each option, whether the options are Incentive Stock Options
or nonstatutory stock options, and the manner in which
options may be exercised. In making such determination, the
Committee may take into consideration the value of the
services rendered by the respective individuals, their
present and potential contributions to the success of the
Company and its subsidiaries and such other factors which
the Committee may deem relevant in accomplishing the purpose
of the Plan.
No option may be granted to any individual who
immediately after the option grant owns directly or
indirectly stock possessing more than five percent (5%) of
the total combined voting power or value of all classes of
stock of the Company or any subsidiary.
An individual may be granted more than one option but
only on the terms and subject to the restrictions
hereinafter set forth. No person shall be eligible to
receive an option for a larger number of shares than is
recommended for such individual by the Committee.
Section 6. Limitation on Incentive Stock Options.
(a) General Rule. For options granted after December
31, 1986, the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first
time during any calendar year by the optionee under all
plans of the Company and its subsidiaries shall not exceed
$100,000.
(b) Fair Market Value. Fair market value shall be
deemed to be the average of the high and low prices of the
common stock of the Company for composite transactions as
published by major newspapers for the date the Incentive
Stock Option is granted or, if no sale of the Company's
stock shall have been made on that day, the next preceding
day on which there was a sale of such stock.
Section 7. Terms and Conditions of Options.
Each option granted under the Plan shall be evidenced
by a Stock Option Agreement in such form not inconsistent
with the Plan as the Committee shall determine, provided
that such Stock Option Agreement clearly and separately
identifies nonstatutory stock options and Incentive Stock
<PAGE>
Options and that the substance of the following terms and
conditions be included therein:
(a) Option Price. The price at which each share of
common stock covered by such option may be purchased shall
be determined by the Committee and shall be no less than one
hundred percent (100%) of the fair market value of the stock
on the date the option is granted. Fair market value shall
be deemed to be the average of the high and low prices of
the common stock of the Company for composite transactions
as published by major newspapers for the date the option is
granted or, if no sale of the Company's stock shall have
been made on that day, the next preceding day on which there
was a sale of such stock.
(b) Nontransferable. The option and any related SAR
shall not be transferable by the optionee otherwise than by
will or by the laws of descent and distribution; provided
that, if so determined by the Committee, an optionee may, in
the manner established by the Committee, designate a
beneficiary to exercise:
(i) any incentive stock option granted on or after the
effective date of the Committee's approval of
applicable procedures; and
(ii) any nonqualified options or SAR
upon the death of the optionee. During the optionee's
lifetime, the option and any related SAR may be exercised
only by the optionee or, if permissible under applicable
law, by the guardian or representative of the optionee.
(c) Exercise of Option. The option and any right
related thereto, if exercised by the optionee, may be
exercised (subject, however, to the provisions of Section 9,
and if applicable, Section 10) only if the optionee has been
an employee of the Company or of any subsidiary thereof at
all times during the period beginning with the date of the
granting of the option and ending on the day three (3)
months before the date of such exercise; provided, however,
that in the case of an optionee who is a retiree of the
Company or of any subsidiary thereof or who becomes
permanently and totally disabled, the three (3) months shall
be extended to twelve (12) months for options designated
"Incentive Stock Options" and to five (5) years for options
designated "Nonqualified" or "Nonstatutory" options. (For
this purpose, a retiree is a person who is entitled to
receive pension benefits in accordance with the United
System Employee Retirement Plan immediately upon termination
<PAGE>
of employment.) Options granted under the Plan shall not be
affected by any change of duties or position so long as the
optionee continues to be an employee of the Company or of a
subsidiary. Only those options exercisable at the date the
optionee's employment is terminated may be exercised during
the period following such termination, whether such
termination is by retirement or otherwise.
(d) Term of Option. The option and any right related
thereto shall not be exercisable after the expiration of ten
(10) years from the date the option was granted.
(e) Death of Optionee. In the event of the death of
an optionee during the period in which an option is
exercisable (as set forth in Subsection (c) above), the
option theretofore granted to such person and any related
SAR shall be exercisable only within the twelve (12) months
next succeeding such death, and then only (i) by the
executor or administrator of the optionee's estate, by the
person or persons to whom the optionee's rights under the
option shall pass by the optionee's will or the laws of
descent and distribution, or, if a beneficiary has been
designated in accordance with Subsection (b) above, by the
beneficiary, and (ii) if and to the extent that the optionee
was entitled to exercise the option at the date of the
optionee's death, provided that in no event shall the option
be exercisable more than ten (10) years after the date it
was granted.
(f) Sequential Exercise of Incentive Stock Options.
No Incentive Stock Option granted prior to January 1, 1987,
shall be exercisable while there is outstanding any other
Incentive Stock Option which was granted to the optionee at
an earlier time to purchase stock in the Company or in any
corporation which (at the time of the granting of such
Incentive Stock Option) is a subsidiary of the Company, or
in any predecessor of any of such corporations. For the
purpose of this Section 7(f), an Incentive Stock Option
which has not been exercised in full is outstanding until
the expiration of the period during which, under its initial
terms, it could have been exercised. The cancellation of an
earlier Incentive Stock Option will not enable a subsequent
Incentive Stock Option to be exercised any sooner.
Section 8. Consideration for Options.
Each optionee shall, as consideration for the grant of
the option, agree in writing to remain in the employ of the
Company or of one of its subsidiaries, at the pleasure of
the Company or of such subsidiary, for at least (1) year
<PAGE>
from the date of the granting of such option or until
earlier termination of the optionee's employment effected or
approved by the Company or by such subsidiary. In the event
of a violation by the optionee of such agreement, any
options still held by such person at the time of such
violation shall automatically terminate. The Committee may
waive this requirement in the case of any optionee. Nothing
contained in the Plan, or in any option granted pursuant to
the Plan, nor in any agreement made pursuant to the
provisions of this Section 8, shall confer upon any optionee
any right with respect to continuance of employment by the
Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate
the optionee's employment or change the optionee's
compensation at any time.
Section 9. Exercise of Options - Purchase of Shares.
Unless otherwise determined by the Committee, 25% of
the total number of shares subject to an option granted
under the Plan shall become exercisable one year from date
of grant and 25% on each of the three succeeding
anniversaries. An optionee's right to purchase shares with
respect to shares which become exercisable shall be
cumulative during the term of the option. An option shall
be exercisable by purchase of shares only upon payment to
the Company of the full purchase price of the shares with
respect to which the option is exercised; provided, however,
that the Company shall not be required to issue or deliver
any certificates for shares of common stock purchased upon
the exercise of an option prior to (i) if requested by the
Company, the filing with the Company by the optionee or
purchaser acting under Section 7(e) hereof of a
representation in writing that at the time of such exercise
it is the optionee's or purchaser's then present intention
to acquire the shares being purchased for investment and not
for resale, or (ii) the completion of any registration or
other qualification of such shares under any state or
federal laws or rulings or regulations of any government
regulatory body, which the Company shall determine to be
necessary or advisable.
Payment for the shares shall be either in United States
dollars, payable in cash or by check, or by surrender of
stock certificates representing like common stock of the
Company having an aggregate fair market value, determined as
of the date of exercise, equal to the number of shares with
respect to which such option is exercised multiplied by the
option price per share; provided that the Committee may
impose whatever restrictions it deems necessary or desirable
<PAGE>
with respect to the payment for shares by the surrender of
stock certificates representing like common stock of the
Company. The fair market value of common stock on the date
of exercise of an option shall be determined in the same
manner as the fair market value of common stock on the date
of grant of an option is determined pursuant to Section
7(a). Such payment shall be accompanied by a written
request for the shares purchased. An option shall be deemed
exercised on the date such payment and written request are
received by the Secretary of the Company.
In addition, for all nonqualified options outstanding
on February 17, 1995, or issued thereafter, certain
optionees, as determined by the Committee, may elect to
receive restricted shares upon payment for the exercise of
an option in the form of unrestricted common stock. The
optionee will receive the same number of unrestricted shares
as the number of shares surrendered to pay the exercise
price, while the shares received in excess of the number
surrendered to pay the exercise price may be restricted.
Such optionees may also elect to deliver restricted shares
of the Company's common stock in payment of the exercise
price notwithstanding restrictions on transferability to
which such shares are subject. The Company shall be
authorized to issue restricted shares of common stock upon
such exercises of stock options, subject to the following
conditions:
(a) The optionee shall elect a vesting period for the
restricted common stock to be received upon exercise of the
option of between six (6) months and ten (10) years, but in
no event may an optionee elect a vesting period shorter than
the period provided in paragraph (c) hereof.
(b) Restricted common stock issued upon an exercise
shall include the right to have stock withheld for taxes on
the lapse of the restrictions. Notwithstanding any other
provisions to the contrary in the Plan, no reload option
shall be granted for shares withheld or delivered in payment
of taxes upon the lapse of restrictions.
(c) Restricted common stock received in such an
exercise or from an election to receive a Long-Term
Incentive Plan payout in restricted stock, or any Restricted
Stock Award granted pursuant to the Long-Term Stock
Incentive Program, shall be eligible for use in payment of
the exercise price of a stock option, so long as all the
shares received as a result of such an exercise are
restricted for a period at least as long as, and with terms
at least as restrictive as the terms of, the restricted
common stock used in payment. Any such restricted common
<PAGE>
stock so delivered in payment of the exercise price shall
have an aggregate fair market value (determined as of the
date of exercise and in the same manner as the fair market
value of unrestricted common stock of the Company on the
date of exercise of an option is determined pursuant to
Section 7(a)) equal to the number of shares with respect to
which such option is exercised, multiplied by the exercise
price per share.
(d) Shares of restricted common stock received in an
exercise of a stock option that continue to be restricted
shall be forfeited in the event that vesting conditions are
not satisfied, subject to the discretion of the Committee,
except in the case of death, disability, normal retirement,
or involuntary termination for reasons other than cause, in
which case all restrictions lapse; provided, however, that
in no event shall restrictions lapse if the restrictions on
shares used to pay for the exercise would not have lapsed
under the same conditions.
(e) The optionee who receives restricted stock may not
sell, transfer, assign, pledge or otherwise encumber or
dispose of shares of restricted stock until such time as all
restrictions on such stock have lapsed except: (i) to the
Company in payment of the exercise price of a stock option
issued by the Company under any employee stock option plan
adopted by the Company that provides for payment of the
exercise price in the form of restricted stock, provided
that such payment is made in accordance with the terms of
such plan; or (ii) to a trust of which the optionee, the
optionee's spouse, or descendants of the optionee are the
primary beneficiaries and which is a grantor trust treated
as owned by the optionee under Subchapter J of the Internal
Revenue Code, upon the following terms:
(A) the Company receives, prior to such transfer, an
opinion from optionee's counsel (1) that the trust will
be treated as a grantor trust and will be treated as
being owned by the optionee at all times until the
restrictions on such stock lapse or the stock is
forfeited under the terms of its grant, (2) with
respect to any trust structured as a grantor retained
annuity trust, that the annuity period ends after the
last date on which restrictions on such stock can
lapse, (3) that the terms of the trust provide that
upon the forfeiture of the restricted stock under the
terms of its grant or the earlier termination of the
trust for whatever reason, ownership of the restricted
stock shall revert to the optionee or to the Company,
(4) that the trustee of such trust may not, prior to
<PAGE>
the lapsing of restrictions on such stock, sell,
transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock except to the
Company or to the optionee, subject to the restrictions
provided for in this Plan, and (5) that the trustee is
not authorized to incur liabilities on behalf of the
trust, other than to the beneficiaries of the trust;
and
(B) the optionee and the trustee of the trust shall
execute stock powers in blank to be held in the custody
of the Company; and
(C) the Corporate Secretary of the Company may, in his
discretion, enforce the foregoing transfer restrictions
by maintaining physical custody of the certificate or
certificates representing such shares of restricted
stock, by placing a restrictive legend on such
certificates, by requiring the optionee and the trustee
to execute other documents as a pre-condition to such
transfer, or otherwise.
(f) The optionee will have all the rights of a
stockholder with respect to shares of restricted stock
received upon the exercise of an option, including the right
to vote the shares of stock and the right to dividends on
the stock. Unless the Corporate Secretary establishes
alternative procedures, the shares of restricted stock will
be registered in the name of the optionee and the
certificates evidencing such shares shall bear an
appropriate legend referring to the terms, conditions and
restrictions applicable to the award and shall be held in
escrow by the Company. The optionee shall execute a stock
power or powers assigning the shares of restricted stock
back to the Company, which stock powers shall be held in
escrow by the Company and used only in the event of the
forfeiture of any of the shares of restricted stock. A
certificate evidencing unrestricted shares of common stock
shall be issued to the optionee promptly after the
restrictions lapse on any restricted shares.
(g) The Corporate Secretary shall have the discretion
and authority to establish any and all procedures, including
the requirement of election forms, which he deems necessary
or desirable for the orderly administration of such
exercises.
No optionee or optionee's executor or administrator,
legatees or distributees, as the case may be, will be, or
will be deemed to be, a holder of any shares subject to an
<PAGE>
option unless and until a stock certificate or certificates
for such shares are issued to such person or them under the
terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other
rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section
11 hereof.
In the event that any optionee shall be dismissed from
the employ of the Company or any of its subsidiaries for any
reason which in the opinion of the Committee shall
constitute good cause for dismissal, any option still held
by such person at such time shall automatically terminate.
The decision of the Committee as to what shall constitute
good cause for dismissal shall be final and binding upon all
concerned.
Section 10. Exercise of Options - Stock Appreciation
Rights.
In addition to providing for the exercise of an option
as set forth in Section 9, at the time of grant of such
option the Committee may by separate agreement, in
conjunction with all or part of any option granted under the
Plan, permit an optionee to exercise the option in an
alternative manner based on the appreciated value of the
common stock subject to option ("Stock Appreciation Right");
provided, however, that no Stock Appreciation Right granted
to an optionee who is an officer of the Company or who is
otherwise subject to Section 16(b) of the Exchange Act shall
be exercisable during the six-month period following the
date of grant, except that such limitation shall not apply
in the event of death or physical disability of such
optionee occurring prior to the expiration of such six-month
period. Stock Appreciation Rights may be exercised by an
optionee by surrendering the related option or applicable
portion thereof. Upon such exercise and surrender, the
optionee shall be entitled to receive the value of such
Stock Appreciation Rights determined in the manner
prescribed in this Section 10. Options which have been so
surrendered, in whole or in part, shall no longer be
exercisable.
Each agreement evidencing Stock Appreciation Rights
shall clearly and separately identify the nonstatutory stock
options and Incentive Stock Options to which it relates and
shall contain such terms and conditions not inconsistent
with other provisions of the Plan as shall be determined
<PAGE>
from time to time by the Committee, which shall include the
following:
(a) Stock Appreciation Rights shall expire no later
than the expiration of the related option.
(b) Stock Appreciation Rights shall be transferable
only when and to the extent that the related option is
transferable.
(c) Stock Appreciation Rights shall be exercisable at
such time or times and only to the extent that the related
option is exercisable.
(d) Stock Appreciation Rights shall be exercisable
only when there is a positive spread, that is, when the
market price of the stock subject to the related option
exceeds the exercise price of such option.
(e) Upon the exercise of Stock Appreciation Rights, an
optionee shall be entitled to receive the value thereof,
which value shall be equal to the excess of the fair market
value on the date of exercise of one share of common stock
over the option price per share specified in the related
option multiplied by the number of shares in respect of
which the Stock Appreciation Rights shall have been
exercised. The fair market value of common stock on the
date of exercise of Stock Appreciation Rights shall be
determined in the same manner as the fair
market value of common stock on the date of grant of an
option is determined pursuant to Section 7(a).
(f) Upon an exercise of Stock Appreciation Rights, the
optionee shall notify the Company of the form in which
payment of the value thereof will be made (i.e., cash,
common stock, or any combination thereof); provided,
however, in the case of optionees who are officers of the
Company or other persons subject to Section 16(b) of the
Exchange Act, (i) payment of the value of Stock Appreciation
Rights related to Incentive Stock Options may be elected in
common stock only insofar as the issuance of such common
stock to the optionee would be subject to the Internal
Revenue Code of 1954, Section 83 Income Inclusion Rule, as
in effect on the date of exercise of the Stock Appreciation
Rights, and (ii) the Committee may at any time impose any
other limitations upon the exercise of Stock Appreciation
Rights which, in the Committee's sole discretion, are
necessary or desirable in order to comply with Section 16(b)
and the rules and regulations thereunder, or in order to
obtain any exemption therefrom.
<PAGE>
Upon the exercise of Stock Appreciation Rights, the
option or part thereof to which such Stock Appreciation
Rights is related shall be deemed to have been exercised for
the purpose of the limitation of the number of shares of
common stock to be issued under the Plan as set forth in
Section 4 and the requirement of sequential exercise of
Incentive Stock Options as set forth in Section 7(f). Stock
Appreciation Rights shall be deemed exercised on the date
written notice of exercise is received by the Secretary of
the Company.
Section 11. Change in Stock, Adjustments, Etc.
In the event that the outstanding shares of common
stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number of shares
or kind of shares or other securities of the Company or of
another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or a dividend payable in
capital stock, appropriate adjustment shall be made by the
Committee in the number and kind of shares for the purchase
of which options may be granted under the Plan including the
maximum number that may be granted to any one person. In
addition, the Committee shall make appropriate adjustment in
the number and kind of shares as to which outstanding
options, or portions thereof then unexercised, shall be
exercisable, to the end that the optionee's proportionate
interest shall be maintained as before the occurrence of
such event, and such adjustment of outstanding options shall
be made without change of the total price applicable to the
unexercised portion of the option and with a corresponding
adjustment in the option price per share; provided, however,
that each such adjustment in the number and kind of shares
subject to outstanding options, including any adjustment in
the option price, shall be made in such manner as not to
constitute a modification as defined in Section 425 of the
Internal Revenue Code of 1986, as amended. Any such
adjustment made by the Committee shall be conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
<PAGE>
Section 12. Duration, Amendment and Termination.
The Board of Directors of the Company may at any time
terminate the Plan or make such amendments thereof as it
shall deem advisable and in the best interests of the
Company, without further action on the part of the
stockholders of the Company; provided, however, that no such
termination or amendment shall, without the consent of the
individual to whom any option shall theretofore have been
granted, affect or impair the rights of such individual
under such option, and provided further, that unless the
stockholders of the Company shall have first approved
thereof, no amendment of this Plan shall be made whereby (a)
the total number of shares which may be optioned under the
Plan to all individuals, or any of them, shall be increased,
except by operation of the adjustment provisions of Section
11 hereof, (b) the authority to administer the Plan by a
committee consisting of directors of the Company not
eligible to receive options granted under the Plan shall be
withdrawn, (c) the term of the options shall be extended,
(d) the minimum option price shall be decreased, or (e) the
class of employees to whom options may be granted shall be
changed.
No Incentive Stock Option shall be granted under the
Plan after November 30, 1994, but Incentive Stock Options
granted prior to or as of such date may extend beyond such
date in accordance with the provisions hereof.
Section 13. Effectiveness of Plan.
This Plan shall not become effective unless and until
the following conditions shall have been met:
(a) The Plan shall have been adopted by the
affirmative vote of a majority of the outstanding shares of
the Company present and entitled to vote at a meeting of the
stockholders at which a quorum is present within one (1)
year of its approval by the Board of Directors.
(b) The Committee shall have been advised by counsel
that all other applicable legal requirements incident to the
establishment and operation of the Plan have been complied
with.
Section 14. Date of Granting of Options.
The granting of an option pursuant to the Plan shall
take place on the date the Committee decides to grant the
<PAGE>
option. Within thirty (30) days of the granting of the
option, the Company shall notify the optionee of the grant
of the option, and submit to the optionee a Stock Option
Agreement and, if applicable, an agreement respecting Stock
Appreciation Rights, duly executed by and on behalf of the
Company, with the request that the optionee execute the
agreement or agreements within thirty (30) days after the
mailing by the Company of the notice to the optionee. If
the optionee shall fail to execute the written option
agreement and, if applicable, the agreement respecting Stock
Appreciation Rights within said 30-day period, such person's
option shall be automatically terminated.
Section 15. Application of Funds.
The proceeds received by the Company from the sale of
stock subject to option are to be added to the general funds
of the Company and used for its corporate purposes as the
Board of Directors shall determine.
Section 16. No Obligation to Exercise Option.
Granting of an option shall impose no obligation on the
optionee to exercise such option.
Section 17. Stock Withholding Election.
When taxes are withheld in connection with the exercise
of a stock option by delivering shares of stock in payment
of the exercise price, or an exercise of an SAR for stock,
or upon the lapse of restrictions on restricted stock
received upon the exercise of an option (the date on which
such exercise occurs or such restrictions lapse hereinafter
referred to as the "Tax Date"), the optionee may elect to
make payment for the withholding of federal, state and local
taxes, including Social Security and Medicare ("FICA")
taxes, up to the optionee's marginal tax rate, by one or
both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at fair
market, as defined herein, on the Tax Date) which
shares, if acquired from the Company, must have been
held for at least six months;
(ii) requesting the Company to withhold from those
shares that would otherwise be received upon exercise
of the option, upon exercise of an SAR for stock, or
upon the lapse of restrictions, a number of shares
having a fair market value (as defined herein) on the
<PAGE>
Tax Date equal to the amount to be withheld. The
amount of tax with-holding to be satisfied by
withholding shares from the option exercise is limited
to the minimum amount of taxes, including FICA taxes,
required to be withheld under federal, state and local
law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in cash. If
no timely election is made, cash must be delivered to
satisfy all tax withholding requirements.
Optionees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders") making an
election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) after February 8, 1996,
for FICA taxes; (b) at least six months after the date of
grant of the option or SAR; and (c) either within a "window
period" as defined in Rule 16b-3(e)(3) under the Securities
Exchange Act of 1934 or at least six months in advance of
the Tax Date. An election by an Insider to have stock
withheld to satisfy tax obligations is subject to the
approval of the Committee and to such rules as the Committee
may from time to time adopt.
<PAGE>
Exhibit 10(d)
1990 STOCK OPTION PLAN
(As Amended February 16, 1991, April 16, 1991,
August 13, 1991, December 8, 1992, February 18, 1995,
April 18, 1995 and August 8, 1995)
Section 1. Establishment.
Pursuant to the Sprint Corporation Long-Term Stock
Incentive Program (the "Program"), Sprint Corporation, a
Kansas corporation (the "Company"), hereby establishes a
stock option plan to be named the 1990 Stock Option Plan
(the "Plan"), for officers and key employees of the Company
and its subsidiaries.
Section 2. Purpose.
The purpose of the Plan is to induce officers and key
employees of the Company and its subsidiaries, who are in a
position to contribute materially to the prosperity thereof,
to remain with the Company or its subsidiaries, to offer
them incentives and rewards in recognition of their share in
the Company's progress, and to encourage them to continue to
promote the best interests of the Company and its
affiliates. The Plan will also aid the Company and its
subsidiaries in competing with other enterprises for the
services of new key personnel needed to help insure their
continued development.
