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, 1996
------------------------------------
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, 1996:
COMMON STOCK 344,193,227
CLASS A COMMON STOCK 86,236,036
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SPRINT CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
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Page
Number
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Part I - Financial Information
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Item 1. Financial Statements 1 - 9
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 - 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10 - 22
Part II - Other Information
Item 1. Legal Proceedings 23
Item 2. Changes in Securities 23
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23 - 24
Signature 25
Exhibits
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PART I.
Item 1.
SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
As of As of
September 30, December 31,
1996 1995
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
(Unaudited)
Assets
Current assets
<S> <C> <C>
Cash and equivalents $ 1,582.0 $ 124.2
Accounts receivable, net of allowance for doubtful accounts of
$123.2 million ($125.8 million in 1995) 2,382.1 1,523.7
Receivable from cellular division -- 1,400.0
Inventories 206.6 171.0
Prepaid expenses 150.5 166.6
Other 337.7 233.9
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
Total current assets 4,658.9 3,619.4
Investments in equity securities 250.4 262.9
Property, plant and equipment
Long distance communications services 7,226.4 6,773.7
Local communications services 13,228.5 12,603.1
Other 541.2 539.1
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
20,996.1 19,915.9
Less accumulated depreciation 11,028.0 10,200.1
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
9,968.1 9,715.8
Investments in affiliates 1,427.9 1,130.1
Net investment in cellular division -- 106.9
Other assets 437.9 360.8
- ---------------------------------------------------------------------- --- ------------------ --- ------------------
$ 16,743.2 $ 15,195.9
--- ------------------ --- ------------------
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,
1996 1995
- ---------------------------------------------------------------------------------------------------------------------
(Unaudited)
Liabilities and shareholders' equity
Current liabilities
<S> <C> <C>
Current maturities of long-term debt $ 91.8 $ 280.4
Short-term borrowings 200.0 2,144.0
Accounts payable 891.9 938.9
Accrued interconnection costs 869.6 617.7
Accrued taxes 259.4 235.5
Advance billings 189.0 202.9
Other 692.6 722.7
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,194.3 5,142.1
Long-term debt 3,047.4 3,253.0
Deferred credits and other liabilities
Deferred income taxes and investment tax credits 832.0 843.4
Postretirement and other benefit obligations 913.5 889.3
Other 355.6 393.0
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2,101.1 2,125.7
Redeemable preferred stock 13.2 32.5
Common stock and other shareholders' equity
Common stock, par value $2.50 per share, authorized 1.0 billion shares,
issued 350.3 million (349.2 million in 1995) and
outstanding 344.2 million (349.2 million in 1995) 875.7 872.9
Class A common stock, par value $2.50 per share, authorized 500
million shares, issued and outstanding 86.2 million shares 215.6 --
Capital in excess of par or stated value 4,422.8 960.0
Retained earnings 3,076.9 2,763.0
Treasury stock, at cost, 6.1 million shares (248.9) --
Other 45.1 46.7
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8,387.2 4,642.6
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$ 16,743.2 $ 15,195.9
----------------------------------------------
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,
---------------------------------- ----------------------------------
1996 1995 1996 1995
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Net operating revenues $ 3,544.4 $ 3,205.3 $ 10,422.7 $ 9,426.5
Operating expenses
Costs of services and products 1,775.3 1,623.7 5,212.3 4,812.0
Selling, general and administrative 773.6 715.9 2,271.1 2,124.7
Depreciation and amortization 396.6 368.6 1,184.6 1,088.1
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total operating expenses 2,945.5 2,708.2 8,668.0 8,024.8
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Operating income 598.9 497.1 1,754.7 1,401.7
Interest expense (48.0) (64.7) (145.2) (201.9)
Other expense, net (41.1) (20.3) (85.0) (54.7)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Income from continuing operations before
income taxes 509.8 412.1 1,524.5 1,145.1
Income tax provision (193.6) (148.5) (579.6) (413.6)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Income from continuing operations 316.2 263.6 944.9 731.5
Discontinued operation, net -- 4.9 (2.6) 7.0
Extraordinary losses from early
extinguishments of debt, net (3.8) -- (3.8) --
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Net income 312.4 268.5 938.5 738.5
Preferred stock dividends (0.3) (0.6) (1.1) (1.9)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings applicable to common stock $ 312.1 $ 267.9 $ 937.4 $ 736.6
--- ------------- -- ------------- --- ------------- -- -------------
Earnings per common share
Continuing operations $ 0.73 $ 0.75 $ 2.23 $ 2.08
Discontinued operation -- 0.01 -- 0.02
Extraordinary item (0.01) -- (0.01) --
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total $ 0.72 $ 0.76 $ 2.22 $ 2.10
--- ------------- -- ------------- --- ------------- -- -------------
Weighted average number of common shares 434.7 350.5 423.1 350.0
--- ------------- -- ------------- --- ------------- -- -------------
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,
----------------------------------
1996 1995
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Operating activities
<S> <C> <C>
Net income $ 938.5 $ 738.5
Adjustments to reconcile net income to net cash provided by operating
activities
Discontinued operation, net 2.6 (7.0)
Extraordinary losses from early extinguishments of debt 4.7 --
Equity in net losses of affiliates 165.8 5.9
Depreciation and amortization 1,184.6 1,088.1
Deferred income taxes and investment tax credits (16.5) (36.8)
Changes in operating assets and liabilities
Accounts receivable, net (900.7) (127.2)
Inventories and other current assets 40.3 (19.2)
Accounts payable and other current liabilities 250.9 15.1
Noncurrent assets and liabilities, net (17.0) 108.0
Other, net (51.2) (5.0)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash provided by continuing operations 1,602.0 1,760.4
Net cash provided (used) by cellular division (0.1) 107.4
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash provided by operating activities 1,601.9 1,867.8
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Investing activities
Capital expenditures (1,569.6) (1,280.7)
Investments in affiliates (340.3) (901.3)
Investment in debt securities (100.0) --
Deposit for PCS license auction (84.0) --
Other, net 6.9 6.1
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash used by continuing operations (2,087.0) (2,175.9)
Repayment of intercompany advances by cellular division 1,400.0 --
Net investing activities of cellular division (140.7) (268.7)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash used by investing activities (827.7) (2,444.6)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Financing activities
Proceeds from long-term debt 6.6 260.2
Retirements of long-term debt (352.5) (259.9)
Net change in notes payable and commercial paper (1,986.8) 1,097.7
Proceeds from Class A common stock issued 3,661.3 --
Proceeds from common stock issued 19.6 7.4
Dividends paid (303.4) (263.5)
Purchase of treasury stock (376.1) --
Other, net 14.9 (15.2)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Net cash provided by financing activities 683.6 826.7
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Increase in cash and equivalents 1,457.8 249.9
Cash and equivalents at beginning of period 124.2 113.7
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Cash and equivalents at end of period $ 1,582.0 $ 363.6
--- ------------- -- -------------
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, 1996
- ---------------------------------------------------------------------------------------------------------------------
Capital
in Excess
Class A of Par or
Common Common Stated Retained Treasury
Stock Stock Value Earnings Stock Other Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of January
1, 1996 $ 872.9 $ -- $ 960.0 $ 2,763.0 $ -- $ 46.7 $ 4,642.6
Net income -- -- -- 938.5 -- -- 938.5
Common stock dividends -- -- -- (260.2) -- -- (260.2)
Preference and Class A
common stock dividends -- -- -- (53.3) -- -- (53.3)
Preferred stock dividends -- -- -- (1.1) -- -- (1.1)
Common stock issued 2.5 -- 16.8 -- -- -- 19.3
Class A common stock issued -- 215.6 3,436.3 -- -- -- 3,651.9
Change in unrealized
holding gains, net -- -- -- -- -- (4.4) (4.4)
Spin-off of cellular
division -- -- -- (259.1) -- -- (259.1)
Purchase of treasury stock -- -- -- -- (381.0) -- (381.0)
Treasury stock issued -- -- (0.7) (45.9) 132.1 -- 85.5
Other, net 0.3 -- 10.4 (5.0) -- 2.8 8.5
- ---------------------------------------------------------------------------------------------------------------------
Balance as of
September 30, 1996 $ 875.7 $ 215.6 $ 4,422.8 $ 3,076.9 $ (248.9) $ 45.1 $ 8,387.2
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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, 1996 and 1995
The information contained in this Form 10-Q for the three- and nine-month
interim periods ended September 30, 1996 and 1995, has been prepared in
accordance with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In
management's opinion, the consolidated interim financial statements reflect all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the consolidated financial position, results of operations, and cash
flows for the interim periods presented.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles (GAAP) have been condensed or omitted. The results of operations for
the nine months ended September 30, 1996, are not necessarily indicative of the
operating results that may be expected for the year ending December 31, 1996.
1. Accounting Policies
Basis of Consolidation
The 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.
The consolidated financial statements are prepared in conformity with GAAP. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities. Those estimates and assumptions also affect
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The prior periods' financial statements have been restated to reflect Sprint's
spin-off of its cellular and wireless communications services division
(Cellular) (see Note 2). The operating results, net assets and cash flows of
Cellular have been separately classified as a discontinued operation and have
been excluded from Sprint's continuing operations. Intercompany transactions
with Cellular, which were previously eliminated in consolidation, have now been
reflected in Sprint's consolidated financial statements.
Certain other amounts previously reported for the prior periods have been
reclassified to conform to the current periods' presentation in the consolidated
financial statements. These reclassifications had no effect on the results of
operations or shareholders' equity as previously reported.
During 1995, Sprint determined its local communications services division no
longer met 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." Accordingly,
effective December 31, 1995, Sprint adopted accounting principles for a
competitive marketplace for its local division. In accordance with SFAS No. 71,
revenues and related net income of nonregulated operations attributable to
intercompany transactions with Sprint's regulated telephone companies were not
eliminated in the prior periods' consolidated financial statements. Intercompany
revenues of these entities were $65 million and $210 million for the three and
nine months ended September 30, 1995, respectively. In conjunction with the
adoption of accounting principles for a competitive marketplace, these
intercompany amounts have been eliminated beginning in 1996. All other
significant intercompany transactions in 1996 and 1995 have been eliminated.
6
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2. Spin-off of Cellular Division
In March 1996, Sprint completed the tax-free spin-off of Cellular to the holders
of Sprint common stock. The spin-off was effected by distributing to all holders
of Sprint common stock all shares of Cellular common stock at a rate of 1 share
of Cellular common stock for every 3 shares of Sprint common stock held. In
connection with the spin-off, Cellular repaid $1.4 billion of intercompany debt
owed by Cellular to Sprint. In addition, Sprint contributed to the equity
capital of Cellular $185 million of debt owed by Cellular in excess of the
amount repaid. This equity contribution, together with Sprint's previous
investments in Cellular, resulted in Sprint's net investment in Cellular
aggregating $259 million as of the date of the spin-off. The prior periods'
financial statements have been restated to reflect the spin-off of Cellular (see
Note 1).
3. Investments in Debt and Equity Securities
Investments in debt and equity securities are classified as available for sale
and reported at fair value (estimated based on quoted market prices). Gross
unrealized holding gains and losses are reflected as adjustments to other
shareholders' equity, net of related income taxes.
During August 1996, Sprint purchased $183 million (face value) of Sprint
Spectrum Senior Discount bonds for $100 million. These bonds will mature in
2006. As of September 30, 1996, the accreted cost of the bonds was $101 million
and unrealized holding gains totaled $5 million. This investment is reflected in
"Other current assets" on the 1996 consolidated balance sheet.
The cost of equity securities was $109 million as of September 30, 1996 and
December 31, 1995. Net unrealized holding gains decreased to $141 million at
September 30, 1996 from $154 million at December 31, 1995.
4. Income Taxes
The differences that cause the effective income tax rate to vary from the
statutory federal income tax rate of 35 percent are as follows (in millions):
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Nine Months Ended
September 30,
----------------------------------
1996 1995
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<S> <C> <C>
Income tax provision at the statutory rate $ 533.6 $ 400.8
Effect of:
State income taxes, net of federal income tax effect 51.2 36.6
Investment tax credits included in income (5.3) (11.2)
Other, net 0.1 (12.6)
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Income tax provision $ 579.6 $ 413.6
--- ------------- -- -------------
Effective income tax rate 38.0% 36.1%
--- ------------- -- -------------
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7
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5. Common Stock and Other Shareholders' Equity
On January 31, 1996, Sprint, along with Deutsche Telekom AG (DT) and France
Telecom (FT), consummated their joint venture, operating as Global One. Upon
closing of the agreement, DT and FT acquired shares of a new class of
convertible preference stock for a total of $3.0 billion. This resulted in DT
and FT each holding 7.5 percent of Sprint's voting power. In April 1996,
following the spin-off of Cellular, the preference stock was converted into
shares of Class A common stock, and DT and FT acquired additional shares of
Class A common stock. Following their aggregate investment of $3.7 billion, DT
and FT each own shares of Class A common stock with 10 percent of Sprint's
voting power.
DT and FT, as the holders of the Class A common stock, have the right in most
circumstances to proportionate representation on Sprint's board of directors and
to purchase additional shares of Class A common stock from Sprint to enable them
to maintain their aggregate ownership level at 20 percent. In addition, the
holders of Class A common stock have disapproval rights with respect to Sprint's
undertaking certain types of transactions. DT and FT have also entered into a
standstill agreement with Sprint that contains restrictions on their ability to
acquire voting securities of Sprint other than as contemplated by their
investment agreement with Sprint and related agreements. The standstill
agreement also contains customary provisions restricting DT and FT from
initiating or participating in any proposal with respect to the control of
Sprint.
6. Litigation, Claims and Assessments
Following the 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 were
dismissed. On June 27, 1996, Centel and the other defendants were granted
summary judgment in the federal action. The plaintiffs have appealed the court's
order. On October 12, 1995, the New York trial court granted the motion of
Centel's financial advisors to dismiss a purported class action suit filed
against them in connection with their representation of Centel in the merger.
The plaintiffs have appealed the order dismissing their claims. Sprint may have
indemnification obligations to the financial advisors in connection with this
suit. 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.
7. Supplemental Cash Flows Information and Noncash Activities (in millions)
<TABLE>
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Nine Months Ended
September 30,
--- ------------------------------
1996 1995
- ------------------------------------------------------------------------------- --- ------------- -- -------------
Cash paid for:
Interest (net of amounts capitalized)
<S> <C> <C>
Continuing operations $ 152.9 $ 186.5
--- ------------- -- -------------
Cellular division $ 22.9 $ 95.1
--- ------------- -- -------------
Income taxes $ 548.5 $ 407.0
--- ------------- -- -------------
</TABLE>
On January 31, 1996, in connection with the consummation of the Global One joint
venture, Sprint contributed cash, property, plant and equipment, and other
assets and liabilities of certain international operations to Global One. The
net book value of the noncash assets and liabilities contributed to Global One
totaled $65 million.
During the nine months ended September 30, 1996, Sprint issued treasury stock
and previously unissued common stock to employees in connection with an employee
stock purchase plan. The stock had a market value of $65 million.
8
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During the nine months ended September 30, 1996, as discussed in Note 2, Sprint
completed the tax-free spin-off of Cellular to the holders of Sprint common
stock. The spin-off had no immediate effect on cash flows other than Cellular's
repayment of $1.4 billion in intercompany debt to Sprint.
8. Supplemental Earnings per Share (EPS) Information
Had the Class A common stock shares discussed in Note 5 been issued as of
January 1, 1996, and the related proceeds been used to repay debt or invested on
a temporary basis at that time, Sprint's EPS from continuing operations for the
three months ended September 30, 1996, would have been unchanged. For the nine
months ended September 30, 1996, EPS from continuing operations would have
decreased from $2.23 per share to an estimated $2.19 per share.
9. Subsequent Events
In October 1996, Sprint's Board of Directors declared dividends of $0.25 per
share on both Sprint's common stock and Sprint's Class A common stock payable on
December 27, 1996.
9
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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, incorporated in 1938 under the laws of Kansas, is primarily
a holding company. Sprint's principal subsidiaries provide domestic and
international long distance and local exchange 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.
Sprint and its subsidiaries (Sprint) include certain estimates, projections and
other forward-looking statements in its reports as well as in presentations to
analysts and others and in other material disseminated to the public. There can
be no assurances of future performance. Actual results may differ materially
from those in the forward-looking statements. Factors that could cause actual
results to differ materially from estimates or projections contained in
forward-looking statements include:
the effects of vigorous competition in the markets in which Sprint
operates;
the cost of entering new markets necessary to provide seamless
services;
the risks associated with Sprint's investment in Sprint Spectrum and
Global One which are presently in early stages of development;
the impact of any unusual items resulting from ongoing evaluations of
Sprint's business strategies;
requirements imposed on Sprint and its competitors by the Federal
Communications Commission (FCC) and state regulatory commissions
under the Telecommunications Act of 1996;
the possibility of one or more of the markets in which Sprint competes
being impacted by variations in political, economic or other factors
such as monetary policy, legal and regulatory changes or other
external factors over which Sprint has no control; and
unexpected results in litigation filed against Sprint.
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 primarily provides domestic
and international voice, video and data communications services. The division
offers its services to the public subject to different levels of state and
federal regulation, but rates are not subject to rate-base regulation except
nominally in some states.
Local Communications Services. The local division consists of regulated local
exchange carriers (LECs) that serve more than seven million access lines in 19
states. In addition to furnishing local exchange services, the division provides
intraLATA toll service and interLATA access by telephone customers and other
carriers to Sprint's local exchange facilities.
Sprint has initiated efforts to enter local markets across the United States by
filing for competitive local exchange carrier status. Through October 1996,
Sprint had filed in 47 states and the District of Columbia. State regulatory
commissions have authorized Sprint to provide competitive local telephone
service in 18 states and the District of Columbia.
Product Distribution and Directory Publishing. North Supply Company (North
Supply), a wholesale distributor of telecommunications and security and alarm
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.
10
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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 325
directories in 20 states with a circulation of 17.6 million copies.
Joint Ventures
Sprint Spectrum
Sprint is a 40 percent partner in Sprint Spectrum L.P. (Sprint Spectrum), a
partnership with Tele-Communications Inc., Comcast Corporation and Cox
Communications, Inc. Sprint Spectrum plans to provide wireless personal
communications services (PCS) on a broad geographic basis within the United
States under the "Sprint PCS" brand name.
As part of an overall strategy to increase PCS coverage, Sprint has elected to
participate in the FCC auction of PCS licenses which began in late August 1996.
If Sprint acquires PCS licenses or invests in any other entity that acquires
licenses, it is expected that affiliation arrangements will be entered into with
Sprint Spectrum.
Global One
Sprint is also a partner in Global One, a joint venture with Deutsche Telekom AG
(DT) and France Telecom (FT) to provide seamless global telecommunications
services to business, residential and carrier markets worldwide. The interests
of DT and FT in the venture are held by their own joint venture, referred to as
Atlas. The operating group serving Europe (excluding France and Germany) is
owned one-third by Sprint and two-thirds by Atlas. The operating group for the
worldwide activities outside the United States and Europe is owned 50 percent by
Sprint and 50 percent by Atlas. Home country markets are served by DT in
Germany, FT in France and Sprint in the United States.
Telecommunications Law
The Telecommunications Act of 1996, which was signed into law in February 1996,
promotes competition in all aspects of telecommunications. In particular, the
new law removes barriers to competition that will enable local and long distance
companies and cable TV companies to enter each others' markets. The Regional
Bell Operating Companies (RBOCs) were allowed to provide out-of-region and
incidental long distance service upon enactment. The RBOCs will be allowed to
provide in-region long distance service once they obtain state certification of
compliance with a competitive "checklist" and a FCC ruling that it is in the
public interest and that a facilities-based competitor exists in each market.
The new law directs the FCC to adopt rules that will significantly influence the
amount and shape of competition in both local and long distance markets in the
future.
