<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
[x]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to ______________
Commission file number 1-6793
CENTRAL TELEPHONE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 47-0533677
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 11315, Kansas City, Missouri 64112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 624-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Convertible Junior Preferred Stock, with a stated value of $10 per share
Cumulative Preferred Stock
$2.50 Dividend Series with a stated value of $50 per share
$1.24 Dividend Series with a stated value of $25 per share
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates
at March 15, 1994 was $8,632,855 (preferred stock at stated
value). The number of shares of common stock, no par value,
outstanding at March 15, 1994 was 9,000,000.
Documents incorporated by reference.
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Registrant
Stephen M. Bailor - Mr. Bailor, 50, is Vice President of
Central Telephone Company (Central Telephone). He also is, and
since September, 1993 has been, Vice President-Financial and
Local Billing Services of Sprint's Finance Division. He has been
an officer of Central Telephone for more than 5 years. Mr.
Bailor has been a Director since March, 1993.
Don A. Jensen - Mr. Jensen, 58, is, and since September,
1993 has been, Vice President and Assistant Secretary of Central
Telephone. He also is, and since 1975 has been, Vice President
and Corporate Secretary of Sprint Corporation (Sprint). Mr.
Jensen has been a Director since March, 1993.
William E. McDonald - Mr. McDonald, 51, is, and since
September, 1993 has been, President of the North Carolina
Division of Central Telephone. Mr. McDonald is also President of
the four other companies comprising the Mid-Atlantic Group of
local exchange companies of Sprint. From 1988 to 1993, he was
President of the two companies comprising the Eastern Group of
local exchange companies of Sprint. Mr. McDonald has been a
Director since September, 1993.
D. Wayne Peterson - Mr. Peterson, 58, is, and since
September 1993 has been, President and Chief Executive Officer of
Central Telephone. He is also President - Local
Telecommunications Division of Sprint. From 1980 to 1993, Mr.
Peterson served as President of Carolina Telephone and Telegraph
Company, a subsidiary of Sprint. Mr. Peterson has been a
Director since July, 1993.
M. Jeannine Strandjord - Ms. Strandjord, 48, is, and since
September, 1993 has been, Vice President and Treasurer of Central
Telephone. She also is, and since 1990 has been, Senior Vice
President and Treasurer of Sprint. From 1986 to 1990, she was
Vice President and Controller of Sprint. Ms. Strandjord has been
a Director since March, 1993.
Alan J. Sykes - Mr. Sykes, 46, is, and since 1987 has been,
Vice President of Revenues of Sprint's Local Telecommunications
Division. Mr. Sykes has been a Director since March, 1993.
Dianne Ursick - Ms. Ursick, 44, is, and since March, 1993
has been, President of the Nevada Division of Central Telephone.
From 1989 to 1993, she was General Regulatory Manager of the
Nevada Division. Ms. Ursick has been a Director since September,
1993.
Executive Officers of the Registrant
For information pertaining to Executive Officers of Central
Telephone, as required by Instruction 3 of Paragraph (b) of Item
401 of Regulation S-K, refer to the "Executive Officers of the
Registrant" section of Part I of this report.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934
requires Central Telephone's Directors and executive officers to
file with the Securities and Exchange Commission (SEC) initial
reports of ownership and reports of changes in ownership of
Central Telephone's equity securities. Directors and executive
officers are required by regulations of the SEC to furnish
Central Telephone with copies of all Section 16(a) reports they
file.
None of Central Telephone's Directors and executive officers
own any equity securities of Central Telephone. Due to an
oversight, none of these individuals filed initial reports
required under Section 16(a) when they first became directors or
executive officers to report that no such securities were owned
by them. As soon as the oversight was discovered, Central
Telephone's Directors and executive officers promptly filed the
required reports.
To Central Telephone's knowledge, based solely on review of
the copies of such reports furnished to Central Telephone and
written representations that no other reports were required,
during 1993 all Section 16(a) filing requirements applicable to
its Directors and executive officers were complied with, except
for the initial filings described in the preceding paragraph.