Options granted to an optionee shall be either
Incentive Stock Options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended, or
Nonqualified Stock Options, provided that no Incentive Stock
Options shall be granted which would permit options first
exercisable in any calendar year to exceed the limitations
set forth in Section 6(a) hereof. Options which become
first exercisable in any calendar year in excess of said
limitations shall be Nonqualified Stock Options. Options
designated "Nonqualified Stock Options" shall not be
restricted by the limitations of said Section 6(a) and shall
not be treated as Incentive Stock Options.
Section 3. Administration.
The Plan shall be administered by the Organization and
Compensation Committee (the "Committee") of the Board of
Directors of the Company. Members of the Committee shall be
Disinterested Persons as defined in the Program. The
Committee shall hold its meetings at such times and places
as it may determine. A majority of the Committee shall
<PAGE>
constitute a quorum and the acts of a majority of the
members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee,
shall be deemed the acts of the Committee. The Company
shall grant options and related Stock Appreciation Rights
("SARs") under the Plan in accordance with determinations
made by the Committee pursuant to the provisions of the Plan
and the Program. The Committee from time to time may adopt
(and thereafter amend and rescind) such rules and
regulations for carrying out the Plan and take such action
in the administration of the Plan, not inconsistent with the
provisions of the Plan and the Program, as it shall deem
proper. The interpretation and construction of any
provisions of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the
Company, be final and conclusive. No member of the Board of
Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or
any option granted under it.
Section 4. Total Number of Shares to be Optioned.
The maximum number of shares of common stock ($2.50 par
value) of the Company which may be issued upon exercise of
options under the Plan shall not exceed 17,000,000 (subject
to adjustment as provided in Section 11 hereof). The shares
sold under the Plan may be either treasury shares or
authorized but unissued shares, as the Board of Directors
from time to time may determine. The maximum number of
shares of common stock which may be issued upon exercise of
options granted in any calendar year, together with shares
of common stock subject to other awards under the Program,
shall not exceed the limits set forth in Section 4(a) of the
Program.
In the event that any outstanding options under the
Plan for any reason expire or are terminated, the shares of
common stock of the Company allocable to the unexercised
portion of all of such options may again be subject to an
option under the Plan.
Section 5. Eligibility.
Options shall be granted only to officers and key
employees of the Company or its subsidiaries. The Committee
will, in its discretion, determine the officers and key
employees to be granted options, the time or times at which
options shall be granted, the number of shares subject to
each option, whether the options are Incentive Stock Options
or Nonqualified Stock Options, any conditions on the
<PAGE>
exercise of the options, and the manner in which options may
be exercised. In making such determination, the Committee
may take into consideration the value of the services
rendered by the respective individuals, their present and
potential contributions to the success of the Company and
its affiliates and such other factors which the Committee
may deem relevant in accomplishing the purpose of the Plan.
No option may be granted to any individual who
immediately after the option grant owns directly or
indirectly stock possessing more than five percent (5%) of
the total combined voting power or value of all classes of
stock of the Company or any subsidiary.
An individual may be granted more than one option but
only on the terms and subject to the restrictions
hereinafter set forth. No person shall be eligible to
receive an option for a larger number of shares than is
recommended for such individual by the Committee.
Section 6. Limitation on Incentive Stock Options.
(a) General Rule. The aggregate fair market value
(determined at the time the option is granted) of the stock
with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year by
the optionee under all plans of the Company and its
subsidiaries shall not exceed $100,000 or, if different, the
maximum limitation in effect at the time of grant under
Section 422A of the Internal Revenue Code of 1986, as
amended, or any successor provision, and any regulations
promulgated thereunder.
(b) Fair Market Value. Fair market value shall be
deemed to be the average of the high and low prices of the
common stock of the Company for composite transactions as
published by major newspapers for the date the Incentive
Stock Option is granted or, if no sale of the Company's
stock shall have been made on that day, the next preceding
day on which there was a sale of such stock.
Section 7. Terms and Conditions of Options.
Each option granted under the Plan shall be evidenced
by a Stock Option Agreement in such form not inconsistent
with the Plan as the Committee shall determine, provided
that such Stock Option Agreement clearly and separately
identifies Nonqualified Stock Options and Incentive Stock
Options and that the substance of the following terms and
conditions be included therein:
<PAGE>
(a) Option Price. The price at which each share of
common stock covered by such option may be purchased shall
be determined by the Committee and shall be no less than one
hundred percent (100%) of the fair market value of the stock
on the date the option is granted. Fair market value shall
be deemed to be the average of the high and low prices of
the common stock of the Company for composite transactions
as published by major newspapers for the date the option is
granted or, if no sale of the Company's stock shall have
been made on that day, the next preceding day on which there
was a sale of such stock.
(b) Nontransferable. The option and any related SAR
shall not be transferable by the optionee otherwise than by
will or by the laws of descent and distribution; provided
that, if so determined by the Committee, an optionee may, in
the manner established by the Committee, designate a
beneficiary to exercise the option and any related SAR upon
the death of the optionee. During the optionee's lifetime,
the option and any related SAR may be exercised only by the
optionee or, if permissible under applicable law, by the
guardian or representative of the optionee.
(c) Exercise of Option. The option and any related
SAR, if exercised by the optionee, may be exercised
(subject, however, to the provisions of Section 9, and if
applicable, Section 10) only if the optionee has been an
employee of the Company or of any subsidiary thereof at all
times during the period beginning with the date of the
granting of the option and ending on the day three (3)
months before the date of such exercise; provided, however,
that in the case of an optionee who is a retiree of the
Company or of any subsidiary thereof or who becomes
permanently and totally disabled, the three (3) months shall
be extended to twelve (12) months for options designated
"Incentive Stock Options" and to five (5) years for options
designated "Nonqualified Stock Options" (for this purpose, a
retiree is a person who is entitled to receive pension
benefits in accordance with the Sprint Retirement Pension
Plan immediately upon termination of employment). Options
granted under the Plan shall not be affected by any change
of duties or position so long as the optionee continues to
be an employee of the Company or of a subsidiary. Only
those options exercisable at the date the optionee's
employment is terminated may be exercised during the period
following such termination, whether such termination is by
retirement or otherwise.
<PAGE>
(d) Term of Option. The option and any related SAR
shall not be exercisable after the expiration of ten (10)
years from the date the option was granted.
(e) Death of Optionee. In the event of the death of
an optionee during the period in which an option is
exercisable (as set forth in Section 7(c) above), the option
theretofore granted to such person and any related SAR shall
be exercisable only within the twelve (12) months next
succeeding such death, and then only (i) by the executor or
administrator of the optionee's estate, by the person or
persons to whom the optionee's rights under the option shall
pass by the optionee's will or the laws of descent and
distribution, or, if a beneficiary has been designated in
accordance with Section 7(b) above, by the beneficiary, and
(ii) if and to the extent that the optionee was entitled (or
deemed to be entitled by the Committee) to exercise the
option at the date of the optionee's death, provided that in
no event shall the option be exercisable more than ten (10)
years after the date it was granted.
Section 7A. Reload Options.
In connection with nonqualified options, including
newly-granted options or outstanding options granted under
the Plan, or the stock option plans of 1978, 1981, 1985 and
1989 of the Company, the Committee may provide that an
optionee has the right to a reload option, which shall be
subject to the following terms and conditions:
(a) Grant of the Reload Option; Number of Shares,
Price. Subject to subsections (b) and (c) of this Section
7A and to the availability of shares to be optioned under
the Plan, if an optionee has an option (the "original
option") with reload rights and pays for the exercise of the
original option by surrendering common stock of the Company,
the optionee shall receive a new option ("reload option")
for the number of shares so surrendered at an option price
equal to the fair market value of the stock on the date of
the exercise of the original option.
(b) Minimum Purchase Required. A reload option will
be granted only if the exercise of the original option is an
exercise of at least 25% of the total number of shares
granted under the original option (or an exercise of all the
shares remaining under the original option if less than 25%
of the shares remain to be exercised).
(c) Other Requirements. A reload option will not be
granted: (1) if the market value of the common stock of the
<PAGE>
Company on the date of exercise of the original option is
less than the exercise price of the original option; (2) if
the optionee is no longer an employee of Sprint or a Sprint
subsidiary; or (3) if the original option is exercised less
than one year prior to the expiration of the original
option.
(d) Term of Option. The reload option shall expire on
the same date as the original option.
(e) Type of Option. The reload option shall be a non-
qualified option.
(f) No Additional Reload Options. The reload options
shall not include any right to a second reload option.
(g) Date of Grant, Vesting. The date of grant of the
reload option shall be the date of the exercise of the
original option. The reload options shall be exercisable in
full beginning one year from date of grant; provided,
however, that all shares purchased upon the exercise of the
original option (except for any shares withheld for tax
withholding obligations) shall not be sold, transferred or
pledged within six months from the date of exercise of the
original option. In no event shall a reload option be
exercised after the original option expires as provided in
subsection (d) of this Section 7A.
(h) Stock Withholding; Grants of Reload Options. If
the other requirements of this Section 7A are satisfied, and
if shares are withheld or shares surrendered for tax
withholding pursuant to Section 17, a reload option will be
granted for the number of shares surrendered as payment for
the exercise of the original option plus the number of
shares surrendered or withheld to satisfy tax withholding.
In connection with reload options for officers who are
subject to Section 16 of the Securities Exchange Act of 1934
("Insiders"), the Committee may at any time impose any
limitations which, in the Committee's sole discretion, are
necessary or desirable in order to comply with Section 16(b)
of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, or in order to obtain any exemption
therefrom.
(i) Other Terms and Conditions. Except as otherwise
provided in this Section 7A, all the provisions of the 1990
Stock Option Plan shall apply to reload options granted
pursuant to this Section 7A.
Section 8. Consideration for Options.
<PAGE>
Each optionee shall, as consideration for the grant of
the option, agree in writing to remain in the employ of the
Company or of one of its subsidiaries, at the pleasure of
the Company or of such subsidiary, for at least (1) year
from the date of the granting of such option or until
earlier termination of the optionee's employment effected or
approved by the Company or by such subsidiary. In the event
of a violation by the optionee of such agreement, any
options still held by such person at the time of such
violation shall automatically terminate. The Committee may
waive this requirement in the case of any optionee. Nothing
contained in the Plan, or in any option granted pursuant to
the Plan, nor in any agreement made pursuant to the
provisions of this Section 8, shall confer upon any optionee
any right with respect to continuance of employment by the
Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate
the optionee's employment or change the optionee's
compensation at any time.
Section 9. Exercise of Options - Purchase of Shares.
Options and related SARs shall be exercisable at such
time or times, and upon the satisfaction of such conditions,
as determined by the Committee; provided, however, that
unless otherwise determined by the Committee, no Incentive
Stock Option shall be exercisable during the year ending on
the day before the first anniversary date of the granting of
the Incentive Stock Option. An optionee's right to purchase
shares with respect to shares which become exercisable shall
be cumulative during the term of the option. An option
shall be exercisable by purchase of shares only upon payment
to the Company of the full purchase price of the shares with
respect to which the option is exercised; provided, however,
that the Company shall not be required to issue or deliver
any certificates for shares of common stock purchased upon
the exercise of an option prior to (i) if requested by the
Company, the filing with the Company by the optionee or
purchaser acting under Section 7(e) hereof of a
representation in writing that at the time of such exercise
it is the optionee's or purchaser's then present intention
to acquire the shares being purchased for investment and not
for resale, or (ii) the completion of any registration or
other qualification of such shares under any state or
federal laws or rulings or regulations of any government
regulatory body which the Company shall determine to be
necessary or advisable.
<PAGE>
Payment for the shares shall be either in United States
dollars, payable in cash or by check, or by surrender of
stock certificates representing like common stock of the
Company having an aggregate fair market value, determined as
of the date of exercise, equal to the number of shares with
respect to which such option is exercised multiplied by the
option price per share; provided that the Committee may
impose whatever restrictions it deems necessary or desirable
with respect to the payment for shares by the surrender of
stock certificates representing like common stock of the
Company. The fair market value of common stock on the date
of exercise of an option shall be determined in the same
manner as the fair market value of common stock on the date
of grant of an option is determined pursuant to Section
7(a). Such payment shall be accompanied by a written
request for the shares purchased. An option shall be deemed
exercised on the date such payment and written request are
received by the Secretary of the Company.
In addition, for all nonqualified options outstanding
on February 17, 1995, or issued thereafter, certain
optionees, as determined by the Committee, may elect to
receive restricted shares upon payment for the exercise of
an option in the form of unrestricted common stock. The
optionee will receive the same number of unrestricted shares
as the number of shares surrendered to pay the exercise
price, while the shares received in excess of the number
surrendered to pay the exercise price may be restricted.
Such optionees may also elect to deliver restricted shares
of the Company's common stock in payment of the exercise
price notwithstanding restrictions on transferability to
which such shares are subject. The Company shall be
authorized to issue restricted shares of common stock upon
such exercises of stock options, subject to the following
conditions:
(a) The optionee shall elect a vesting period for the
restricted common stock to be received upon exercise of the
option of between six (6) months and ten (10) years, but in
no event may an optionee elect a vesting period shorter than
the period provided in paragraph (c) hereof.
(b) Restricted common stock issued upon an exercise
shall include the right to have stock withheld for taxes on
the lapse of the restrictions. Notwithstanding any other
provisions to the contrary in the Plan, no reload option
shall be granted for shares withheld or delivered in payment
of taxes upon the lapse of restrictions.
(c) Restricted common stock received in such an
exercise or from an election to receive a Long-Term
<PAGE>
Incentive Plan payout in restricted stock, or any Restricted
Stock Award granted pursuant to the Long-Term Stock
Incentive Program, shall be eligible for use in payment of
the exercise price of a stock option, so long as all the
shares received as a result of such an exercise are
restricted for a period at least as long as, and with terms
at least as restrictive as the terms of, the restricted
common stock used in payment. Any such restricted common
stock so delivered in payment of the exercise price shall
have an aggregate fair market value (determined as of the
date of exercise and in the same manner as the fair market
value of unrestricted common stock of the Company on the
date of exercise of an option is determined pursuant to
Section 7(a)) equal to the number of shares with respect to
which such option is exercised, multiplied by the exercise
price per share.
(d) Shares of restricted common stock received in an
exercise of a stock option that continue to be restricted
shall be forfeited in the event that vesting conditions are
not satisfied, subject to the discretion of the Committee,
except in the case of death, disability, normal retirement,
or involuntary termination for reasons other than cause, in
which case all restrictions lapse; provided, however, that
in no event shall restrictions lapse if the restrictions on
shares used to pay for the exercise would not have lapsed
under the same conditions.
(e) The optionee who receives restricted stock may not
sell, transfer, assign, pledge or otherwise encumber or
dispose of shares of restricted stock until such time as all
restrictions on such stock have lapsed except: (i) to the
Company in payment of the exercise price of a stock option
issued by the Company under any employee stock option plan
adopted by the Company that provides for payment of the
exercise price in the form of restricted stock, provided
that such payment is made in accordance with the terms of
such plan; or (ii) to a trust of which the optionee, the
optionee's spouse, or descendants of the optionee are the
primary beneficiaries and which is a grantor trust treated
as owned by the optionee under Subchapter J of the Internal
Revenue Code, upon the following terms:
(A) the Company receives, prior to such transfer, an
opinion from optionee's counsel (1) that the trust will
be treated as a grantor trust and will be treated as
being owned by the optionee at all times until the
restrictions on such stock lapse or the stock is
forfeited under the terms of its grant, (2) with
respect to any trust structured as a grantor retained
<PAGE>
annuity trust, that the annuity period ends after the
last date on which restrictions on such stock can
lapse, (3) that the terms of the trust provide that
upon the forfeiture of the restricted stock under the
terms of its grant or the earlier termination of the
trust for whatever reason, ownership of the restricted
stock shall revert to the optionee or to the Company,
(4) that the trustee of such trust may not, prior to
the lapsing of restrictions on such stock, sell,
transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock except to the
Company or to the optionee, subject to the restrictions
provided for in this Plan, and (5) that the trustee is
not authorized to incur liabilities on behalf of the
trust, other than to the beneficiaries of the trust;
and
(B) the optionee and the trustee of the trust shall
execute stock powers in blank to be held in the custody
of the Company; and
(C) the Corporate Secretary of the Company may, in his
discretion, enforce the foregoing transfer restrictions
by maintaining physical custody of the certificate or
certificates representing such shares of restricted
stock, by placing a restrictive legend on such
certificates, by requiring the optionee and the trustee
to execute other documents as a pre-condition to such
transfer, or otherwise.
(f) Except as otherwise provided herein, the optionee
will have all the rights of a stockholder with respect to
shares of restricted stock received upon the exercise of an
option, including the right to vote the shares of stock and
the right to dividends on the stock. Unless the Corporate
Secretary establishes alternative procedures, the shares of
restricted stock will be registered in the name of the
optionee and the certificates evidencing such shares shall
bear an appropriate legend referring to the terms,
conditions and restrictions applicable to the award and
shall be held in escrow by the Company. The optionee shall
execute a stock power or powers assigning the shares of
restricted stock back to the Company, which stock powers
shall be held in escrow by the Company and used only in the
event of the forfeiture of any of the shares of restricted
stock. A certificate evidencing unrestricted shares of
common stock shall be issued to the optionee promptly after
the restrictions lapse on any restricted shares.
<PAGE>
(g) The Corporate Secretary shall have the discretion
and authority to establish any and all procedures, including
the requirement of election forms, which he deems necessary
or desirable for the orderly administration of such
exercises.
No optionee or optionee's beneficiary, executor or
administrator, legatees or distributees, as the case may be,
will be, or will be deemed to be, a holder of any shares
subject to an option unless and until a stock certificate or
certificates for such shares are issued to such person or
them under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or
other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in
Section 11 hereof.
In the event that any optionee shall be dismissed from
the employ of the Company or any of its subsidiaries for any
reason which in the opinion of the Committee shall
constitute good cause for dismissal, any option still held
by such person at such time shall automatically terminate.
The decision of the Committee as to what shall constitute
good cause for dismissal shall be final and binding upon all
concerned.
In the event that any optionee, without the consent
of the Committee, while employed by the Company or any
affiliate of the Company or after termination of such
employment, becomes associated with, employed by, renders
services to, or owns any interest in (other than any
nonsubstantial interest, as determined by the Committee),
any business that is in competition with the Company or
with any business in which the Company has a substantial
interest, as determined by the Committee, any option still
held by such person at such time shall automatically
terminate. The decision of the Committee on any such
matters shall be final and binding upon all concerned.
Section 10. Exercise of Options - Stock Appreciation
Rights.
In addition to providing for the exercise of an option
as set forth in Section 9, at the time of grant of such
option the Committee may by separate agreement, in
conjunction with all or part of any option granted under the
Plan, permit an optionee to exercise the option in an
alternative manner based on the appreciated value of the
common stock subject to option; provided, however, that no
<PAGE>
SAR granted to an optionee who is subject to Section 16(b)
of the Exchange Act (an "Insider") shall be exercisable
during the six-month period following the date of grant,
except that such limitation shall not apply in the event of
death or physical disability of such optionee occurring
prior to the expiration of such six-month period. SARs may
be exercised by an optionee by surrendering the related
option or applicable portion thereof. Upon such exercise
and surrender, the optionee shall be entitled to receive
the value of such SARs determined in the manner prescribed
in this Section 10. Options which have been so surrendered,
in whole or in part, shall no longer be exercisable.
Each agreement evidencing SARs shall clearly and
separately identify the Nonqualified Stock Options and
Incentive Stock Options to which it relates and shall
contain such terms and conditions not inconsistent with
other provisions of the Plan and the Program as shall be
determined from time to time by the Committee, which shall
include the following:
(a) SARs shall expire no later than the expiration of
the related option.
(b) SARs shall be transferable only when and to the
extent that the related option is transferable.
(c) SARs shall be exercisable at such time or times
and only to the extent that the related option is
exercisable. The SAR shall terminate and no longer be
exercisable upon the termination or exercise of the related
option, except that SARs granted with respect to less than
the full number of shares covered by a related option shall
not be reduced until the exercise or termination of the
related option exceeds the number of shares not covered by
the SARs.
(d) SARs shall be exercisable only when there is a
positive spread, that is, when the market price of the stock
subject to the related option exceeds the exercise price of
such option.
(e) Upon the exercise of SARs, an optionee shall be
entitled to receive the value thereof, which value shall be
equal to the excess of the fair market value on the date of
exercise of one share of common stock over the option price
per share specified in the related option multiplied by the
number of shares in respect of which the SARs shall have
been exercised. The fair market value of common stock on
the date of exercise of SARs shall be determined in the same
<PAGE>
manner as the fair market value of common stock on the date
of grant of an option is determined pursuant to Section
7(a).
(f) Upon an exercise of SARs, the optionee shall
notify the Company of the form in which payment of the value
thereof will be made (i.e., cash, common stock, or any
combination thereof); provided, however, in the case of
Insiders, (i) payment of the value of SARs related to
Incentive Stock Options may be elected in common stock only
insofar as the issuance of such common stock to the optionee
would be subject to the Internal Revenue Code of 1986,
Section 83 Income Inclusion Rule, as in effect on the date
of exercise of the SARs, and (ii) the Committee may at any
time impose any other limitations upon the exercise of SARs
which, in the Committee's sole discretion, are necessary or
desirable in order to comply with Section 16(b) of the
Exchange Act and the rules and regulations thereunder, or in
order to obtain any exemption therefrom.
Upon the exercise of SARs, the option or part thereof
to which such SARs are related shall be deemed to have been
exercised for the purpose of the limitation of the number of
shares of common stock to be issued under the Plan as set
forth in Section 4 and the limitation of the number of
shares of common stock to be issued under the Program as set
forth in Section 4(a) of the Program. SARs shall be deemed
exercised on the date written notice of exercise is received
by the Secretary of the Company.
Section 11. Change in Stock, Adjustments, Etc.
In the event that the outstanding shares of common
stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number of shares
or kind of shares or other securities of the Company or of
another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or a dividend payable in
capital stock, appropriate adjustment shall be made by the
Committee in the number and kind of shares for the purchase
of which options may be granted under the Plan including the
maximum number that may be granted to any one person. In
addition, the Committee shall make appropriate adjustment in
the number and kind of shares as to which outstanding
options, or portions thereof then unexercised, shall be
exercisable, to the end that the optionee's proportionate
interest shall be maintained as before the occurrence of
such event, and such adjustment of outstanding options shall
be made without change of the total price applicable to the
<PAGE>
unexercised portion of the option and with a corresponding
adjustment in the option price per share; provided, however,
that each such adjustment in the number and kind of shares
subject to outstanding options, including any adjustment in
the option price, shall be made in such manner as not to
constitute a modification as defined in Section 425 of the
Internal Revenue Code of 1986, as amended. If any
outstanding options are subject to any conditions, the
Committee shall also make appropriate adjustments to such
conditions. Any such adjustment made by the Committee shall
be conclusive.
The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
Section 12. Duration, Amendment and Termination.