The new law eliminates regulatory barriers to entry into local telephone markets
and imposes several obligations upon incumbent LECs. They must allow local
resale without unreasonable restrictions, provide number portability and dialing
parity, afford access to rights-of-way, establish reciprocal compensation
arrangements, negotiate interconnection agreements, provide nondiscriminatory
access to unbundled network elements and allow collocation of interconnection
equipment by competitors. The FCC adopted regulations to implement these
requirements on August 1, 1996. Some RBOCs, other LECs and some state regulatory
commissions appealed the FCC's regulations. The cases were consolidated in the
8th Circuit Court of Appeals. The parties requested and the Court granted a
partial stay of the FCC's regulations pending the outcome of the appeal. The
stay was subsequently upheld by a Supreme Court justice. The stay applies
primarily to the costing and pricing regulations and gives the parties and the
states the ability to negotiate and arbitrate rates during the appeal. The Court
set an expedited schedule for the appeal that could result in a decision by
mid-1997.
11
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The impact of the Act on Sprint is unknown because a number of important
implementation issues (such as the nature and extent of continued subsidies for
local rates) still need to be decided by state or federal regulators. However,
the Act offers opportunities as well as risks. Sprint should benefit from the
opportunity to enter additional local telephone markets. The new competitive
environment should lead to a reduction in local access fees, the largest single
cost in providing long distance service today. The risk aspect of local
competition is that market shares of Sprint's LECs in their current operating
regions (approximately 5 percent of the nation's local phone lines) are likely
to decline.
The removal of the long distance restrictions on the RBOCs is not expected to
have an immediate significant adverse impact on Sprint because of the
substantial preconditions that must be met before RBOCs can provide most
in-region long distance services. In addition, Sprint has been selected to be
the underlying carrier of long distance service for four of the RBOCs. This
could offset losses of long distance customers at the retail level when the
RBOCs are allowed to provide in-region long distance services.
Results Of Operations
Consolidated
Sprint's two primary divisions -- long distance and local exchange -- generated
improved net operating revenues and operating income in the third quarter of
1996 compared with the third quarter of 1995. The long distance division
generated a 21 percent growth in traffic volumes over the third quarter of 1995
while the number of access lines served by the local division grew 5.4 percent
during the past 12 months.
Consolidated net operating revenues for the third quarter of 1996 were $3.54
billion, a nearly 11 percent increase over net operating revenues of $3.21
billion for the third quarter of 1995. For the third of quarter of 1996, income
from continuing operations was $316 million, or $0.73 per share, compared with
$264 million, or $0.75 per share, for the third quarter of 1995. For the nine
months ended September 30, 1996, consolidated net operating revenues were $10.42
billion, a nearly 11 percent increase over net operating revenues of $9.43
billion for the same 1995 period. Income from continuing operations for the 1996
nine-month period was $945 million, or $2.23 per share, compared with $732
million, or $2.08 per share, for the same 1995 period. The 1996 three- and
nine-month periods include $47 million ($0.10 per share) and $113 million ($0.27
per share), respectively, in after-tax losses related to Sprint Spectrum and
Global One compared with $7 million ($0.02 per share) and $15 million ($0.04 per
share), respectively, of losses for the same 1995 periods.
12
<PAGE>
<TABLE>
<CAPTION>
Long Distance Communications Services
Selected Operating Results
(In Millions)
----------------------------------------------------------------------
Three Months Ended
September 30, Variance
---------------------------------- -------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -----------------
<S> <C> <C> <C> <C>
Net operating revenues $ 2,083.6 $ 1,826.9 $ 256.7 14.1%
Operating expenses
Interconnection 936.2 777.5 158.7 20.4%
Operations 257.9 253.9 4.0 1.6%
Selling, general and administrative 487.9 464.9 23.0 4.9%
Depreciation and amortization 159.3 147.6 11.7 7.9%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 1,841.3 1,643.9 197.4 12.0%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 242.3 $ 183.0 $ 59.3 32.4%
--- ------------- -- ------------- --- -------------
Operating margin 11.6% 10.0%
--- ------------- -- -------------
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues $ 6,138.1 $ 5,351.2 $ 786.9 14.7%
Operating expenses
Interconnection 2,736.1 2,295.9 440.2 19.2%
Operations 785.3 748.8 36.5 4.9%
Selling, general and administrative 1,446.8 1,372.9 73.9 5.4%
Depreciation and amortization 466.0 428.4 37.6 8.8%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 5,434.2 4,846.0 588.2 12.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 703.9 $ 505.2 $ 198.7 39.3%
--- ------------- -- ------------- --- -------------
Operating margin 11.5% 9.4%
--- ------------- -- -------------
</TABLE>
On January 31, 1996, the long distance division contributed certain
international assets and related operations of its international business unit
to Global One (the Contribution to Global One). As a result, the operating
results of those international operations have been reflected in the long
distance division's operating results only through the date of contribution. Had
the Contribution to Global One occurred on January 1, 1995, operating income for
the 1996 three- and nine-month periods would have increased an estimated 22
percent and 29 percent, respectively, from the same 1995 periods. The related
operating margins would have been an estimated 11.6 percent for both 1996
periods versus 11.2 percent and 10.5 percent for the 1995 three- and nine-month
periods, respectively.
Net operating revenues for the 1996 three- and nine-month periods increased 14
percent and 15 percent, respectively, over the same 1995 periods. Traffic
volumes increased 21 percent and 19 percent for the 1996 three- and nine-month
periods compared with the same 1995 periods.
13
<PAGE>
Revenue growth for the 1996 three- and nine-month periods was mainly driven by
strong volume growth in the residential, business and wholesale markets. Both
1996 periods also reflect continuing growth in the data services markets. Growth
in the residential market reflects the continuing success of Sprint Sense (sm),
a flat rate calling plan. The small-to-medium business market, which experienced
revenue declines during 1995, produced increased net operating revenues in the
1996 three- and nine-month periods compared with the same 1995 periods. These
increases generally reflect the introduction and continued success of the
Fridays Free (sm) calling plan, which experienced strong domestic and
international volume growth. Growth in the data services market, which includes
sales of consumer on-line services, reflects continued growth in demand and
expanded service offerings. The wholesale market experienced strong growth in
both the international and domestic markets. The Contribution to Global One
resulted in reduced revenue as customers of the international operations became
Global One customers. Global One traffic carried by the division is now priced
on a wholesale, rather than retail, basis, contributing to the strong increases
in the wholesale markets. Had the Contribution to Global One occurred as of
January 1, 1995, the division's net operating revenues for the 1996 three- and
nine-month periods would have increased an estimated 17 percent compared with
the same 1995 periods.
Interconnection costs consist of amounts paid to local exchange carriers, other
domestic service providers, and foreign telephone companies to complete calls
made by the division's domestic customers. Interconnection costs increased
during the 1996 three- and nine-month periods compared with the same 1995
periods mainly due to strong growth in both international outbound and domestic
traffic volumes. For the 1996 three- and nine-month periods, interconnection
costs were 44.9 percent and 44.6 percent, respectively, of net operating
revenues versus 42.6 percent and 42.9 percent for the same 1995 periods. The
increases in interconnection costs as a percentage of net operating revenues
reflect changes in revenue mix, particularly the growth in international
traffic. In addition, this percentage relationship was affected by reduced
revenues due to Global One traffic being priced on a wholesale rather than
retail basis, as discussed above. These factors were partially offset by reduced
costs of connecting to networks both domestically and internationally.
Interconnection costs for the 1996 periods were nominally impacted by the
Contribution to Global One. Had the contribution occurred as of January 1, 1995,
interconnection costs for the 1995 three- and nine-month periods would have been
an estimated 43.7 percent and 44.0 percent, respectively, of net operating
revenues.
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 1996 three- and nine-month periods increased $4 million and $37
million, respectively, from the same 1995 periods. These increases were mainly
due to growth in the residential, business and wholesale markets, partly offset
by the impact of the Contribution to Global One. Had the Contribution to Global
One occurred as of January 1, 1995, the division's operations expense for the
1996 three- and nine-month periods would have increased an estimated 20 percent
and 19 percent, respectively, from the same 1995 periods.
Selling, general and administrative (SG&A) expense for the 1996 three- and
nine-month periods increased $23 million and $74 million, respectively, over the
same 1995 periods. The increases generally reflect the overall growth in the
division's operating activities. The increases in SG&A expense were generally
due to costs related to advertising and marketing efforts, which continue to be
important in the intensely competitive long distance marketplace. These
increases were partly offset by the Contribution to Global One. Had the
contribution occurred as of January 1, 1995, SG&A expense would have increased
an estimated 10 percent and 9 percent for the 1996 three- and nine-month
periods, respectively, compared with the 1995 periods.
Depreciation and amortization expense increased during the 1996 three- and
nine-month periods compared with the same 1995 periods generally due to an
increased asset base. The increased asset base supports data revenue growth and
improved transport capacity resulting from the deployment of the synchronous
optical network (SONET). Depreciation and amortization expense was minimally
affected by the Contribution to Global One. Included in the contribution were
depreciable assets with an aggregate net book value of $110 million.
14
<PAGE>
<TABLE>
<CAPTION>
Local Communications Services
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Three Months Ended
September 30, Variance
---------------------------------- ------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues
<S> <C> <C> <C> <C>
Local service $ 532.5 $ 474.7 $ 57.8 12.2%
Network access 473.5 422.4 51.1 12.1%
Toll service 103.7 123.1 (19.4) (15.8)%
Other 205.1 159.7 45.4 28.4%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 1,314.8 1,179.9 134.9 11.4%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating expenses
Plant operations 357.7 335.8 21.9 6.5%
Depreciation and amortization 225.3 208.6 16.7 8.0%
Customer operations 168.6 152.3 16.3 10.7%
Other 224.8 192.8 32.0 16.6%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 976.4 889.5 86.9 9.8%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 338.4 $ 290.4 $ 48.0 16.5%
--- ------------- -- ------------- --- -------------
Operating margin 25.7% 24.6%
--- ------------- -- -------------
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues
Local service $ 1,541.3 $ 1,393.0 $ 148.3 10.6%
Network access 1,394.8 1,251.9 142.9 11.4%
Toll service 323.6 367.2 (43.6) (11.9)%
Other 578.2 476.5 101.7 21.3%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 3,837.9 3,488.6 349.3 10.0%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating expenses
Plant operations 1,032.8 1,011.6 21.2 2.1%
Depreciation and amortization 681.9 623.1 58.8 9.4%
Customer operations 484.2 440.3 43.9 10.0%
Other 640.0 582.2 57.8 9.9%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 2,838.9 2,657.2 181.7 6.8%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 999.0 $ 831.4 $ 167.6 20.2%
--- ------------- -- ------------- --- -------------
Operating margin 26.0% 23.8%
--- ------------- -- -------------
</TABLE>
15
<PAGE>
Sprint adopted accounting principles for a competitive marketplace effective
December 31, 1995, and discontinued applying Statement of Financial Accounting
Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation," to its local division. The primary effects of Sprint's discontinued
application of SFAS No. 71 were that certain accumulated depreciation balances
were increased; plant asset lives were shortened from regulator-prescribed lives
to estimated economic lives; switch software costs, which had previously been
expensed as incurred, are now being capitalized and amortized; and the effects
of any actions of regulators that had been recognized as assets and liabilities
pursuant to SFAS No. 71 but which would not have been recognized as such by
enterprises in general were eliminated from the consolidated balance sheet.
Alternative regulation now exists in eight states in which the division
operates, impacting 67 percent of its access lines. Effective January 1, 1996,
Sprint's operations in Florida, which represent approximately 25 percent of its
access lines, changed from rate of return regulation to price regulation. At the
same time, the Florida local markets were opened to competition. Effective in
June 1996, North Carolina, which represents 18 percent of the division's access
lines, adopted alternative regulation. This shift from rate of return regulation
to various forms of alternative regulation will result in seasonal trends in the
division's revenues.
The division's net operating revenues for the 1996 three- and nine-month periods
increased 11 percent and 10 percent, respectively, over the same 1995 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 5.4 percent during the past
twelve months. This increase was driven by strong economic growth in the
division's service areas and by multiple access lines being added by both
business and residential customers.
Network access revenues, derived from interexchange long distance carriers' use
of the local network to complete calls, increased due to increased traffic
volumes, a portion of which is due to a migration of traffic related to toll
service revenues as described below. Traffic volumes increased due to strong
economic conditions in many of Sprint's operating territories coupled with the
harsh 1996 winter season experienced on the east coast. The impact of the FCC's
interim interstate price caps plan, which became effective August 1, 1995,
increased network access revenues for the 1996 nine-month period and had a
nominal effect on the 1996 three-month period. Under the new plan, the local
division adopted a rate formula based on the maximum productivity factors that
effectively removes 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 16 percent and 12 percent for the 1996 three- and nine-month
periods, respectively. 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 due to this increased competition, this reduction
is partially recovered through increased network access revenues resulting from
additional use of the local network by interexchange long distance carriers.
Other revenues, including revenues from sales of telecommunications equipment,
directory publishing fees, and billing and collection services, increased 28
percent and 21 percent for the 1996 three- and nine-month periods, respectively,
over the same 1995 periods. The increases were generally due to growth in
equipment sales.
Plant operations expense includes network operations, repair and maintenance
costs of property, plant and equipment, and other costs related to the provision
of local exchange services. Plant operations expense increased $22 million and
$21 million for the 1996 three- and nine-month periods, respectively, compared
with the same 1995 periods. These increases mainly reflect increased service
costs due to access line growth and increased repair and maintenance expenses in
the division's Florida and Mid-Atlantic regions related to bad weather
conditions, including the storms and hurricanes that have occurred during 1996.
Partially offsetting the increases in plant operations expense is the change in
accounting treatment of switch software costs due to the adoption of accounting
principles for a competitive marketplace. As a result, Sprint now capitalizes
and amortizes switch software costs; previously, these costs were expensed as
incurred.
16
<PAGE>
Depreciation and amortization expense increased for the 1996 three- and
nine-month periods compared with the same 1995 periods mainly due to plant
additions. Amortization of capitalized switch software costs also contributed to
the increase. Throughout 1996, this amortization is expected to substantially
offset the related decrease in plant operations expense discussed above.
Accordingly, the annual impact on operations resulting from the capitalization
of switch software is not expected to be significant. Additionally, the impact
of shortened asset lives due to the adoption of accounting principles for a
competitive marketplace is not expected to have a significant effect on 1996
operating results.
Customer operations expense includes costs related to 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 $16 million and $44 million in the 1996 three- and
nine-month periods, respectively, compared with the same 1995 periods. The
increases were primarily due to increased marketing costs to promote new
products and services and the overall growth in access lines.
Other operating expenses increased $32 million and $58 million in the 1996
three- and nine-month periods over the same 1995 periods mainly due to the
growth in equipment sales.
<TABLE>
<CAPTION>
Product Distribution and Directory Publishing Businesses
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Three Months Ended
September 30, Variance
---------------------------------- ------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues
<S> <C> <C> <C> <C>
Non-affiliated $ 226.6 $ 208.9 $ 17.7 8.5%
Affiliated 94.6 86.2 8.4 9.7%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 321.2 295.1 26.1 8.8%
Operating expenses
Costs of services and products 271.0 247.1 23.9 9.7%
Selling, general and administrative 22.3 22.4 (0.1) (0.4)%
Depreciation and amortization 1.8 1.9 (0.1) (5.3)%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 295.1 271.4 23.7 8.7%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 26.1 $ 23.7 $ 2.4 10.1%
--- ------------- -- ------------- --- -------------
Operating margin 8.1% 8.0%
--- ------------- -- -------------
17
<PAGE>
Selected Operating Results
(In Millions)
---------------------------------------------------------------------
Nine Months Ended
September 30, Variance
--- ------------------------------ ------------------------------
1996 1995 Dollar Percent
- -------------------------------------------- --- ------------- -- ------------- --- ------------- ----------------
Net operating revenues
Non-affiliated $ 655.2 $ 605.6 $ 49.6 8.2%
Affiliated 270.3 264.8 5.5 2.1%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total net operating revenues 925.5 870.4 55.1 6.3%
Operating expenses
Costs of services and products 776.8 733.8 43.0 5.9%
Selling, general and administrative 67.7 66.0 1.7 2.6%
Depreciation and amortization 5.5 5.5 -- --
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Total operating expenses 850.0 805.3 44.7 5.6%
- -------------------------------------------- --- ------------- -- ------------- --- -------------
Operating income $ 75.5 $ 65.1 $ 10.4 16.0%
--- ------------- -- ------------- --- -------------
Operating margin 8.2% 7.5%
--- ------------- -- -------------
</TABLE>
North Supply, Sprint's product distribution subsidiary, had net operating
revenues of $240 million and $684 million for the 1996 three- and nine-month
periods, respectively, increasing $18 million and $30 million from the same 1995
periods. North Supply's service and product costs increased to $206 million for
the 1996 three-month period from $189 million for the same 1995 period. For the
1996 nine-month period, service and product costs increased to $585 million from
$560 million during the same 1995 period. These results were primarily due to
increased sales.
Sprint Publishing & Advertising, Sprint's directory publishing subsidiary, had
net operating revenues of $82 million and $241 million for the 1996 three- and
nine-month periods, respectively, versus $73 million and $216 million for the
same 1995 periods. For the 1996 three- and nine-month periods, service and
product costs increased to $65 million and $192 million, respectively, from $58
million and $173 million for the same 1995 periods.
18
<PAGE>
Non-Operating Items
<TABLE>
<CAPTION>
Interest Expense
Interest costs consist of the following (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
--- ------------------------------ --- ------------------------------
1996 1995 1996 1995
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Interest expense from continuing operations $ 48.0 $ 64.7 $ 145.2 $ 201.9
Interest costs related to Cellular
operations -- 32.9 21.3 94.4
Capitalized interest costs 27.4 21.7 80.6 34.0
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total interest costs $ 75.4 $ 119.3 $ 247.1 $ 330.3
--- ------------- -- ------------- --- ------------- -- -------------
Average debt outstanding $ 3,384.0 $ 5,994.8 $ 3,692.2 $ 5,481.0
--- ------------- -- ------------- --- ------------- -- -------------
Effective interest rate 8.9% 8.0% 8.9% 8.0%
--- ------------- -- ------------- --- ------------- -- -------------
</TABLE>
Interest expense related to Cellular's operations has been included in
"Discontinued operation" on the consolidated income statements. For the 1996
periods, Sprint's average debt outstanding, including the debt incurred to fund
intercompany advances to Cellular prior to the spin-off, decreased compared with
the 1995 periods. This is mainly due to repayments funded by the cash received
from DT and FT for their equity investment in Sprint as well as the cash
received from Cellular to repay intercompany debt in connection with Sprint's
spin-off of Cellular. Sprint's effective interest rate increased for the 1996
periods mainly due to the significant decrease in short-term borrowings as a
percentage of total borrowings. Had all of the proceeds from Cellular's
repayment of intercompany debt been used to retire outstanding external debt,
interest expense from continuing operations would have been lower than reported;
however, the proceeds have been invested on a short-term basis resulting in a
corresponding increase in interest income (see "Other Expense, Net").
<TABLE>
<CAPTION>
Other Expense, Net
The components of other expense, net are as follows (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
--- ------------------------------ --- ------------------------------
1996 1995 1996 1995
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
<S> <C> <C> <C> <C>
Equity in loss of Sprint Spectrum $ (47.6) $ (7.2) $ (120.4) $ (12.5)
Equity in loss of Global One and related
venture costs (24.2) (4.8) (51.5) (11.0)
Loss on sales of accounts receivable -- (9.7) (4.3) (29.3)
Dividend and interest income 22.4 3.9 66.1 11.6
Gains on sales of telecommunications assets 8.1 -- 15.0 --
Other 0.2 (2.5) 10.1 (13.5)
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total other expense, net $ (41.1) $ (20.3) $ (85.0) $ (54.7)
--- ------------- -- ------------- --- ------------- -- -------------
</TABLE>
19
<PAGE>
Income Tax Provision
See Note 4 of Condensed Notes to Consolidated Financial Statements for
information regarding the differences that cause the effective income tax rate
to vary from the statutory federal income tax rate.