Item 11. Executive Compensation
The following tables set forth the annual compensation of
the two individuals who served as Chief Executive Officer during
1993 and the other executive officers of Central Telephone who
earned at least $100,000 in salary and bonus for services to
Central Telephone and its subsidiaries (the Company), during 1993
(the Named Officers).
Summary Compensation Table
The following table reflects the cash and non-cash
compensation for the Named Officers. Annual salary and bonus
amounts shown are amounts allocated to the Company by Sprint, or
by Centel Corporation (Centel) prior to the merger of Sprint and
Centel on March 9, 1993 (the Merger), whereas all other amounts
represent items of compensation attributable to Sprint or Centel
as a whole.
<TABLE>
Annual Compensation
_________________________________
<CAPTION>
Other
Annual
Compen-
Name and Principal sation
Position Year Salary($) Bonus($) ($)<F1>
<S> <C> <C> <C> <C>
John P. Frazee, 1993 98,738 0 150,704 <F4>
Jr. <F3>
Chief Executive 1992 394,927 431,055 570,805
Officer 1991 337,453 443,080 ---
D. Wayne 1993 27,985 19,762 24,166 <F6>
Peterson<F5>
Chief Executive
Officer
Dianne Ursick<F7> 1993 74,808 41,156 4,587
President
Nevada Division
<CAPTION>
Long-Term Compensation
____________________________________
Awards Payouts
_______________________ _______
Securities
Restricted Underlying
Stock Options/ LTIP
Name and Principal Year Award(s) SARs Payouts
Position ($) (#) ($)
<S> <C> <C> <C> <C>
John P. Frazee, 1993 0 31,000 0
Jr. <F3>
Chief Executive 1992 0 0 0
Officer 1991 0 52,000 725,072
D. Wayne 1993 372,500<F8> 11,000 89,783
Peterson<F5>
Chief Executive
Officer
Dianne Ursick<F7> 1993 0 5,000 0
President
Nevada Division
<CAPTION>
All
Other
Compen-
Name and Principal sation
Position Year ($)<F1><F2>
<S> <C> <C>
John P. Frazee, 1993 89,500
Jr. <F3>
Chief Executive 1992 29,743
Officer 1991 ---
D. Wayne 1993 42,431
Peterson<F5>
Chief Executive
Officer
Dianne Ursick<F7> 1993 6,060
President
Nevada Division
____________
Notes:
<FN>
<F1> In accordance with the transitional provisions applicable
to the revised proxy rules adopted by the Securities and
Exchange Commission (SEC), amount of Other Annual Compensation
and All Other Compensation are excluded for 1991.
<F2> Consists of the following amounts for 1993: (a) $5,053,
$5,862 and $5,612 contributed on behalf of Mr. Frazee, Mr.
Peterson and Ms. Ursick, respectively, as company
contributions under Sprint's and Centel's Retirement Savings
Plans; (b) $843 and $448 in dividends on Centel Employees'
Stock Ownership Plan shares for Mr. Frazee and Ms. Ursick,
respectively; (c) $73,311 and $34,455 in relocation expenses
for Mr. Frazee and Mr. Peterson, respectively; (d) $10,293 in
contributions on behalf of Mr. Frazee under Centel's Matched
Deferred Salary Plan; and (e) $2,114 for Mr. Peterson
representing the portion of interest credits on deferred
compensation accounts under Sprint's Executive Deferred
Compensation Plan that are deemed by SEC rules to be at above-
market rates.
<F3> Mr. Frazee retired as Chief Executive Officer of Central
Telephone on August 1, 1993.
<F4> Includes the cost of providing tax and financial services
of $12,500 and personal use of corporate aircraft of $16,800.
<F5> Mr. Peterson first became an executive officer of Central
Telephone on September 28, 1993.
<F6> Includes $12,500 in automobile allowance and $4,854 in
telephone concessions.
<F7> Ms. Ursick first became an executive officer of Central
Telephone on March 9, 1993.
<F8> The value of the restricted stock shown is based on the
closing price of Sprint common stock on October 20, 1993, the
date of the grant. As of December 31, 1993, Mr. Peterson held
10,000 restricted shares valued at $347,500, based on the closing
price of Sprint common stock on December 31, 1993, equal to
$34.75. Mr. Peterson has the right to vote and receive dividends
on the restricted shares. Twenty-five percent of the award
vests on July 12, 1996, 25% on July 12, 1997, and 50% on July 12,
1998.