The Board of Directors of the Company may at any time
terminate the Plan or make such amendments thereof as it
shall deem advisable and in the best interests of the
Company; provided, however, that no such termination or
amendment shall, without the consent of the individual to
whom any option shall theretofore have been granted, affect
or impair the rights of such individual under such option;
and provided further, that any such amendment shall be
consistent with the provisions of the Program, as it may be
amended from time to time.
No stock option shall be granted under the Plan after
April 18, 1999, but stock options granted prior to or as of
such date may extend beyond such date in accordance with the
provisions hereof.
Section 13. Effectiveness of Plan.
This Plan shall be effective as of February 17, 1990.
Section 14. Date of Granting of Options.
The date of grant of a reload option shall be
determined in accordance with Section 7A(g). The date of
grant of all other options shall be the date designated by
the Committee as the date of grant, provided that in no
event shall the date of grant be earlier than the date on
which the Committee approves the grant. Within sixty (60)
days of the granting of the option, the Company shall notify
<PAGE>
the optionee of the grant of the option, and submit to the
optionee a Stock Option Agreement and, if applicable, an
agreement respecting SARs, duly executed by and on behalf of
the Company, with the request that the optionee execute the
agreement or agreements within sixty (60) days after the
mailing by the Company of the notice to the optionee. The
optionee shall execute the written option agreement and, if
applicable, the agreement respecting SARs, within said 60-
day period.
Section 15. Application of Funds.
The proceeds received by the Company from the sale of
stock subject to option are to be added to the general funds
of the Company and used for its corporate purposes.
Section 16. No Obligation to Exercise Option.
Granting of an option shall impose no obligation on the
optionee to exercise such option.
Section 17. Stock Withholding Election.
When taxes are withheld in connection with the exercise
of a stock option by delivering shares of stock in payment
of the exercise price, or an exercise of an SAR for stock,
or upon the lapse of restrictions on restricted stock
received upon the exercise of an option (the date on which
such exercise occurs or such restrictions lapse hereinafter
referred to as the "Tax Date"), the optionee may elect to
make payment for the withholding of federal, state and local
taxes, including Social Security and Medicare ("FICA")
taxes, up to the optionee's marginal tax rate, by one or
both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at fair
market, as defined herein, on the Tax Date) which
shares, if acquired from the Company, must have been
held for at least six months;
(ii) requesting the Company to withhold from those
shares that would otherwise be received upon exercise
of the option, upon exercise of an SAR for stock, or
upon the lapse of restrictions, a number of shares
having a fair market value (as defined herein) on the
Tax Date equal to the amount to be withheld. The
amount of tax with-holding to be satisfied by
<PAGE>
withholding shares from the option exercise is limited
to the minimum amount of taxes, including FICA taxes,
required to be withheld under federal, state and local
law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in cash. If
no timely election is made, cash must be delivered to
satisfy all tax withholding requirements.
Optionees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders") making an
election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) after February 8, 1996,
for FICA taxes; (b) at least six months after the date of
grant of the option or SAR; and (c) either within a "window
period" as defined in Rule 16b-3(e)(3) under the Securities
Exchange Act of 1934 or at least six months in advance of
the Tax Date. An election by an Insider to have stock
withheld to satisfy tax obligations is subject to the
approval of the Committee and to such rules as the Committee
may from time to time adopt.
<PAGE>
Exhibit 10(e)
1990 RESTRICTED STOCK PLAN
(as amended June 9, 1992, August 10, 1993, December 13, 1994,
February 18, 1995 and August 8, 1995)
Section 1. Establishment.
Pursuant to the Sprint Long-Term Stock Incentive Program
(the "Program"), Sprint Corporation, a Kansas corporation (the
"Company"), hereby establishes a restricted stock plan to be
named the 1990 Restricted Stock Plan (the "Plan").
Section 2. Purpose.
The purpose of the Plan is to aid the Company and its
subsidiaries in competing with other enterprises for the services
of new key personnel needed to help ensure their continued
development. The Plan will also help the Company and its
subsidiaries retain key personnel.
Section 3. Administration.
The Plan shall be administered by the Organization and
Compensation Committee (the "Compensation Committee") of the
Board of Directors of the Company. Members of the Compensation
Committee shall be Disinterested Persons as defined in the
Program. The Compensation Committee shall hold its meetings at
such times and places as it may determine. A majority of the
Compensation Committee shall constitute a quorum and the acts of
a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of
the Compensation Committee, shall be deemed the acts of the
Compensation Committee. The Compensation Committee may delegate
to the Chief Executive Officer of the Company (the "CEO") the
right to grant awards of restricted stock to employees of the
Company and its subsidiaries who are not officers or directors of
the Company and to cancel or suspend such awards. The CEO may
not make awards of restricted stock to any one individual in
excess of 15,000 shares and may not make awards of restricted
stock aggregating in excess of 50,000 shares between meetings of
the Compensation Committee. The awards made by the CEO shall be
reported to the Compensation Committee at each of its meetings.
The Company shall issue shares of restricted stock under the
Plan in accordance with determinations made by the Compensation
Committee or the CEO pursuant to the provisions of the Plan and
the Program. The Compensation Committee from time to time may
adopt (and thereafter amend and rescind) such rules and
regulations for carrying out the Plan and take such action in the
administration of the Plan, not inconsistent with the provisions
of the Plan and the Program, as it shall deem proper. Except as
set forth in Section 6(a) hereof, the Compensation Committee may
accelerate the time or times at which restrictions lapse and may
waive any forfeiture of restricted stock. The interpretation and
construction of any provisions of the Plan by the Compensation
Committee shall, unless otherwise determined by the Board of
Directors of the Company,
<PAGE>
be final and conclusive. No member of the Board of Directors
or the Compensation Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
grant under it.
Section 4. Total Number of Shares Subject to Grant.
The maximum number of shares of common stock ($2.50 par
value) of the Company which may be issued under the Plan shall
not exceed 300,000 (subject to adjustment as provided in Section
7 hereof). The shares issued under the Plan may be either
treasury shares or authorized but unissued shares, as the Board
of Directors from time to time may determine. The maximum number
of shares of common stock which may be issued in any calendar
year, together with shares of common stock subject to other
awards under the Program, shall not exceed the limits set forth
in Section 4(a) of the Program.
In the event that any outstanding shares of restricted stock
under the Plan are forfeited for any reason, such shares of
common stock may again be subject to grant under the Plan.
Section 5. Eligibility.
Restricted stock shall be granted only to key employees of
the Company or its subsidiaries, including new hires. No grants
shall be made by the CEO to any individual who is an officer or
director of the Company or who will be proposed to be elected as
an officer or director at the next meeting of the Board of
Directors or Stockholders of the Company. The Compensation
Committee or the CEO will, in its discretion, determine the key
employees to be granted restricted stock, the time or times at
which restricted stock shall be granted, the number of shares to
be granted and the duration of restrictions on the shares
granted. In making such determination, the Compensation
Committee and the CEO may take into consideration the value of
the services rendered or to be rendered by the respective
individuals, their present and potential contributions to the
success of the Company and its affiliates and such other factors
which the Compensation Committee or the CEO may deem relevant in
accomplishing the purposes of the Plan.
No restricted stock may be granted to any individual who
immediately after the grant owns directly or indirectly stock
possessing more than five percent (5%) of the total combined
voting power or value of all classes of stock of the Company or
any subsidiary. No person shall be eligible to receive a larger
number of shares of restricted stock than is recommended for such
individual by the Compensation Committee or the CEO.
Section 6. Terms and Conditions of Grants.
Each grant under the Plan shall be evidenced by an Agreement
in such form not inconsistent with the Plan as the Compensation
Committee or the CEO shall determine; provided that the substance
of the following terms and conditions be included therein:
<PAGE>
(a) Duration of Restrictions. The restrictions on
restricted stock shall lapse at such time or times as
determined by the Compensation Committee or the CEO;
provided, however, that no restricted stock shall
become free of restrictions prior to the first
anniversary date of the granting of the restricted
stock.
(b) Nontransferable. The employee who receives the
restricted stock (the "Grantee") may not sell,
transfer, assign, pledge, or otherwise encumber or
dispose of shares of restricted stock, except in
payment of the exercise price of a stock option issued
by the Company, until such time as all restrictions on
such stock have lapsed.
(c) Termination of Employment. If, before the restrictions
on shares of restricted stock lapse, the Grantee ceases
to be employed by the Company or a subsidiary of the
Company for any reason (including death or disability),
the shares of restricted stock that continue to be
restricted shall be forfeited and the Grantee or his
representative shall sign any document and take any
other action required to assign said restricted shares
back to the Company.
(d) Consideration. Each Grantee shall, as consideration for
the grant of restricted stock, agree in writing to
remain in the employ of the Company or of one of its
subsidiaries, at the pleasure of the Company or of such
subsidiary, for the period of time until the
restrictions on the restricted stock lapse. Nothing
contained in the Plan or in any Agreement shall confer
upon any Grantee any right with respect to continuance
of employment by the Company or its subsidiaries, nor
interfere in any way with the right of the Company or
its subsidiaries to terminate the Grantee's employment
or change the Grantee's compensation at any time.
(e) Interest in Competitor. In the event that any Grantee,
without the consent of the Compensation Committee,
renders services to, or owns any interest in (other
than any nonsubstantial interest, as determined by the
Compensation Committee) any business that is in
competition with the Company or with any business in
which the Company has a substantial interest, as
determined by the Compensation Committee, any
restricted stock shall automatically be forfeited. The
decision of the Compensation Committee on any such
matters shall be final and binding upon all concerned.
(f) Rights as Stockholder. Except as set forth in the
Plan, a Grantee will have all rights of a stockholder
with respect to shares of restricted stock, including
the right to vote the shares of stock and the right to
dividends on the stock. The shares of restricted stock
will be registered in the name of the Grantee and the
certificates evidencing such shares shall bear an
appropriate legend referring to the terms, conditions
and restrictions applicable to the award and shall be
held in escrow by the Company. The Grantee shall
execute a
<PAGE>
stock power or powers assigning the shares of
restricted stock back to the Company, which stock
powers shall be held in escrow by the Company and used
only in the event of the forfeiture of any of the
shares of restricted stock. A certificate evidencing
unrestricted shares of common stock shall be issued to
the Grantee promptly after the restrictions lapse on
any restricted shares.
(g) Stock Withholding Election. When taxes are withheld
upon the lapse of restrictions on restricted stock (the
date on which such restrictions lapse hereinafter
referred to as the "Tax Date"), the Grantee may elect
to make payment for the withholding of federal, state
and local taxes, including Social Security and Medicare
("FICA") taxes, up to the Grantee's marginal tax rate,
by one or both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at fair
market, as defined herein, on the Tax Date) which
shares, if acquired from the Company, must have been
held for at least six months; or
(ii) requesting the Company to withhold from
those shares that would otherwise be received upon the
lapse of restrictions, a number of shares having a fair
market value (as defined herein) on the Tax Date equal
to the amount to be withheld. The amount of tax
withholding to be satisfied by withholding shares is
limited to the minimum amount of taxes, including FICA
taxes, required to be withheld under federal, state and
local law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in
cash. If no timely election is made, cash must be
delivered to satisfy all tax withholding requirements.
Grantees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders") making an
election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) after February 8,
1996, for FICA taxes; (b) at least six months after the
date of grant of restricted stock; and (c) either
within a "window period" as defined in Rule 16b-3(e)(3)
under the Securities Exchange Act of 1934 or at least
six months in advance of the Tax Date. An election by
an Insider to have stock withheld to satisfy tax
obligations is subject to the approval of the Committee
and to such rules as the Committee may from time to
time adopt.
<PAGE>
Section 7. Change in Stock, Adjustments, Etc.
In the event that the outstanding shares of common stock of
the Company are hereafter increased or decreased or changed into
or exchanged for a different number of shares or kind of shares
or other securities of the Company or of another corporation, by
reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination
of shares, or a dividend payable in capital stock, outstanding
shares of restricted stock shall be treated the same as other
outstanding shares of common stock and appropriate adjustment
shall be made by the Compensation Committee in the number and
kind of shares that may be granted under the Plan and that may be
granted by the CEO under the Plan.
The grant of restricted stock pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate, or sell or transfer all or any part of its
business or assets.
Section 8. Duration, Amendment and Termination.
The Board of Directors of the Company may at any time
terminate the Plan or make such amendments thereof as it shall
deem advisable and in the best interests of the Company;
provided, however, that no such termination or amendment shall,
without the consent of the individual to whom any restricted
stock shall theretofore have been granted, affect or impair the
rights of such individual with respect to such restricted stock;
and provided further, that any such amendment shall be consistent
with the provisions of the Program, as it may be amended from
time to time.
No restricted stock shall be granted under the Plan after
April 18, 1999.
Section 9. Effectiveness of Plan.
This Plan shall be effective as of February 17, 1990.
Section 10. Date of Granting of Restricted Stock.
The granting of restricted stock pursuant to the Plan shall
take place on the date the Compensation Committee or the CEO
decides to grant the restricted stock. As soon as practicable
but no later than twenty (20) days after the granting of the
restricted stock, the Company shall notify the employee of the
grant and, within sixty (60) days of the granting of the
restricted stock, the Company shall submit to the employee an
Agreement duly executed by and on behalf of the Company, and a
stock power or powers with respect to the restricted stock, with
the request that the employee execute the Agreement and stock
powers within sixty (60) days after the mailing by the Company of
the notice to the
<PAGE>
employee. The employee shall execute the written Agreement
and stock powers within said 60-day period.
<PAGE>
Exhibit 10(f)
Executive Deferred Compensation Plan
ARTICLE I
PURPOSE
The purpose of the Sprint Corporation Executive Deferred
Compensation Plan (hereinafter referred to as the "Plan") is to
provide funds for retirement or death for executive employees (and
their beneficiaries) of Sprint Corporation and its subsidiaries. It is
intended that the Plan will aid in retaining and attracting employees
of exceptional ability by providing such employees with a means to
supplement their standard of living at retirement.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly
indicates otherwise:
2.1 Account Transfer Request. "Account Transfer Request" means a
written notice, in a form prescribed by the Company, by a Participant
to transfer all or any portion of one Deferred Benefit Account to
another Deferred Benefit Account as provided for in paragraph 6.7.
2.2 Beneficiary. "Beneficiary" means the person, persons or
entity designated by the Participant, or as provided in Article VIII,
to receive any benefits payable under the Plan. Any Participant
Beneficiary Designation shall be made in a written instrument filed
with the Company and shall become effective only when received,
accepted and acknowledged in writing by the Company.
2.3 Board. "Board" means the Board of Directors of the Company.
2.4 Committee. "Committee" means Deferred Compensation Committee
appointed to review the Plan decisions pursuant to Article III.
2.5 Company. "Company" means Sprint Corporation, or any
successor thereto.
2.6 Compensation. "Compensation" means the Base Salary, Annual
Incentive Compensation and Long-Term Incentive Compensation payable to
a Participant during a Plan Year other than a distribution under this
plan.
(a) Base Salary. "Base Salary" means all regular cash
remuneration for services, other than such items as Annual
Incentive Compensation, payable by the Employer to a Participant
in cash during a Plan Year, but before reduction for amounts
deferred pursuant to this Plan or any other Plan of the Employer.
<PAGE>
(b) Annual Incentive Compensation. "Annual Incentive
Compensation" means any annual cash incentive compensation
payable by the Employer to a Participant in a Plan Year.
(c) Long-Term Incentive Compensation. "Long-Term Incentive
Compensation" means any incentive compensation earned over a
period of at least two years.
2.7 Deferral Benefit. "Deferral Benefit" means the benefit
payable to a Participant on his retirement, death, disability, or
termination of employment as calculated in Article VII hereof.
2.8 Deferred Benefit Account. "Deferred Benefit Account" means
the accounts maintained on the books of account of the Employer for
each Participant pursuant to Article VI. Separate Deferred Benefit
Accounts shall be maintained for each Participant. More than one
Deferred Benefit Account shall be maintained for each Participant to
reflect (a) Termination and Retirement Interest Yields, (b) separate
deferral elections, and (c) Account A, Account B, Account AA, and
Account BB elections. For Account AA two sub-accounts (a Retirement
Deferred Benefit Account and a Termination Deferred Benefit Account)
shall be maintained to reflect the difference in Interest Yields as
provided in Article VI, paragraph 6.4. For Account BB two sub-accounts
(a Retirement Deferred Benefit Account and a Termination Deferred
Benefit Account) shall be maintained to reflect, in the event of a
transfer from Account AA to Account BB pursuant to paragraph 6.7, the
difference in values of the two sub-accounts of Account AA transferred
to Account BB. A Participant's Deferred Benefit Accounts shall be
utilized solely as a device for the measurement and determination of
the amounts to be paid to the Participant pursuant to this Plan. A
Participant's Deferred Benefit Account shall not constitute or be
treated as a trust fund of any kind. Unless the context requires
otherwise, "Deferred Benefit Account" shall mean the aggregate balance
of all accounts of a Participant.
2.9 Determination Date. "Determination Date" means the date on
which the amount of a Participant's Deferred Benefit Account is
determined as provided in Article VI hereof. The last day of each
calendar month shall be a Determination Date.
2.10 Disability. "Disability" or "Disabled Participant" means a
physical or mental condition of a Participant resulting in a
determination of disability for purposes of receiving benefits under
the Employer Long-Term Disability Insurance Plan.
2.11 Early Retirement Date. "Early Retirement Date" means the
date on which the Participant actually terminates employment following
the first day of the month coincidental with or next following a
Participant's attainment of age fifty-five (55), but prior to his
Normal Retirement Date.
2.12 Employer. "Employer" means Sprint Corporation, any
successor to the business thereof or any affiliate or subsidiary
designated by the Board.
2.13 Internal Revenue Code. "Internal Revenue Code" means
Internal Revenue Code of 1986, as amended or supplemented from time to
time. References to any section of the
<PAGE>
Internal Revenue Code shall be to that section as it is renumbered,
amended, supplemented or re-enacted.
2.14 Interest Yield. "Interest Yield" means with respect to any
calendar month the Termination Interest Yield or the Retirement
Interest Yield as defined below:
(a) Termination Interest Yield. The "Termination Interest
Yield" means (1)in the case of balances in Account AA, the
composite yield on Moody's Seasoned Corporate Bond Yield Index
for the preceding calendar month as determined from Moody's Bond
Record published by Moody's Investors Services, Inc. (or any
successor thereto), or, if such monthly yield is no longer
published, a substantially similar average selected by the
Company, and (2) in the case of balances in Account A, the
greater of (i) the prime rate in effect at Citibank, N.A. at the
opening of business on the first business day of the month, or if
said bank, for any reason, no longer publishes its prime rate,
the prime rate similarly determined of another major bank
selected by the Company and (ii) six percent per annum.
(b) Retirement Interest Yield. The "Retirement Interest
Yield" means (1) in the case of balances in Account AA, three
percentage points over the Termination Interest Yield, and (2) in
the case of balances in Account A, the Termination Interest
Yield.
2.15 Normal Retirement Age. "Normal Retirement Age" means the
time at which a Participant attains age sixty-five (65).
2.16 Normal Retirement Date. "Normal Retirement Date" means the
first day of the month coincidental with or next following a
Participant's Normal Retirement Age.
2.17 Participant. "Participant" means any individual who is
designated by the Company in accordance with paragraph 4.1 to
participate in this Plan and who elects to participate by filing a
Participation Agreement as provided in Article IV.
2.18 Participation Agreement. "Participation Agreement" means
the agreement, in a form prescribed by the Company, filed by a
Participant prior to the beginning of the first period in which the
Participant's Compensation is to be deferred pursuant to the Plan and
the Participation Agreement. A new Participation Agreement shall be
filed by the Participant for each separate Base Salary deferral
election and for each Annual Incentive Compensation and Long-Term
Incentive Compensation deferral election not accompanying a Base
Salary deferral election.
2.19 Pension Make-Up Benefit. "Pension Make-Up Benefit " means
the benefit described under paragraph 5.2(b).
2.20 Pension Make-Up Compensation. "Pension Make-Up
compensation" means the sum of (a) compensation as determined under
the Retirement Plan and (b) Base Salary and Annual Incentive
Compensation which are actually deferred under this Plan.
2.21 Plan. "Plan" means the Sprint Corporation Executive
Deferred Compensation Plan as set forth in this document. This Plan is
the successor to, and comprises an
<PAGE>
amendment and revision of, the United Telecommunications, Inc.
1985 Executive Deferred Compensation Plan adopted February 12, 1985.
2.22 Plan Administrator. "Plan Administrator" means the person
appointed by the Company to represent the Company in the
administration of this Plan.
2.23 Plan Year. "Plan Year" means a twelve month period
commencing May 1st and ending the following April 30th. The first Plan
Year shall commence on May 1, 1985.
2.24 Retirement Plan. "Retirement Plan" means the Sprint
Retirement Pension Plan, as amended from time to time.
2.25 Share Unit. "Share Unit" means a measure of participation
under the Plan having a value based on the market value of a share of
common stock of the Company.
2.26 Spouse. "Spouse" means a Participant's wife or husband who
was lawfully married to the Participant upon the Participant's
retirement, death or severance from service.
2.27 Transition Date. "Transition Date" means May 1, 1990.
ARTICLE III
ADMINISTRATION
3.1 Plan Administrator; Company and Committee; Duties. This Plan
shall be administered by the Committee. The Committee shall consist of
not more than five persons appointed by the Board. The Committee may
be a consolidated Committee administering other benefit plans of the
Company in addition to this Plan. The Committee shall have the
authority to make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and decide or
resolve any and all questions including interpretations of this Plan,
as may arise in connection with the Plan. The Committee may appoint a
Benefit Administrative Committee and a Plan Administrator. The
Committee may delegate its duties for the day-to-day operations of the
Plan to the Plan Administrator and other duties to the Benefit
Administrative Committee. Members of the Committee, the Benefit
Administrative Committee and the Plan Administrator may be
Participants under this Plan.
3.2 Claim for Benefits. Any claim for benefits under this Plan
shall be made in writing to the Plan Administrator. If a claim for
benefits is wholly or partially denied, the Plan Administrator shall
so notify the Participant or Beneficiary within 90 days after receipt
of the claim. The notice of denial shall be written in a manner
calculated to be understood by the Participant or Beneficiary and
shall contain (a) the specific reason or reasons for denial of the
claim, (b) specific references to the pertinent Plan provisions upon
which the denial is based, (c) a description of any additional
material or information necessary to perfect the claim together with
an explanation of why such material or information is necessary and
(d) an explanation of the claims review procedure. The decision or
action of the Plan Administrator shall be final, conclusive and
binding on all persons having any interest in the Plan, unless a
written appeal is filed as provided in Section 3.3 hereof.
<PAGE>
3.3 Review of Claim. Within 60 days after the receipt by the
Participant or Beneficiary of notice of denial of a claim, the
Participant or Beneficiary may (a) file a request with the Benefit
Administrative Committee that it conduct a full and fair review of the
denial of the claim, (b) review pertinent documents and (c) submit
questions and comments to the Committee in writing.