Financial Condition
Sprint's financial condition at September 30, 1996 compared with December 31,
1995, mainly reflects the completion of strategic initiatives during the first
half of 1996. Cash received from DT's and FT's investment in Sprint and
Cellular's repayment of intercompany debt was used to reduce short- and
long-term debt. In addition, Sprint used the cash to meet its commitments
related to Sprint Spectrum and to terminate an accounts receivable sales
agreement. The remaining proceeds have been invested on a temporary basis. As a
result, Sprint's debt-to-capital ratio improved to 28.4 percent at September 30,
1996 compared with 54.8 percent at December 31, 1995.
Liquidity and Capital Resources
Cash Flows - Operating Activities
Cash flows from the operating activities of Sprint's continuing operations were
$1.60 billion during the first nine months of 1996, compared with $1.76 billion
during the first nine months of 1995. During the first quarter of 1996, Sprint
terminated an accounts receivable sales agreement, resulting in a $600 million
increase in accounts receivable. Excluding the effect of this termination, cash
flows from continuing operations for the 1996 nine-month period increased $442
million compared with the same 1995 period, generally reflecting improved
operating results in all divisions.
Cash Flows - Investing Activities
Investing activities of Sprint's continuing operations used cash of $2.09
billion and $2.18 billion during the 1996 and 1995 year-to-date periods,
respectively. Capital expenditures were $1.57 billion and $1.28 billion during
the first nine months of 1996 and 1995, respectively. Long distance capital
expenditures totaled $646 million for the first nine months of 1996 compared
with $528 million for the same period in 1995. The 1996 expenditures were
incurred mainly 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 $887
million for the first nine months of 1996 compared with $728 million for the
same 1995 period. Due to the December 31, 1995 adoption of accounting principles
for a competitive marketplace, the local division now capitalizes switch
software costs. Previously, these costs were expensed as incurred. For the 1996
nine-month period, switch software costs totaled $62 million. The remaining 1996
capital expenditures were made to accommodate access line growth and to expand
the division's capabilities for providing enhanced telecommunications services.
During the first nine months of 1996, Sprint contributed $274 million to Sprint
Spectrum. These contributions were used to fund Sprint's portion of Sprint
Spectrum's capital and operating requirements. Sprint does not anticipate
additional capital contributions to Sprint Spectrum during the remainder of
1996. During the first nine months of 1995 Sprint contributed $892 million to
Sprint Spectrum. This contribution was used to fund Sprint's portion of payments
to the FCC for licenses acquired in the PCS auction as well as for capital and
operating requirements. Investments in affiliates for the nine months ended
September 1996 also includes cash of $39 million held by Sprint's international
operations at the time of the Contribution to Global One.
During August 1996, Sprint purchased $183 million (face value) of Sprint
Spectrum Senior Discount bonds for $100 million. Also in the third quarter of
1996, Sprint made a deposit of $84 million to participate in the FCC auction of
PCS licenses. See Joint Ventures - Sprint Spectrum for further discussion.
20
<PAGE>
In connection with the March 1996 spin-off of Cellular, Cellular repaid $1.4
billion of intercompany debt to Sprint. Prior to the spin-off, Cellular's 1996
investing activities required net cash of $141 million, primarily for the
acquisition of additional cellular properties and capital expenditures.
Cash Flows - Financing Activities
Financing activities provided cash of $684 million during the 1996 nine-month
period compared with $827 million in the same 1995 period. DT and FT acquired
shares of a new class of Sprint stock for a total of $3.7 billion. These
proceeds, together with the $1.4 billion received from Cellular as discussed
above, were used to reduce outstanding debt, meet commitments related to Sprint
Spectrum and terminate an accounts receivable sales agreement. The remaining
proceeds were invested on a temporary basis.
Financing activities during 1995 generally reflect debt issued in order to fund
commitments associated with Sprint Spectrum.
Capital Requirements
During 1996, Sprint anticipates funding annual capital expenditures of $2.2
billion and annual dividends of $425 million with cash flows from operating
activities (excluding the impact of the termination of the accounts receivable
sales agreement). Sprint expects to continue to reduce outstanding debt with
available cash.
In March 1996, the Sprint Board of Directors authorized the repurchase of up to
10 million shares of Sprint common stock, of which 9.4 million shares were
repurchased during the first nine months of 1996. In addition, in October 1996,
the Board of Directors authorized the repurchase of shares on the open market to
meet share issuance requirements of employee benefit plans and the conversion of
preferred stock through 1998. These requirements have historically been 4 to 5
million shares per year. Repurchased shares will be held as treasury stock until
reissued for these stated purposes.
Liquidity
As of September 30, 1996, Sprint had the ability to borrow $1.3 billion under a
revolving credit agreement with a syndicate 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 $900 million of debt securities pursuant to shelf registration statements
filed with the Securities and Exchange Commission.
The aggregate amount of additional borrowings that can be incurred is ultimately
limited by certain covenants contained in existing debt agreements. As of
September 30, 1996, Sprint had borrowing capacity of $12.9 billion under the
most restrictive of its debt covenants.
The most restrictive covenant applicable to dividends results from Sprint's
revolving credit agreement. Among other restrictions, the agreement requires
Sprint to maintain specified levels of consolidated net worth, as defined. Due
to this requirement, $2.48 billion of Sprint's $3.08 billion consolidated
retained earnings were effectively restricted from the payment of dividends as
of September 30, 1996.
General Hedging Policies
Sprint utilizes certain derivative instruments in an effort to manage exposure
to interest rate risk and foreign exchange risk. Sprint's use of these
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 the
agreements. However, since Sprint controls its exposure to credit risk through
credit approvals, credit limits, and internal monitoring procedures, Sprint
believes its credit risk exposure is limited.
21
<PAGE>
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.
Interest Rate Risk Management
Sprint's interest rate risk management program focuses on minimizing
vulnerability to movements in interest rates, setting an optimal mixture of
floating-rate and fixed-rate debt in the liability portfolio and preventing
liquidity risk. Sprint primarily employs a gap methodology to measure interest
rate exposure and utilizes simulation analysis to manage interest rate risk.
Sprint takes an active stance in modifying hedge positions to benefit from the
value of timing flexibility and fixed-rate/floating-rate adjustments.
Foreign Exchange Risk Management
Sprint's foreign exchange risk management program focuses on optimizing
consolidated cash flows and stabilizing accounting results. Sprint does not
hedge translation exposure because it believes optimizing consolidated cash
flows will, over time, maintain shareholder value. Sprint's primary transaction
exposure in foreign currencies results from changes in foreign exchange rates
between the dates Sprint incurs and settles liabilities (payable in a foreign
currency). These liabilities reflect charges from overseas telephone companies
for terminating international calls made by Sprint's domestic customers.
22
<PAGE>
PART II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended September 30,
1996.
Item 2. Changes in Securities
There were no reportable events during the quarter ended September 30,
1996.
Item 3. Defaults Upon Senior Securities
There were no reportable events during the quarter ended September 30,
1996.
Item 4. Submission of Matters to a Vote of Security Holders
There were no reportable events during the quarter ended September 30,
1996.
Item 5. Other Information
Sprint's ratios of earnings to fixed charges were 6.14 and 4.41 for the
three months ended September 30, 1996 and 1995, respectively, and 6.04
and 4.44 for the nine months ended September 30, 1996 and 1995,
respectively. These ratios have been computed by dividing fixed charges
into the sum of (a) income from continuing operations before taxes,
less capitalized interest and equity losses of less than 50 percent
owned entities included in income, and (b) fixed charges. Fixed charges
consist of interest on all indebtedness of continuing operations
(including amortization of debt issuance expenses), the interest
component of operating rents and the pre-tax cost of preferred stock
dividends of subsidiaries.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(3) Bylaws
(a) Bylaws, as amended
(10) Executive Compensation Plans and Arrangements:
(a) 1985 Stock Option Plan, as amended
(b) 1990 Stock Option Plan, as amended
(c) 1990 Restricted Stock Plan, as amended
(d) Executive Deferred Compensation Plan, as amended
(e) Management Incentive Stock Option Plan, as amended
(f) Long-Term Stock Incentive Program, as amended
23
<PAGE>
(g) Key Management Benefit Plan, as amended
(h) Directors Deferred Fee Plan, as amended
(i) Long-Term Incentive Compensation Plan, as amended
(j) Centel Stock Option Plan, as amended
(k) Summary of Executive Officer and Director Benefits
(11) Computation of Earnings Per Common Share
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedules:
(a) September 30, 1996 Financial Data Schedule
(b) September 30, 1995 Restated Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1996.
24
<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 8, 1996
25
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER
(3) Bylaws
(a) Bylaws, as amended
(10) Executive Compensation Plans and Arrangements:
(a) 1985 Stock Option Plan, as amended
(b) 1990 Stock Option Plan, as amended
(c) 1990 Restricted Stock Plan, as amended
(d) Executive Deferred Compensation Plan, as amended
(e) Management Incentive Stock Option Plan, as amended
(f) Long-Term Stock Incentive Program, as amended
(g) Key Management Benefit Plan, as amended
(h) Directors Deferred Fee Plan, as amended
(i) Long-Term Incentive Compensation Plan, as amended
(j) Centel Stock Option Plan, as amended
(k) Summary of Executive Officer and Director Benefits
(11) Computation of Earnings Per Common Share
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedules:
(a) September 30, 1996 Financial Data Schedule
(b) September 30, 1995 Restated Financial Data Schedule
<PAGE>
<PAGE>
EXHIBIT 3(a)
SPRINT CORPORATION
BYLAWS
ARTICLE I
Name and Location
SECTION 1. The name of the Corporation shall be the name
set forth in the Articles of Incorporation.
SECTION 2. The principal office of the Corporation is located at 2330
Shawnee Mission Parkway, Westwood, Kansas.
SECTION 3. Other offices for the transaction of business of the Corporation
may be located at such place in Kansas or elsewhere as the Board of Directors
may from time to time determine.
ARTICLE II
Capital Stock
SECTION 1. All certificates of stock shall be signed by the Chairman of the
Board of Directors, the President or a Vice President and the Secretary or an
Assistant Secretary, and sealed with the corporate seal.
SECTION 2. Transfers of stock shall be made on the books of the Corporation
upon the surrender of the old certificate properly endorsed, and said old
certificate shall be cancelled before a new certificate is issued.
SECTION 3. A new certificate of stock may be issued in the place of any
certificate theretofore issued, alleged to have been lost or destroyed, and the
Corporation may, in its discretion, require the owner of the lost or destroyed
certificate, or its legal representative, to give a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss of any certificate.
SECTION 4. No holder of shares of any class of this Corporation, or holder
of any securities or obligations convertible into shares of any class of this
Corporation, shall have any preemptive right whatsoever to subscribe for,
purchase or otherwise acquire shares of this Corporation of any class, whether
now or hereafter authorized; provided, however, that nothing in SECTION 4 shall
prohibit the Corporation from granting, contractually or otherwise, to any such
holder, the right to purchase additional securities of the Corporation.
<PAGE>
ARTICLE III
Stockholders' Meetings
SECTION 1. The annual meeting of the stockholders of the Corporation shall
be held on the third Tuesday of April in each year, either within or without the
State of Kansas, as may from time to time be determined by the Board of
Directors. At such meeting the stockholders shall elect directors in the manner
provided in the Articles of Incorporation of the Corporation. The stockholders
may transact such other business at such annual meetings as may properly come
before the meeting.
SECTION 2. A special meeting of the holders of any one or more classes of
the capital stock of the Corporation entitled to vote as a class or classes with
respect to any matter, as required by law or as provided in the Articles of
Incorporation, may be called at any time and place by the Chairman, the
President or the Board of Directors, and shall be called by the Chairman, the
President or the Secretary on the written request of the holders of record of a
majority of the shares of stock of such class or classes issued and outstanding
and entitled to vote.
SECTION 3. Notice of the time and place of all annual meetings and of the
time, place and purpose of all special meetings (other than meetings of the
holders of the Class A Stock separately as a class) shall be mailed by the
Secretary to each stockholder at his last known post office address as it
appears on the records of the Corporation at least twenty (20) days before the
date set for such meeting.
SECTION 4. Nominations of persons for election to the Board of the
Corporation at a meeting of the stockholders may be made by or at the direction
of the Board of Directors or may be made (a) in the case of persons to be
elected by stockholders other than the holders of Class A Stock, at a meeting of
stockholders by any stockholder of the Corporation who is not a holder of shares
of Class A Stock and who is entitled to vote for the election of Directors at
the meeting, and (b) in the case of persons to be elected by the holders of
shares of Class A Stock as provided for in the Articles of Incorporation of the
Corporation (the "Class A Directors"), at a meeting of stockholders by any
holder of shares of Class A Stock, in each case in compliance with the notice
procedures set forth in this SECTION 4 of ARTICLE III. Such nominations, other
than those made by or at the direction of the Board, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than fifty (50) days nor
more than seventy-five (75) days prior to the meeting; provided, however, that
in the event that less than sixty-five (65) days' notice or prior public
disclosure of the date of the meeting is given or made to
<PAGE>
stockholders, notice by the stockholder to be timely must be so received no
later than the close of business on the fifteenth (15th) day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a Director, (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the person and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of Directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of the stockholder
and (ii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of such proposed nominee to
serve as Director of the Corporation. No person shall be eligible for election
as a Director of the Corporation at a meeting of the stockholders (a) unless
such person has been nominated in accordance with the procedures set forth
herein; and (b) unless nominated by holders of the Class A Stock or the
Preferred Stock, such person is an Independent Nominee, as hereinafter defined,
provided that nominees need not be Independent Nominees if election of such
nominees would not result in less than a majority of the Board of Directors
following such election being Independent Directors (as such term is defined in
the Articles of Incorporation of the Corporation). If the facts warrant, the
Chairman of the meeting shall determine and declare to the meeting that a
nomination does not satisfy one or both of the requirements set forth in clauses
(a) and (b) of the preceding sentence and the defective nomination shall be
disregarded. As used herein, "Independent Nominee" means a person who, if
elected, would be an Independent Director as such term is defined in the
Articles of Incorporation of the Corporation. Nothing in this SECTION 4 shall be
construed to affect the requirements for proxy statements of the Corporation
under Regulation 14A of the Exchange Act.
SECTION 5. At any meeting of the stockholders (other than a separate
meeting of the holders of the Class A Stock), only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before a meeting (other than a separate meeting of the holders of the
Class A Stock), business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before a meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation.
<PAGE>
To be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the Corporation not less than
fifty (50) days nor more than seventy-five (75) days prior to the meeting;
provided, however, that in the event that less than sixty-five (65) days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received no
later than the close of business on the fifteenth (15th) day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each matter the stockholder proposes to
bring before the meeting, a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting, and (b) as to the stockholder giving the notice (i) the name and record
address of the stockholder, (ii) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the stockholder and (iii) any
material interest of the stockholder in such business. No business shall be
conducted at a meeting of the stockholders (other than a separate meeting of the
holders of the Class A Stock) unless proposed in accordance with the procedures
set forth herein. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the foregoing procedure and such business
shall not be transacted. To the extent this SECTION 5 shall be deemed by the
Board of Directors or the Securities and Exchange Commission, or finally
adjudged by a court of competent jurisdiction, to be inconsistent with the right
of stockholders to request inclusion of a proposal in the Corporation's proxy
statement pursuant to Rule 14a-8 promulgated under the Securities Exchange Act
of 1934, as amended, such rule shall prevail.
SECTION 6. The Chairman of the Board of Directors, or in his absence the
President, or in his absence or inability to act, a Vice President shall preside
at all stockholders' meetings (other than meetings of the holders of the Class A
Stock separately as a class).
SECTION 7. Except as otherwise provided in the Articles of Incorporation of
the Corporation, at each meeting of the stockholders, each stockholder shall be
entitled to cast one vote for each share of voting stock standing of record on
the books of the Corporation, in his name, and may cast such vote either in
person or by proxy. All proxies shall be in writing and filed with the Secretary
of the meeting.
SECTION 8. Except as otherwise provided in the Articles of Incorporation of
the Corporation, each stockholder other than a holder of shares of Class A Stock
shall have the right to vote, in person or by proxy, a number of votes equal to
the number of shares of stock owned by the stockholder for each Director to be
elected (other than those to be elected by the holders of shares of Class A
Stock as provided for in the Articles of Incorporation of the Corporation). Each
holder of shares of Class A Stock
<PAGE>
shall have the right to vote, in person or by proxy, a number of votes equal to
the number of shares of Class A Stock owned by such holder (or such other number
of votes as may be provided in the Articles of Incorporation of the Corporation)
for each director to be elected by the holders of Class A Stock as provided for
in the Articles of Incorporation of the Corporation. Stockholders shall not be
entitled to cumulative voting of their shares in elections of Directors.
SECTION 9. At any meeting held for the purpose of electing directors, (i)
the presence in person or by proxy of the holders of at least a majority of the
then outstanding shares of Class A Stock shall be required and be sufficient to
constitute a quorum of such class for the election by such class of Class A
Directors and (ii) the presence in person or by proxy of the holders of at least
a majority of the then outstanding voting shares of the Corporation other than
the Class A Stock shall be required and be sufficient to constitute a quorum for
the election of directors other than Class A Directors. At any such meeting or
adjournment thereof the absence of a quorum of the holders of Class A Stock
shall not prevent the election of directors other than Class A Directors, and
the absence of a quorum of the holders of voting shares other than Class A Stock
shall not prevent the election of Class A Directors. At a meeting held for any
purpose other than the election of directors, shares representing a majority of
the votes entitled to be cast on such matter, present in person or represented
by proxy, shall constitute a quorum. In the absence of the required quorum at
any meeting of stockholders, a majority of such holders present in person or by
proxy shall have the power to adjourn the meeting, from time to time, without
notice (except as required by law) other than an announcement at the meeting,
until a quorum shall be present.
SECTION 10. At each of the annual stockholders' meetings, one of the
executive officers of the Corporation shall submit a statement of the business
done during the preceding year, together with a report of the general financial
condition of the Corporation.
ARTICLE IV
Directors
SECTION 1. The business and property of the Corporation shall be managed by
a Board consisting of such number of Directors as is determined from time to
time in accordance with the provisions of the Articles of Incorporation of the
Corporation. The Board of Directors may elect one of their number to act as
Chairman of the Board.
SECTION 2. Each Director upon his election shall qualify
by filing his written acceptance with the Secretary or an
Assistant Secretary and by fulfilling any prerequisite to
<PAGE>
qualification that may be set forth in the Articles of
Incorporation of the Corporation.
SECTION 3. The annual meeting of the directors shall be held immediately
after the adjournment of each annual meeting of the stockholders and in the
event a quorum is not present, said meeting shall be held within ten days after
adjournment upon proper notice by the Chairman of the Board of Directors, the
President or a Vice President.
SECTION 4. Special meetings of the Board of Directors may be called at any
time or place by the Chairman of the Board or by the President, and in the
absence or inability of either of them to act, by a Vice President, and may also
be called by any two members of the Board. By unanimous consent of the
directors, special meetings of the Board may be held without notice, at any time
and place.