</TABLE>
Option Grants
The following table summarizes options granted to the Named
Officers during 1993 for the purchase of shares of Sprint common
stock under Sprint's stock option plans. The amounts shown as
potential realizable values on these options are based on
arbitrarily assumed annualized rates of appreciation in the price
of Sprint common stock of five percent and ten percent over the
term of the options, as set forth in SEC rules. The Named
Officers will realize no gain on these options without an
increase in the price of Sprint common stock. No stock
appreciation rights were granted during 1993. The amounts below
represent items of compensation attributable to Sprint as a
whole.
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
% of Total
Number of Options
Securities Granted to
Underlying Options Employees in
Name Granted (#)<F1> Fiscal Year
<S> <C> <C>
John P. Frazee, Jr. 31,000 1.9140
D. Wayne Peterson 11,000 0.6791
Dianne Ursick 5,000 0.3097
<CAPTION>
Exercise or
Base Price Expiration
Name ($/Sh) Date 0%
<S> <C> <C> <C>
John P. Frazee, Jr. $30.81250 03/09/03 $0.00
D. Wayne Peterson $30.81250 03/09/03 $0.00
Dianne Ursick $30.81250 03/09/03 $0.00
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term <F2>
______________________________________
Name 5% 10%
<S> <C> <C>
John P. Frazee, Jr. $600,712.29 $1,522,322.88
D. Wayne Peterson $213,155.97 $540,179.09
Dianne Ursick $96,889.08 $245,535.95
_____
Notes:
<FN>
<F1> Twenty-five percent of the grants shown became
exercisable on March 9, 1994, and an additional 25% become
exercisable on March 9 of each of the three successive years.
The options each have a reload feature. A reload option is
an option granted when an optionee exercises a stock option
and makes payment of the purchase price using shares of
previously owned Sprint common stock. A reload option is
granted for the number of shares equal to the number of shares
utilized in payment of the purchase price and tax withholding,
if any. The option price for a reload option is equal to the
market price of Sprint common stock on the date of exercise of
the original option. The expiration date of a reload option
is the same as the expiration date of the option that was
exercised. A reload option becomes exercisable one year from
the date the original option was exercised, provided the
shares acquired on the exercise of the original option are
held by the optionee for at least six months. The reload
feature is designed to encourage early exercise of options,
without foregoing the opportunity for further appreciation,
and to promote retention of the Sprint common stock acquired.
<F2> The dollar amounts in these columns are the result of
calculations at the five percent and ten percent rates set by
the SEC and are not intended to forecast future appreciation
of Sprint common stock.
</TABLE>
Option Exercises and Fiscal Year-End Values
The following table summarizes the net value realized on the
exercise of options in 1993, and the value of the outstanding
options at December 31, 1993, for the Named Officers.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and FY-end Option Values
<CAPTION>
Shares Acquired Value Realized
Name on Exercise(#) <F1>($)
<S> <C> <C>
John P. Frazee, Jr. 564,525 9,619,681
D. Wayne Peterson 0 0
Dianne Ursick 15,173 223,947
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at 12/31/93 Options at 12/31/93<F2>
___________________________ ___________________________
Exercisable Unexercisable Exercisable Unexercisable
Name (#) (#) ($) ($)
<S> <C> <C> <C> <C>
John P. Frazee, Jr. 0 0 0 0
D. Wayne Peterson 53,200 27,000 738,554 166,766
Dianne Ursick 1,233 5,000 6,170 19,375
__________
Note:
<FN>
<F1> The value realized upon exercise of an option is the
difference between the fair market value of the shares of
Sprint common stock received upon the exercise, valued on the
exercise date, and the exercise price paid.
<F2> The value of unexercised, in-the-money options is the
difference between the exercise price of the options and the
fair market value of Sprint common stock at 12/31/93
($34.6875).