3.4 Decision After Review. Within 60 days after the receipt of
a request for review under Section 3.3, the Committee shall deliver to
the Participant or Beneficiary a written decision with respect to the
claim, except that if there are special circumstances (such as the
need to hold a hearing) which require more time for processing, the 60-
day period shall be extended to 120 days upon notice to the
Participant or Beneficiary to that effect. The decision shall be
written in a manner calculated to be understood by the Participant or
Beneficiary and shall (a) include the specific reason or reasons for
the decision and (b) contain a specific reference to the pertinent
Plan provisions upon which the decision is based.
ARTICLE IV
PARTICIPATION
4.1 Participation. Participation in the Plan shall be limited to
executives having a job grade level of E14 or above who elect to
participate in the Plan by filing a Participation Agreement with the
Company. Except as provided below, a Participation Agreement must be
filed prior to the April 15th immediately preceding the Plan Year in
which the Participant's participation under the agreement will
commence, and the election to participate shall be effective on the
first day of the Plan Year following receipt by the Company of a
properly completed and executed Participation Agreement. A Participant
in the Plan, who is also a participant in the Employer's 1975
Executive Deferred Compensation Plan, may elect to transfer to this
Plan all, and not less than all, of the dollar value of his Account A
and the dollar value of his Account B under the 1975 Plan. Such
election shall be made by delivering to the Company a properly
executed Participation Agreement; such an election must be made when
the Participant is first eligible for the 1985 Plan.
4.2 Minimum and Maximum Deferral and Length of Participation. A
Participant may elect in any Participation Agreement to defer a
portion of his Compensation. The minimum and maximum amounts that may
be deferred under any single Participation Agreement shall be in $100
units and shall be as follows:
<TABLE>
<CAPTION>
Minimum Deferral Maximum Deferral
<S> <C> <C>
With respect to initial
Base Salary Deferrals $300 per month 50% of Base Salary
Subsequent Base Salary
Deferrals $100 per month 50% of Base Salary
With respect to Annual 25% of Annual 100% of Annual
Incentive Compensation Incentive Incentive
Compensation Compensation
With respect to Long- 25% of Long-Term 100% of Long-Term
Term Incentive Incentive Incentive
Compensation Compensation Compensation
</TABLE>
<PAGE>
(a) With respect to Base Salary deferrals, the dollar
amount of deferral elected in each Participation Agreement shall
be the amount of Base Salary that will be deferred in each month
subject to the Participation Agreement. Each Participation
Agreement shall apply to the Participant's Base Salary payable
over a period (1) for Participation Agreements first effective
before the Transition Date, of either four or eight Plan Years,
or (2) for Participation Agreements first effective on or after
the Transition Date, one Plan Year (or, in either case, until the
Participant's retirement, whichever occurs first), commencing
with the Plan Year immediately following the Plan Year in which
the respective Participation Agreement is filed. The fixed dollar
amount of Base Salary deferral applicable over a deferral period
shall not be changed by virtue of a change in Base Salary alone.
(b) With respect to Annual Incentive Compensation or Long-
Term Incentive Compensation deferrals, the deferral percentage
selected in each Participation Agreement shall apply only to the
Participant's Annual Incentive Compensation or Long-Term
Incentive Compensation paid in the Plan Year immediately
following receipt of the respective Participation Agreement.
(c) From time to time, the Company may increase or decrease
the minimum and maximum deferrals set forth above as well as the
period for which the deferrals are effective by giving reasonable
written notice to the affected Participants. Such changes shall
be effective for all Participation Agreements filed thereafter.
(d) A Participant's election to defer Compensation shall be
irrevocable upon the filing of the respective Participation
Agreement; provided, however, that the deferral of Compensation
under any Participation Agreement may be suspended or amended as
provided in paragraphs 7.5 or 9.1.
4.3 Additional Participation Agreements. A Participant may enter
into additional Participation Agreements by filing a Participation
Agreement with the Company prior to April 15th of any calendar year,
stating the amount that the Participant elects to have deferred. Such
additional agreements shall be effective as to Compensation paid in
Plan Years beginning after the last day of the Plan Year in which the
respective agreement is filed with the Company. Each additional
Participation Agreement is subject to all of the provisions and
requirements set forth in paragraph 4.2, including without limitation,
the provisions relating to minimum and maximum deferral amounts and
duration of the agreements; provided, that the minimum Base Salary
deferral for each additional Participation Agreement shall be $1,200
per year. In addition, the aggregate amount of Base Salary that a
Participant may have deferred under this Plan out of his Base Salary
for any single Plan Year under all applicable Participation Agreements
shall not exceed 50% of his Base Salary, excluding Incentive
Compensation. In the event a Participant elects to defer Compensation
for a new period, the new election shall be treated as an arrangement
for which a separate Deferred Benefit Account shall be maintained and
separate Deferred Benefits shall be payable.
<PAGE>
ARTICLE V
DEFERRED COMPENSATION
5.1 Elective Deferred Compensation. The amount of Compensation
that a Participant elects to defer in the Participation Agreement
executed by the Participant, with respect to each Plan Year of
participation in the Plan, shall be credited by the Company to the
Participant's Deferred Benefit Account throughout each Plan Year as
the Participant is paid the non-deferred portion of Compensation for
such Plan Year. The amount credited to a Participant's Deferred
Benefit Account shall equal the amount deferred. To the extent that
the Employer is required to withhold any taxes or other amounts from
the employees' deferred wages pursuant to any state, federal or local
law, such amounts shall be taken out of the portion of the
Participant's Compensation which is not deferred under this Plan.
5.2 Additional Amounts Under Savings Plan and Retirement Plan.
(a) Savings Plan. Except for Participants who are officers
of the Company subject to Section 16 of the Securities Exchange
Act of 1934, to the extent a Participant's deferral of
Compensation under this Plan causes a reduction in the Company's
contribution for the Participant under the Sprint Retirement
Savings Plan, the Company shall credit the amount of any such
reduction to the Participant's Deferred Benefit Account B. For
such officers, such reduction shall be credited to Account A.
(b) Retirement Plan. A Participant shall receive a Pension
Make-Up Benefit from the Supplemental Executive Retirement Plan
if the deferral of compensation under this Plan causes a
reduction in the Participant's benefit under the Retirement Plan.
5.3 Additional Payments. The Company also intends that
supplemental payments shall be made at death, disability or
termination of employment, as the case may be, for any reduction in
benefits due to deferrals of Compensation under this Plan in respect
of any of the Employer's life insurance or disability plans or
Employee Stock Purchase Plan now in existence or adopted after the
effective date of this Plan.
5.4 Vesting of Deferred Benefit Account. A Participant shall be
100% vested in his/her Deferred Benefit Account.
ARTICLE VI
DEFERRED BENEFIT ACCOUNT
6.1 Determination of Account. Each Participant's Deferred
Benefit Account, as of each Determination Date, shall consist of the
balance of the Participant's Deferred Benefit Account as of the
immediately preceding Determination Date, plus the Participant's
elective deferred compensation withheld since the immediately
preceding Determination Date pursuant to paragraph 5.1 and plus
amounts credited to the Participant's Deferred Benefit Account
pursuant to paragraphs 6.4 and 6.5. The Deferred Benefit Account of
each Participant shall be reduced by the amount of all distributions,
if any, made from such Deferred Benefit Account since the preceding
Determination Date.
<PAGE>
6.2 Type of Deferral. A Participant may elect to have any
portion of the amount deferred credited to either Account A (fixed
income return) or to Account B (Share Units). The initial election
shall be made by a properly executed Participation Agreement. With
respect to a Participation Agreement first effective before the
Transition Date, an election to defer any amount to Account A shall be
treated as an election to defer to Account AA, except as set forth
below. A separate Deferred Benefit Account shall be maintained for a
Participant's Account A, B, AA, and BB.
An election to change the apportionment of deferred amounts
between Accounts A and B may be made by a Participant filing with the
Plan Administrator a revised Participation Agreement indicating such
change on or before April 15th of each calendar year. The revised
Participation Agreement shall be deemed a continuation of the initial
Participation Agreement to which it relates for purposes of complying
with the provisions of paragraphs 4.2 and 4.3 relating to the minimum
and maximum deferrals and duration of the Participation Agreement. The
revised Participation Agreement shall be effective for Plan Years
beginning after the date it is filed.
Deferrals in such Plan Years shall be credited in accordance with
the election of the revised Participation Agreement, provided,
however, that an election to allocate a portion of deferrals to
Account A in excess of the portion allocated in the Participation
Agreement to be deferred into the fixed income account as of May 1,
1989, shall be deemed to be an election by the Participant to allocate
to Account AA a portion of deferrals equal to the portion so allocated
to the fixed income account on May 1, 1989, and to allocate to Account
A the portion in excess of such portion.
6.3 Accounts AA and BB. As of the start of business on the
Transition Date, all amounts standing to the credit of each
Participant in Account A shall be transferred to an Account AA. As of
the start of business on the Transition Date, amounts standing to the
credit of each Participant in Account B that are attributable to prior
transfers from Account A into Account B shall be transferred to an
Account BB. The amount of such transfers shall be an amount equal to
the sum of the dollar amount of all transfers from Account A to
Account B during the period beginning on the effective date of the
Participation Agreement and ending on the Transition Date. For all
purposes of this Plan, except as otherwise noted in this Plan, Account
AA shall be treated in the same manner as Account A, and Account BB
shall be treated in the same manner as Account B. Compensation earned
by employees on or after the Transition Date subject to deferral under
a Participation Agreement first effective before the Transition Date
shall be credited to Accounts AA and B (in accordance with the
Participant's election to allocate such deferrals to Accounts A or B,
respectively, in such Participation Agreements) for such Participation
Agreement.
6.4 Accounts A and AA. As of each Determination Date, the
Participant's Deferred Benefit Accounts A and AA shall be increased by
the amount of interest earned since the preceding Determination Date.
Interest on Accounts A and AA shall be based upon the Interest Yield
defined in paragraph 2.14. For Account AA, a Retirement Deferred
Benefit Account shall be maintained and increased at the rate
specified by the Retirement Interest Yield and a Termination Deferred
Benefit Account shall be maintained and increased at the rate
specified by the Termination Interest Yield. Interest shall be
credited on the mean
<PAGE>
average of the balances of the Deferred Benefit Account on the
Determination Date (before crediting the interest) and on the last
preceding Determination Date, but after the Deferred Benefit Account
has been adjusted for any contributions or distributions to be credited
or deducted for each such day.
6.5 Accounts B and BB. The monthly amount to be credited to the
Participant's Deferred Benefit Account B or BB shall be converted into
Share units, or fractions thereof, by dividing the amount to be
credited by the market value of a share of the Employer's common stock
on the Determination Date. Two sub-accounts shall be maintained for
Account BB: a Retirement Deferred Benefit Account shall include the
transfer from Account B into Account BB described in paragraph 6.3
plus amounts transferred from the Account AA Retirement Deferred
Benefit Account, if any, plus additions pursuant to subparagraphs (a)
and (b) of this paragraph; a Termination Deferred Benefit Account
shall include the transfer from Account B into Account BB described in
paragraph 6.3 plus amounts transferred from the Account AA Termination
Deferred Benefit Account, if any, plus additions pursuant to
subparagraphs (a) and (b) of this paragraph. The market value of a
share of the Company's common stock for purposes other than
distributions from
Accounts B and BB shall be the closing price for such stock as
reported by the New York Stock Exchange on the Determination Date. If
no common shares were traded on that date, the immediately preceding
day on which trading occurred shall be used.
(a) For all Participants except Participants subject to
liability under Section 16 of the Securities Exchange Act of
1934, when a dividend is declared and paid by the Company on its
common stock, an amount shall be credited to the Participant's
Accounts B and BB as though the same dividend had been paid on
the Share Units in such accounts as of the Determination Date
immediately preceding the declaration of the dividend, and such
amount shall be converted to Share Units. Such amount shall be
valued as of the Determination Date immediately preceding the
declaration of the dividend.
(b) For Participants subject to liability under Section 16
of the Securities Exchange Act of 1934, subparagraph (a) of this
paragraph 6.5 shall apply to balances in Accounts B and BB as of
April 30, 1991. With respect to Share Units resulting from
deferrals or transfers from Account A or Account AA into Account
B or Account BB on or after May 1, 1991 ("Post May 1, 1991 Share
Units"), when a cash dividend is declared and paid by the Company
on its common stock, an amount shall be credited to the
Participant's Account A or Account AA, as appropriate, as though
the same dividend had been paid on the Post May 1, 1991 Share
Units as of the Determination Date immediately preceding the
declaration of the dividend.
(c) In the event of a stock dividend, stock split or other
corporate reorganization involving the Employer's common stock,
the Company shall make equitable adjustment to the number of
Share units credited to a Participant's Accounts B and BB as may
be necessary to give effect to such change in the Employer's
capital structure.
(d) Share Units in Accounts B and BB shall be converted to
an equivalent dollar amount prior to any distribution thereof to
a Participant pursuant to Article VII. For
<PAGE>
purposes of distribution, the value of a Share Unit shall be based
upon the average market value of a share of the Company's common
stock. Such average market value shall be based upon the closing price
of the Company's common stock on the New York Stock Exchange on
the last day (or, if no share traded on such day, the immediately
preceding day on which shares traded) for each of the twelve
calendar months preceding the date of distribution. If a
Participant elects payment in other than a lump sum, Share Units
shall be converted to a dollar amount only with respect to each
distribution. During the period of distribution, dividends and
other equitable adjustments shall be credited to the
Participant's Accounts B and BB in accordance with paragraphs
6.5(a). 6.5(b) and 6.5(c). For such purposes, a Participant
subject to liability under Section 16 of the Securities Exchange
Act of 1934 immediately prior to the event that entitles the
Participant to distribution shall be deemed subject to such
liability during the period of distribution.
6.6 Statement of Accounts. The Company shall submit to each
Participant, within 120 days after the close of each Plan Year, a
statement in such form as the Company deems desirable, setting forth
the balance to the credit of such Participant in his Deferred Benefit
Accounts A and B and in his Deferred Benefit Accounts AA and BB
(showing separate calculations for each Interest Yield), and in each
case, as of the last day of the preceding Plan Year.
6.7 Transfer Between Accounts. Within the limitations of this
paragraph 6.7, a Participant may elect, by executing an Account
Transfer Request: (1) to transfer all or any portion of his Account A
to Account B, (2) to transfer all or any portion of his Account B to
Account A, (3) to transfer all or any portion of his Account AA to
Account BB, and (4) to transfer all or any portion of his Account BB
to Account AA. Such election shall be effective on the last day of the
calendar month in which the Plan Administrator timely receives the
Participant's executed Account Transfer Request.
(a) Participants subject to liability under Section 16 of
the Securities Exchange Act of 1934 may request any combination
of the foregoing transfers no more than twice in any Plan Year,
provided, however, that no such transfer may be made unless a
period of at least six months shall have elapsed from the
effective date of the most recent such transfer (whether it
occurred in the current Plan Year or not) to the effective date
of the current transfer.
(b) Participants not described in paragraph 6.7(a) may make
any combination of the foregoing transfers no more than four
times in any Plan Year provided, however, that no such transfer
may be made unless a period of at least three months shall have
elapsed from the effective date of the most recent such transfer
(whether it occurred in the current Plan Year or not) to the
effective date of the current transfer.
ARTICLE VII
BENEFITS
7.1 Benefit for Normal or Early Retirement and Termination After
Age 55. Subject to paragraph 7.6 below, upon a Participant's (i)
retirement after reaching the Normal
<PAGE>
Retirement Date, or (ii) retirement after reaching the Early Retirement
Date, or (iii) termination of employment after attaining age 55, he shall
be entitled to a Deferral Benefit equal to the amount of his Retirement
Deferred Benefit Account determined under paragraph 6.1 hereof as
of the Determination Date coincident with or immediately following such
event.
7.2 Termination of Employment Before Age 55. Upon any
termination of service of the Participant before age 55 for reasons
other than death or Disability, the Employer shall pay to the
Participant, as compensation earned for services rendered prior to his
termination of service, a Deferral Benefit equal to the amount of his
Termination Deferred Benefit Account determined under paragraph 6.1
hereof. The Termination Deferred Benefit Account of a Participant
whose employment has terminated shall be paid in a single sum to the
terminated Participant within 30 days following termination of
employment, if the aggregate balance of the Deferred Benefit
Account(s) of such Participant is $20,000 or less. If such aggregate
balance of a Participant's Deferred Benefit Account(s) is more than
$20,000, payment shall commence pursuant to the Participant's election
in the Participation Agreement.
7.3 Death. If a Participant dies after the commencement of
payments of his Deferral Benefit, his Beneficiary shall continue to
receive the remaining installments of his Deferred Benefit Account in
accordance with the Participant's election pursuant to paragraph 7.6.
If a Participant dies while employed, prior to any payments of a
Deferral Benefit, the aggregate amounts deferred under all
Participation Agreements shall be determined as follows:
(a) In the case of deferrals pursuant to a Participation
Agreement first effective before the Transition Date:
(1) Deferrals of Incentive Compensation shall be the
Retirement Deferred Benefit Account value thereof.
(2) Deferrals of Base Salary pursuant to
Participation Agreements requiring a total deferral of less
than $15,000 per year allocated to Accounts A and AA
pursuant to the Participation Agreement as revised on the
date of the Participant's death shall be the greater of (I)
the Retirement Deferred Benefit Account value thereof or
(ii) ten times the amount of the elected annual Base Salary
deferral.
(3) Deferrals of Base Salary pursuant to
Participation Agreements requiring a total deferral of
$15,000 or more per year allocated to Accounts A and AA
pursuant to the Participation Agreement as revised on the
date of the Participant's death shall be determined as
follows: (i) that portion of the deferral which totals
$15,000 per year shall be the greater of (x) the Retirement
Deferred Benefit Account value thereof and (y) ten times
the amount of the elected annual Base Salary deferral, and
(ii) the portion of such deferral which is in excess of
$15,000 per year shall be the Retirement Deferred Benefit
Account value of such excess.
<PAGE>
(4) Deferrals allocated to Accounts B and BB shall be
the Retirement Deferred Benefit Account value thereof.
(b) In the case of deferrals pursuant to a Participation
Agreement first effective on or after the Transition Date, the
aggregate amount of all deferrals shall be the Retirement
Deferred Benefit Account value of Accounts A and B.
The Deferral Benefit shall be payable as provided for in
paragraph 7.6.
The Deferral Benefit provided above shall be in lieu of all
other benefits under this Plan.
7.4 Disability. In the event of Disability, as defined in
paragraph 2.10, while employed by the Employer, prior to the
completion of all deferrals provided for under a Participation
Agreement, the Employer shall credit to the disabled Participant's
Deferred Benefit Account an amount equal to the amount of the
Participant's Agreement to defer during such period of Disability, but
not beyond the period elected.
In the event of Disability prior to termination of employment or
the Normal Retirement Date, the disabled Participant, unless he
otherwise elects under this paragraph, shall be entitled to the amount
in his Retirement Deferred Benefit Account (rather than his
Termination Deferred Benefit Account) determined under paragraph 6.1
as of the Determination Date next following such Disability, with
payments to commence upon attainment of the Participant's Normal
Retirement Date in the form specified in paragraph 7.6(a)(2) and/or
7.6(a)(3) over a 15 year period. Before payments commence under the
preceding sentence, a Disabled Participant may elect, subject to
Committee approval upon good cause shown: (i) to accelerate
commencement of the payments to any earlier date, but not sooner than
60 days after the onset of Disability and/or (ii) to change the form
of payment permitted under paragraph 7.6(a).
7.5 Suspension of Participation/Failure to Continue
Participation. The Committee, in its sole discretion, may suspend the
deferral of a Participant's Compensation upon the advanced written
request of a Participant on account of financial hardship suffered by
that Participant. A Participant must file any request for such
suspension on or before the 15th day preceding the regular payment
date on which the suspension is to take effect. The Committee, in its
sole discretion, shall determine the amount, if any, that will not be
deferred by the Participant as a result of the financial hardship.
The suspension of any deferrals under this paragraph shall not
affect amounts deferred with respect to periods prior to the effective
date of the suspension. A Participant whose deferrals are suspended
may not execute a subsequent Participation Agreement that would take
effect prior to the beginning of the third Plan Year following the
close of the Plan Year in which the suspension first took effect.
In the event the Participant ceases to remain a member of the
class of employees who are eligible to participate in this Plan, the
Participant may elect to suspend the amount of any remaining deferral
commitment in the same manner as described for other suspensions in
this paragraph, except that Committee approval shall not be required.
<PAGE>
7.6 Form of Benefit Payment
(a) Upon the happening of an event described in paragraphs
7.1, 7.2, 7.3 or 7.4 above, the Employer shall pay to the
Participant or his Beneficiary the amount specified therein in
one of the following forms as elected by the Participant in the
Participation Agreement filed by the Participant:
(1) A lump sum payment at a time designated in the
Participation Agreement but no later than the Participant's
Normal Retirement Date.
(2) With respect to balances in Accounts A and AA, an
annual payment of a fixed amount which shall amortize the
Deferred Benefit Account balance in equal annual payments
of principal and interest over a period from 2 to 20 years.
For purposes of determining the amount of the annual
payment, the assumed rate of interest on Accounts A and AA
shall be the average of the applicable Interest Yield as of
each Determination Date for the 60 months preceding the
initial annual installment payment.
(3) With respect to balances in Accounts B and BB, an
annual payment over a period from 2 to 20 years. Each
payment shall be the value (as determined pursuant to
paragraph 6.5 [d]) of the number of Share Units equal to
(i) the number of Share Units in the accounts on the
Determination Date immediately following the event
described in paragraph 7.1, 7.2, 7.3 or 7.4, divided by
(ii) the number of annual installments elected.
(4) A Participant may change the form in which his
benefits shall be paid by filing a revised Participation
Agreement indicating such change prior to attaining age 60
and at least 13 months prior to the date upon which the
payments to be made are determined. Such revised
Participation Agreement shall be deemed a continuation of
the initial Participation Agreement to which it relates for
purposes of complying with the provisions of paragraphs 4.2
and 4.3 relating to the minimum and maximum deferrals and
duration of Participation Agreements. No such revised
Participation Agreement shall change the amount elected to
be deferred in the original Participation Agreement, nor
the time elected for commencement of benefit payments.
(b) In the absence of a Participant's election under
subparagraph 7.6(a), benefits shall be paid in the form specified
in subparagraph 7.6(a)(2) and/or 7.6(a)(3) over a 15 year period,
except as provided in paragraph 7.2. In the event of a Disabled
Participant, payment shall be in the form described in paragraph
7.4.
7.7 Withholding; Payroll Taxes. To the extent required by the
law in effect at the time payments are made, the Employer shall
withhold from payments made hereunder any taxes required to be
withheld from an employee's wages for the federal or any state or
local government.