SECTION 5. Notice of all regular and special meetings of the Board of
Directors or the Executive Committee or any committee established pursuant to
SECTION 12 of ARTICLE IV (an "Other Committee") shall be sent to each Director
or member of such committee, as the case may be, by the Secretary, by a means
reasonably calculated to be received at least seven (7) days prior to the time
fixed for such meeting, or notice of special meetings of the Board of Directors
or the Executive Committee or any Other Committee may be given by telephone,
telegraph, telefax or telex to each Director or member of such committee, as the
case may be, at least twenty-four (24) hours prior to the time fixed for such
meeting, or on such shorter notice as the person or persons calling the meeting
may reasonably deem necessary or appropriate in the circumstances. To the extent
provided in the notice of the meeting or as otherwise determined by the Chairman
of the Board or the Board of Directors, Directors may participate in any regular
or special meeting by means of conference telephone or similar communications
equipment which allows all persons participating in such meeting to hear each
other, and participation in such meeting by means of such a device shall
constitute presence in person at such meeting. In addition, Class A Directors
who have not received notice of any special meeting of the Board of Directors or
the Executive Committee or any Other Committee, as the case may be, at least six
(6) days prior to the time fixed for such meeting may participate in such
meeting by means of conference telephone or similar communications equipment
which allows all persons participating in such meeting to hear each other, and
participation in such meeting by means of such a device shall constitute
presence in person at such meeting.
SECTION 6. Except as otherwise provided in the Articles of Incorporation of
the Corporation, a quorum for the transaction of business at any meeting of the
directors shall consist of a majority of the members of the Board, but the
directors present, although less than a quorum, shall have the power to adjourn
the meeting from time to time or to some future date.
<PAGE>
SECTION 7. The directors shall elect the officers of the Corporation and
fix their salaries. Such election shall be made at the Directors' meeting
following each annual stockholders' meeting.
SECTION 8. The Board of Directors from time to time, as they may deem
proper, shall have authority to appoint a general manager, counsel or attorneys
and other employees for such length of time and upon such terms and conditions
and at such salaries as they may deem necessary and/or advisable.
SECTION 9. The members of the Board of Directors shall receive compensation
for their services in such amount as may be reasonable and proper and consistent
with the time and service rendered. The members of the Board of Directors shall
receive the reasonable expenses necessarily incurred in the attendance of
meetings and in the transaction of business for the Corporation.
SECTION 10.
(a) Indemnification.
(1) Actions Other Than Those by or in the Right of the
Corporation. The Corporation shall indemnify any
person who was or is a party or is threatened to
be made a party to any threatened, pending or
completed action, suit or proceeding, whether
civil, criminal, administrative or investigative
(other than an action by or in the right of the
Corporation) by reason of the fact that such
person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at
the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by
such person in connection with such action, suit
or proceeding if such person acted in good faith
and in a manner such person reasonably believed to
be in or not opposed to the best interests of the
Corporation (or such other corporation or
organization), and, with respect to any criminal
action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the
person did not act in good faith and in a manner
which such person reasonably believed to be in or
not opposed to the best interests of the
Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to
believe that such person's conduct was unlawful.
<PAGE>
(2) Action by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to
any threatened, pending or completed action or
suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the
fact that such person is or was a director,
officer, employee or agent of the Corporation, or
is or was serving at the request of the
Corporation as a director, officer, employee or
agent of another corporation, partnership, joint
venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection
with the defense or settlement of such action or
suit if such person acted in good faith and in a
manner such person reasonably believed to be in or
not opposed to the best interests of the
Corporation (or such other corporation or
organization) and except that no indemnification
shall be made in respect of any claim, issue or
matter as to which such person shall have been
adjudged to be liable to the Corporation (or such
other corporation or organization) unless and only
to the extent that the court in which such action
or suit was brought shall determine upon
application that, despite the adjudication of
liability but in view of all the circumstances of
the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such
court shall deem proper.
(3) Successful Defense of Action. Notwithstanding,
and without limitation of, any other provision of
this SECTION 10, to the extent that a director,
officer, employee or agent of the Corporation has
been successful on the merits or otherwise in
defense of any action, suit or proceeding referred
to in paragraph (1) or (2) of this sub-Section
(a), or in defense of any claim, issue or matter
therein, such director, officer, employee or agent
shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred
by such person in connection therewith.
(4) Determination Required. Any indemnification under
paragraph (1) or (2) of this sub-Section (a)
(unless ordered by a court) shall be made by the
Corporation only as authorized in the specific
case upon a determination that indemnification of
the director, officer, employee or agent is proper
in the circumstances because such director,
officer, employee or agent has met the applicable
standard of conduct set forth in said paragraph.
Such determination shall be made (i) by the Board
<PAGE>
of Directors by a majority vote of a quorum consisting of
directors who were not parties to the particular action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
stockholders.
(5) Advance of Expenses. Expenses incurred in
defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in
advance of the final disposition of such action,
suit or proceeding upon receipt of a satisfactory
undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if
it shall ultimately be determined that such person
is not entitled to be indemnified by the
Corporation as authorized in this sub-Section (a).
(b) Insurance. The Corporation may, when authorized by the
Board of Directors, purchase and maintain insurance on
behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such
person and incurred by such person in any such
capacity, or arising out of such person's status as
such, whether or not the Corporation would have the
power to indemnify him against such liability under the
provisions of sub-Section (a). The risks insured under
any insurance policies purchased and maintained on
behalf of any person as aforesaid or on behalf of the
Corporation shall not be limited in any way by the
terms of this SECTION 10 and to the extent compatible
with the provisions of such policies, the risks insured
shall extend to the fullest extent permitted by law,
common or statutory.
(c) Nonexclusivity; Duration. The indemnifications and
rights provided by, or granted pursuant to, this
SECTION 10 shall not be deemed exclusive of any other
indemnifications, rights or limitations of liability to
which any person may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested
directors, or otherwise, either as to action in such
person's official capacity or as to action in another
capacity while holding office, and they shall continue
although such person has ceased to be a director,
officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and
administrators. The authorization to purchase and
maintain insurance set forth in sub-Section (b) shall
likewise not be deemed exclusive.
<PAGE>
SECTION 11. The Chief Executive Officer of the Corporation, together with
no more than five additional Directors elected by stockholders other than
holders of shares of Class A Stock, and at least one Class A Director selected
by the holders of a majority of the shares of Class A Stock, shall constitute an
Executive Committee of the Board of Directors. The Executive Committee between
regular meetings of the Board of Directors shall manage the business and
property of the Corporation and shall have the same power and authority as the
Board of Directors; provided, however, the Executive Committee shall not act
(other than to make recommendations) in those cases where it is provided by law
or by the Articles of Incorporation of the Corporation that any vote or action
in order to bind the Corporation shall be taken by the Directors. Members of the
Executive Committee may participate in any meeting of the Executive Committee by
means of conference telephone or similar communications equipment which allows
all persons participating in the meeting to hear each other, and participation
in a meeting by means of such a device shall constitute presence in person at
such meeting.
The Executive Committee shall keep a record of its proceedings and may hold
meetings upon one (1) day's written notice or upon waiver of notice signed by
the members either before or after said Executive Committee meeting.
A majority of the Executive Committee shall constitute a quorum for the
transaction of business at any meeting for which notice has been given to all
members in accordance with ARTICLE IV, SECTION 5 hereof or for which notice has
been waived by all members.
SECTION 12. If the Board of Directors shall form any committee other than
the Executive Committee, such committee shall have at least one member who is a
Class A Director; provided, however, that no Class A Director shall be a member
of (i) any committee established pursuant to the provisions of any law relating
to the national security of the United States, (ii) any committee the membership
on which by such a director would be prohibited by any law or by the rules of
the New York Stock Exchange or (iii) the compensation committee, if the Board of
Directors determines that such a director would not be considered a
"non-employee director" within the meaning of Rule 16b- 3(b)(3)(i) promulgated
under the Securities Exchange Act of 1934, as amended. Any committee so formed,
to the extent provided in the resolution of the Board of Directors pursuant to
which it was formed or in the Bylaws or pursuant to the statutes of Kansas,
shall have and may exercise all the powers and authority of the Board of
Directors.
<PAGE>
ARTICLE V
Officers
SECTION 1. The officers of this Corporation shall be a Chairman of the
Board of Directors, a President, as many Vice Presidents as the Board of
Directors may from time to time deem advisable and one or more of which may be
designated Executive Vice President or Senior Vice President, a Secretary, a
Treasurer, and such Assistant Secretaries and Assistant Treasurers as the Board
of Directors may from time to time deem advisable, and such other officers as
the Board of Directors may from time to time deem advisable and designate. The
Chairman of the Board of Directors shall be a member of and be elected by the
Board of Directors. All other officers shall be elected by the Board of
Directors. All officers shall hold office until their respective successors are
elected and shall have qualified. Any two of said offices may be held by one
person except the office of President and Vice President.
SECTION 2. The Chairman of the Board of Directors shall preside at all
meetings of the Directors and stockholders at which he is present and shall have
such other duties, power and authority as may be prescribed by the Board of
Directors from time to time. The Board of Directors may designate the Chairman
of the Board as the Chief Executive Officer of the Corporation with all of the
powers otherwise conferred upon the President of the Corporation under these
Bylaws, or it may, from time to time, divide the responsibilities, duties and
authority for the general control and management of the Corporation's business
and affairs between the Chairman of the Board and the President.
SECTION 3. Unless the Board of Directors otherwise provides, the President
shall be the Chief Executive Officer of the Corporation with such general
executive powers and duties of supervision and management as are usually vested
in such office and shall perform such other duties as are authorized by the
Board of Directors. The Chairman of the Board or the President shall sign
contracts, certificates and other instruments of the Corporation as authorized
by the Board of Directors. If the Chairman of the Board is designated as the
Chief Executive Officer of the Corporation, the President shall perform such
duties as may be delegated to him by the Board of Directors and as are conferred
by law exclusively upon such office.
SECTION 4. A Vice President shall have right and power to perform all
duties and exercise all authority of the President, in case of absence of the
President or upon vacancy in the office of President, and shall have all power
and authority usually enjoyed by a person holding the office of Vice President.
SECTION 5. The Secretary shall issue notices of all directors' and
stockholders' meetings, and shall attend and keep the minutes of the same; shall
have charge of all corporate books, records and papers; shall be custodian of
the corporate seal; shall attest with his signature, which may be a facsimile
<PAGE>
signature if authorized by the Board of Directors, and impress with the
corporate seal, all stock certificates and written contracts of the Corporation;
and shall perform all other duties as are incident to his office. Any Assistant
Secretary, in the absence or inability of the Secretary, shall perform all
duties of the Secretary and such other duties as may be required.
SECTION 6. The Treasurer shall have custody of all money and securities of
the Corporation and shall give bond in such sum and with such sureties as the
directors may specify, conditioned upon the faithful performance of the duties
of his office. He shall keep regular books of account and shall submit them,
together with all his records and other papers, to the directors for their
examination and approval annually; and semi-annually, or when directed by the
Board of Directors, he shall submit to each director a statement of the
condition of the business and accounts of the Corporation; and shall perform all
such other duties as are incident to his office. An Assistant Treasurer, in the
absence or inability of the Treasurer, shall perform all the duties of the
Treasurer and such other duties as may be required.
SECTION 7. Any officer or employee of the Corporation shall give such bond
for the faithful performance of his duties in such sum, as and when the Board of
Directors may direct.
ARTICLE VI
Dividends
SECTION 1. Dividends shall be paid out of the net income or earned surplus
of the Corporation, determined after making proper provision for required
sinking fund deposits for debt obligations and proper provisions for working
capital and such reserves as may be required by good and generally accepted
accounting practice, when declared from time to time by resolution of the Board
of Directors. No such dividends shall be declared or paid which will impair the
capital of the Corporation.
ARTICLE VII
Amendments
SECTION 1. Except as otherwise provided in the Articles of Incorporation of
the Corporation and SECTION 2 of this ARTICLE VII, the Bylaws may be amended,
altered or repealed by the Board of Directors, subject to the power of
stockholders to amend, alter or repeal the Bylaws; or the Bylaws shall be
amended in such other manner as may from time to time be authorized by the laws
of the State of Kansas.
<PAGE>
SECTION 2. The following provisions of the Bylaws may not be amended,
altered, repealed or made inoperative or ineffective by adoption of other
provisions to the Bylaws without the affirmative vote of the holders of record
of a majority of the shares of Class A Stock then outstanding, voting separately
as a class, at any annual or special meeting of stockholders, the notice of
which shall have specified or summarized the proposed amendment, alteration or
repeal of the Bylaws: ARTICLE III, SECTIONS 2, 4, 5, 8 and 9; ARTICLE IV,
SECTIONS 5, 6, 10, 11 and 12; ARTICLE VI, SECTION 1; and ARTICLE VII, SECTIONS 1
and 2.
ARTICLE VIII
Corporate Seal
SECTION 1. The corporate seal of this Corporation shall have inscribed
thereon the name of the Corporation and its state of incorporation and the
words, "Seal - Incorporated 1938".
AMENDED: October 8, 1996 - Section 12, Article IV
<PAGE>
EXHIBIT 10(a)
1985 STOCK OPTION PLAN
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 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
<PAGE>
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 3,152,618 (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.
---------------------------------
(f1) The initial number of shares authorized was doubled due to the December,
1989 two-for-one stock split.
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.
<PAGE>
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 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) Limitations on Transfer. Options may not be transferred, levied,
garnished, executed upon, subjected to a security interest, or assigned to any
person other than the optionee, except that the optionee may transfer a
nonqualified option to a trust of which the optionee is the sole beneficiary
during his lifetime. Upon the death of the optionee, the trustee of such trust
may exercise any options to which the trustee has legal title on or before the
expiration date of such options, and shares issued pursuant to such exercise
shall be issued to the trustee. Documents evidencing the transfer of any option
and the identity of the trustee shall be in such form as may be required by the
Secretary of the Company.
(c) Post-Employment Exercise of Options. An
optionee whose employment has terminated may
exercise an option issued under the Plan on or
before the expiration date of the option and
within a period following his termination of
(1) (A) 12 months in the case of Incentive Stock
Options and
(B) 60 months, in the case of all other
options
<PAGE>
held by an optionee who is a retiree of the Company (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) or
who terminated by reason of permanent and total disability;
(2) 12 months in the case of options held by an
optionee whose employment terminated by reason
of his death;
(3) 3 months in the case of options held by an
optionee whose employment terminated voluntarily;
and
(4) 3 months in the case of options held by an
optionee whose employment terminated involuntarily
other than for cause.
An optionee whose employment has been terminated for cause, as determined
by the Committee, shall forfeit all his outstanding options immediately upon
termination of his employment, and the Secretary of the Corporation may suspend
processing of stock option exercises of any optionee with respect to whom any
officer of the Company has notified the Secretary of probable termination for
cause until the next scheduled meeting of the Committee, at which meeting a
final and binding determination of the Committee with respect to such optionee's
termination for cause shall be made.
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 terminates may be exercised during the period following
such termination. For purposes of this Plan, an employee who becomes employed by
Sprint Spectrum L.P., Global One, or Alcatel, N.V. (each, together with their
subsidiaries, an "Affiliated Entity"), shall not, except with respect to
incentive stock options, be considered to have terminated employment with the
Company or a subsidiary of the Company until his employment is terminated with
all Affiliated Entities without becoming employed by the Company or its
subsidiaries.
(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) Exercise After Death of Employee; Designation of Beneficiaries. An
option exercisable upon the death of an employee may be exercised by (i) the
executor or administrator of the optionee's estate, (ii) by the person or
persons to whom the optionee's rights under the option pass by the optionee's
will or the laws of descent and distribution, (iii) by a trustee to whom legal
title to the option has been transferred in accordance with this plan, or (iv)
the beneficiary designated by the optionee in accordance with the following
paragraph.
An optionee may designate a beneficiary or beneficiaries to exercise
unexpired options and to own shares issued upon any such exercise after the
optionee's death without order of any probate court or otherwise. A beneficiary
so designated may exercise an option upon presentation to the Company of
evidence satisfactory to the Secretary of (1) the beneficiary's identity and (2)
the death of the optionee. An optionee may change any beneficiary designation at
anytime before his death but may not do so
<PAGE>
by testamentary designation in his will or otherwise. Beneficiary designations
must be made in writing on a form provided by the Secretary. Beneficiary
designations shall become effective on the date that the form, properly
completed, signed and notarized, is received by the Secretary. Any designation
of a beneficiary with respect to any option shall be deemed canceled upon the
transfer of such option to an inter vivos trust in accordance with the terms of
the Plan.
(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 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
<PAGE>
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. In lieu of the delivery of
physical certificates, the optionee may deliver shares in payment of the
exercise price by attesting, on a form established for such purpose by the
Secretary, to the ownership, either outright or through ownership of a broker
account, of a sufficient number of shares held for a period of at least six
months to pay the exercise price. The attestation must be notarized and signed
by the optionee's spouse if the spouse is a joint owner of the shares with
respect to which such attestation is made and must be accompanied by such
documentation as the Corporate Secretary may consider necessary to evidence
actual ownership of such shares. 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. At any time on or before the
13th calendar month preceding the date on which restrictions on shares of
restricted stock would otherwise lapse, the optionee may elect to extend the
vesting period on all but not a portion of such shares by six months or any
multiple of six months.
(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.
<PAGE>
(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
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 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
<PAGE>
(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 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
<PAGE>
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 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).
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
<PAGE>
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 (including a spin-off), 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 material 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. 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, 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:
<PAGE>
(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 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;
<PAGE>
(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 withholding 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.
<PAGE>
EXHIBIT 10(b)
1990 STOCK OPTION PLAN
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 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
<PAGE>
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 20,441,564 (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 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
<PAGE>
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:
(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) Limitations on Transfer. Options may not be transferred, levied,
garnished, executed upon, subjected to a security interest, or assigned to any
person other than the optionee, except that the optionee may transfer an option
to a trust of which the optionee is the sole beneficiary during his lifetime.
Upon the death of the optionee, the trustee of such trust may exercise any
options to which the trustee has legal title on or before the expiration date of
such options, and shares issued pursuant to such exercise shall be issued to the
trustee. Documents evidencing the transfer of any option and the identity of the
trustee shall be in such form as may be required by the Secretary of the
Company.
(c) Post-Employment Exercise of Options. An optionee whose employment has
terminated may exercise an option issued under the Plan only during the term of
his employment and within a period following his termination of
(1) (A) 12 months in the case of Incentive Stock Options and
(B) 60 months, in the case of all other options held by an optionee who is
a retiree of the Company (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) or
who terminated by reason of permanent and total disability;
(2) 12 months in the case of options held by an optionee whose employment
terminated by reason of his death;
<PAGE>
(3) 3 months in the case of options held by an optionee whose employment
terminated voluntarily; and
(4) 3 months in the case of options held by an optionee whose employment
terminated involuntarily other than for cause.
An optionee whose employment has been terminated for cause, as determined
by the Committee, shall forfeit all his outstanding options immediately upon
termination of his employment, and the Secretary of the Corporation may suspend
processing of stock option exercises of any optionee with respect to whom any
officer of the Company has notified the Secretary of probable termination for
cause until the next scheduled meeting of the Committee, at which meeting a
final and binding determination of the Committee with respect to such optionee's
termination for cause shall be made.
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 terminates may be exercised during the period following
such termination. For purposes of this Plan, an employee who becomes employed by
Sprint Spectrum L.P., Global One, or Alcatel, N.V. (each, together with their
subsidiaries, an "Affiliated Entity"), shall not, except with respect to
incentive stock options, be considered to have terminated employment with the
Company or a subsidiary of the Company until his employment is terminated with
all Affiliated Entities without becoming employed by the Company or its
subsidiaries.
(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) Exercise After Death of Employee; Designation of Beneficiaries. An
option exercisable upon the death of an employee may be exercised by (i) the
executor or administrator of the optionee's estate, (ii) by the person or
persons to whom the optionee's rights under the option pass by the optionee's
will or the laws of descent and distribution, (iii) by a trustee to whom legal
title to the option has been transferred in accordance with this plan, or (iv)
the beneficiary designated by the optionee in accordance with the following
paragraph.