<PAGE>
7.8 Commencement of Payments. Unless otherwise provided,
payments under this Plan shall begin within 60 days following receipt
of notice by the Plan Administrator of an event which entitles a
Participant (or a Beneficiary) to payments under this Plan, or at such
earlier date as may be determined by the Company pursuant to the terms
of the plan. All payments shall be made as of the first day of the
month.
ARTICLE VIII
BENEFICIARY DESIGNATION
8.1 Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person or persons as his
Beneficiary or Beneficiaries (both principal as well as contingent) to
whom payment under this Plan shall be paid in the event of his death
prior to complete distribution to the Participant of the benefits due
him under the Plan.
8.2 Amendments. Any Beneficiary Designation may be changed by a
participant by the written filing of such change on a form prescribed
by the Company. The filing of a new Beneficiary Designation form will
cancel all Beneficiary Designations previously filed.
8.3 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided above, or if all designated
Beneficiaries predecease the Participant, then the Participant's
designated Beneficiary shall be deemed to be the person or persons
surviving him in the first of the following classes in which there is
a survivor, share and share alike:
(a) The surviving Spouse;
(b) The Participant's children, except that if any of
the children predecease the Participant but leave issue
surviving, then such issue shall take by right of
representation the share their parent would have taken if
living;
(c) The Participant's personal representative
(executor or administrator).
8.4 Effect of Payment. The payment to the deemed Beneficiary
shall completely discharge the Employer's obligations under this Plan.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment. The Board may at any time amend the Plan in whole
or in part; provided, however, that no amendment shall be effective to
decrease or restrict any Deferred Benefit Account at the time of such
amendment.
9.2 Employer's Right to Terminate. The Board may at any time
terminate the Plan with respect to new elections to defer if, in its
judgment, the continuance of the Plan, the tax, accounting, or other
effects thereof, or potential payments thereunder would not be in the
best interests of the Company. The Board may also terminate the Plan
in its entirety at any time, and upon any such termination, each
Participant (a) who is then receiving a Deferral Benefit shall be paid
in a lump sum, or over such period of time as determined by the
Company, the
<PAGE>
then remaining balance in his Deferred Benefit Account,
and (b) who has not received a Deferral Benefit shall be paid in a
lump sum, or over such period of time as determined by the Company,
the balance in his Deferred Benefit Account.
ARTICLE X
MISCELLANEOUS
10.1 Unsecured General Creditor. Participants and their
Beneficiaries shall have no legal or equitable rights, interest or
claims in any property or assets of the Employer, nor shall they be
Beneficiaries of, or have any rights, claims or interests in any life
insurance policies, annuity contracts or the proceeds therefrom owned
or which may be acquired by the Employer ('Policies'). Such Policies
or other assets of the Employer shall not be held under any trust for
the benefit of Participants or their Beneficiaries or held in any way
as collateral security for the fulfilling of the obligations of the
Employer under this Plan. Any and all of the Employer's assets and
Policies shall be, and remain, the general, unpledged, unrestricted
assets of the Employer. The Employer's obligation under the Plan shall
be merely that of an unfunded and unsecured promise of the Employer to
pay money in the future.
10.2 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights
to which are, expressly declared to be unassignable and non-
transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor be transferable by operation of
law in the event of a Participant's or any other person's bankruptcy
or insolvency.
10.3 Not a Contract of Service. The terms and conditions of this
Plan shall not be deemed to constitute a contract of service between
the Employer and the Participant, and the Participant (or his
Beneficiary) shall have no rights against the Employer except as may
otherwise be specifically provided herein. Moreover, nothing in this
Plan shall be deemed to give a Participant the right to be retained in
the service of the Employer or to interfere with the right of the
Employer to discipline or discharge him at any time.
10.4 Protective Provisions. A Participant will cooperate with
the Employer by furnishing any and all information requested by the
Employer, in order to facilitate the payment of benefits hereunder,
and by taking such physical examinations as the Employer may deem
necessary and taking such other action as may be requested by the
Employer.
10.5 Applicable Law. The Plan, and any Participation Agreement
related thereto, shall be governed by the laws of the State of Kansas,
without regard to the principles of conflicts of law.
10.6 Alcatel Employees. Employees who transferred to the joint
venture with Alcatel, N.V. (the "Joint Venture") December 31, 1993,
shall not be deemed a retirement or termination of employment. When
such transferred employees retire or terminate employment with the
Joint Venture (other than by reason of a transfer to employment with
the Company or
<PAGE>
an affiliate of the Company), or if prior to such retirement or termination
of employment, the Company ceases to own at least a 49 percent interest
in the Joint Venture (or such lesser percentage as determined by the
Organization and Compensation Committee of the Company), the
transferred employees shall be considered to have retired or terminated
employment.
<PAGE>
Exhibit 10(g)
MANAGEMENT INCENTIVE STOCK OPTION PLAN
(As Amended April 18, 1995 and August 8, 1995)
1. Establishment and Purpose. Sprint Corporation, a
Kansas corporation (the "Company"), hereby establishes
a stock option plan to be named the Management
Incentive Stock Option Plan (the "Plan") The purpose of
the Plan is to permit employees of the Company and its
subsidiaries who are eligible to receive annual
incentive compensation to receive nonqualified stock
options in lieu of a portion of the target incentive
under the Company's management incentive plans
("MIPs"), thereby encouraging the employees to focus on
the growth and profitability of the Company and the
performance of its common stock. Subject to approval
of the Company's stockholders, the Plan provides for
options to be granted beginning March 15, 1995, and
ending April 18, 2005. Stock options granted prior to
or as of April 18, 2005, may extend beyond that date.
2. Administration. The Plan shall be administered by the
Organization and Compensation Committee of the Board of
Directors (the "Committee"). The Company shall grant
options under the Plan in accordance with
determinations made by the Committee pursuant to the
provisions of the Plan. The Committee from time to
time may adopt (and thereafter amend and rescind) such
rules and regulations for carrying out the Plan and
take such action in the administration of the Plan, not
inconsistent with the provisions of the Plan, as it
shall deem proper. The Committee may correct any
defect, supply any omission or reconcile any
inconsistency in the Plan, or in any option or
restricted shares of common stock granted or issued
pursuant to the Plan, in the manner and to the extent
it shall deem desirable to effect the terms of the
Plan. The interpretation and construction of any
provisions of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the
Company, be final and conclusive. No member of the
Board of Directors or the Committee shall be liable for
any action or determination made in good faith with
respect to the Plan or any option granted under it.
The Corporate Secretary shall act as Plan Administrator
carrying out the day-to-day administration of the Plan
unless the Committee appoints another officer or
employee of the Company as Plan Administrator.
3. Eligibility. The Committee will determine each year
whether options will be granted in such year, whether
participation will be elective or automatic and the
amount of incentive compensation to be given up for
each stock option. Any salaried employee of the
Company and its subsidiaries shall be eligible to be
selected for participation in the MIPs. The Committee
will, in its discretion, determine the employees who
participate in the MIPs and, therefore, who will be
eligible for options, the dates on which options shall
be granted, and any conditions on the exercise of the
options.
<PAGE>
No option may be granted to any individual who
immediately after the option grant owns directly or
indirectly stock possessing more than five percent (5%)
of the total combined voting power or value of all
classes of stock of the Company or any subsidiary.
4. Common Stock Subject to the Plan. The shares of common
stock of the Company, $2.50 par value, to be issued
upon the exercise of a nonqualified option to purchase
common stock granted in lieu of MIP payout may be made
available from the authorized but unissued common stock
of the Company, shares of common stock held in the
treasury, or common stock purchased on the open market
or otherwise.
Approval of the Plan by the Stockholders of the Company
shall constitute authorization to use such shares for
the Plan subject to the discretion of the Board or as
such discretion may be delegated to the Committee.
Subject to the provisions of the following paragraph,
the total number of shares for which options may be
granted under the Plan each year shall be 0.9% of the
total outstanding shares of common stock of the Company
as of the first day of such year; provided, however,
that such numbers shall be increased in any year by the
number of shares available in previous years for which
options have not been granted. If and when an option
granted under the Plan is terminated without having
been exercised in full, the unpurchased or forfeited
shares shall become available for grant to other
employees.
The number of shares subject to the Plan may be
appropriately adjusted by the Committee in the
circumstances outlined in Section 5(k).
5. Stock Options; Terms and Conditions. Each option will
represent the right to purchase a specific number of
shares of common stock of the Company and shall be
subject to the following terms and conditions and to
such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem
desirable:
a. Consideration for and Number of Options. Each
option shall be granted in lieu of a portion of the
optionee's cash payout under the MIPs. The Committee
shall determine the number of shares or the manner of
calculating the number of shares available for each
option each year, subject to the total number of shares
available under the Plan for such year, and the amount
or the method of determining the amount of annual
incentive compensation to be given up by each
participant in return for an option, taking into
consideration appropriate factors in making such
determinations, such as interest rates, volatility of
the market price of common stock of the Company and the
term of the option, provided, however that shares
subject to options granted to any individual employee
during any calendar year shall not exceed a total of
500,000 shares.
<PAGE>
b. Participation in the Plan. Participation in the
Plan may be voluntary or automatic, as determined
by the Committee. The rules and procedures for
voluntary participation, when applicable, shall be
established and implemented by the Plan
Administrator.
c. Exercise Price. The price at which each share
covered by an option may be purchased shall be one
hundred percent (100%) of the fair market value of
the Company's common stock on the date the option
is granted. Fair market value shall be deemed to
be the average of the high and low prices of the
Company's common stock for composite transactions
as published by major newspapers for the date the
option is granted or, if no sale of the Company's
common stock shall have been made on that day, the
next preceding day on which there was a sale of
such stock.
d. Vesting. Unless the Committee determines
otherwise, stock option grants shall provide that
the total number of shares subject to an option
shall become exercisable December 31 in the year
of the date of grant.
e. Term of Option. Options shall not be exercisable
after the expiration of ten (10) years from the
date of grant.
f. Payment of Exercise Price. Options shall be
exercisable only upon payment to the Company of
the full purchase price of the shares with respect
to which options are exercised. Payment for the
shares shall be either in United States dollars,
payable in cash or by check, or by surrender of
stock certificates representing like common stock
of the Company having an aggregate fair market
value, determined as of the date of exercise,
equal to the number of shares with respect to
which such options are exercised multiplied by the
exercise price per share. The fair market value
of common stock on the date of exercise of options
shall be determined in the same manner as the fair
market value of common stock on the date of grant
of options is determined. Certain optionees may
use restricted stock as payment for the exercise
price in accordance with Section 6 hereof. In
that event, fair market value of the shares of
restricted stock will be determined as if the
shares were not restricted.
g. Manner of Exercise. A completed exercise form and
the exercise price, whether in the form of cash or
stock, must be delivered to the Plan Administrator
in order to exercise an option. An option shall
be deemed exercised on the date such exercise form
and payment are received by the Plan
Administrator.
h. Time for Exercise. Each option expires if it has
not been exercised within its term. Once an option has
expired for any reason, it can no longer be
<PAGE>
exercised. If employment with the
Company or a subsidiary of the Company is
terminated, the optionee may exercise options
which are exercisable on the date of termination
of employment until the earlier of (1) the date on
which the option expires and (2) the end of the
applicable time period below:
(i) retirement: five years after retirement
date.
(ii) disability (qualifying for long-term
disability benefits under the Company's Basic
Long-Term Disability Plan): five years after
qualification date.
(iii) death: one year after death for the
estate or designated beneficiary to exercise
the decedent's options.
(iv) involuntary termination other than for cause:
the date on which the option expires.
(v) voluntary termination: three months from the
date of termination of employment.
If an optionee's employment is terminated for a
reason constituting good cause, any outstanding
options granted under the Plan and held by such
optionee at such time will automatically
terminate. For this purpose, "good cause" shall
mean conduct by the optionee which reflects
adversely on his or her honesty, trustworthiness
or fitness as an employee, or the optionee's
willful engagement in conduct which is
demonstrably and materially injurious to the
Company.
If an optionee becomes associated with,
becomes employed by, renders services to, or owns
any interest in (other than a nonsubstantial
interest, as determined by the Committee) any
business in competition with the Company, all
outstanding options whether vested or unvested
shall automatically terminate and shares of
restricted stock received upon the exercise of an
option pursuant to Section 6 hereof which continue
to be restricted shall be forfeited.
i. Restricted Stock. Certain optionees may elect to
deliver restricted shares or receive restricted
shares in connection with an exercise of an
option, as provided in Section 6 hereof.
j. Assignment of Benefits; Beneficiary Designations.
Options may not be executed, levied, garnished,
attached, pledged, assigned or transferred other
than by will or by the laws of descent and
distribution, except that an optionee may
designate a beneficiary or beneficiaries to
exercise unexpired
<PAGE>
options after the optionee's death. Designations
must be made in writing on a form provided by the
Plan Administrator. Designations shall become
effective on the date that the form -- properly
completed, signed and notarized -- is received
by the Plan Administrator.
k. Change in Stock, Adjustments. In the event that
the outstanding shares of common stock of the
Company are hereafter increased or decreased or
changed into or exchanged for a different number
of shares or kind of shares or other securities of
the Company or of another corporation, by reason
of reorganization, merger, consolidation,
recapitalization, reclassification, stock split
up, combination of shares, or a dividend payable
in capital stock, appropriate adjustment shall be
made by the Committee in the number of shares as
to which outstanding options, or portions thereof
then unexercised, shall be exercisable, to the end
that the optionee's proportionate interest shall
be maintained as before the occurrence of such
event, and such adjustment of outstanding options
shall be made without change of the total price
applicable to unexercised options and with a
corresponding adjustment in the exercise price per
share.
6. Restricted Stock. Certain optionees, as determined by
the Committee, may elect to receive restricted shares
upon payment for the exercise of an option in the form
of unrestricted common stock. The optionee will
receive the same number of unrestricted shares as the
number of shares surrendered to pay the exercise price,
while the shares received in excess of the number
surrendered to pay the exercise price may be
restricted. Such optionees may also elect to deliver
restricted shares of the Company's common stock in
payment of the exercise price notwithstanding
restrictions on transferability to which such shares
are subject. The Company shall be authorized to issue
restricted shares of common stock upon such exercises
of stock options, subject to the following conditions:
a. The optionee shall elect a vesting period for the
restricted common stock to be received upon
exercise of the option of between six (6) months
and ten (10) years, subject to rules and
procedures established by the Plan Administrator,
but in no event may an optionee elect a vesting
period shorter than the period provided in
paragraph (d) of this Section 6.
b. The optionee who receives restricted stock may not
sell, transfer, assign, pledge or otherwise
encumber or dispose of shares of restricted stock
until such time as all restrictions on such stock
have lapsed except: (i) to the Company in payment
of the exercise price of a stock option issued by
the Company under any employee stock option plan
adopted by the Company that provides for payment
of the exercise price in the form of restricted
stock, provided that such payment is made in
accordance with the terms of such plan; or (ii) to
a trust of which the optionee, the optionee's
spouse, or descendants of the optionee are the
primary beneficiaries and which is a
<PAGE>
grantor trust treated as owned by the optionee under
Subchapter J of the Internal Revenue Code, upon the
following terms:
(A) the Company receives, prior to such transfer,
an opinion from optionee's counsel (1) that the
trust will be treated as a grantor trust and will
be treated as being owned by the optionee at all
times until the restrictions on such stock lapse
or the stock is forfeited under the terms of its
grant, (2) with respect to any trust structured as
a grantor retained annuity trust, that the annuity
period ends after the last date on which
restrictions on such stock can lapse, (3) that the
terms of the trust provide that upon the
forfeiture of the restricted stock under the terms
of its grant or the earlier termination of the
trust for whatever reason, ownership of the
restricted stock shall revert to the optionee or
to the Company, (4) that the trustee of such trust
may not, prior to the lapsing of restrictions on
such stock, sell, transfer, assign, pledge, or
otherwise encumber or dispose of shares of
restricted stock except to the Company or to the
optionee, subject to the restrictions provided for
in this Plan, and (5) that the trustee is not
authorized to incur liabilities on behalf of the
trust, other than to the beneficiaries of the
trust; and
(B) the optionee and the trustee of the trust
shall execute stock powers in blank to be held in
the custody of the Company; and
(C) the Corporate Secretary of the Company may, in
his discretion, enforce the foregoing transfer
restrictions by maintaining physical custody of
the certificate or certificates representing such
shares of restricted stock, by placing a
restrictive legend on such certificates, by
requiring the optionee and the trustee to execute
other documents as a pre-condition to such
transfer, or otherwise.
c. An optionee who elects to receive restricted
common stock upon an exercise shall have the right
to satisfy tax withholding obligations in the
manner provided in Section 8 hereof.
Notwithstanding any provision to the contrary in
Section 7(h) hereof, no reload option shall be
granted for shares withheld or delivered in
payment of taxes upon the lapse of restrictions on
restricted stock received upon an exercise.
d. Restricted common stock received in such an
exercise or from an election to receive a Long-
Term Incentive Plan payout in restricted stock, or
any Restricted Stock Award granted pursuant to the
Long-Term Stock Incentive Program, shall be
eligible for use in payment of the exercise price
of a stock option, so long as all the shares
received as a result of such an exercise are
restricted for a period at least as long as, and
with terms at least as restrictive as the terms
of, the restricted common stock used in payment.
<PAGE>
e. The shares of restricted common stock received in
an exercise of a stock option that continue to be
restricted shall be forfeited in the event that
vesting conditions are not satisfied, subject to
the discretion of the Committee, except in the
case of death, disability, normal retirement, or
involuntary termination for reasons other than
cause, in which case all restrictions lapse;
provided, however, that in no event shall
restrictions lapse if the restrictions on shares
used to pay for the exercise have not lapsed under
the same conditions. If restricted shares are
forfeited, the optionee or his representative
shall sign any document and take any other action
required to assign said restricted shares back to
the Company.
f. The optionee will have all the rights of a
stockholder with respect to shares of restricted
stock received upon the exercise of an option,
including the right to vote the shares of stock
and the right to dividends on the stock. Unless
the Plan Administrator establishes alternative
procedures, the shares of restricted stock will be
registered in the name of the optionee and the
certificates evidencing such shares shall bear an
appropriate legend referring to the terms,
conditions and restrictions applicable to the
award and shall be held in escrow by the Company.
The optionee shall execute a stock power or powers
assigning the shares of restricted stock back to
the Company, which stock powers shall be held in
escrow by the Company and used only in the event
of the forfeiture of any of the shares of
restricted stock. A certificate evidencing
unrestricted shares of common stock shall be
issued to the optionee promptly after the
restrictions lapse on any restricted shares.
g. The Plan Administrator shall have the discretion
and authority to establish any rules in connection
with the use of restricted stock, including but
not limited to regulating the timing of the lapse
of restrictions within the six-month to ten-year
period and prescribing election forms as the Plan
Administrator deems necessary or desirable for the
orderly administration of such exercises.
7. Reload Options. The Committee may provide that
optionees have the right to a reload option, which
shall be subject to the following terms and conditions:
a. Grant of the Reload Option; Number of Shares;
Price. Subject to subsections (b) and (c) of this
Section 7 and to the availability of shares to be
optioned under the Plan, if an optionee has an
option (the "original option") with reload rights
and pays for the exercise of the original option
by surrendering common stock of the Company, the
optionee shall receive a new option ("reload
option") for the number of shares so surrendered
(or, if applicable, the number of shares provided
for in paragraph (h) of this
<PAGE>
Section 7) at an exercise price equal to the fair market
value of the stock on the date of the exercise of the
original option.
b. Minimum Purchase Required. A reload option will
be granted only if the exercise of the original
option is an exercise of at least 25% of the total
number of shares granted under the original option
(or an exercise of all the shares remaining under
the original option if less than 25% of the shares
remain to be exercised).
c. Other Requirements. A reload option will not be
granted: (1) if the market value of the common
stock of the Company on the date of exercise of
the original option is less than the exercise
price of the original option; (2) if the optionee
is no longer an employee of the Company or its
subsidiary; or (3) if the original option is
exercised less than one year prior to the
expiration of the original option.
d. Term of Option. The reload option shall expire on
the same date as the original option.
e. Type of Option. The reload option shall be a
nonqualified option.
f. No Additional Reload Options. The reload options
shall not include any right to a second reload
option.
g. Date of Grant, Vesting. The date of grant of the
reload option shall be the date of the exercise of
the original option. The reload options shall be
exercisable in full beginning one year from date
of grant; provided, however, that all shares
purchased upon the exercise of the original option
(except for any shares withheld for tax
withholding obligations) shall not be sold,
transferred or pledged within six months from the
date of exercise of the original option. In no
event shall a reload option be exercised after the
original option expires as provided in subsection
(d) of this Section 7.
h. Stock Withholding; Grants of Reload Options. If
the other requirements of this Section 7 are
satisfied, and if shares are withheld or shares
surrendered for tax withholding, a reload option
will be granted for the number of shares
surrendered as payment for the exercise of the
original option plus the number of shares
surrendered or withheld to satisfy tax
withholding. In connection with reload options
for officers who are subject to Section 16 of the
Securities Exchange Act of 1934, the Committee may
at any time impose any limitations which, in the
Committee's sole discretion, are necessary or
desirable in order to comply with Section 16(b) of
the Securities Exchange Act of 1934 and the rules
and regulations thereunder, or in order to obtain
any exemption therefrom.
<PAGE>
i. Other Terms and Conditions. Except as otherwise
provided in this Section 7, all the provisions of
the Plan shall apply to reload options.
8. Stock Withholding Election.
When taxes are withheld in connection with the
exercise of a stock option by delivering shares of
stock in payment of the exercise price, or an
exercise of an SAR for stock, or upon the lapse of
restrictions on restricted stock received upon the
exercise of an option (the date on which such
exercise occurs or such restrictions lapse
hereinafter referred to as the "Tax Date"), the
optionee may elect to make payment for the
withholding of federal, state and local taxes,
including Social Security and Medicare ("FICA")
taxes, up to the optionee's marginal tax rate, by
one or both of the following methods:
(i) delivering part or all of the payment in
previously-owned shares (which shall be valued at
fair market, as defined herein, on the Tax Date)
which shares, if acquired from the Company, must
have been held for at least six months;
(ii) requesting the Company to withhold from
those shares that would otherwise be received upon
exercise of the option, upon exercise of an SAR
for stock, or upon the lapse of restrictions, a
number of shares having a fair market value (as
defined herein) on the Tax Date equal to the
amount to be withheld. The amount of tax with-
holding to be satisfied by withholding shares from
the option exercise is limited to the minimum
amount of taxes, including FICA taxes, required to
be withheld under federal, state and local law.
Such election is irrevocable. Any fractional share
amount and any additional withholding not paid by
the withholding or surrender of shares must be
paid in cash. If no timely election is made, cash
must be delivered to satisfy all tax withholding
requirements.
Optionees who are subject to Section 16 of the
Securities Exchange Act of 1934 ("Insiders")
making an election pursuant to (i) or (ii) of the
immediately preceding paragraph must do so: (a)
after February 8, 1996, for FICA taxes; (b) at
least six months after the date of grant of the
option or SAR; and (c) either within a "window
period" as defined in Rule 16b-3(e)(3) under the
Securities Exchange Act of 1934 or at least six
months in advance of the Tax Date. An election by
an Insider to have stock withheld to satisfy tax
obligations is subject to the approval of the
Committee and to such rules as the Committee may
from time to time adopt.
<PAGE>
9. Miscellaneous.
a. Amendment. The Company reserves the right to
amend the Plan at any time by action of the Board
of Directors provided that no such amendment may
materially and adversely affect any outstanding
stock options without the consent of the
respective participants, and provided that,
without the approval of the stockholders, no such
amendment may increase the total number of shares
reserved for the purposes of the Plan.
b. Effectiveness of Plan. This Plan shall be
effective as of February 18, 1995, subject to
approval of Stockholders of the Company prior to
February 18, 1996.
c. Rights in Securities. All certificates for shares
delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules,
regulations, and other requirements of the
Securities and Exchange Commission, any stock
exchange upon which the shares are then listed,
and any applicable federal or state securities
law, and the Committee may cause a legend or
legends to be put on any such certificates to make
appropriate reference to such restrictions. No
optionee or optionee's beneficiary, executor or
administrator, legatees or distributees, as the
case may be, will be, or will be deemed to be, a
holder of any shares subject to an option unless
and until a stock certificate or certificates for
such shares are issued to such person or persons
under the terms of the Plan. No adjustment shall
be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or
distributions or other rights for which the record
date is prior to the date such stock certificate
is issued, except as provided in Section 5(k)
hereof.
d. Date of Grant. The grant of an option shall be
effective no earlier than the date the Committee
decides to grant the option, except that grants of
reload options shall be effective as provided in
Section 7g hereof. .
e. Application of Funds. The proceeds received by
the Company from the sale of stock subject to
option are to be added to the general funds of the
Company and used for its corporate purposes.
f. No Obligation to Exercise Option. Granting of an
option shall impose no obligation on the optionee
to exercise such option.
<PAGE>
Exhibit 10(h)
LONG-TERM STOCK INCENTIVE PROGRAM
(as amended February 18, 1995, April 18, 1995
and August 8, 1995)
Section 1. Purpose. The purposes of the Sprint Long-
Term Stock Incentive Program (the "Plan") are to encourage
directors of Sprint Corporation (the "Company") and officers
and selected key employees of the Company and its Affiliates
to acquire a proprietary and vested interest in the growth
and performance of the Company, to generate an increased
incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the
benefit of stockholders, and to enhance the ability of the
Company and its Affiliates to attract and retain individuals
of exceptional talent upon whom, in large measure, the
sustained progress, growth and profitability of the Company
depends.
Section 2. Definitions. As used in the Plan, the
following terms shall have the meanings set forth below:
(a) "Affiliate" shall mean (i) any Person that
directly, or through one or more intermediaries, controls,
or is controlled by, or is under common control with, the
Company or (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation
Right, Restricted Stock Award, Performance Share,
Performance Unit, Dividend Equivalent, Other Stock Unit
Award, or any other right, interest, or option relating to
Shares granted pursuant to the provisions of the Plan.
(c) "Award Agreement" shall mean any written
agreement, contract, or other instrument or document
evidencing any Award granted hereunder and signed by both
the Company and the Participant or by both the Company and
an Outside Director.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
<PAGE>
(f) "Committee" shall mean the Organization and
Compensation Committee of the Board, composed of not less
than three directors each of whom is a Disinterested Person.
(g) "Company" shall mean Sprint Corporation.
(h) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3(d)(3) promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of
1934, as amended, or any successor definition adopted by the
Commission.
(i) "Dividend Equivalent" shall mean any right granted
pursuant to Section 14(h) hereof.
(j) "Employee" shall mean any salaried employee of the
Company or of any Affiliate.
(k) "Fair Market Value" shall mean, with respect to
any property, the market value of such property determined
by such methods or procedures as shall be established from
time to time by the Committee.
(l) "Incentive Stock Option" shall mean an Option
granted under Section 6 hereof that is intended to meet the
requirements of Section 422A of the Code or any successor
provision thereto.
(m) "Nonstatutory Stock Option" shall mean an Option
granted to a Participant under Section 6 hereof, and an
Option granted to an Outside Director pursuant to Section 11
hereof, that is not intended to be an Incentive Stock
Option.
(n) "Option" shall mean any right granted to a
Participant under the Plan allowing such Participant to
purchase Shares at such price or prices and during such
period or periods as the Committee shall determine.
"Option" shall also mean the right granted to an Outside
Director under Section 11 hereof allowing such Outside
Director to purchase shares of the common stock of the
Company on the terms set forth in Section 11.
(o) "Other Stock Unit Award" shall mean any right
granted to a Participant by the Committee pursuant to
Section 10 hereof.
<PAGE>
(p) "Outside Director" shall mean a member of the
Board who is not an Employee of the Company or of any
Affiliate.
(q) "Participant" shall mean an Employee who is
selected by the Committee to receive an Award under the
Plan.
(r) "Performance Award" shall mean any Award of
Performance Shares or Performance Units pursuant to Section
9 hereof.
(s) "Performance Period" shall mean that period
established by the Committee at the time any Performance
Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to
such Award are to be measured.
(t) "Performance Share" shall mean any grant pursuant
to Section 9 hereof of a unit valued by reference to a
designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee
shall determine, including, without limitation, cash,
Shares, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the
Committee shall establish at the time of such grant or
thereafter.
(u) "Performance Unit" shall mean any grant pursuant
to Section 9 hereof of a unit valued by reference to a
designated amount of property other than Shares, which value
may be paid to the Participant by delivery of such property
as the Committee shall determine, including, without
limitation, cash, Shares, or any combination thereof, upon
achievement of such performance goals during the Performance
Period as the Committee shall establish at the time of such
grant or thereafter.
(v) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, or government or political
subdivision thereof.
(w) "Restricted Stock" shall mean any Share issued
with restrictions on the holder's right to sell, transfer,
pledge, or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may
impose (including, without limitation, any restriction on
<PAGE>
the right to vote such Share, and the right to receive any
cash dividends), which restrictions may lapse separately or
in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
(x) "Restricted Stock Award" shall mean an award of
Restricted Stock under Section 8 hereof.
(y) "Senior Officer" shall mean any employee of the
Company holding the office of Vice President or higher.
(z) "Shares" shall mean shares of the common stock of
the Company, $2.50 par value, and such other securities of
the Company as the Committee may from time to time
determine.
(aa) "Stock Appreciation Right" shall mean any right
granted to a Participant pursuant to Section 7 hereof to
receive, upon exercise by the Participant, the excess of (i)
the Fair Market Value of one Share on the date of exercise
or, if the Committee shall so determine in the case of any
such right other than one related to any Incentive Stock
Option, at any time during a specified period before the
date of exercise over (ii) the grant price of the right as
specified by the Committee, in its sole discretion, on the
date of grant, which shall not be less than the Fair Market
Value of one Share on such date. Any payment by the Company
in respect of such right may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in
its sole discretion, shall determine.
(bb) "Stockholder Meeting" shall mean the annual
meeting of stockholders of the Company in each year.
Section 3. Administration. The Plan shall be
administered by the Committee. The Committee shall have
full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan
as may from time to time be adopted by the Board, to: (i)
select the Employees of the Company and its Affiliates to
whom Awards may from time to time be granted hereunder; (ii)
determine the type or types of Award to be granted to each
Participant hereunder; (iii) determine the number of Shares
to be covered by each Award granted hereunder; provided,
however, that Shares subject to Options and Stock
Appreciation Rights granted to any individual employee
during any calendar year shall not exceed a total of 500,000
Shares; (iv) determine the terms and conditions, not
<PAGE>
inconsistent with the provisions of the Plan, of any Award
granted hereunder; (v) determine whether, to what extent and
under what circumstances Awards may be settled in cash,
Shares or other property or canceled or suspended; (vi)
determine whether, to what extent and under what
circumstances cash, Shares and other property and other
amounts payable with respect to an Award under this Plan
shall be deferred either automatically or at the election of
the Participant; (vii) interpret and administer the Plan and
any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other
determination and take any other action that the Committee
deems necessary or desirable for administration of the Plan.
Decisions of the Committee shall be final, conclusive and
binding upon all persons, including the Company, any
Participant, any stockholder, and any employee of the
Company or of any Affiliate. Notwithstanding the above, the
Committee shall not have any discretion with respect to the
Options granted to Outside Directors pursuant to Section 11
hereof. A majority of the members of the Committee may
determine its actions and fix the time and place of its
meetings.
Section 4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in Section 4(b),
the total number of Shares available for grant under the
Plan in each calendar year shall be three-fifths of one
percent (0.6%) of the total outstanding Shares as of the
first day of such year for which the Plan is in effect;
provided that such number shall be increased in any year by
the number of Shares available for grant hereunder in
previous years but not covered by Awards granted hereunder
in such years; and provided further, that no more than four
million (4,000,000) (f1) Shares shall be cumulatively available
for the grant of Incentive Stock Options under the Plan. In
addition, any Shares issued by the Company through the
assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for
grants under the Plan. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued
shares or treasury shares. If any Shares subject to any
(f1) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
<PAGE>
Award granted hereunder are forfeited or such Award
otherwise terminates without the issuance of such Shares or
of other consideration in lieu of such Shares, the Shares
subject to such Award, to the extent of any such forfeiture
or termination, shall again be available for grant under the
Plan.
(b) In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, or other
change in corporate structure affecting the Shares, such
adjustment shall be made in the aggregate number and class
of Shares which may be delivered under the Plan, in the
number, class and option price of Shares subject to
outstanding Options granted under the Plan, and in the value
of, or number or class of Shares subject to, Awards granted
under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number
of Shares subject to any Award shall always be a whole
number, and provided further, that the number and price of
shares subject to outstanding Options granted to Outside
Directors pursuant to Section 11 hereof and the number of
shares subject to future Options to be granted pursuant to
Section 11 shall be subject to adjustment only as set forth
in Section 11.
Section 5. Eligibility. Any Employee (excluding any
member of the Committee) shall be eligible to be selected as
a Participant.
Section 6. Stock Options. Options may be granted
hereunder to Participants either alone or in addition to
other Awards granted under the Plan. Any Option granted to
a Participant under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to
time approve. Any such Option shall be subject to the
following terms and conditions and to such additional terms
and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price per Share
purchasable under an Option shall be determined by the
Committee in its sole discretion; provided that such
purchase price shall not be less than the Fair Market Value
of the Share on the date of the grant of the Option.
(b) Option Period. The term of each Option shall be
fixed by the Committee in its sole discretion; provided that
<PAGE>
no Incentive Stock Option shall be exercisable after the
expiration of ten years from the date the Option is granted.
(c) Exercisability. Options shall be exercisable at
such time or times as determined by the Committee at or
subsequent to grant. Unless otherwise determined by the
Committee at or subsequent to grant, no Incentive Stock
Option shall be exercisable during the year ending on the
day before the first anniversary date of the granting of the
Incentive Stock Option.
(d) Method of Exercise. Subject to the other
provisions of the Plan and any applicable Award Agreement,
any Option may be exercised by the Participant in whole or
in part at such time or times, and the Participant may make
payment of the option price in such form or forms,
including, without limitation, payment by delivery of cash,
Shares or other consideration (including, where permitted by
law and the Committee, Awards) having a Fair Market Value on
the exercise date equal to the total option price, or by any
combination of cash, Shares and other consideration as the
Committee may specify in the applicable Award Agreement.
(e) Incentive Stock Options. In accordance with rules
and procedures established by the Committee, the aggregate
Fair Market Value (determined as of the time of grant) of
the Shares with respect to which Incentive Stock Options
held by any Participant which are exercisable for the first
time by such Participant during any calendar year under the
Plan (and under any other benefit plans of the Company or of
any parent or subsidiary corporation of the Company) shall
not exceed $100,000 or, if different, the maximum limitation
in effect at the time of grant under Section 422A of the
Code, or any successor provision, and any regulations
promulgated thereunder. The terms of any Incentive Stock
Option granted hereunder shall comply in all respects with
the provisions of Section 422A of the Code, or any successor
provision, and any regulations promulgated thereunder.
(f) Form of Settlement. In its sole discretion, the
Committee may provide, at the time of grant, that the shares
to be issued upon an Option's exercise shall be in the form
of Restricted Stock or other similar securities, or may
reserve the right so to provide after the time of grant.
Section 7. Stock Appreciation Rights. Stock
Appreciation Rights may be granted hereunder to Participants
either alone or in addition to other Awards granted under
<PAGE>
the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock
Appreciation Rights need not be the same with respect to
each recipient. Any Stock Appreciation Right related to a
Nonstatutory Stock Option may be granted at the same time
such Option is granted or at any time thereafter before
exercise or expiration of such Option. Any Stock
Appreciation Right related to an Incentive Stock Option must
be granted at the same time such Option is granted. In the
case of any Stock Appreciation Right related to any Option,
the Stock Appreciation Right or applicable portion thereof
shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a
Stock Appreciation Right granted with respect to less than
the full number of Shares covered by a related Option shall
not be reduced until the exercise or termination of the
related Option exceeds the number of shares not covered by
the Stock Appreciation Right. Any Option related to any
Stock Appreciation Right shall no longer be exercisable to
the extent the related Stock Appreciation Right has been
exercised. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right
as it shall deem appropriate.
Section 8. Restricted Stock.
(a) Issuance. Restricted Stock Awards may be issued
hereunder to Participants, for no cash consideration or for
such minimum consideration as may be required by applicable
law, either alone or in addition to other Awards granted
under the Plan. The provisions of Restricted Stock Awards
need not be the same with respect to each recipient.
(b) Registration. Any Restricted Stock issued
hereunder may be evidenced in such manner as the Committee
in its sole discretion shall deem appropriate, including,
without limitation, book-entry registration or issuance of a
stock certificate or certificates. In the event any stock
certificate is issued in respect of shares of Restricted
Stock awarded under the Plan, such certificate shall be
registered in the name of the Participant, and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award.
(c) Forfeiture. Except as otherwise determined by the
Committee at the time of grant, upon termination of
employment for any reason during the restriction period, all
shares of Restricted Stock still subject to restriction
<PAGE>
shall be forfeited by the Participant and reacquired by the
Company; provided that in the event of a Participant's
retirement, permanent disability, other termination of
employment or death, or in cases of special circumstances,
the Committee may, in its sole discretion, when it finds
that a waiver would be in the best interests of the Company,
waive in whole or in part any or all remaining restrictions
with respect to such Participant's shares of Restricted
Stock. Unrestricted Shares, evidenced in such manner as the
Committee shall deem appropriate, shall be issued to the
grantee promptly after the period of forfeiture, as
determined or modified by the Committee.
Section 9. Performance Awards. Performance Awards may
be issued hereunder to Participants, for no cash
consideration or for such minimum consideration as may be
required by applicable law, either alone or in addition to
other Awards granted under the Plan. The performance
criteria to be achieved during any Performance Period and
the length of the Performance Period shall be determined by
the Committee upon the grant of each Performance Award.
Except as provided in Section 12, Performance Awards will be
paid only after the end of the relevant Performance Period.
Performance Awards may be paid in cash, Shares, other
property or any combination thereof, in the sole discretion
of the Committee at the time of payment. The performance
levels to be achieved for each Performance Period and the
amount of the Award to be distributed shall be conclusively
determined by the Committee. Performance Awards may be paid
in a lump sum or in installments following the close of the
Performance Period or, in accordance with procedures
established by the Committee, on a deferred basis.
Section 10. Other Stock Unit Awards.
(a) Stock and Administration. Other Awards of Shares
and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares or other
property ("Other Stock Unit Awards") may be granted
hereunder to Participants, either alone or in addition to
other Awards granted under the Plan. Other Stock Unit
Awards may be paid in Shares, cash or any other form of
property as the Committee shall determine. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees of the Company
and its Affiliates to whom and the time or times at which
such Awards shall be made, the number of Shares to be
granted pursuant to such Awards, and all other conditions of
<PAGE>
the Awards. The provisions of Other Stock Unit Awards need
not be the same with respect to each recipient.
(b) Terms and Conditions. Subject to the provisions
of this Plan and any applicable Award Agreement, Shares
subject to Awards made under this Section 10 may not be
sold, assigned, transferred, pledged or otherwise encumbered
prior to the date on which the Shares are issued, or, if
later, the date on which any applicable restriction,
performance or deferral period lapses. Shares granted under
this Section 10 may be issued for no cash consideration or
for such minimum consideration as may be required by
applicable law; Shares purchased pursuant to a purchase
right awarded under this Section 10 shall be purchased for
such consideration as the Committee shall in its sole
discretion determine, which shall not be less than the Fair
Market Value of such Shares as of the date such purchase
right is awarded.
<PAGE>
Section 11. Outside Directors' Options.
(a) Grant of Options. On the date of the 1989
Stockholders Meeting, each Outside Director shall
automatically be granted an Option to purchase 5,000 (f2) shares
of the common stock of the Company, $2.50 par value; on the
date of the 1990 Stockholders Meeting, each Outside Director
who became an Outside Director after the 1989 Stockholders
Meeting shall automatically be granted an Option to purchase
8,000 (f3) shares of the common stock of the Company; on the
date of the 1991 Stockholders Meeting, each Outside Director
who became an Outside Director after the 1990 Stockholders
Meeting shall automatically be granted an Option to purchase
6,000 (f4) shares of the common stock of the Company; on the
date of the 1992 Stockholders Meeting, each Outside Director
who became an Outside Director after the 1991 Stockholders
Meeting shall automatically be granted an Option to purchase
4,000 (f5) shares of the common stock of the Company; on the
date of the 1993 Stockholders Meeting, each Outside Director
who became an Outside Director after the 1992 Stockholders
Meeting shall automatically be granted an Option to purchase
2,000 (f6) shares of the common stock of the Company; and on the
date of each Stockholders Meeting after the 1993
Stockholders Meeting, each Outside Director shall
automatically be granted an Option to purchase 2,000 (f7) shares
of the common stock of the Company. All such options shall
be Nonstatutory Stock Options. The price at which each
share of common stock covered by such Options may be
purchased shall be one hundred percent (100%) of the fair
market value of the stock on the date the Option is granted.
Fair market value for purposes of this Section 11 shall be
deemed to be the average of the high and low prices of the
common stock for composite transactions as published by
major newspapers for the date the Option is granted or, if
no sale of the common stock shall have been made on that
(f2) The number of shares under the options was increased to
10,000 due to the December, 1989 two-for-one stock split.
(f3) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
(f4) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
(f5) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
(f6) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
(f7) The initial number of shares authorized was doubled due to
the December, 1989 two-for-one stock split.
<PAGE>
day, the next preceding day on which there was a sale of the
common stock.
(b) Exercise of Options. Except as set forth in this
Section 11, 25% of the total number of the shares subject to
an Option granted to an Outside Director shall become
exercisable on December 31 of the year in which the option
is granted and 25% on December 31 of each of the three
succeeding years. The right to purchase shares with respect
to shares which have become exercisable shall be cumulative
during the term of the Option. Any Option that has been
outstanding for more than one (1) year shall immediately
become exercisable in the event of a Change in Control, as
hereinafter defined. The Option may be exercised by the
Outside Director during the period that the Outside Director
remains a member of the Board and for a period of five (5)
years following retirement, provided that only those Options
exercisable at the date of the Outside Director's retirement
may be exercised during the period following retirement and,
provided further, that in no event shall the Option be
exercisable more than ten (10) years after the date of
grant.
In the event of the death of an Outside Director, the
Option shall be exercisable only within the twelve (12)
months next succeeding the date of death, and then only (i)
by the executor or administrator of the Outside Director's
estate or by the person or persons to whom the Outside
Director's rights under the Option shall pass by the Outside
Director's will or the laws of descent and distribution, and
(ii) if and to the extent that the Outside Director was
entitled to exercise the Option at the date of the Outside
Director's death, provided that in no event shall the Option
be exercisable more than ten (10) years after the date of
grant.
(c) Payment. An Option granted to an Outside Director
shall be exercisable only upon payment to the Company of the
full purchase price of the shares with respect to which the
Option is being exercised. Payment for the shares shall be
in United States dollars, payable in cash or by check.
(d) Adjustment of Options. In case there shall be a
merger, reorganization, consolidation, recapitalization,
stock dividend or other change in corporate structure such
that the shares of common stock of the Company are changed
into or become exchangeable for a larger or smaller number
of shares, thereafter the number of shares subject to
<PAGE>
outstanding Options and the number of shares subject to
Options to be granted to Outside Directors pursuant to the
provisions of this Section 11 shall be increased or
decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of common stock
of the Company by reason of such change in corporate
structure, provided that the number of shares shall always
be a whole number, and the purchase price per share of any
outstanding Options shall, in the case of an increase in the
number of shares, be proportionately reduced, and in the
case of a decrease in the number of shares, shall be
proportionately increased.
Section 12. Change in Control.
(a) In order to maintain the Participants' rights in
the event of any Change in Control of the Company, as
hereinafter defined, the Committee, as constituted before
such Change in Control, may, in its sole discretion, as to
any Award (except Options granted pursuant to Section 11),
either at the time an Award is made hereunder or any time
thereafter, take any one or more of the following actions:
(i) provide for the acceleration of any time periods
relating to the exercise or realization of any such Award so
that such Award may be exercised or realized in full on or
before a date fixed by the Committee; (ii) provide for the
purchase of any such Award, upon the Participant's request,
for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization
of the Participant's rights had such Award been currently
exercisable or payable; (iii) make such adjustment to any
such Award then outstanding as the Committee deems
appropriate to reflect such Change in Control; or (iv) cause
any such Award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving
corporation after such Change in Control. The Committee
may, in its discretion, include such further provisions and
limitations in any agreement documenting such Awards as it
may deem equitable and in the best interests of the Company.
(b) A "Change in Control" shall be deemed to have
occurred if (i) any Person other than a trustee or other
fiduciary holding securities under an employee benefit plan
of the Company, and other than the Company or a corporation
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
<PAGE>
Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding
securities; or (ii) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board and any new Director (other than a
Director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in (i) above) whose election by the Board or nomination for
election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the Directors then
still in office who either were Directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute a majority thereof.
Section 13. Amendments and Termination. The Board may
amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would
impair the rights of an optionee or Participant under an
Award theretofore granted, without the optionee's or
Participant's consent, or that without the approval of the
Stockholders would:
(a) except as is provided in Section 4(b) of the Plan,
increase the total number of shares reserved for the
purposes of the Plan;
(b) change the employees or class of employees
eligible to participate in the Plan; or
(c) change in any way the Options provided for in
Section 11 of the Plan.
The Committee may amend the terms of any Award
theretofore granted (except Options granted pursuant to
Section 11 hereof), prospectively or retroactively, but no
such amendment shall impair the rights of any Participant
without his consent. The Committee may also substitute new
Awards for Awards previously granted to Participants,
including without limitation previously granted Options
having higher option prices.
Section 14. General Provisions.