An optionee may designate a beneficiary or beneficiaries to exercise
unexpired options and to own shares issued upon any such exercise after the
optionee's death without order of any probate court or otherwise. A beneficiary
so designated may exercise an option upon presentation to the Company of
evidence satisfactory to the Secretary of (1) the beneficiary's identity and (2)
the death of the optionee. An optionee may change any beneficiary designation at
anytime before his death but may not do so by testamentary designation in his
will or otherwise. Beneficiary designations must be made in writing on a form
provided by the Secretary. Beneficiary designations shall become effective on
the date that the form, properly completed, signed and notarized, is received by
the Secretary. Any designation of a beneficiary with respect to any option shall
be deemed canceled upon the transfer of such option to an inter vivos trust in
accordance with the terms of the Plan.
<PAGE>
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 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
<PAGE>
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.
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.
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
<PAGE>
surrender of stock certificates representing like common stock of the Company.
In lieu of the delivery of physical certificates, the optionee may deliver
shares in payment of the exercise price by attesting, on a form established for
such purpose by the Secretary, to the ownership, either outright or through
ownership of a broker account, of a sufficient number of shares held for a
period of at least six months to pay the exercise price. The attestation must be
notarized and signed by the optionee's spouse if the spouse is a joint owner of
the shares with respect to which such attestation is made and must be
accompanied by such documentation as the Corporate Secretary may consider
necessary to evidence actual ownership of such shares. 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. At any time on or before the
13th calendar month preceding the date on which restrictions on shares of
restricted stock would otherwise lapse, the optionee may elect to extend the
vesting period on all but not a portion of such shares by six months or any
multiple of six months.
(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
7(a))
<PAGE>
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 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
<PAGE>
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 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 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
<PAGE>
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
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).
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,
<PAGE>
stock split-up, combination of shares, or a dividend payable in capital stock
(including a spin-off), 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 material
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. 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 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
<PAGE>
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 withholding 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.
<PAGE>
EXHIBIT 10(c)
1990 RESTRICTED STOCK PLAN
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, 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.
<PAGE>
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 577,482 (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:
(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
<PAGE>
the granting of the restricted stock. At any time on or before the
13th calendar month preceding the date on which restrictions on shares
of restricted stock would otherwise lapse, the grantee may elect to
extend the period of restriction on all but not a portion of such
shares by six months or any multiple of six months.
(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. For purposes of this Plan,
an employee who becomes employed by Sprint Spectrum L.P., Global One,
or Alcatel, N.V. (each, together with their subsidiaries, an
"Affiliated Entity"), shall not, except with respect to incentive
stock options, be considered to have terminated employment with the
Company or a subsidiary of the Company until his employment is
terminated with all Affiliated Entities without becoming employed by
the Company or its subsidiaries.
(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
<PAGE>
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 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.
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.
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
<PAGE>
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
employee. The employee shall execute the written Agreement and stock powers
within said 60-day period.
<PAGE>
Exhibit 10(d)
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 Cellular. "Cellular" means Sprint Cellular
Company, however renamed, or any successor thereto.
2.5 Cellular Insider. "Cellular Insider" means, as of any time when the
determination thereof is relevant, any Participant subject to liability under
Section 16 of the Securities Exchange Act of 1934 with respect to trading in the
equity securities of Cellular.
<PAGE>
2.6 Cellular Share Unit. "Cellular Share Unit" means
a measure of participation under the Plan having a
value based on the market value of one share of common
stock of Cellular after the distribution thereof by the
Company to the Company's shareholders.
2.7 Committee. "Committee" means Deferred
Compensation Committee appointed to review the Plan
decisions pursuant to Article III.
2.8 Company. "Company" means Sprint Corporation, or
any successor thereto.
2.9 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.
(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.
2.10 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.
2.11 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 C, Account
AA, Account BB, and Account CC elections.
For Account AA two sub-accounts (a Retirement Deferred Benefit Account and a
Termination Deferred Benefit Account) shall be maintained to
<PAGE>
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.
For Account CC two sub-accounts (a Retirement Deferred Benefit Account and a
Termination Deferred Benefit Account) shall be maintained to reflect the
crediting of Cellular Share Units with respect to Share Units in the respective
sub-accounts of the Account BB with respect to which the Cellular Share Units
were credited pursuant to Section 6.3(b).
A Participant's Deferred Benefit Accounts shall be used 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.
2.12 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.
2.13 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.
2.14 Distribution Agreement. "Distribution Agreement"
means the agreement entered into by the Company,
Cellular, and Centel Corporation for the purpose of
providing for the distribution by the Company of its
stock in Cellular to the Company's stockholders.
2.15 Distribution Dividend Rate. "Distribution
Dividend Rate" means the Dividend Rate as defined in
the Distribution Agreement.
2.16 Distribution Time. "Distribution Time" is defined
in the Distribution Agreement.
2.17 Early Retirement Date. "Early Retirement Date"
means the date on which the Participant actually
terminates employment following the first
<PAGE>
day of the month coincidental with or next following a Participant's attainment
of age fifty-five (55), but before his Normal Retirement Date.
2.18 Employer. "Employer" means Sprint Corporation,
any successor to the business thereof or any affiliate
or subsidiary designated by the Board.
2.19 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 Internal Revenue Code shall be to that
section as it is renumbered, amended, supplemented or
re-enacted.
2.20 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.
2.21 Normal Retirement Age. "Normal Retirement Age"
means the time at which a Participant attains age sixty
- -five (65).
2.22 Normal Retirement Date. "Normal Retirement Date"
means the first day of the month coincidental with or
next following a Participant's Normal Retirement Age.
2.23 Participant. "Participant" means any individual
who is designated by the Company in accordance with
paragraph 4.1 to participate in this
<PAGE>
Plan and who elects to participate by filing a Participation Agreement as
provided in Article IV.
2.24 Participation Agreement. "Participation Agreement" means the agreement, in
a form prescribed by the Company, filed by a Participant before 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.
2.25 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 amendment and revision of, the United
Telecommunications, Inc. 1985 Executive Deferred
Compensation Plan adopted February 12, 1985.
2.26 Plan Administrator. "Plan Administrator" means
the person appointed by the Company to represent the
Company in the administration of this Plan.
2.27 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.
2.28 Retirement Plan. "Retirement Plan" means the
Sprint Retirement Pension Plan, as amended from time to
time.
2.29 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.
2.30 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.
2.31 Sprint Insider. "Sprint Insider" means, as of any time when the
determination thereof is relevant, any Participant subject to liability under
Section 16 of the Securities Exchange Act of 1934 with respect to trading in the
equity securities of the Company.
2.32 Transition Date. "Transition Date" means May 1,
1990.
<PAGE>
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.
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
<PAGE>
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, or any other employees designated by
the Committee, 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 before 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 Maximum
Deferral Deferral
<S> <C> <C>
With respect $300 per month 50% of Base
to initial Salary
Base Salary
Deferrals
With respect $100 per month 50% of Base
to
<PAGE>
<CAPTION>
Minimum Maximum
Deferral Deferral
<S> <C> <C>
Subsequent Salary
Base Salary
Deferrals
With respect 25% of 100% of
to Annual Annual Annual
Incentive Incentive Incentive
Compen- Compen- Compen-
sation sation sation
With respect 25% of Long- 100% of
to Long-Term Term Incentive Long-Term
Incentive Compensation Incentive
Compen- Compen-
sation sation
</TABLE>
(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.
<PAGE>
4.3 Additional Participation Agreements. A Participant may enter into additional
Participation Agreements by filing a Participation Agreement with the Company
before 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.
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 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
<PAGE>
Employer's life insurance or disability plans or Employees Stock Purchase Plan
now in existence or adopted after the effective date of this Plan.
5.3 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.
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.
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
<PAGE>
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 Creation of Accounts AA, BB, C, and CC.
(a) 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.
(b) Accounts C and CC. On the Determination Date first following the
Distribution Time, there shall be credited to Accounts C and CC, created
for each Participant having a positive balance in an Account B or BB with
respect to any Plan Year, a number of Cellular Share Units determined as
follows:
(1) one Cellular Share Unit in Account C for each Distribution Dividend
Rate number of Share Units in Account B for such Participant for such
Plan Year as of the Distribution Time; and
(2) one Cellular Share Unit in the Retirement
Deferred Benefit Account of Account CC for
each Distribution Dividend Rate number of
Share Units in the Retirement Deferred
Benefit Account of Account BB for such
Participant for such Plan Year as of the
Distribution Time; and.
<PAGE>
(3) one Cellular Share Unit in the Termination
Deferred Benefit Account of Account CC for
each Distribution Dividend Rate number of
Share Units in the Termination Deferred
Benefit Account of Account BB for such
Participant for such Plan Year as of the
Distribution Time.
6.4 Maintenance of 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. 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 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 Maintenance of Share Unit Accounts.
(a) Maintenance of Accounts B and BB.
(1) Conversion between Dollar Amounts and Share
Units in Accounts B and BB. When an amount
is to be added to a Participant's Deferred
Benefit Accounts B or BB, it shall be
converted into Share Units, or fractions
thereof, by dividing the amount to be
credited by the closing price of the
Company's common stock as reported by the New
York Stock Exchange on the last trading day
on or before the Determination Date. When a
number of Share Units is to be subtracted
from a Participant's Deferred Benefit
Accounts B or BB, such number of Share Units
shall be converted into a dollar amount by
multiplying such number of Share Units by the
closing price of the Company's common stock
as reported by the New York Stock Exchange on
the last trading day on or before the
Determination Date.
(2) Sub-accounts to be Maintained for Purposes of
Computing Retirement and Termination
Benefits. Two sub-accounts shall be
maintained for Account BB: (i) a
<PAGE>
Retirement Deferred Benefit Account which shall include the transfer
from Account B into Account BB described in paragraph 6.3(a) plus
amounts transferred from the Account AA Retirement Deferred Benefit
Account, if any, plus other additions pursuant to this paragraph
6.5(a); and (ii) a Termination Deferred Benefit Account which shall
include the transfer from Account B into Account BB described in
paragraph 6.3(a) plus amounts transferred from the Account AA
Termination Deferred Benefit Account, if any, plus other additions
pursuant to this paragraph 6.5(a).
(3) Dividends. 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.
(4) [Deleted]
(5) Effect of Recapitalization. In the event of
a stock dividend, stock split, or other
corporate reorganization involving the
Company'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 Company's
capital structure.
(6) Conversion of Share Units to Dollars on Dis
tribution. Share Units in Accounts B and BB
shall be converted to an equivalent dollar
amount before any distribution thereof to a
Participant pursuant to Article VII. For
purposes of distribution, the value of a
Share Unit shall be the average closing price
of the Company's common stock on the New York
Stock Exchange on the last trading day of
each of the twelve calendar months
immediately preceding the date of
distribution. If a Participant elects
payment in other than a lump sum, Share Units
shall be so converted to a dollar amount with
respect to each payment made in the
<PAGE>
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)(3), 6.5(a)(4), and
6.5(a)(5). For such purposes, a Participant that is a Sprint Insider
immediately before the event that entitles the Participant to
distribution shall be deemed a Sprint Insider during the period of
distribution.
(b) Maintenance of Accounts C and CC.
(1) Conversion between Dollar Amounts and
Cellular Share Units in Accounts B and
BB. When an amount is to be added to a
Participant's Deferred Benefit Accounts C or
CC, it shall be converted into Cellular Share
Units, or fractions thereof, by dividing the
amount to be credited by the closing price of
Cellular's common stock as reported by the
New York Stock Exchange on the last trading
day on or before the Determination Date.
When a number of Cellular Share Units is to
be subtracted from a Participant's Deferred
Benefit Accounts C or CC, such number of
Cellular Share Units shall be converted into
a dollar amount by multiplying such number of
Cellular Share Units by the closing price of
Cellular's common stock as reported by the
New York Stock Exchange on the last trading
day on or before the Determination Date.
(2) Sub-accounts to be Maintained for Purposes of
Computing Retirement and Termination
Benefits. Two sub-accounts shall be
maintained for Account CC: (i) a Retirement
Deferred Benefit Account which shall include
the value of the Cellular Share Units
credited pursuant to paragraph 6.3(b)(2) plus
other additions pursuant to this paragraph
6.5(b) and (ii) a Termination Deferred
Benefit Account which shall include the value
of the Cellular Share Units credited pursuant
to paragraph 6.3(b)(3) plus other additions
pursuant to this paragraph 6.5(b).
(3) Dividends to non-Cellular Insiders. For all Participants other than
Cellular Insiders, when a dividend is declared and paid by Cellular on
its common stock, an amount shall be credited to the Participant's
Accounts C and CC as
<PAGE>
though the same dividend had been paid on the Cellular Share Units in
such accounts as of the Determination Date immediately preceding the
declaration of the dividend, and such amount shall be converted to
Cellular Share Units. Such amount shall be valued as of the
Determination Date immediately preceding the declaration of the
dividend.
(4) Dividends to Cellular Insiders. For
Participants that are Cellular Insiders, when
a cash dividend is declared and paid by
Cellular on its common stock, an amount equal
to such dividend shall be credited to the
Participant's Account A or Account AA with
respect to Cellular Share Units in Accounts C
or CC, respectively as of the Determination
Date immediately preceding the declaration of
the dividend.
(5) Effect of Recapitalization. In the event of
a stock dividend, stock split or other
corporate reorganization involving Cellular's
common stock, the Company shall make
equitable adjustment to the number of
Cellular Share Units credited to a
Participant's Accounts C and CC as may be
necessary to give effect to such change in
Cellular's capital structure.
(6) Conversion of Cellular Share Units to Dollars
on Distribution. Cellular Share Units in
Accounts C and CC shall be converted to an
equivalent dollar amount before any
distribution thereof to a Participant
pursuant to Article VII. For purposes of
distribution, the value of a Cellular Share
Unit shall be the average closing price of
Cellular's common stock on the New York Stock
Exchange on the last trading day for each of
(i) the 12 calendar months immediately
preceding the date of such distribution or
(ii) the smaller number of calendar months
elapsed from the Distribution Time to such
distribution. If a Participant elects
payment in other than a lump sum, Cellular
Share Units shall be so converted to a dollar
amount with respect to each payment made in
the distribution. During the period of
distribution, dividends and other equitable
adjustments shall be credited to the
Participant's Accounts C and CC in accordance
with paragraphs 6.5(b)(3), 6.5(b)(4), and
6.5(b)(5). For such purposes, a Participant
that is a Cellular Insider immediately before
the event that entitles the Participant to
distribution
<PAGE>
shall be deemed a Cellular Insider 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, B, and C and in his Deferred
Benefit Accounts AA, BB, and CC (showing separate calculations for each Interest
Yield), in each case, as of the last day of the preceding Plan Year.
6.7 Transfers 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, (4) to transfer all or any portion of his Account BB
to Account AA, (5) to transfer all or any portion of his Account C to Account A,
(6) to transfer all or any portion of his Account C to Account B, (7) to
transfer all or any portion of his Account CC to Account AA, and (8) to transfer
all or any portion of his Account CC to Account BB. 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. Transfers
may not be made more than four times in any Plan Year, and 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 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
<PAGE>
than death or Disability, the Employer shall pay to the Participant, as
compensation earned for services rendered before 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, before 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
<PAGE>
deferral which is in excess of $15,000 per year shall be the
Retirement Deferred Benefit Account value of such excess.
(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 while employed by the Employer,
before 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 before 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.
<PAGE>
The suspension of any deferrals under this paragraph shall not affect amounts
deferred with respect to periods before the effective date of the suspension. A
Participant whose deferrals are suspended may not execute a subsequent
Participation Agreement that would take effect before 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.
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 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 that
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 such payment having a value,
as determined pursuant to paragraph
6.5(a)(6), 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. During the period that a
Participant is receiving a distribution from
<PAGE>
Account B or BB, Share Unit dividends will be added to the Accounts in
accordance with subparagraph 6.5(a)(3) or 6.5(a)(4) hereof. Such Share
Unit dividends shall be valued in the same manner as previously
described, and all such Share Units accruing after a distribution from
Accounts B or BB is made shall be paid to the Participant with the
next distribution from the account.
(4) with respect to balances in Accounts C and
CC, an annual payment over a period from 2 to
20 years, each such payment having a value,
as determined pursuant to paragraph
6.5(b)(6), of the number of Cellular Share
Units equal to (i) the number of Cellular
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. During the period that
a Participant is receiving a distribution
from Account C or CC, Cellular Share Unit
dividends will be added to the Accounts in
accordance with subparagraph 6.5(b)(3) or
6.5(b)(4) hereof. Such Cellular Share Unit
dividends shall be valued in the same manner
as previously described, and all such
Cellular Share Units accruing after a
distribution from Accounts C or CC is made
shall be paid to the Participant with the
next distribution from the account.
(b) A Participant may change the form in which his
benefits shall be paid by filing a revised
Participation Agreement indicating such change
before attaining age 60 and at least 13 months
before 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 the 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.
(c) 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),
7.6(a)(3), and 7.6(a)(4) over a 15 year period, except as
<PAGE>
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.
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.
7.9 Termination of SpinCo Group Employees. For purposes of this Plan, any
Participant who, within the meaning of the Distribution Agreement, is a SpinCo
Group Employee immediately after the Distribution Time shall be treated as
terminated on the Distribution
Time.
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 before 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
<PAGE>
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 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,
<PAGE>
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, before 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 For purposes of this Plan, an employee who becomes employed by Sprint
Spectrum L.P., Global One, or Alcatel, N.V. (each, together with their
subsidiaries, an "Affiliated Entity"), shall not, except with respect to
incentive stock options, be considered to have terminated employment with the
Company or a subsidiary of the Company until his employment is terminated with
all Affiliated Enitites without becoming employed by the Company or its
subsidiaries.
<PAGE>
Exhibit 10(e)
MANAGEMENT INCENTIVE STOCK OPTION PLAN
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.
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.
<PAGE>
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.
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
<PAGE>
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. In lieu of the delivery of
physical certificates, the optionee may
deliver shares in payment of the
exercise price by attesting, on a form
established for such purpose by the
Secretary, to the ownership, either
outright or through ownership of a
broker account, of a sufficient number
of shares held for a period of at least
six months to pay the exercise price.
The attestation must be notarized and
signed by the optionee's spouse if the
spouse is a joint owner of the shares
with respect to which such attestation
is made and must be accompanied by such
documentation as the Corporate Secretary
may consider necessary to evidence
actual ownership of such shares.
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
exercised. If employment with the
Company or a subsidiary
<PAGE>
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. For
purposes of this Plan, an employee who becomes employed by Sprint Spectrum L.P.,
Global One, or Alcatel, N.V. (each, together with their subsidiaries, an
"Affiliated Entity"), shall not, except with respect to incentive stock options,
be considered to have terminated employment with the Company or a subsidiary of
the Company until his employment is terminated with all Affiliated Entities
without becoming employed by the Company or its subsidiaries.
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. Beneficiary Designations. An optionee
may designate a beneficiary or
beneficiaries to exercise unexpired
options and to own shares issued upon
any such exercise after the optionee's
death without order of any probate court
or otherwise. A beneficiary so
designated may exercise an option upon
presentation to the Company of evidence
satisfactory to the Corporate Secretary
of (1) the beneficiary's identity and
(2) the
<PAGE>
death of the optionee. An optionee may change any beneficiary
designation at anytime before his death but may not do so by
testamentary designation in his will or otherwise. Beneficiary
designations must be made in writing on a form provided by the Plan
Administrator. Beneficiary 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 (including a
spin-off), 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.
l. Limited Transferability. Options may
not be transferred, levied, garnished,
executed upon, subjected to a security
interest, or assigned to any person
other than the optionee, except that the
optionee may transfer an option to a
trust of which the optionee is the sole
beneficiary during his lifetime. Upon
the death of the optionee, the trustee
of such trust may exercise any options
to which the trustee has legal title on
or before the expiration date of such
options, and shares issued pursuant to
such exercise shall be issued to the
trustee. Documents evidencing the
transfer of any option and the identity
of the trustee shall be in such form as
may be required by the Secretary of the
Company.
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
<PAGE>
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. At any time on or before the 13th calendar month
preceding the date on which restrictions on shares of restricted stock
would otherwise lapse, the optionee may elect to extend the vesting
period on all but not a portion of such shares by six months or any
multiple of six months.
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 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
<PAGE>
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.
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
<PAGE>
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
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
<PAGE>
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.
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.
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.
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.
<PAGE>
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(f)
LONG-TERM STOCK INCENTIVE PROGRAM
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.
(f) "Committee" means the Organization, Compensation, and Nominating
Committee of the Board, composed of not less than two directors each of whom is
a Non-Employee Director.
(g) "Company" shall mean Sprint Corporation.
(h) "Non-Employee Director" shall have the meaning provided for in Rule
16b-3(b)(3) under the Securities Exchange Act of 1934, 240 CFR
16b-2(b)(3), as amended.
(i) "Dividend Equivalent" shall mean any right granted pursuant to Section
14(h) hereof.
<PAGE>
(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.
(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
<PAGE>
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 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 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
<PAGE>
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 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, spin-off, or other change in the 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.
- --------------------------------
(f1) The initial number of shares authorized was doubled due to the December,
1989 two-for-one stock split.
<PAGE>
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 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 the Plan and may, but need
not, relate to a specific Option granted under Section
<PAGE>
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 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
<PAGE>
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 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.
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
- --------------------------------
(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.
<PAGE>
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 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.
- --------------------------------
(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>
(d) Adjustment of Options. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend, spin-off, 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 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
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.
<PAGE>
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 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.
<PAGE>
(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
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.
(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.
<PAGE>
(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.
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(g)
SPRINT CORPORATION
KEY MANAGEMENT BENEFIT PLAN
(AS AMENDED AUGUST 12, 1996)
This Plan has been established for the benefit of certain key executives of
Sprint Corporation and its subsidiaries, in order to retain their services and
encourage them to continue the increasing profitability of the Company.
Section 1. Definitions
The following terms shall have the meaning set forth below:
(a) "Base Salary" means the highest annual salary of a Participant during
the last five years immediately preceding the participant's death or retirement,
as applicable. "Base Salary" shall include amounts deferred under the Sprint
Retirement Savings Plan and the Sprint Executive Deferred Compensation Plan, but
shall not include incentive payments, bonuses, supplemental unemployment
benefits, contributions to any profit sharing or other qualified plan,
reimbursements of moving expenses or other expenses, or disability payments. The
Compensation Committee shall determine whether a particular item of income
constitutes Base Salary if a question arises.
(b) "Beneficiary" means the person or persons entitled under Section 5 to
receive a Survivor Benefit after a Participant's death.
(c) "Company" means Sprint Corporation.
(d) "Compensation Committee" means the Organization,
Compensation and Nominating Committee of the Company's
Board of Directors.
(e) "Key Executive" means a key employee of Company or its subsidiaries so
designated by the Chief Executive Officer of the Company.
(f) "Participant" means a present or former Key Executive on whose account
a Survivor Benefit will be payable under Section 3.
(g) "Participation Agreement" means a written agreement, together with a
form of Benefit Election, in form and substance satisfactory to the Company, by
which a Participant in the Plan agrees to retire from employment with the
Company or subsidiary no later than the month following the date on which the
Participant attains age 65.
(h) "Plan" means this Key Management Benefit Plan as amended from time to
time.
(i) "Survivor Benefit" means a benefit payable under Section 3 of this
Plan.
<PAGE>
Section 2. Participation
The Chief Executive Officer of the Company, with the approval of the
Compensation Committee, shall designate from time to time the Key Executives who
may become Participants in this Plan.
A Key Executive shall become a Participant in the Plan only after signing a
Participation Agreement. A Beneficiary shall be eligible for benefits only as
hereinafter provided.
Section 3. Survivor Benefit
(a) If a Participant's employment with Company or subsidiary end because of
his death while he is a Key Executive, his Beneficiary shall receive an annual
Survivor Benefit equal to 25% of the Participant's Base Salary. This annual
benefit shall be payable for a period of 10 years.
(b) If a participant (i) remains a Key Executive until age 60, and retires
or terminates employment no later than the month after the date on which the
Participant attains age 65, or (ii) becomes disabled and qualifies for long-term
disability benefits under the Company's Long-Term Disability Insurance Plan, or
(iii) elects to retire before age 65 and qualifies to receive early retirement
benefits under the Company's pension plan, then his Beneficiary shall receive
upon his death a Survivor Benefit equal to 300% of the Participant's Base
Salary; provided, the Survivor Benefit for a Participant electing early
retirement under (iii) above shall be reduced 10% per year of attained age prior
to age 60, e.g., to 270% of Base Salary for retirement at age 59, and to 150% of
Base Salary for retirement at age 55. This Survivor Benefit shall be paid in the
manner provided in Section 4(b) and/or Section 4(c).
(c) If a participant does not satisfy the conditions of Section 3(a) or
3(b), no Survivor Benefit shall be payable on his account.
Section 4. Payment of Survivor Benefit
(a) The Survivor Benefit under Section 3(a) shall be payable in equal
annual installments, commencing on the first day of the second month following
the Participant's death.
(b) The Survivor Benefit described in Section 3(b) shall normally be paid
in a lump sum. However, a Participant may elect in the Participation Agreement
an installment method of payment and the period of such payments, provided that
in all events the Survivor Benefit shall be payable over a period of not less
than 2 years but not more than 20 years. If a Participant elects to have the
Survivor Benefit pay in installments, the actuaries then servicing the Company
shall determine the present value using an assumed interest rate of 6 1/2% of
the payment method so elected, and the amount of the Survivor
<PAGE>
Benefit shall be revised accordingly, so that the value of the Survivor Benefit,
determined at the time of the Participant's death, is the same as if the
Beneficiary received a lump sum.
(c) A Participant, with the consent of the Company, may elect, at least 13
months prior to retirement, to receive the Survivor Benefit described in Section
3(b) in the form of a supplemental retirement benefit. A Participant may elect
in the Participation Agreement to receive, upon satisfying the requirement of
clause (i) or (iii) of Section 3(b), the Survivor Benefit in the form of a
supplemental retirement benefit. The Company may determine to pay a disabled
Participant's Survivor Benefit in the form of a supplemental retirement benefit
within 60 days of the commencement of the Participant's disability. Such
determination shall be final and conclusive on all parties. The Participant may
elect in the Participation Agreement to receive the supplemental retirement
benefit either (i) in a lump sum, (ii) in annual installments over a period not
to exceed 30 years, or (iii) in the form of a single life annuity, or (iv) in
any combination of the forms set forth in Section 4(c)(i)-(iii) (to be elected
as a percentage of the total benefit). The actuaries then servicing the Company
shall determine the present value using an assumed interest rate of 6 1/2% of
the payment method elected by the Participant, and the amount of the Survivor
Benefit shall be revised accordingly, so that the value of the supplemental
retirement benefit determined at the time of the Participant's retirement, is
the same as if the Participant received the Survivor Benefit in a lump sum.
(d) If a Participant fails to make the election described in Section 4(c)
in the Participation Agreement, the Survivor Benefit shall be paid as provided
in Section 4(b).
Section 5. Beneficiaries
(a) A Participant may designate one or more Beneficiaries to receive a
Survivor Benefit payable under this Plan. Beneficiaries shall be designated only
upon forms made available by or satisfactory to the Company, and filed by the
Participant with the Company, as the Company may require.
(b) At any time prior to his death, a Participant may change his
Designation of Beneficiary by filing a substitute Designation of Beneficiary
with the Company in accordance with Section 5(a) above.
(c) In the absence of an effective Designation of Beneficiary, or if all
persons so designated shall have predeceased the Participant or shall have died
before the Survivor Benefit shall have been fully distributed, the balance of
the Survivor Benefit shall be paid to the Participant's surviving spouse or, if
none, to the Participant's issue per stirpes or, if no issue to the executor or
administrator of the Participant's estate.
(d) If a Survivor Benefit is payable to a minor or person declared
incompetent or to a person incapable of handling the disposition of his
property, the Company may pay such Survivor Benefit to the guardian, legal
representative or person having the care and
<PAGE>
custody of such minor, incompetent or person. The Company may require proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate
prior to distribution of the Survivor Benefit. Such distribution shall
completely discharge the Company from all liability with respect to such
benefit.
Section 6. Unfunded Plan
(a) Benefits to be provided under this Plan are unfunded obligations of the
Company. Nothing contained in this Plan shall require the Company to segregate
any monies from its general funds, to create any trust, to make any special
deposits, or to purchase any policies of insurance with respect to such
obligations. If the Company elects to purchase individual policies of insurance
on one or more of the Participants to help finance its obligations under this
Plan, such individual policies and the proceeds therefrom shall at all times
remain the sole property of the Company and neither the Participants whose lives
are insured nor their Beneficiaries shall have any ownership rights in such
policies of insurance.
(b) No Participant shall be required or permitted to
make contributions to this Plan.
Section 7. Plan Administration
(a) The Company through its Compensation Committee, shall be the Plan
Administrator of this Plan and shall be solely responsible for its general
administration and interpretation and for carrying out the respective provisions
hereof, and shall have all such powers as may be necessary to do so. The Company
may from time to time establish rules for the administration of this Plan and
the transaction of its business. Any action by the Company shall be final,
conclusive and binding on each Participant and all persons claiming by, through
or under any Participant, unless a written appeal is received by the Company
within 60 days of the disputed action. The appeal will be reviewed by the
Compensation Committee and the decision of the Compensation Committee shall be
final, conclusive and binding on the Participant and on all persons claiming by,
through or under the Participant.
(b) The Company may employ or engage such agents, accountants, actuaries,
counsel, other experts and other persons as it shall deem necessary or desirable
in connection with the interpretation and administration of this Plan. The
Company shall be entitled to rely upon all certificates made by an accountant or
actuary selected by Company. The Company and its committees, officers, directors
and employees shall not be liable for any action taken, suffered or omitted by
them in good faith in reliance upon the advice or opinion of any counsel,
accountant, actuary or other expert and all action so taken, suffered or omitted
shall be conclusive upon each of them and upon all other persons interested in
this Plan.
<PAGE>
(c) The Company may require proof of the death of any Participant and
evidence of the right of any person to receive any Survivor Benefit.
(d) Claims under this Plan shall be filed with the Company on its
prescribed forms.
(e) The Company shall withhold from benefits paid under this Plan any taxes
or other amounts required to be withheld by law.
Section 8. Miscellaneous
(a) No Survivor Benefit shall be subject in any manner to alienation, sale,
transfer, assignment, pledge or encumbrance of any kind. Any attempt to
alienate, sell, transfer, assign, pledge, or otherwise encumber any Survivor
Benefit, whether presently or hereafter payable, shall be void. Except as
required by law, no Survivor Benefit payable under this Plan shall in any manner
be subject to garnishment, attachment, execution, or other legal process, or be
liable for or subject to the debts or liability of any Participant or
Beneficiary.
(b) Notwithstanding any Plan provision to the contrary, the Board of
Directors of the Company shall have the right to amend, modify, suspend, or
terminate this Plan at any time. No amendment, suspension or termination shall
adversely affect the right of a Participant or Beneficiary to receive a benefit
payable as the result of the death, termination of employment, retirement or
disability of a Participant which occurred prior to the effective date of such
amendment, suspension or termination.
(c) Nothing contained in this Plan shall be construed as a contract of
employment between any Participant and the Company or to suggest or create a
right in any Participant to be continued in employment as a Key Executive or
other employee of the Company.
(d) The Company may impose such other lawful terms and conditions on
participation in this Plan as deemed desirable.
(e) 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.
(f) This Plan shall become effective as of March 1,
1985.
<PAGE>
Exhibit 10(h)
Directors' Deferred Fee Plan
ARTICLE I
PURPOSE
The purpose of the Sprint Corporation Directors' Deferred Fee Plan (hereinafter
referred to as the "Plan") is to provide funds upon termination of service or
death for Directors (and their beneficiaries) of Sprint Corporation and its
subsidiaries. It is intended that the Plan will aid in retaining and attracting
Directors of exceptional ability by providing such Directors with a means to
supplement their standard of living.
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, 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 Cellular. "Cellular" means Sprint Cellular
Company, however renamed, or any successor
thereto.
2.5 Cellular Insider. "Cellular Insider" means, as of any time when the
determination thereof is relevant, any Participant subject to liability under
Section 16 of the Securities Exchange Act of 1934 with respect to trading in the
equity securities of Cellular.
<PAGE>
2.6 Cellular Share Unit. "Cellular Share Unit" means
a measure of participation under the Plan having a
value based on the market value of one share of common
stock of Cellular after the distribution thereof by the
Company to the Company's shareholders.
2.7 Committee. "Committee" means the Organization
and Compensation Committee of the Board.
2.8 Company. "Company" means Sprint Corporation,
or any successor thereto.
2.9 Deferral Benefit. "Deferral Benefit" means the
benefit payable to a Participant on his death or
termination of service as a Director, as calculated in
Article VII hereof.
2.10 Deferred Benefit Account. "Deferred Benefit Account" means the accounts
maintained on the books of account of the Company 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) separate deferral elections made pursuant to
separately executed Participation Agreements as provided in paragraph 4.3, and
(b) Account A, Account B, Account C, Account AA, Account BB, and Account CC
elections made by each Participant in each such Participation Agreement.
A Participant's Deferred Benefit Account shall be used 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.
2.11 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.
2.12 Director. "Director" means a member of the Board
of Directors of the Company or its subsidiaries who is
not an employee of the Company or its subsidiaries.
2.13 Distribution Agreement. "Distribution Agreement"
means the agreement entered into by the Company,
Cellular, and Centel Corporation for the purpose of
providing for the distribution by the Company of its
stock in Cellular to the Company's stockholders.
<PAGE>
2.14 Distribution Dividend Rate. "Distribution
Dividend Rate" means the Dividend Rate as defined
in the Distribution Agreement.
2.15 Distribution Time. "Distribution Time" is
defined in the Distribution Agreement.
2.16 Fee. "Fee" means any cash compensation
paid to a Director for his services as a Director other
than a distribution under this Plan.
2.17 Interest Yield. "Interest Yield" means, with respect to any calendar month,
(a) in the case of balances in Account AA, three percentage points over 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,
(b) 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.
2.18 Participant. "Participant" means any Director
who elects to participate by filing a Participation Agree
ment as provided in Article IV.
2.19 Participation Agreement. "Participation Agreement" means the agreement, in
a form prescribed by the Company, filed by a Participant before the beginning of
the first period in which the Participant's Fees are to be deferred pursuant to
the Plan. A new Participation Agreement shall be filed by the Participant for
each separate fee deferral election.
2.20 Plan. "Plan" means the Sprint Corporation Directors' Deferred Fee Plan as
set forth in this document. This Plan is the successor to, and comprises an
amendment and revision of, the United Telecommunications, Inc., 1985 Directors'
Deferred Fee Plan adopted February 12, 1985.
2.21 Plan Administrator. "Plan Administrator"
means the person appointed by the Company to
represent the Company in the administration of this
Plan.
2.22 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.
<PAGE>
2.23 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.
2.24 Spouse. "Spouse" means a Participant's wife
or husband who was lawfully married to the Participant
upon the Participant's death or severance from service.
2.25 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 Plan Administrator. Decisions of the Plan Administrator may
be reviewed by the Company through the Committee. Members of the Committee may
be Participants under this Plan. The Company shall also 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.
3.2 Binding Effect of Decisions. The decision or action of the Company in
respect to any question arising out of or in connection with the administration,
interpretation, and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan unless a written appeal is received by the
Company within sixty days of the disputed action. The appeal will be reviewed by
the Committee, and its decision shall be final, conclusive, and binding on the
Participant and on all persons claiming by, through, or under the Participant.
ARTICLE IV
PARTICIPATION
4.1 Participation. Participation in the Plan shall be limited to Directors,
under age 70, 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 before 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
<PAGE>
Company of a properly completed and executed Participation Agreement. With
respect to an individual becoming a Director during a Plan Year who thereby
becomes eligible to participate herein, an initial Participation Agreement may
be filed within 30 days of the Company's notification to him of his eligibility
to participate, and such election to participate shall be effective on the first
day of the month following the Company's receipt thereof, except that elections
not received by the Company before the 15th day of any calendar month shall be
effective no earlier than the first day of the second month following the month
of receipt.
4.2 Amount of Deferral and Length of Participation. A Participant may elect in
any Participation Agreement to defer up to 100% of the Fees that are expected at
the time of election to be earned over a period of (1) for Participation
Agreements first effective before the Transition Date, either 4 or 8 Plan Years,
and (2) for Participation Agreements first effective on or after the Transition
Date, one Plan Year, provided, the minimum amount of Fees that may be deferred
shall, in either case, be $5,000 per year or 100% of Fees payable, whichever is
less.
(a) The deferral percentage in each Participation Agreement shall be applied to
the Participant's Fees as they are payable during the period of election.
(b) A Participant's election to defer his Fees shall be irrevocable upon the
filing of the respective Participation Agreement; provided, however, that
the deferral of Fees under any Participation Agreement may be suspended or
amended as provided in paragraphs 7.3 or 9.1.
4.3 Additional Participation Agreements. A Participant may enter into additional
Participation Agreements by filing a Participation Agreement with the Company
before April 15th of any calendar year, stating the amount that the Participant
elects to have deferred. Such additional agreements shall be effective as to
Fees 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. In the event a Participant elects to defer Fees pursuant
to a new Participation Agreement, the new election shall be treated as an
arrangement for which a separate Deferred Benefit Account shall be maintained
and separate Deferral Benefits shall be payable.
<PAGE>
ARTICLE V
DEFERRED FEES
5.1 Elective Deferred Fees. The amount of Fees 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 amount credited to a Participant's Deferred Benefit
Account shall equal the amount deferred. To the extent that the Company is
required to withhold any taxes or other amounts from the Directors' deferred
Fees pursuant to any state, federal or local law, such amounts shall be taken
out of the Participant's Fees.
5.2 Vesting of Deferred Benefit Account. A
Participant shall be 100% vested in the 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 Fees 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.
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.
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
<PAGE>
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 with respect to
Participation Agreements first effective before the Transition Date, 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 Creation of Accounts AA, BB, C, and CC.
(a) 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 he
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. Fees earned by
Directors 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.
(b) Accounts C and CC. On the Determination Date
first following the Distribution Time, there shall
be credited to an Account C and CC,
<PAGE>
created for each Participant having a positive balance in an Account B or
BB with respect to any Plan Year, a number of Cellular Share Units
determined as follows:
(1) one Cellular Share Unit in Account C for each Distribution Dividend
Rate number of Share Units in Account B for such Participant for such
Plan Year as of the Distribution Time; and
(2) one Cellular Share Unit in Account CC for each Distribution Dividend
Rate number of Share Units in Account BB for such Participant for such
Plan Year as of the Distribution Time.
6.4 Maintenance of 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 based on the
Interest Yield. Interest shall be credited on the 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 Maintenance of Share Unit Accounts.
Accounts B and BB and Accounts C and CC shall
maintain balances in Share Units and Cellular Share
Units, respectively.
(a) Maintenance of Accounts B and BB.
(1) Conversion between Dollar Amounts and Share
Units in Accounts B and BB. When an amount
is to be added to a Participant's Deferred
Benefit Accounts B or BB, it shall be
converted into Share Units, or fractions
thereof, by dividing the amount to be
credited by the closing price of the
Company's common stock as reported by the
New York Stock Exchange on the last trading
day on or before the Determination Date. When
a number of Share Units is to be subtracted
from a Participant's Deferred Benefit
Accounts B or BB, such number of Share Units
shall be converted into a dollar amount by
multiplying such number of Share Units by the
closing price of the Company's common stock as
<PAGE>
reported by the New York Stock Exchange
on the last trading day on or before the
Determination Date.
(2) Dividends on Share Units. 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.
(3) [Deleted]
(4) Effect of Recapitalization. In the event of
a stock dividend, stock split, or other
corporate reorganization involving the
Company'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 Company's
capital structure.