(a) No Award shall be assignable or transferable by a
Participant or an Outside Director otherwise than by will or
by the laws of descent and distribution, except that
<PAGE>
Restricted Stock may be used in payment of the exercise
price of a stock option issued by the Company and may be
otherwise transferred in a manner that protects the
interests of the Company as the Committee may determine;
provided that, if so determined by the Committee, a
Participant may, in the manner established by the Committee,
designate a beneficiary to exercise the rights of the
Participant with respect to any Award upon the death of the
Participant. Each Award shall be exercisable, during the
lifetime of the Participant or the Outside Director, only by
the Participant or the Outside Director or, if permissible
under applicable law, by the guardian or legal
representative of the Participant or Outside Director.
(b) The term of each Award shall be for such period of
months or years from the date of its grant as may be
determined by the Committee; provided that in no event shall
the term of any Incentive Stock Option or any Stock
Appreciation Right related to any Incentive Stock Option
exceed a period of ten (10) years from the date of its
grant.
(c) No Employee or Participant shall have any claim to
be granted any Award under the Plan and there is no
obligation for uniformity of treatment of Employees or
Participants under the Plan.
(d) The prospective recipient of any Award under the
Plan shall not, with respect to such Award, be deemed to
have become a Participant, or to have any rights with
respect to such Award, until and unless such recipient shall
have executed an agreement or other instrument evidencing
the Award and delivered a fully executed copy thereof to the
Company, and otherwise complied with the then applicable
terms and conditions.
(e) The Committee shall be authorized to make
adjustments in performance award criteria or in the terms
and conditions of other Awards in recognition of unusual or
nonrecurring events affecting the Company or its financial
statements or changes in applicable laws, regulations or
accounting principles. The Committee may correct any
defect, supply any omission or reconcile any inconsistency
in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry it into effect. In the event
the Company shall assume outstanding employee benefit awards
or the right or obligation to make future such awards in
connection with the acquisition of another corporation or
<PAGE>
business entity, the Committee may, in its discretion, make
such adjustments in the terms of Awards under the Plan as it
shall deem appropriate. Notwithstanding the above, the
Committee shall not have the right to make any adjustments
in the terms or conditions of Options granted pursuant to
Section 11.
(f) The Committee shall have full power and authority
to determine whether, to what extent and under what
circumstances any Award (other than an Option granted
pursuant to Section 11) shall be canceled or suspended. In
particular, but without limitation, all outstanding Awards
to any Participant shall be canceled if the Participant,
without the consent of the Committee, while employed by the
Company or after termination of such employment, becomes
associated with, employed by, renders services to, or owns
any interest in (other than any nonsubstantial interest, as
determined by the Committee), any business that is in
competition with the Company or with any business in which
the Company has a substantial interest as determined by the
Committee or any one or more Senior Officers or committee of
Senior Officers to whom the authority to make such
determination is delegated by the Committee.
(g) All certificates for Shares delivered under the
Plan pursuant to any Award shall be subject to such stock-
transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any
stock exchange upon which the Shares are then listed, and
any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.
(h) Subject to the provisions of this Plan and any
Award Agreement, the recipient of an Award (including,
without limitation, any deferred Award, but excluding
Options granted pursuant to Section 11) may, if so
determined by the Committee, be entitled to receive,
currently or on a deferred basis, interest or dividends, or
interest or dividend equivalents, with respect to the number
of shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have
been reinvested in additional Shares or otherwise
reinvested.
<PAGE>
(i) Except as otherwise required in any applicable
Award Agreement or by the terms of the Plan, recipients of
Awards under the Plan shall not be required to make any
payment or provide consideration other than the rendering of
services.
(j) The Committee may delegate to one or more Senior
Officers or a committee of Senior Officers the right to
grant Awards to Employees who are not officers or directors
of the Company and to cancel or suspend Awards to Employees
who are not officers or directors of the Company.
(k) The Company shall be authorized to withhold from
any Award granted or payment due under the Plan the amount
of withholding taxes due with respect to an Award or payment
hereunder and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for
the payment of such taxes. The Company shall also be
authorized to accept the delivery of shares by a Participant
in payment for the withholding of taxes up to the
Participant's marginal tax rates.
(l) Nothing contained in this Plan shall prevent the
Board of Directors from adopting other or additional
compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific
cases.
(m) The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of
Kansas and applicable Federal law.
(n) If any provision of this Plan is or becomes or is
deemed invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed
amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be
stricken and the remainder of the Plan shall remain in full
force and effect.
Section 15. Effective Date of Plan. The Plan shall be
effective as of April 18, 1989.
<PAGE>
Section 16. Term of Plan. No Award shall be granted
pursuant to the Plan after 10 years from the date of
stockholder approval, but any Award theretofore granted may
extend beyond that date.
<PAGE>
Exhibit 10(i)
SPRINT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SECTION 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment. The Company hereby establishes the Plan
for certain eligible Employees, effective as of January 1, 1994.
1.2 Purpose. The Plan is established to supplement the
benefits of any Participant whose retirement income under a
Qualified Pension Plan is limited in accordance with Section 415
or 401(a)(17) of the Code or whose benefit under such a plan is
reduced by his or her Deferred Compensation Plan Deferrals. The
Plan is intended to restore such a Participant's overall
retirement income to the level which would have been payable
under the Qualified Pension Plan absent either such limitation
under the Code or absent such deferrals. The Plan is further
intended to facilitate the attraction and retention of senior
level executives who have significant experience with a former
employer prior to becoming employed by an Employer.
It is intended that the Plan qualify as an unfunded plan
which is maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees and, to the extent applicable, an unfunded
excess benefit plan, so as to qualify for the various applicable
exceptions and exemptions to the requirements otherwise imposed
by ERISA on employee pension benefit plans.
<PAGE>
SECTION 2
DEFINITIONS AND CONSTRUCTION
2.1 Definitions. The following terms, when capitalized as
shown below, shall have the following respective meanings, unless
the context clearly indicates otherwise.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time. References to any provision of the Code
herein shall include any successor provisions thereto.
"Committee" means the committee established pursuant to
Section 8.
"Company" means Sprint Corporation, a Kansas corporation
("Sprint") and its successor or successors.
"Deferred Compensation Plan Deferrals" means the amount of
compensation deferred by a Participant in the Sprint Executive
Deferred Compensation Plan to the extent such compensation would
have been compensation for purposes of determining a
Participant's benefit under the Qualified Pension Plan had the
amount not been deferred; provided, however, that a Deferred
Compensation Plan Deferral shall not include any amount deferred
for which the Participant receives a pension make-up benefit as
such term is defined in the Sprint Executive Deferred
Compensation Plan.
"Employee" means any person employed by an Employer who
receives regular stated compensation other than a pension,
retainer or fee under contract.
"Employer" means the Company or any subsidiary of the
Company which participates in a Qualified Pension Plan.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time. References to any provision
of ERISA herein shall include any successor provisions thereto.
<PAGE>
"Gross Misconduct" occurs if the Committee determines that
the Participant has engaged in a willful, deliberate, or gross
act of commission or omission which is injurious to the finances
or reputation of the Company or any Subsidiary or other
affiliate.
"Involuntary Termination without Cause" means a
Participant's termination of employment from the Company and all
Subsidiaries, if involuntary and not for reasons of Gross
Misconduct, including but not limited to, termination due to a
job elimination pursuant to a reduction-in-force.
"Normal Retirement Date" means the first day of the calendar
month coincident with or next following the 65th birthday of the
Participant.
"Participant" means an Employee who has satisfied the
requirements of Section 3.1 for participation in the Plan or a
former Employee entitled to benefits hereunder.
"Plan" means the Sprint Supplemental Executive Retirement
Plan, as set forth herein and as amended from time to time.
"Plan Administrator" means the plan administrator appointed
by the Committee under Section 8.1.
"Qualified Pension Plan" means the Sprint Retirement Pension
Plan.
"Subsidiary" means (a) a member of a controlled group of
corporations of which an Employer is a member, (b) an
unincorporated trade or business which is under common control
with an Employer as determined in accordance with Section 414(c)
of the Code or (c) a member of an affiliated service group of
which an Employer is a member as determined in accordance with
Section 414(m) of the Code. For purposes hereof, a "controlled
group of corporations" means a controlled group of corporations
as defined in Section 1563(a) of the Code, determined without
regard to Sections 1563(a)(4) and 1563(e)(3)(C).
<PAGE>
2.2 Construction. Unless the context clearly indicates
otherwise, terms not defined in Section 2.1 shall have the
meaning specified in the Qualified Pension Plan under which the
Participant is entitled to a benefit (if defined therein). In
addition, except when otherwise clearly indicated by the context,
the plural shall include the singular and the singular shall
include the plural.
<PAGE>
SECTION 3
PARTICIPATION
3.1 Covered employees. Any Employee who is not a member of
a collective bargaining unit and whose benefits under a Qualified
Pension Plan maintained by the Company are limited in accordance
with section 415 or 401(a)(17) of the Code shall become a
Participant in this Plan as of the date such benefits are first
so limited. Also, any Employee whose Deferred Compensation Plan
Deferrals cause a reduction in his or her benefit under the
Qualified Pension Plan shall be a Participant in this Plan. An
Employee whose employment with the Company and all of its
Subsidiaries terminated before January 1, 1994, however, shall
not be eligible to be a Participant herein.
<PAGE>
SECTION 4
BENEFIT RESTORATION AMOUNTS
4.1 Computation of Benefit. The monthly amount of benefit
restoration payable to a Participant under this Plan, when
expressed in the form of a single life annuity beginning on the
Participant's Normal Retirement Date, shall be equal to the
excess of (a) over (b) where:
(a) equals the Participant's monthly retirement
income benefit under the Qualified Pension Plan, payable in
the form of a single life annuity beginning on such
Participant's Normal Retirement Date, as determined under
the terms and conditions of such plan, except that (i) such
determination shall disregard the restrictions on
retirement income benefits under such plan which are
imposed in accordance with Sections 415 and 401(a)(17) of
the Code and (ii) compensation for purposes of such
determination shall include any Deferred Compensation Plan
Deferrals; and
(b) equals such Participant's actual monthly
retirement income benefit under such Qualified Pension
Plan, payable in the form of a single life annuity
beginning on such Participant's Normal Retirement Date, as
determined under the terms and conditions of such plan,
including the restrictions on retirement income benefits
under such plan which are imposed in accordance with
sections 415 and 401(a)(17) of the Code and excluding any
Deferred Compensation Plan Deferrals from compensation for
purposes of such determination.
4.2 Vesting and Forfeiture for Cause. A Participant shall
be vested in the benefit restoration payable under the Plan to
the same degree that the Participant is vested in his or her
retirement income benefits under the Qualified Pension Plan.
Notwithstanding the foregoing, however, any vested supplemental
retirement income benefits or survivor benefits payable under
this Plan shall be forfeited, and a Participant, together with
any of his or her beneficiaries, shall have no right to such
benefits if: (a) such Participant has engaged in Gross
Misconduct, or (b) the
<PAGE>
Participant, without the consent of the Committee, while
employed by the Company or a Subsidiary or after
termination of such employment, becomes associated with, employed
by, renders services to, or owns any interest in (other than any
nonsubstantial interest, as determined by the Committee), any
business that is in competition with the Company or with any
business in which the Company has a substantial interest as
determined by the Committee. The restriction from competition
after termination of employment described in the preceding
sentence shall not apply to a Participant in the event he or she
has an Involuntary Termination without Cause.
<PAGE>
SECTION 5
MID-CAREER PENSION ENHANCEMENT
5.1 Recommendation of Participants for Mid-Career Pension
Enhancement. Subject to the approval of the Organization and
Compensation Committee of the Board, the Company's Chief
Executive Officer may recommend Participants who are Senior Vice
President and above to receive a mid-career pension enhancement.
Such recommendation shall be delivered, in writing, to the
Committee and shall specify the following: (a) the identity of
the Participant selected, (b) the number of additional years of
service (based on the relevant business experience of the
Participant with another employer prior to his or her employment
with the Company or a Subsidiary) with which such Participant
will be credited for the purpose of calculating benefits in
accordance with the benefit formula under the Qualified Pension
Plan, (c) the service requirements which a Participant must
satisfy to be eligible for such benefits (if different than as
described in Section 5.3) and (d) the conditions under which such
benefits will be forfeited (if different than as described in
Section 5.4). 5.2 Computation of Benefit. The monthly amount
of any mid-career pension enhancement benefit payable to a
Participant under this Plan, when expressed in the form of a
single life annuity beginning on the Participant's Normal
Retirement Date, shall be equal to the excess of (a) over (b)
where:
(a) equals the Participant's monthly retirement
income benefit under Section 4.1 of this Plan and the
Qualified Pension Plan, payable in the form of a single
life annuity beginning on such Participant's Normal
Retirement Date, as determined under the terms and
conditions of such plans, except that such determination
under this Section 5.2(a) shall be made assuming that the
Participant had additional years of credited service as
specified in the recommendation under Section 5.1; and
(b) equals the sum of (i) such Participant's actual
monthly retirement income benefit under Section 4.1 of this
Plan and the Qualified Pension Plan,
<PAGE>
payable in the form of a single life annuity beginning on
such Participant's Normal Retirement Date, as determined
under the terms and conditions of such plans, but without
assuming the additional years of credited service as specified
in the recommendation under Section 5.1 and (ii) the actuarial
equivalent amount, expressed as a single life annuity
beginning on such Participant's Normal Retirement Date,
received by such Participant from any pension plans of his
or her previous employers, if any, whether qualified under
Section 401 of the Code or not.
5.3 Service Requirements. Unless provided otherwise in the
recommendation, the number of additional years of service
specified in the recommendation shall be credited to a
Participant at the rate of one additional year of service for
each completed year of service with the Company or one of its
Subsidiaries.
5.4 Forfeiture. Unless provided otherwise in the
recommendation, mid-career pension enhancement benefits shall be
forfeited, and a Participant, together with any of his or her
beneficiaries, shall have no right to such benefits if:
(a) the Participant has engaged in Gross Misconduct;
(b) the Participant, without the consent of the
Committee, while employed by the Company or a Subsidiary or
after termination of such employment, becomes associated
with, employed by, renders services to, or owns any interest
in (other than any nonsubstantial interest, as determined by
the Committee), any business that is in competition with the
Company or with any business in which the Company has a
substantial interest as determined by the Committee (such
restriction from competition after termination of employment
shall not apply to a Participant in the event he or she has
an Involuntary Termination without Cause); or
(c) the Participant terminates employment with the
Company and all of its Subsidiaries prior to age 60, unless
the Participant terminates such employment for reasons of
(i) death, (ii) total and permanent disability, or (iii)
Involuntary Termination without Cause.
<PAGE>
SECTION 6
BENEFIT COMMENCEMENT DATE AND
FORM OF PAYMENT
6.1 Benefit Commencement Date. Subject to Section 9.6 and
the following sentence, benefits payable to a Participant under
the Plan shall commence as of the same annuity starting date as
the benefits under the Qualified Pension Plan to which such
benefits relate. In addition, mid-career pension enhancement
benefits payable under the Plan will not commence until the
Participant has cooperated, to the satisfaction of the Committee,
in disclosing the benefits he or she will receive from any
pension plans of a previous employer as described in Section
5.2(b)(ii).
6.2 Form of Payment. Subject to Section 9.6, benefits
payable to a Participant under the Plan shall be distributed as
follows: (a) if the Participant does not make a timely election
(as described under (b) below), then (i) if the Participant is
not married as of his or her annuity starting date, in the form
of an annuity for the Participant's life, or (ii) if the
Participant is married as of his or her annuity starting date, in
the form of an annuity for the Participant's life with a survivor
annuity for the life of the Participant's spouse where the
survivor annuity is 50% of the amount of the annuity payable
during the joint lives of the Participant and the Participant's
spouse, or (b) in any form provided under the Qualified Pension
Plan which the Participant elects. Such election must be made by
the Participant in writing and will only be effective if it is
received by the Committee no later than one year prior to the
Participant's annuity starting date for benefits under the
Qualified Pension Plan.
In the event benefits payable under the Plan commence as of
an annuity starting date other than the Participant's Normal
Retirement Date or are distributed in a form other than a single
life annuity, the amount of such benefits payable hereunder,
computed as described in Sections 4.1 and 5.2, shall be adjusted
actuarially in the
<PAGE>
same manner that actuarial adjustments are made to the benefits
of such Participant for such contingencies under the Qualified
Pension Plan.
<PAGE>
SECTION 7
DEATH BENEFITS
7.1 Death On or After Annuity Starting Date. If a
Participant dies on or after his or her annuity starting date,
the survivor benefits payable under the Plan, if any, shall be
payable in accordance with the form of distribution in effect for
such Participant under the Plan as of the date of his or her
death.
7.2 Death Prior to Annuity Starting Date. If a Participant
dies before his or her annuity starting date and such Participant
is survived by a spouse to whom he or she was married for at
least one year immediately prior to the date of such
Participant's death, such surviving spouse shall be entitled to a
survivor benefit hereunder. Subject to Section 9.6, such
survivor benefit shall commence as of the same date that the
survivor benefit to such spouse under the Qualified Pension Plan
begins and shall be payable in the form of a single life annuity.
The monthly amount of such survivor benefit shall be equal to the
excess of (a) over (b) where:
(a) equals the monthly amount of the survivor benefit
payable to the Participant's surviving spouse under the
Qualified Pension Plan, as determined under the terms and
conditions of such plan, except that (i) such determination,
computed as described in Section 4.1, shall disregard the
restrictions under such plan which are imposed in accordance
with Sections 415 and 401(a)(17) of the Code and shall
include as compensation any Deferred Compensation Plan
Deferrals, and (ii) such determination shall include any
additional years of credited service specified in Section
5.1 for such Participant computed as described in Section
5.2; and
(b) equals the sum of (i) the monthly amount of the
survivor benefit which is actually paid to such surviving
spouse from such Qualified Pension Plan, as determined under
the terms and conditions of such plan, including the
restrictions under such plan which are imposed in accordance
with sections 415 and 401(a)(17) of the Code and excluding
any Deferred Compensation Plan Deferrals and any additional
years of credited service specified in Section 5.1 for
<PAGE>
such Participant and (ii) for Participants entitled to a mid-
career pension enhancement under Section 5, the monthly
amount of the survivor benefit which is actually paid to
such surviving spouse from any pension plan of the
Participant's previous employers, if any, whether qualified
under Section 401 of the Code or not.
In the event a surviving spouse eligible to receive a
survivor benefit under this Section 7.2 dies before his or her
actual benefit commences as set forth above, no benefit shall be
payable hereunder.
<PAGE>
SECTION 8
ADMINISTRATION OF THE PLAN
8.1 The Committee and the Plan Administrator. The Plan
will be administered by a Committee consisting of not less than
three persons designated from time to time by the Board. The
Committee shall appoint a Plan Administrator to assist the
Committee in the Plan's administration. The Plan Administrator
shall be responsible for the day-to-day administration of the
Plan and shall have other powers and responsibilities delegated
to him or her by the Committee. The Committee may authorize the
Plan Administrator to designate agents to carry out certain of
his or her responsibilities.
8.2 Power of the Committee. The Committee shall have full
power and authority:
(a) to, in its sole discretion, make decisions and
take any action with respect to questions arising in
connection with the Plan, including but not limited to, the
construction and interpretation of the Plan and to make
equitable adjustments for any mistakes or errors made in the
administration of the Plan;
(b) to, in its sole discretion, determine all
questions arising in the administration of the Plan,
including the power to determine the rights of Participants
and their beneficiaries and the amount of their respective
interests;
(c) to adopt such rules and regulations as it may deem
reasonably necessary for the proper and efficient
administration of the Plan consistent with its purposes;
(d) to enforce the Plan in accordance with its terms
and the rules and regulations adopted by the Committee; and
(e) to delegate its powers to any officer of the
Company or other specified persons or committees.
(f) to do all other acts which in its judgment are
necessary or desirable for the proper and advantageous
administration of the Plan.
<PAGE>
8.3 Coordination of Benefit payments. The Committee shall
take such action as it deems necessary or appropriate to
establish procedures to coordinate the payment of benefits under
the Plan with the payment of the corresponding benefits under the
Qualified Pension Plan to which the benefits payable hereunder
relate.
8.4 Committee Actions. The Committee shall act by the vote
or concurrence of the majority of its members and shall maintain
a written record of its decisions and actions. Resolutions may
be adopted or other action may be taken without a meeting upon
the unanimous written consent of the Committee. No member of the
Committee shall have any personal liability to anyone, either as
such member or as an individual, for anything done or omitted to
be done in good faith in carrying out the provisions of the Plan.
8.5 Indemnification. The Employers will indemnify and hold
harmless the directors and officers of the Employers, and of all
Subsidiaries, the members of the Committee and all other
Employees of the Employers, or of any Subsidiary, from any
liability, loss, cost or damage that such individuals may incur
in the exercise and performance of their duties and powers
hereunder, except as may result from their own gross negligence
or willful default. The Employers also will assume the defense
of any and all actions, suits or proceedings brought or advanced
by any person (other than an Employer) against any such
individual arising under the Plan.
8.6 Claim for Benefits. Any claim for benefits under this
Plan shall be made in writing to the Plan Administrator. If a claim
for benefits is wholly or partially denied, the Plan Administrator shall
so notify the Participant or beneficiary within 90 days after receipt
of the claim. The notice of denial shall be written in a manner
calculated to be
<PAGE>
understood by the Participant or beneficiary and
shall contain (a) the specific reason or reasons for denial of
the claim, (b) specific references to the pertinent Plan
provisions upon which the denial is based, (c) a description of
any additional material or information necessary to perfect the
claim together with an explanation of why such material or
information is necessary and (d) an explanation of the claims
review procedure. The decision or action of the Plan
Administrator shall be final, conclusive and binding on all
persons having any interest in the Plan, unless a written appeal
is filed as provided in Section 8.7 hereof.
8.7 Review of Claim. Within 60 days after the receipt by
the Participant or beneficiary of notice of denial of a claim,
the Participant or beneficiary may (a) file a request with the
Committee that it conduct a full and fair review of the denial of
the claim, (b) review pertinent documents and (c) submit
questions and comments to the Committee in writing.
8.8 Decision After Review. Within 60 days after the
receipt of a request for review under Section 8.7, the Committee,
or its delegate, shall deliver to the Participant or beneficiary
a written decision with respect to the claim, except that if
there are special circumstances (such as the need to hold a
hearing) which require more time for processing, the 60-day
period shall be extended to 120 days upon notice to the
Participant or beneficiary to that effect. The decision shall be
written in a manner calculated to be understood by the
Participant or beneficiary and shall (a) include the specific
reason or reasons for the decision and (b) contain a specific
reference to the pertinent Plan provisions upon which the
decision is based.
<PAGE>
SECTION 9
MISCELLANEOUS PROVISIONS
9.1 Expenses. Expenses of administering the Plan,
including the fees and expenses of any trustee, will be borne by
the Employers.