(5) Conversion of Share Units to Dollars on Dis
tribution. Share Units in Accounts B and BB
shall be converted to an equivalent dollar
amount before any distribution thereof to a
Participant pursuant to Article VII. For
purposes of distribution, the value of a
Share Unit shall be the average closing price
of the Company's common stock on the New
York Stock Exchange on the last trading day
of each of the 12 calendar months immediately
preceding the date of distribution. If a
Participant elects payment in other than a
lump sum, Share Units shall be so converted
to a dollar amount with respect to each
payment made in the distribution. During the
period of distribution, dividends and other
equitable adjustments shall be credited to
the Participant's Accounts A, AA, B, and BB
in accordance with paragraphs 6.5(a)(2),
6.5(a)(3), and 6.5(a)(4).
(b) Maintenance of Accounts C and CC.
(1) Conversion between Dollar Amounts and
Cellular Share Units in Accounts C and
CC. When an amount is to be
<PAGE>
added to a Participant's Deferred Benefit Accounts C or CC, it shall
be converted into Cellular Share Units, or fractions thereof, by
dividing the amount to be credited by the market value of a share of
Cellular's common stock on the Determination Date. When a number of
Cellular Share Units is to be subtracted from a Participant's Deferred
Benefit Accounts C or CC, such number of Cellular Share Units shall be
converted into a dollar amount by multiplying such number of Cellular
Share Units by the closing price of Cellular's common stock as
reported by the New York Stock Exchange on the last trading day on or
before the Determination Date.
(2) Dividends on Cellular Share Units. With
respect to balances in Accounts C and CC,
when a dividend is declared and paid by
Cellular on its common stock, an amount
shall be credited to the Participant's Accounts
C and CC as though the same dividend had
been paid on the Cellular Share Units in such
accounts as of the Determination Date
immediately preceding the declaration of the
dividend, and such amount shall be converted
to Cellular Share Units. Such amount shall
be valued as of the Determination Date
immediately preceding the declaration of the
dividend.
(3) Effect of Recapitalization. In the event of
a stock dividend, stock split, or other
corporate reorganization involving the
Company's common stock, the Company
shall make equitable adjustment to the number
of Cellular Share Units credited to a
Participant's Accounts C and CC as may be
necessary to give effect to such change in
the Employer's capital structure.
(4) Conversion of Cellular Share Units to Dollars
on Distribution. Cellular Share Units in
Accounts C and CC shall be converted to an
equivalent dollar amount before any
distribution thereof to a Participant
pursuant to Article VII. For purposes of
distribution, the value of a Share Unit shall
be the average closing price of the Company's
common stock on the New York Stock
Exchange on the last trading day of each of
the (i) 12 calendar months immediately
preceding the date of distribution or (ii) the
smaller number
<PAGE>
of calendar months elapsed from the Distribution Time to such
distribution. If a Participant elects payment in other than a lump
sum, Cellular Share Units shall be so converted to a dollar amount
with respect to each payment made in the distribution. During the
period of distribution, dividends and other equitable adjustments
shall be credited to the Participant's Accounts A, AA, C, and CC in
accordance with paragraphs 6.5(b)(2) and 6.5(a)(3).
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 AA, B and BB, and C and CC,
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, (4) to transfer all or any portion of his Account BB
to Account AA, (5) to transfer all or any portion of his Account C to Account A,
(6) to transfer all or any portion of his Account C to Account B, (7) to
transfer all or any portion of his Account CC to Account AA, and (8) to transfer
all or any portion of his Account CC to Account BB. 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. Transfers
may not be made more than four times in any Plan Year, and 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 Termination of Service as Director. Subject to paragraph 7.4 below, upon any
termination of service of the Participant for reasons other than his death, the
Company shall pay to the Participant a Deferral Benefit equal to the amount of
his Deferred Benefit Account determined under paragraph 6.1 thereof.
<PAGE>
7.2 Death. If a Participant dies after the commencement of payments of his
Deferral Benefit, his Beneficiary shall continue to receive the remaining
balance of his Deferred Benefit Account in accordance with the Participant's
election pursuant to paragraph 7.4.
If a Participant dies before any payments of a Deferral Benefit, the amounts
deferred under each Participation Agreement shall be determined separately as
follows:
(a) deferrals allocated to Accounts A, B, BB, C, and CC shall be the Deferred
Benefit Account values thereof and
(b) deferrals allocated to Account AA shall be the
greater of (i) the Deferred Benefit Account value
thereof and (ii) ten times the amount of the
elected annual fee deferral allocated to Account
AA pursuant to the Participation Agreement as
revised on the date of the Participant's death, subject
to such conditions relating to the Participant's health
as the Company may impose.
The Deferral Benefit shall be payable as provided for in paragraph 7.4.
The Deferral Benefit provided above shall be in lieu of all other benefits under
this Plan.
7.3 Suspension of Participation; Failure to Continue Participation. The
Committee, in its sole discretion, may suspend the deferral of a Participant's
Fees 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 before
the effective date of the suspension. A Participant whose deferrals are
suspended may not execute a subsequent Participation Agreement that would take
effect before the beginning of the third Plan Year following the close of the
Plan Year in which the suspension first took effect.
7.4 Form of Benefit Payment
(a) Upon the happening of an event described in paragraphs 7.1 or 7.2 above,
the Company shall pay to the Participant or his Beneficiary the amount
specified therein in one of the following forms as
<PAGE>
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 applicable Company's mandatory termination date
for Directors.
(2) with respect to balances in Accounts A and
AA, an annual payment of a fixed amount that
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(a)(5), 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
paragraphs 7.1 or 7.2, divided by (ii) the
number of annual installments elected.
During the period that a Participant is receiving a distribution from
Account B or BB, Share Unit dividends will be added to the Accounts in
accordance with subpara graph 6.5(a)(2) or 6.5(a)(3) hereof. Such
Share Unit dividends shall be valued in the same manner as previously
described, and all such Share Units accruing after a distribution from
Accounts B or BB is made shall be paid to the Participant with the
next distribution from the account.
(4) With respect to balances in Accounts C
and CC, an annual payment over a period
from 2 to 20 years. Each payment shall be
the value, as determined pursuant to paragraph
6.5(b)(4), of the number of Cellular Share
Units equal to (i) the number of Cellular
Share Units in the accounts on the
Determination Date immediately following the
event described in paragraphs 7.1 or 7.2,
divided by (ii) the number of annual
installments elected.
<PAGE>
During the period that a Participant is receiving a distribution from
Account C or CC, Share Unit dividends will be added to the Accounts in
accordance with subparagraph 6.5(b)(2) hereof. Such Cellular Share
Unit dividends shall be valued in the same manner as previously
described, and all such Cellular Share Units accruing after a
distribution from Accounts C or CC is made shall be paid to the
Participant with the next distribution from the account.
(b) A Participant may change the form in which his
benefits shall be paid by filing a revised
Participation Agreement indicating such change
at least 13 months before the date upon which the
initial payment to be made is determined. Such
revised Participation Agreement shall be deemed
a continuation of the initial Participation
Agreement to which they relate 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
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.
(c) In the absence of a Participant's election under subparagraph 7.4(a),
benefits shall be paid in the form specified in subparagraphs 7.4(a)(2),
7.4(a)(3), and 7.4(a)(4) over a 15 year period.
7.5 Commencement of Payments. Unless otherwise provided, payments under this
Plan shall begin within 60 days following receipt of notice by the Company of an
event that 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 before complete distribution to the Participant of the
benefits due him under the Plan.
<PAGE>
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 Company'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 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.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 Unsecured General Creditor. Participants and their Beneficiaries shall have
no legal or equitable rights, claims, or interests in any property or assets of
the Company, 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 that may be acquired by the Company ("Policies"). Such
Policies or other assets of the Company 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 Company under
this Plan. Any and all of the Company's assets and Policies shall be and remain
the general, unpledged, unrestricted assets of the Company. The Company'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, before 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 Company and the
Participant, and the Participant (or his Beneficiary) shall have no rights
against the Company 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 Company.
10.4 Protective Provisions. A Participant will cooperate with the Company by
furnishing any and all information requested by the Company, in order to
facilitate the payment of benefits hereunder, by taking such physical
examinations as the Company may deem necessary, and by taking such other action
as may be requested by the Company.
<PAGE>
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.
<PAGE>
Exhibit 10(i)
SPRINT CORPORATION
Long-Term Incentive Plan
1.0 Establishment
1.01 The Long-Term Incentive Plan is effective January 1, 1990.
Thereafter, it will continue from year to year, until the Board
amends or terminates it.
2.0 Definitions
2.01 "Board" is the Board of Directors of
Sprint Corporation.
2.02 "Committee" is the Organization,
Compensation and Nominating Committee of
the Board.
2.03 "Company" is Sprint Corporation.
2.04 "Employee" is any person (including officers and directors of the
Company) employed by the Company, or a subsidiary of the Company,
on a full-time salaried basis.
2.05 "Participant" is an employee designated
by the Committee to participate in the
Plan.
3.0 Purpose
3.01 The Plan is intended to further the Company's long-term objectives
by offering competitive incentive compensation to key employees who
make substantive contributions to those objectives.
4.0 Administration
4.01 The Committee will be responsible for the administration of the
Plan. The Committee is authorized to interpret the Plan, to
prescribe, amend, and rescind rules and regulations deemed
advisable to protect the interests of the Company, and to make all
other administrative determinations necessary. Any determination,
interpretation or other action made or taken by the Committee
pursuant to the Plan's
<PAGE>
provisions will be final for all purposes and
upon all persons.
5.0 Performance Cycle
5.01 Performance shares may be awarded to participants for any period
established by the Committee, consisting of at least two (2)
consecutive calendar years, over which period the Company's
performance is to be measured (Performance Cycle).
6.0 Performance Criteria
6.01 The Committee shall determine for each Performance Cycle a basis
for measuring the Company's performance and a method for computing
the number and value of performance shares which may be earned for
each Performance Cycle. Such Committee determinations may vary for
different Performance Cycles and the Committee, in its discretion,
may change any such determination for any Performance Cycle at any
time during the course of such Cycle. The potential number and
value of performance shares which may be earned for any Performance
Cycle shall be determined by the Committee, which may adopt such
rules and procedures regarding performance shares as in its
discretion shall be deemed necessary or desirable.
7.0 Participation
7.01 Participants in the Plan shall be selected by the Committee from
those employees who have an opportunity to influence the long-term
success of the Company. The Committee shall also determine, within
the limits of the express provisions of the Plan, the time or times
at which performance shares shall be granted. A Director of the
Company who is not also an employee of the Company will not be
eligible to receive a performance share grant.
7.02 Individuals may join or leave the Plan through transfer to a
participating or non-participating position, as the case may be,
throughout the Performance Cycle. In such cases, the Plan incentive
opportunity, and any Plan payout, will be prorated according to the
number of months served under
<PAGE>
the Plan, except that no employee will be eligible to receive a
Plan payout without having served at least 24 months of the
Performance Cycle in a participating position as determined by this
Plan unless otherwise provided herein. With the concurrence of the
Committee, individuals who have not served such 24 months under
this Plan, but who have a total of 24 months under this Plan and
any other Sprint company or subsidiary long-term Plan during the
cycle, may receive a pro rata payout under this Plan.
8.0 Grant of Performance Shares
8.01 At the beginning of each Performance Cycle, Participants will be
granted performance shares. A performance share shall have a dollar
value directly related to the fluctuation in the market price, over
the Performance Cycle, of the Company's common stock.
9.0 Payment
9.01 Award payments will be made to the participants as soon as
practicable following the end of each Performance Cycle after
approval of the award event by the Committee. Unless otherwise
determined by the Committee, payment shall be in the form of Sprint
common stock, less the cash amount necessary to pay any taxes due
based on the then current tax law.
10.0 Termination of Employment
10.01 If termination of employment occurs
during a Performance Cycle by reason of
death, disability (as determined under
the Company's long-term disability
program), or normal retirement (as
determined under the Company's
retirement plan), the participant shall
be entitled to an award based on Company
performance as of the most recently
completed Fiscal Year for any plan in
which the participant has completed at
least two thirds of the performance
period. The award shall be determined
by the Committee. If termination of
employment occurs for reasons other than
death, disability or normal retirement,
the participant's performance shares
will be canceled and forfeited, unless
determined otherwise by the Committee.
<PAGE>
11.0 Non-Transferability
11.01 An employee's rights and interests
under the Plan may not be sold, pledged,
assigned or transferred in any manner
other than by will or by the laws of
descent and distribution except as
otherwise may be specified by the
Committee. Any attempt to so sell,
pledge, assign or transfer shall be
void. In the case of an employee's
death, payments, if any, under the Plan
shall be made to his designated
beneficiary, or in the absence of such
designation, according to the terms of
the employee's will or the laws of
descent and distribution.
12.0 Tax Withholding
12.01 The Company shall have the right to deduct from all awards any taxes
required by law to be withheld with respect to such awards.
13.0 Continuance of Employment
13.01 Nothing under this Plan nor any action taken because of the Plan
shall be construed as giving any employee any right to be retained
in the employ of the Company.
14.0 Amendment and Termination
14.01 The Board, at any time, may terminate, and at any time and from time
to time and in any respect, may amend or modify, the Plan.
15.0 Legal Requirements
15.01 The granting of performance shares and the payment of an award shall
be subject to all applicable federal, state and local laws, rules
and regulations.
15.02 The Plan, and all related provisions, shall be construed in
accordance with and governed by the laws of the State of Kansas.
<PAGE>
Exhibit 10(j)
CENTEL CORPORATION
CENTEL STOCK OPTION PLAN
1. Purpose of Plan. The purpose of the Centel
Stock Option Plan (the Plan) is to promote
the long-term financial interests of the
Company and its subsidiaries by:
(a) providing an incentive for key management employees to maximize the
long-term value of Centel Common Stock and otherwise act in the best
interest of Centel shareowners;
(b) providing management with the
opportunity to acquire a greater stake
in the future of the Company and its
subsidiaries through stock ownership;
(c) attracting, retaining and rewarding highly qualified executives and
managers who will contribute in exceptional ways to the long-term
financial success of the Company and its subsidiaries; and
(d) tying compensation of key management employees more closely with the
performance of Common Stock.
2. Definitions. The following words and phrases
have the respective meanings indicated below
unless a different meaning is plainly implied
by the context.
(a) "Administrative Committee" means a committee of management employees
which, pursuant to Section 4, has been appointed by the Board
Committee and authorized to assume designated responsibilities and
perform designated functions.
(b) "award" means the grant of stock options or stock appreciation rights
(SARs) to an eligible employee pursuant to this Plan.
(c) "Board Committee" means the Organization
and Compensation Committee of the Board
of Directors of Sprint.
(d) "Common Stock" or "stock," or "shares"
means shares of common stock of Sprint.
(e) "Company" means Centel Corporation, a
Kansas corporation and its successors.
(f) "date of award" means the date designated by the Board Committee for
the award of stock options or SARs which have been approved by the
Board Committee to be awarded pursuant to this Plan.
<PAGE>
(g) "eligible employee" means any management employee of the Company or of
a subsidiary of Sprint who is designated by the Board Committee as a
key employee eligible to receive an award of options or SARs under
this Plan.
(h) "Exchange Act" means the Securities Exchange Act of 1934. References
to a particular section or, or rule under, the Exchange Act shall
include references to successor provisions.
(i) "Insider" means any participant who is subject to Section 16 of the
Exchange Act with respect to the equity securities of Sprint.
(j) "letter of agreement" means a letter
from the Board Committee, or from the
Administrative Committee or
Administrative Committee member acting
on behalf of the Board Committee, to an
employee, indicating that the employee
is a participant in the Centel Stock
Option Plan, the number of shares
subject to option or SAR to be granted
to the participant, the option price,
the date or dates when such option or
SAR may be exercised, and other
provisions consistent with the Plan.
(k) "market value" of Common Stock on any
date means the average of the high and
low prices of the Common Stock for
composite transactions as published by
major newspapers for that date or, if no
sale of the Common Stock shall have been
made on that date, such average price on
the next preceding date on which there
was a sale.
(l) "Non-Insider" means any participant who
is not an Insider.
(m) "participant" means any person who has
been awarded options or SARs pursuant to
this Plan.
(n) "Plan" means the plan set forth in this Centel Stock Option Plan, as
it may be amended from time to time, and known as the "Centel Stock
Option Plan."
(o) "retirement" means cessation of
employment with the Company, Sprint and
all subsidiaries after a participant has
attained age fifty-five under
circumstances that would result in the
participant having a vested interest
under the Centel Retirement Benefit Plan
or successor Sprint plan if the
participant were a participant in that
plan.
"normal retirement" means retirement after a participant has attained
age sixty-five; "early retirement" means retirement before a
participant has attained age sixty-five.
(p) "SEC" means the Securities and Exchange
Commission.
(q) "Sprint" means Sprint Corporation, a
Kansas corporation, and its successors.
<PAGE>
(r) "stock appreciation right" or "SAR" is a
right granted to a participant to
receive a payment in cash or in shares
of Common Stock or in a combination of
cash and shares equal in value to the
increase in the market value of the
Common Stock from the date of grant of
such SAR to the date of exercise with
respect to the shares represented by
such SAR. The election to receive
either cash or shares, or a combination
of cash and shares, is made by the
participant.
(s) "stock option" or "option" is a right
granted to a participant to purchase a
designated number of shares of Common
Stock at a stated price for a stated
period of time. The participant may
exercise that right according to Section
8 of the Plan as to all or a portion of
the shares at a specified time or times.
Stock options granted under this Plan
are not intended to qualify as incentive
stock options under Internal Revenue
Code Section 422A.
(t) "subsidiary" means any corporation fifty percent or more of the voting
stock of which is owned, directly or indirectly, by the Company or
Sprint.
(u) "tandem grant" means an option and an
SAR granted in combination such that
both cover the same shares. Either the
option or the SAR may be exercised for
all or any portion of the shares. By
exercising the option for a given number
of shares, the right to exercise the
tandem SAR for that number of shares is
canceled and vice-versa.
(v) "total disability" of a participant means the participant would be
eligible to receive disability benefits under the Centel Corporation
Group Welfare Plan or similar Sprint plan if the participant were a
participant in that plan.
(w) "Termination." For purposes of this
Plan, an employee who becomes employed
by Sprint Spectrum L.P., Global One, or
Alcatel, N.V. (each, together with their
subsidiaries, an "Affiliated Entity"),
shall not, except with respect to
incentive stock options, be considered
to have terminated employment with the
Company or a subsidiary of the Company
until his employment is terminated with
all Affiliated Entities without becoming
employed by the Company or its
subsidiaries.
3. Administration of Plan.
(a) This Plan shall be administered by the
Board Committee.
(b) The Board Committee shall have full
authority and discretion to adopt rules
and regulations and prescribe or approve
the forms to carry out the purposes and
provisions of this Plan. The Board
Committee's interpretation and
construction of any provision of this
Plan or any option or SAR granted
hereunder shall be binding and
conclusive, unless otherwise determined
by the Board.
<PAGE>
4. Appointment of Administrative Committee.
(a) The Board Committee may appoint an
Administrative Committee to:
(1) construe this Plan and make equitable adjustments for any
mistakes, omissions, or errors made in the administration of this
Plan;
(2) adopt such rules and regulations as may be deemed reasonably
necessary for the proper and efficient administration of this
Plan consistent with its purposes;
(3) enforce this Plan in accordance
with its terms and with the rules
and regulations adopted for the
Plan; and
(4) do all other acts which in the
Administrative Committee's
reasonable judgment are necessary
or desirable for the proper and
advantageous administration of this
Plan consistent with the Plan's
purposes.
(b) No member of the Administrative Committee who is a participant in the
Plan shall act on any matter that has particular reference to such
member's own interest under this Plan.
5. Eligibility. The Board Committee shall from
time to time determine the key management
employees of the Company (including officers
and directors of the Company who are also
employees) and subsidiaries who shall be
participants in this Plan.