9.2 Employment Rights. Establishment of this Plan shall
not be construed to give any Participant or beneficiary the right
to be retained by the Employer or to any benefits not
specifically provided by the Plan.
9.3 Severability. In the event that any provision of the
Plan shall be held illegal or invalid for any reason, any
illegality or invalidity shall not affect the remaining parts of
the Plan. The Plan shall be construed and enforced, however, as
if the illegal or invalid provision had never been inserted, and
the Company shall have the privilege to correct and remedy such
questions of illegality or invalidity by amendment as provided in
the Plan.
9.4 Trust. The Employers shall make all distributions
under this Plan. Alternatively, the Company may, on behalf of
itself and the other Employers, transfer assets to a trust
established with an independent trustee to make distributions
under the Plan. The assets so held in such trust shall remain
the general assets of the Company which at all times shall be
subject to the rights and claims of the Company's general
creditors in accordance with the terms of the trust. The rights
of Participants and their beneficiaries under this Plan and any
such trust shall be exclusively unsecured contractual rights. No
Participant or beneficiary shall have any right, title or
interest whatsoever in the trust.
<PAGE>
9.5 Applicable Law.
(a) This Plan, to the extent considered an unfunded
deferred compensation plan for a select group of management or
highly compensated employees which is not an excess benefit plan,
is fully exempt from Titles II, III and IV of ERISA. However,
this Plan, to the extent so considered, shall be governed and
construed in accordance with the applicable sections of Title I
of ERISA.
(b) To the extent not governed by ERISA, this Plan shall be
governed by and construed according to the laws of the State of
Kansas.
9.6 Lump Sum Cash Outs. Notwithstanding any other
provision of the Plan to the contrary, the Committee may, in its
sole discretion, direct that the actuarial equivalent of an
individual's benefits payable hereunder be paid to such
individual in a lump sum payment on such date as the Committee
may determine. Such actuarial equivalent amount shall be
determined in the same manner that the amount of an involuntary
cash out distribution is computed under the Qualified Pension
Plan to which the benefits payable hereunder relate. In no
event, however, shall lump sum payments under this Section 9.6 be
limited by the $3,500 ceiling (adjusted for inflation) on
involuntary cash out distributions set forth in such Qualified
Pension Plan. The payment of an immediate lump sum amount under
this Section 9.6 shall be a complete discharge of any obligations
to such individual and his or her beneficiaries hereunder.
9.7 Incapacity of Benefit recipient. In the event any
benefits (including survivor benefits) hereunder are payable to
an individual who is physically or mentally incompetent to
receive such payment, such benefits shall be paid on such
individual's behalf to the same party to whom the corresponding
benefits from the Qualified Pension Plan are paid.
<PAGE>
9.8 Effect on Qualified Retirement Plans. Amounts credited
or paid under this Plan shall not be considered to be
compensation for purposes of the Qualified Pension Plans or any
other qualified retirement plan maintained by an Employer.
9.9 Withholding of Taxes. An Employer, or a person
designated by the Employer, will withhold any required taxes
related to the vesting of accrued benefits or the payment of
supplemental retirement income or survivor benefits hereunder.
In addition, an Employer may withhold such sum as the Employer or
such person may reasonably estimate to be necessary to cover
taxes for which the Employer or such person may be liable and
which may be assessed with regard to such payment of supplemental
retirement income or survivor benefits.
9.10 Amendments. The Board may amend this Plan in its sole
discretion. Any such amendment shall be effective at such date
as the Board may determine, except that no such amendment, other
than an amendment of a minor nature or permitted in accordance
with the terms of the trust, if any, described in Section 9.4,
may apply to any period prior to the announcement of the
amendment. The Committee may also amend the Plan, both
retroactively and prospectively, but only to make minor changes
which are technical or administrative in nature.
9.11 Plan Termination. The Board may at any time terminate
this Plan in whole or in part in which case no further benefits
shall accrue hereunder with respect to any affected Participant.
If an Employer ceases to be a Subsidiary of the Company, the
participation in this Plan of all Participants employed by that
Employer will terminate and no further benefits for such
Participants shall accrue hereunder.
<PAGE>
9.12 Non Alienation. Subject to Section 9.13, no right or
benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and
any attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge the same shall be void. No right or benefit
under the Plan shall in any manner be liable for or subject to
the debts, contracts, liabilities or torts of the person entitled
to such benefits, except such claims as may be made by the
Company or any other Employer.
9.13 Qualified Domestic Relations Orders. Section 9.12
shall not apply to the creation, assignment or recognition of a
right to the benefit under the Plan pursuant to a "domestic
relations order" (as defined in Section 206(d)(3)(B)(ii) of
ERISA) which meets the requirements of a "qualified domestic
relations order" (as defined in Section 206(d)(3)(B)(i) of ERISA)
and which is consistent with the nature of benefits provided
under the Plan.
9.14 Notices. Notices, reports and statements to be given,
made or delivered to a Participant shall be deemed duly given,
made or delivered, when addressed to the Participant, and
delivered by ordinary mail, or by Employer mail, to such
Participant's business address or resident address on the
employee information system of the Employer. All notices
required to be given by a Participant or beneficiary shall be
given on a form provided for the purpose and shall be deemed
received when delivered to the Committee or such Participant's
local human resources department.
<PAGE>
IN WITNESS WHEREOF, Sprint Corporation has caused this
instrument to be executed by a duly authorized officer on this
_____, day of ____________, 1995, effective as of the 1st day of
January, 1994.
SPRINT CORPORATION
By: __________________________
<PAGE>
Exhibit 10(j)
CENTEL DIRECTORS DEFERRED COMPENSATION PLAN
Amended and Restated
as of September 1, 1995
SECTION 1. Plan. Centel Corporation, a Kansas
corporation, hereby establishes this "Centel Directors
Deferred Compensation Plan".
SECTION 2. Definitions. The following words have
the respective meanings stated below unless a different
meaning is plainly required by the context:
(a) "Beneficiary" means any person other than a
Director who is entitled to receive distributions under
this Plan pursuant to Section 5.
(b) "Board" means the Board of Directors of the
Company or of a Subsidiary.
(c) "Committee" means the committee which
administers this Plan as provided in Section 7.
(d) "Common Stock" means shares of common stock
of Sprint.
(e) "Company" means Centel Corporation, a Kansas
corporation, and its successors.
(f) Prior to March 9, 1993, "Director" means an
individual who is (1) serving as a member of a Board or
who has been nominated to serve as a member of a Board
and (2) receives compensation for such service other
than as employee of the Company or a Subsidiary.
Beginning March 9, 1993, "Director" means an individual
<PAGE>
serving as a member of the Board of Directors of Sprint
who was a Director of the Company on March 8, 1993.
(g) "Market Value" of Common Stock on any date
means the closing price of the Common Stock on that day
on the Composite Transactions Tape, as subsequently
reported in The Wall Street Journal, or, if no sale of
the Common Stock shall have been made on that date,
such closing price on the next preceding date on which
there was a sale.
(h) "Plan" means the plan set forth in this
instrument, and known as the "Centel Directors Deferred
Compensation Plan".
(i) "Sprint" means Sprint Corporation, a Kansas
corporation, and its successors.
(j) "Subsidiary" means any corporation fifty
percent or more of the voting stock of which is owned,
directly or indirectly, by the Company.
(k) "Unit" means the equivalent under this Plan
of one share of Common Stock.
(l) "Value" of a Unit on any date means the
Market Value on such date of one share of Common Stock.
SECTION 3. Participation. A Director may elect to
defer the payment of:
(a) annual or quarterly compensation for service
as a Director;
(b) compensation paid for attendance at meetings
of the Board and of committees of the Board; or
<PAGE>
(c) annual or quarterly compensation for service
as a Director plus all additional compensation paid for
attendance at meetings of the Board and of committees
of the Board;
by giving notice: (1) if the Director is a Director on
November 30 of any year, at least thirty days prior to
January 1 of the year for which the election is to be
effective, (2) if the Director is not a Director on November
30 of any year, within 20 days after the date on which the
Director is first elected a Director, or (3) within 20 days
after any amendment of this Plan. Each notice shall continue
in force unless and until revoked or modified by notice at
least thirty days before the January 1 on which such
revocation or modification is to become effective. All
amounts deferred and accrued under this Plan will be
unsecured liabilities of the Company or a Subsidiary and
will not be funded with any specific assets of the Company
or any Subsidiary. Beginning March 9, 1993, no new
elections to defer the payment of compensation under the
Plan may be made.
SECTION 4. Method of Deferment.
(a) A Director who elects to defer compensation
under this Plan may elect to have such compensation
credited to a prime rate account, to a Common Stock
account, or in increments of 25%, to both forms of
account. Amounts accrued in accounts may not be
transferred from one form to the other. A different
<PAGE>
election may be made with respect to compensation
earned in each calendar year.
(b) An amount equal to the compensation which a
Director has elected to have deferred will be credited
by the Company in a deferred compensation account in
the name of the Director on the date such compensation
would otherwise become payable to the director.
(c) Prime rate account. Interest equivalents
will be credited on the balance in a Director's prime
rate account at the end of each calendar quarter. After
installment payments to the Director or a Beneficiary
have commenced under this Plan interest will be paid
quarterly in cash to the Director or Beneficiary, as
the case may be. For the purpose of crediting interest,
(1) interest will be computed at the prime rate of
interest in effect at Harris Trust and Savings Bank,
Chicago, Illinois during such quarter, and (2) the
balance accrued in a Director's deferred compensation
account during any quarter will be the average of the
balances in the Director's account at the beginning of
the quarter and at the end of each month during the
quarter.
(d) Common Stock account. When compensation is
credited to a Common Stock account, the amount
compensation will be divided by the Market Value on the
date such compensation is credited to the account to
determine the number of Units (to the nearest one-
<PAGE>
hundredth) to be credited to such account. On each
record date for determination of shareowners entitled
to receive a dividend on the outstanding shares of
Common Stock, there will be credited to each Common
Stock account that number of additional Units equal to
the number of shares (and fraction of a share to the
nearest one-hundredth) of Common Stock which could have
been purchased at Market Value on that date with the
amount, if paid in cash, or the value, if paid in
property, of the dividend to be paid on a number (to
the nearest one-hundredth) of shares of Common Stock
equal to the number of Units (to the nearest one-
hundredth) in that account on such record date. As of
March 9, 1993, the aggregate number of Units in a
Director's Common Stock Account (the "Aggregate Units")
shall be increased by multiplying the Aggregate Units
by 1.37 in accordance with the terms of the Agreement
and Plan of Merger, dated as of May 27, 1992, pursuant
to which the Company became a wholly-owned subsidiary
of Sprint and which provided that each outstanding
share of common stock of Centel Corporation be
converted into the right to receive 1.37 shares of
Common Stock. Upon termination of service as a
Director (the "Termination"), the Director's Common
Stock account will be converted into a prime rate
account as follows: (1) the Common Stock account will
be valued (the "Account Value") at the closing price on
<PAGE>
the last day of business in the month that the
Termination occurs; (2) an amount equal to the Account
Value will be credited to a prime rate account; and (3)
beginning on the first business day of the next month,
interest equivalents will be credited on the balance in
the prime rate account pursuant to the terms specified
in Section 4(c).
SECTION 5. Distributions.
(a) Except as provided in Section 5(b), the
timing and manner of each distribution to a Director
under the Plan shall be made pursuant to such
Director's Valid Election, as defined in the following
sentence. A "Valid Election" means an election by the
Director which (i) is irrevocable except as provided in
Section 5(h), (ii) is made in writing pursuant to such
rules as the Committee may determine, and (iii)
provides for a distribution pursuant to paragraphs (c)
or (d).
(b) If a Director does not submit a Valid
Election, upon the Director's termination of service as
a Director, the amounts accrued in the Director's
accounts will be distributed to the Director in a lump
sum as soon as practicable after January 31 of the
calendar year following the calendar year in which the
Director's termination of service occurs (Common
<PAGE>
Distribution Date); provided, however, that no payment
of amounts attributable to deferrals credited to a
Director's Common Stock account on or before October
10, 1991 will be made less than six months after the
Director's last acquisition, prior to termination of
service as a Director, of a Sprint equity security (as
defined in Securities and Exchange Commission Rule 16a-
l(d)), which acquisition is not exempt from Section
16(b) of the Securities Exchange Act of 1934.
(c) If the Director submits a Valid Election
prior to the first day of the calendar year in which
such Director's termination from service occurs,
distributions shall be paid under the Plan commencing
on or after the date of the Director's termination of
service as a Director as follows:
(i) in a lump sum either as soon as practicable
after the Director's termination of service
or as soon as practicable after the Common
Distribution Date, as specified in the Valid
Election; or
ii) in equal annual installment payments over a
period from two (2) to twenty (20) years.
For purposes of determining the amount of
<PAGE>
each equal annual installment, the assumed
rate of interest shall be the average of the
Interest Rates for the 20 quarters preceding
the Common Distribution Date.
(d) If the Director submits a Valid Election on
or after the first day of the calendar year in which
such Director's termination from service occurs but
prior to December 31 of the calendar year in which such
Director's termination of service occurs, pursuant to
the terms of such Valid Election distributions shall be
paid under the Plan commencing no earlier than the
Common Distribution Date using one of the following
methods:
(i) in a lump sum as soon as practicable after
the Common Distribution Date; or
(ii) in equal annual installment payments over a
period specified in the Valid Election from
two (2) to twenty (20) years commencing as of
the Common Distribution Date. For purposes
of determining the amount of each equal
annual installment, the assumed rate of
interest shall be the average of the Interest
<PAGE>
Rates for the 20 quarters preceding the
Common Distribution Date.
(e) All distributions of amounts accrued in a
Director's deferred compensation account, whether
accrued in a prime rate account or in a Common Stock
account, will be paid exclusively in cash. If
distribution cannot be made on the day prescribed, it
will be made as soon thereafter as practicable as of
that day. The Value of Units for purposes of
distribution shall be their Value on the date as of
which distribution is deemed made.
(f) Notwithstanding the foregoing, a Director who
has an interest in a prime rate account under this Plan
may elect, by giving notice a least 60 but not more
than 120 days prior to January 1 of the fifth year
following the year in which deferred compensation was
accrued in a Director's prime rate account to have the
amount accrued in such fifth preceding year, together
with interest credited with respect thereto, paid in
cash to the Director on the January 31 following
receipt of the notice.
(g) In the event of a Director's death, any
amounts to which the Director is entitled hereunder
<PAGE>
will be distributed to the Beneficiary entitled
thereto:
(i) if the death occurs prior to January 1,
1994, in such manner as is determined by
the Committee in its sole discretion; and
(ii) if the death occurs on and after January
1, 1994, as provided in a Valid Election
or, (1) if no provision is made in a
Valid Election, or (2) if all of the
designated Beneficiaries predecease the
Director, then in a lump sum payment to
the estate of the deceased Director as
soon as practicable following the death
of the Director.
(h) Notwithstanding any provision to the contrary
hereunder, at any time, the Director may change a Valid
Election by election to accelerate the date(s) of
payment specified in such prior election, subject to
the following circumstances:
(i) the Committee in its sole discretion
consents to the change in Valid
Election, and
<PAGE>
(ii)the amounts which are subject to such
accelerated payment date(s) shall be
reduced by 6%. Subject to the preceding
sentence, the calculation of such
reduction shall be made in the sole
discretion of the Committee.
SECTION 6. Anti-Dilution. In the event of any change
in capitalization which affects the Common Stock, such as a
stock dividend, a stock distribution, a stock split-up or a
subdivision or combination of shares, such adjustments, if
any, as the Board in its discretion deems appropriate to
reflect such change shall be made with respect to the number
of Units in each Common Stock account.
SECTION 7. Beneficiaries.
(a) A Director may, by giving notice during the
Director's lifetime, designate (1) a Beneficiary or
Beneficiaries to whom distribution of the Director's
deferred compensation accounts will be made in the
event of the Director's death prior to the full receipt
of the Director's interests under this Plan, and (2)
the proportions to be distributed to each such
designated Beneficiary if there be more than one. Any
such designation may be revoked or changed by the
Director at any time and from time to time by similar
notice. If a designated Beneficiary dies prior to
distribution of all that designated Beneficiary's
<PAGE>
proportionate share of a Director's interest under this
Plan, the then remaining balance of such share will be
distributed in a lump sum payment to the estate of the
designated Beneficiary.
(b) If the Company, after reasonable inquiry, is
unable within one year to determine whether any
designated Beneficiary did in fact survive the event
that entitled such Beneficiary to receive distribution
under this Plan, it will be conclusively presumed that
such Beneficiary did in fact die prior to such event.
SECTION 8. Committee. This Plan will be administered
by a Committee consisting of at least three (3) members
appointed by the Board of the Company, who are employees of
Sprint or a subsidiary of Sprint and who do not participate
in this Plan.
Except as otherwise expressly provided in this Plan,
the Committee shall have full power and authority, within
the limits provided by this Plan:
(a) to construe this Plan and make equitable
adjustments for any mistakes or errors made in the
administration of this Plan;
(b) to determine all questions arising in the
administration of this Plan, including the power to
determine the rights of Directors participating in this
Plan and their Beneficiaries and the amount of their
respective interests;
<PAGE>
(c) to adopt such rules and regulations as it may
deem reasonably necessary for the proper and efficient
administration of this Plan consistent with its
purposes;
(d) to enforce this Plan in accordance with its
terms and with the rules and regulations adopted by the
Committee; and
(e) to do all other acts which in its judgment
are necessary or desirable for the proper and
advantageous administration of this Plan.
The Committee shall act by the vote or concurrence of a
majority of its members and shall maintain a written record
of its decisions and actions. All decisions and actions of
the Committee pursuant to the provisions of this Plan shall
be final and binding upon all persons affected thereby. No
member of the Committee shall have any personal liability to
anyone, either as such member or as an individual, for
anything done or omitted to be done in good faith in
carrying out the provisions of this Plan.
SECTION 9. Non-Alienation. No right or benefit
under this plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge,
and any attempt to anticipate, alienate, sell, assign,
pledge, encumber or charge the same shall be void. No right
or benefit under this Plan shall in any manner be liable for
or subject to the debts, contracts, liabilities or torts of
<PAGE>
the person entitled to such benefits except such claims as
may be made by the Company or any Subsidiary.
SECTION 10. Notice. Any notice authorized or
required to be given to the Company under this Plan shall be
deemed given upon delivery in writing, signed by the person
giving the notice, to the Secretary of the Company or such
other officer as may be designated by the Board.
SECTION 11. Plan Modifications. The Board of the
Company may, at any time terminate this Plan or may, from
time to time, amend any provision of this Plan in such
manner and to such extent as it may, in its discretion, deem
to be advisable. In the event this Plan is terminated, any
amount remaining in any Director's account will be
distributed in such manner as is determined by the Committee
in its sole discretion.
SECTION 12. Applicable Law. This Plan shall be
governed by the law of the State of Kansas.
<TABLE>
<CAPTION>
EXHIBIT (11)
SPRINT CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED)
(In Millions, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
--- ------------------------------ --- ------------------------------
1995 1994 1995 1994
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Primary earnings per share
Net income $ 268.5 $ 230.1 $ 738.5 $ 677.1
Preferred stock dividends (0.6) (0.6) (1.9) (2.0)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings applicable to common stock $ 267.9 $ 229.5 $ 736.6 $ 675.1
--- ------------- -- ------------- --- ------------- -- -------------
Weighted average number of common shares
(1) 350.5 349.4 350.0 348.0
--- ------------- -- ------------- --- ------------- -- -------------
Primary earnings per share $ 0.76 $ 0.66 $ 2.10 $ 1.94
--- ------------- -- ------------- --- ------------- -- -------------
Fully diluted earnings per share
Earnings applicable to common stock $ 267.9 $ 229.5 $ 736.6 $ 675.1
Convertible preferred stock dividends 0.1 0.1 0.4 0.4
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings as adjusted for purposes of
computing fully diluted earnings per
share $ 268.0 $ 229.6 $ 737.0 $ 675.5
--- ------------- -- ------------- --- ------------- -- -------------
Weighted average number of common shares 350.5 349.4 350.0 348.0
Additional dilution for common stock
equivalents and dilutive securities 1.3 1.3 1.8 1.4
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total 351.8 350.7 351.8 349.4
--- ------------- -- ------------- --- ------------- -- -------------
Fully diluted earnings per share $ 0.76 $ 0.65 $ 2.09 $ 1.93
--- ------------- -- ------------- --- ------------- -- -------------
(1) Weighted average number of common shares have been adjusted for dilutive common stock equivalents using the
treasury stock method.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT (12)
SPRINT CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
(In Millions)
Three Months Ended Nine Months Ended
September 30, September 30,
--- ------------------------------ --- ------------------------------
1995 1994 1995 1994
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Earnings
Net income $ 268.5 $ 230.1 $ 738.5 $ 677.1
Capitalized interest (22.1) (2.5) (34.9) (5.3)
Income tax provision 159.0 132.3 436.4 389.2
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Subtotal 405.4 359.9 1,140.0 1,061.0
Fixed charges
Interest charges 120.2 101.1 332.2 305.0
Interest factor of operating rents 30.7 29.2 91.9 85.1
Pre-tax cost of preferred stock
dividends of subsidiaries 0.2 0.2 0.6 0.7
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total fixed charges 151.1 130.5 424.7 390.8
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings, as adjusted $ 556.5 $ 490.4 $ 1,564.7 $ 1,451.8
--- ------------- -- ------------- --- ------------- -- -------------
Ratio of earnings to fixed charges 3.68 3.76 3.68 3.71
--- ------------- -- ------------- --- ------------- -- -------------
(1) Earnings as computed for the ratio of earnings to fixed charges includes a gain related to the sale of an
investment in equity securities of $22 million for the nine months ended September 30, 1994. In the absence
of this gain, the ratio of earnings to fixed charges would have been 3.63 for the first nine months of 1994.
Note: The above ratios have been computed by dividing fixed charges into the sum of (a) net income less
capitalized interest included in income, (b) income taxes, and (c) fixed charges. Fixed charges consist
of interest on all indebtedness (including amortization of debt issuance expenses), the interest
component of operating rents and the pre-tax cost of preferred stock dividends of subsidiaries.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 364,000
<SECURITIES> 0
<RECEIVABLES> 1,814,300
<ALLOWANCES> 198,200
<INVENTORY> 192,800
<CURRENT-ASSETS> 2,578,200
<PP&E> 20,457,300
<DEPRECIATION> 9,210,900
<TOTAL-ASSETS> 16,624,100
<CURRENT-LIABILITIES> 3,263,300
<BONDS> 5,473,500
<COMMON> 872,000
32,700
0
<OTHER-SE> 4,178,200
<TOTAL-LIABILITY-AND-EQUITY> 16,624,100
<SALES> 0
<TOTAL-REVENUES> 10,079,400
<CGS> 0
<TOTAL-COSTS> 6,176,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 297,300
<INCOME-PRETAX> 1,174,900
<INCOME-TAX> 436,400
<INCOME-CONTINUING> 738,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 738,500
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.09
</TABLE>