6. Shares Subject to Plan. Subject to
adjustment as provided in Section 21, the
aggregate number of shares subject to options
or SARs granted by the Board Committee under
this Plan shall be less than 3,521,378
shares of Common Stock of Sprint, par value
$2.50 per share (the shares), which may be
treasury shares reacquired by Sprint or
authorized and unissued shares, or a
combination of both.
7. Option Price. The option price per share under each option granted by the
Board Committee shall be not less than 100% of the market value per share
on the date an option is granted, but in no event shall the option price be
less than the par value per share.
8. Exercise of Options.
(a) Terms. Each option granted under this
Plan shall be exercisable on the dates
and for the number of shares as shall be
provided in a letter of agreement
between the Company and the participant
evidencing the option granted by the
Board Committee and the terms thereof.
However, subject to Sections 13, 14, 15,
16, and 17, no option shall become
exercisable until six months after its
date of award.
<PAGE>
(b) Exercise and Payment of Exercise Price.
Shares shall be issued to the
participant pursuant to the exercise of
an option only upon receipt by Sprint
from the participant of written notice
of exercise, specifying the number of
shares with respect to which the option
is being exercised, accompanied by
payment in full either in cash or by a
single exchange of shares of Common
Stock of Sprint previously owned by the
optionee, or a combination of both, in
an amount or having a combined value
equal to the aggregate purchase price
for the shares subject to the option or
portion thereof being exercised. The
value of the previously owned shares of
Common Stock exchanged in full or
partial payment for the shares purchased
upon the exercise of an option shall be
equal to the aggregate market value, as
defined in Section 2, of such shares on
the date of the exercise of such option.
Certain optionees may use restricted
stock as payment for the exercise price
in accordance with paragraph (f) of this
Section 8. In that event, market value
of the shares of restricted stock will
be determined as if the shares were not
restricted. Previously owned shares
acquired via prior exercise of a stock
option granted under this Plan shall not
be accepted in full or partial payment
for shares purchased upon the exercise
of an option unless such previously
owned shares have been held by the
participant for at least six months
subsequent to such prior exercise. In
lieu of the delivery of physical
certificates, the optionee may deliver
shares in payment of the exercise price
by attesting, on a form established for
such purpose by the Secretary, to the
ownership, either outright or through
ownership of a broker account, of a
sufficient number of shares held for a
period of at least six months to pay the
exercise price. The attestation must be
notarized and signed by the optionee's
spouse if the spouse is a joint owner of
the shares with respect to which such
attestation is made and must be
accompanied by such documentation as the
Corporate Secretary may consider
necessary to evidence actual ownership
of such shares.
(c) Effect on Tandem Grants. If the option
was granted in a tandem grant (as
defined in Section 2) with an SAR, then
exercise of such option with respect to
a stated number of shares shall cancel
the right to exercise the tandem SAR
with respect to the same number of
shares.
(d) Stock Withholding Election. When
federal, state and local income taxes
are required to be withheld ("Tax
Withholding Obligations") in connection
with the exercise of a stock option, or
upon the lapse of restrictions on
restricted stock received upon the
exercise of an option (the date on which
income is recognized in connection with
any such exercise or lapse of such
restrictions hereinafter referred to as
the "Tax Date"), the optionee may elect
to make payment for Tax Withholding
Obligations by one or both of the
following methods:
(i) delivering part or all of the
payment in previously-owned
unrestricted shares (which shall be
valued at market value on the Tax
Date) held for at least six months,
whether or not received through the
prior exercise of a stock option;
or
<PAGE>
(ii) requesting Sprint to withhold from those shares that would
otherwise be received upon exercise of the option, or upon the
lapse of restrictions, a number of shares having a market value
(as defined herein) on the Tax Date equal to the amount to be
withheld.
Such election is irrevocable. Any fractional share amount, Social
Security taxes, Medicare taxes and any additional withholding not paid
by the withholding of shares must be paid in cash. If no timely
election is made, cash must be delivered to satisfy all Tax
Withholding Obligations.
(e) [Deleted]
(f) Restricted Stock. Certain optionees, as determined by the Board
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 Sprint common stock in payment of the
exercise price notwithstanding restrictions on transferability to
which such shares are subject. Sprint shall be authorized to issue
restricted shares of common stock upon such exercises of stock
options, subject to the following conditions:
(i) 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 Corporate Secretary of
Sprint, but in no event may an
optionee elect a vesting period
shorter than the period provided in
paragraph (iv) of this paragraph
(f). At any time on or before the
13th calendar month preceding the
date on which restrictions on
shares of restricted stock would
otherwise lapse, the optionee may
elect to extend the vesting period
on all but not a portion of such
shares by six months or any
multiple of six months.
(ii) The optionee who receives the restricted stock 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 or Sprint, until
such time as all restrictions on such stock have lapsed.
(iii)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 paragraph (d) of this
Section 8.
<PAGE>
(iv) 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.
(v) 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 Board 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
Sprint.
(vi) 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 alternate procedures
are established, 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 Sprint. The optionee shall execute
a stock power or powers assigning the shares of restricted stock
back to Sprint, which stock powers shall be held in escrow by
Sprint 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.
(vii)The Corporate Secretary of Sprint 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 Corporate
Secretary of Sprint deems necessary or desirable for the orderly
administration of such exercises.
<PAGE>
9. Exercise of SARs.
(a) Terms. Each SAR granted under this Plan
shall be exercisable on the dates and
for the number of shares as shall be
provided in a letter of agreement
between the Company and the participant
evidencing the SAR granted by the Board
Committee and the terms thereof.
However, subject to Sections 13, 14, 15,
16, and 17, no SAR shall become
exercisable until six months after its
date of award.
(b) Exercise by Participants. Cash or shares (at the election of the
participant) shall be issued to the participant pursuant to the
exercise of an SAR upon the receipt by Sprint from the participant of
written notice that an SAR is being exercised.
(c) [Deleted]
(d) Effect on Tandem Grants. If an SAR was granted in a tandem grant (as
defined in Section 2) with an option, then exercise of such SAR with
respect to a stated number of shares shall cancel the right to
exercise the tandem option with respect to the same number of shares.
(e) Withholding. Participants may elect to
have all or a portion of the cash or
shares to be received from exercising an
SAR retained by Sprint in order to
exercise a stock option, or to satisfy
Tax Withholding Obligations in respect
of an exercise of an option or SAR. Any
such election by an Insider that relates
to the satisfaction of Tax Withholding
Obligations shall be subject to the
approval of the Board Committee in its
sole discretion at any time after such
election.
10. Term of Option or SAR. Each option or SAR granted hereunder shall be
exercisable for not more than ten years from the date it is granted, after
which the unexercised portion thereof shall expire.
11. Nontransferability of Option. No option or
SAR granted under this Plan shall be
transferable except by will or the laws of
descent or pursuant to a qualified domestic
relations order as defined by the Internal
Revenue Code of 1986. Each such option and
SAR shall be exercisable during the
participant's lifetime only by the
participant.
12. Termination of Employment. Upon termination
of employment of a participant for any reason
other than retirement, total disability,
death, sale or disposition of a business
unit, or change in control (as defined in
Section 17), all options and SARs previously
granted to the participant, whether
exercisable or unexercisable, shall be
forfeited and canceled.
13. Retirement of Participant.
(a) Upon the normal retirement of a participant (after attaining age
sixty-five), all options and SARs previously granted to the
participant shall
<PAGE>
become fully exercisable, and may be exercised within a three-year
period following the date of retirement, but in no event later than
ten years from the date of grant of such options and SARs.
(b) Upon the early retirement of a
participant (prior to attaining age
sixty-five), the portion of all options
and SARs that the participant is then
entitled to exercise may be exercised
within a three-year period following the
date of retirement, but in no event
later than ten years from the date of
grant of such options and SARs.
14. Total Disability of Participant. Upon the
total disability of a participant (as defined
in Section 2) all options and SARs previously
granted to the participant shall become fully
exercisable and may be exercised within a one-
year period following the date the
participant becomes totally disabled, but in
no event later than ten years from the date
of grant of such options and SARs.
15. Death of Participant. Upon the death of a
participant, all options and SARs previously
granted to the participant shall become fully
exercisable by the legal representative of
the deceased participant's estate and may be
exercised within a one-year period following
the date of the participant's death, but in
no event later than ten years from the date
of grant of such options or SARs.
16. Sale or Disposition of a Business Unit. Upon
the termination of employment of a
participant occurring as a result of the
disposition by Sprint of a subsidiary,
division or business unit, the Board
Committee, or, except with respect to
Insiders, the Administrative Committee,
acting on behalf of the Board Committee, may
determine the extent to which unexercisable
options and SARs shall become exercisable,
and the period of time, if any, following the
date of disposition during which the
participant may exercise such options and
SARs.
17. Change in Control. Deleted.
18. Committee Discretion in the Event of
Termination. Notwithstanding the provisions
of Sections 12, 13, 14, and 15, if, upon
termination of employment of the participant
for any reason, the Board Committee, or,
except with respect to Insiders, the
Administrative Committee acting on behalf of
the Board Committee, determines that it is in
the best interest of Sprint, it may determine
that all or a portion of the participant's
unexercisable options and SARs may become
exercisable, and that all or a portion of the
participant's exercisable options and SARs
may be exercised for a period of time
following the date of the participant's
termination of employment, but in no event
later than ten years from the date of grant
of such options or SARs.
19. Nonalienation of Benefits. 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 the person entitled to such benefits
except such claims as may be made by the
Company, Sprint or any subsidiary. If any
participant or beneficiary hereunder should
become bankrupt or attempt to anticipate,
alienate, sell, assign, pledge,
<PAGE>
encumber or charge any right or benefit under this Plan, such right or
benefit shall, in the sole discretion of the Board Committee (or, except
with respect to Insiders, the Administrative Committee acting on behalf of
the Board Committee), cease, and in such event, the Company or Sprint shall
hold or apply the same or any part thereof for the benefit of such
participant or beneficiary, such person's spouse, children or other
dependents, or any of them, in such manner and in such proportions as the
Committee in its sole discretion shall determine.
20. Indemnification of Committee Members. In
addition to such other rights of
indemnification as any person may have as a
director, officer or member of the Board
Committee or Administrative Committee, each
member of the Committees shall be indemnified
by the Company against the reasonable
expenses, including attorney's fees, actually
and necessarily incurred in connection with
the defense of any action, suit or
proceeding, or in connection with any appeal
therein, to which such person may be a party
by reason of any action taken or failure to
act under or in connection with this Plan,
and against all amounts paid by such person
in settlement thereof (provided such
settlement is approved by legal counsel
selected or approved by the Company), or paid
by such person in satisfaction of a judgment
in any such action, suit or proceeding,
except in relation to matters as to which it
shall be adjudged in such action, suit or
proceeding, that such Committee member is
liable for gross misconduct; provided that
within 60 days after the institution of such
action, suit or proceeding, such Committee
member shall in writing offer the Company the
opportunity, at its own expense, to handle
and defend the same.
21. Adjustment in Number of Shares and Option
Price. In the event of any subdivision or
combination of the outstanding shares of
Sprint by reclassification or otherwise, or
in the event of the payment of a stock
dividend (including a spin-off), a capital
reorganization, a reclassification of shares,
a consolidation or merger, or the sale, lease
or conveyance of substantially all the assets
of Sprint, the Board Committee shall make
appropriate and equitable adjustments in the
number and kind of shares with respect to
which all outstanding options and SARs, or
portions thereof then unexercised, shall be
exercisable. Any such adjustment made by the
Board Committee shall be final and binding
upon all participants, Sprint, the Company
and all other interested persons.
22. Compliance with Rule 16b-3. the intent of
this Plan is to qualify for the exemption
provided by Rule 16b-3 of the Exchange Act.
To the extent any provision of the Plan does
not comply with the requirements of Rule 16b-
3, it shall be deemed inoperative and shall
not affect the validity of the Plan. In the
event Rule 16b-3 is revised or replaced, the
Board Committee, or the Administrative
Committee acting on behalf of the Board
Committee, may exercise discretion to modify
this Plan in any respect necessary to satisfy
the requirements of the revised exemption or
its replacement.
23. Amendments and Discontinuance. The Board of Directors of the Company may
alter, suspend or terminate this Plan; provided, however, that no such
action shall increase the term of any option or SAR previously granted, or
increase the number of shares available under the Plan (other than as
provided
<PAGE>
in Section 21), or reduce the minimum option price per share as provided in
Section 7, and provided further that no such action shall materially and
adversely affect any outstanding options or SARs without the consent of the
respective participants.
<PAGE>
Exhibit (10)(k)
SUMMARY OF EXECUTIVE OFFICER AND BOARD OF DIRECTORS BENEFITS
<TABLE>
<CAPTION>
Description Eligible Positions Amount/Schedule
of Benefit
<S> <C> <C>
Automobile Chief Executive Officer $1,500/month
Allowance Chief Operating Officer $1,300/month
Division Presidents $1,100/month
and Executive Vice
Presidents
Senior Vice Presidents $1,000/month
Vice Presidents $900/month
Assistant Vice $700/month
Presidents
Club Chief Executive Officer, Dues approved at
Membership Chief Operating discretion of CEO
Officer, Division
Presidents and
Executive Vice
Presidents
Senior Vice Dues approved at
Presidents discretion of
Executive Vice
Presidents
Sprint Long- Board of Directors $6,000/year
Distance (continues after
Telephone retirement for up
Service to 120 months)
Chief Executive Officer, Unlimited (continues
Chief Operating after retirement)
Officer, Division
Presidents, Executive
and Senior Vice
Presidents
Miscellaneous Chief Executive Officer $15,000/year
services and Chief Operating
(e.g., Officer
investment/tax Division Presidents $12,000/year
counseling, and Executive Vice
income tax Presidents
preparation, Senior Vice Presidents $10,000/year
estate Vice Presidents and $3,500/initially and
planning) Assistant Vice $1,500/year
Presidents
Disability Chief Executive Officer, 52 weeks at full
Chief Operating base pay
Officer, Division
Presidents, Executive
and Senior Vice
Presidents, Vice
Presidents and
Assistant Vice
Presidents
Separation Chief Executive Officer, Less than 5 years'
Chief Operating services:
Officer, Division 17 weeks' salary
Presidents, Executive continuation
and Senior Vice 5 to 10 years' service
Presidents, Vice 35 weeks' salary
Presidents and continuation
Assistant Vice 11 to 18 years' service
Presidents 43 weeks' salary
continuation
More than 19 years' service:
1 year salary
continuation
</TABLE>
<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,
--- --------------------------- -- ---------------------------
1996 1995 1996 1995
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Primary earnings per share
<S> <C> <C> <C> <C>
Net income from continuing operations $ 316.2 $ 263.6 $ 944.9 $ 731.5
Preferred stock dividends (0.3) (0.6) (1.1) (1.9)
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
315.9 263.0 943.8 729.6
Discontinued operation, net -- 4.9 (2.6) 7.0
Extraordinary losses from early extinguishments
of debt, net (3.8) -- (3.8) --
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Earnings applicable to common stock $ 312.1 $ 267.9 $ 937.4 $ 736.6
--- ----------- -- ------------ -- ------------ -- -----------
Weighted average number of common shares (1)
434.7 350.5 423.1 350.0
--- ----------- -- ------------ -- ------------ -- -----------
Primary earnings per share
Continuing operations $ 0.73 $ 0.75 $ 2.23 $ 2.08
Discontinued operation -- 0.01 -- 0.02
Extraordinary item (0.01) -- (0.01) --
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Total $ 0.72 $ 0.76 $ 2.22 $ 2.10
--- ----------- -- ------------ -- ------------ -- -----------
Fully diluted earnings per share
Income from continuing operations, net of
preferred stock dividends $ 315.9 $ 263.0 $ 943.8 $ 729.6
Convertible preferred stock dividends 0.1 0.1 0.4 0.4
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
316.0 263.1 944.2 730.0
Discontinued operation, net -- 4.9 (2.6) 7.0
Extraordinary losses from early extinguishments
of debt, net (3.8) -- (3.8) --
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Earnings as adjusted for purposes of computing
fully diluted earnings per share $ 312.2 $ 268.0 $ 937.8 $ 737.0
--- ----------- -- ------------ -- ------------ -- -----------
Weighted average number of common shares
434.7 350.5 423.1 350.0
Additional dilution for common stock equivalents
and dilutive securities 1.4 1.3 1.3 1.8
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Total 436.1 351.8 424.4 351.8
--- ----------- -- ------------ -- ------------ -- -----------
Fully diluted earnings per share
Continuing operations $ 0.73 $ 0.75 $ 2.22 $ 2.07
Discontinued operation -- 0.01 -- 0.02
Extraordinary item (0.01) -- (0.01) --
- --------------------------------------------------- --- ----------- -- ------------ -- ------------ -- -----------
Total $ 0.72 $ 0.76 $ 2.21 $ 2.09
--- ----------- -- ------------ -- ------------ -- -----------
(1) Weighted average number of common shares have been adjusted for the assumed
conversion of convertible preference stock and 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,
--- ------------------------------ --- ------------------------------
1996 1995 1996 1995
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings
Income from continuing operations
<S> <C> <C> <C> <C>
before taxes $ 509.8 $ 412.1 $ 1,524.5 $ 1,145.1
Capitalized interest (27.4) (21.7) (80.6) (34.0)
Equity in losses of less than 50
percent owned entities 60.0 7.2 146.4 12.5
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Subtotal 542.4 397.6 1,590.3 1,123.6
Fixed charges
Interest charges of continuing
operations 75.4 86.4 225.8 235.9
Interest factor of operating rents 30.0 30.1 89.4 89.7
Pre-tax cost of preferred stock
dividends of subsidiaries 0.1 0.2 0.4 0.6
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Total fixed charges 105.5 116.7 315.6 326.2
- -------------------------------------------- --- ------------- -- ------------- --- ------------- -- -------------
Earnings, as adjusted $ 647.9 $ 514.3 $ 1,905.9 $ 1,449.8
--- ------------- -- ------------- --- ------------- -- -------------
Ratio of earnings to fixed charges 6.14 4.41 6.04 4.44
--- ------------- -- ------------- --- ------------- -- -------------
Note: The above ratios have been computed by dividing fixed charges into the
sum of (a) income from continuing operations before taxes, less
capitalized interest and equity losses of less than 50 percent owned
entities included in income, and (b) fixed charges. Fixed charges
consist of interest on all indebtedness of continuing operations
(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-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 1,582,000
<SECURITIES> 0
<RECEIVABLES> 2,505,300
<ALLOWANCES> 123,200
<INVENTORY> 206,600
<CURRENT-ASSETS> 4,658,900
<PP&E> 20,996,100
<DEPRECIATION> 11,028,000
<TOTAL-ASSETS> 16,743,200
<CURRENT-LIABILITIES> 3,194,300
<BONDS> 3,047,400
13,200
0
<COMMON> 1,091,300
<OTHER-SE> 7,295,900
<TOTAL-LIABILITY-AND-EQUITY> 16,743,200
<SALES> 0
<TOTAL-REVENUES> 10,422,700
<CGS> 0
<TOTAL-COSTS> 6,396,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 145,200
<INCOME-PRETAX> 1,524,500
<INCOME-TAX> 579,600
<INCOME-CONTINUING> 944,900
<DISCONTINUED> (2,600)
<EXTRAORDINARY> (3,800)
<CHANGES> 0
<NET-INCOME> 938,500
<EPS-PRIMARY> 2.22
<EPS-DILUTED> 2.21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<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
32,700
0
<COMMON> 872,000
<OTHER-SE> 4,178,200
<TOTAL-LIABILITY-AND-EQUITY> 16,624,100
<SALES> 0
<TOTAL-REVENUES> 9,426,500
<CGS> 0
<TOTAL-COSTS> 5,900,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 201,900
<INCOME-PRETAX> 1,145,100
<INCOME-TAX> 413,600
<INCOME-CONTINUING> 731,500
<DISCONTINUED> 7,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 738,500
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.09
</TABLE>