</TABLE>
Long-Term Incentive Plan Awards
The following table represents potential awards under Sprint's
long-term incentive plan which, subject to Sprint's right to
amend the plan at any time prior to the approval of payouts by
the Organization and Compensation Committee of Sprint's Board of
Directors, can be earned by the achievement of certain financial
objectives over the three year period ending December 31, 1995.
Payouts of awards (which represent items of compensation
attributable to Sprint as a whole) are tied to achieving
specified levels of performance criteria, based on certain
financial objectives, within Sprint's Long Distance Division
(LDD), its Local Telecommunications Division (LTD) and its
Cellular Division (CD). The relative weight given to the
performance criteria of the LDD, the LTD and the CD in computing
an executive's payout is based on the executive's
responsibilities with Sprint.
The portion of the payout applicable to the LDD is tied to
achieving specified levels of operating margin and net
collectible revenue growth. The target amount will be earned if
100% of the targeted levels of such criteria is achieved. The
threshold amount will be earned with the achievement of 85% of
the operating margin target and 83% of the revenue growth target
and the maximum award will be earned at achieving 114% of the
operating margin target and 146% of the revenue growth target.
An award payout will not be earned for the portion of the payout
applicable to the LDD criteria for performance below the
threshold.
The portion of the payout applicable to the LTD is tied to
achieving specified levels of earnings before interest, taxes and
depreciation as a percent of net revenues (EBITD), and return on
assets (ROA). The target amount will be earned if 100% of the
targeted level of such criteria is achieved. The threshold
amount will be earned with the achievement of 95% of the ROA
target and 97% of the EBITD target and the maximum award will be
earned at achieving 103% of the ROA target and 104% of the EBITD
target. An award payout will not be earned for the portion of
the payout applicable to the LTD criteria for performance below
the threshold.
The portion of the payout applicable to the CD is tied to
achieving specified levels of operating income and net
collectible revenue. The target amount will be earned if 100% of
the targeted level of such criteria is achieved. The threshold
amount will be earned with the achievement of 70% of the
operating income target and 90% of the revenue target and the
maximum award will be earned at achieving 130% of the operating
income and revenue targets. An award payout will not be earned
for the portion of the payout applicable to the CD criteria for
performance below the threshold.
The calculated payout, based on the achievement of the above
financial criteria, is adjusted (increased or decreased) by the
percent change in the market price of Sprint common stock as
determined by the change in the average of the high and low
prices on January 1, 1993 and December 31, 1995. If the stock
price increases over the three-year performance period, the
payout is adjusted by the percentage increase in stock price.
Conversely, if the stock price decreases over the three-year
performance period, the payout is reduced by the percentage
decrease in stock price. Upon approval of the payouts by the
Organization and Compensation Committee, a portion of each payout
will be paid in Sprint common stock, based on the market value of
Sprint common stock on the date of such approval, and the
remaining portion in cash. Currently the payouts are made 55% in
Sprint common stock and 45% in cash to meet tax withholding
requirements.
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
<CAPTION>
Performance or
Other Period
Until Maturation
Name or Payout
<S> <C>
D. Wayne Peterson 1/1/93-12/31/95
<CAPTION>
Estimated Future Payouts
under Non-Stock Price Based Plans<F1>
_______________________________________________
Threshold Target Maximum
Name ($) ($) ($)
<C> <C> <C>
D. Wayne Peterson $43,964 $106,580 $161,202
________
<FN>
<F1> Awards are based on a percentage of the Named Officers'
average base salary midpoint over the three-year performance
cycle which ends December 31, 1995. In calculating the
average base salary midpoint, the table assumes the base
salary midpoint for 1995 will equal the 1994 base salary
midpoint. In addition, the estimated future payouts shown
assume that the average of the high and low price of Sprint
common stock on December 31, 1995 will be the same as it was
on January 1, 1993. Mr. Peterson was the only Named Officer
to receive an award under the Long-Term Incentive Plan during
1993.
</TABLE>
Retirement Pension Plans
The Centel Retirement Pension Plan was a qualified,
noncontributory plan available to certain employees of the
Company and Centel including the executive officers. On December
31, 1993, the Centel plan was merged with and into the Sprint
Retirement Pension Plan. On January 1, 1994, all employees of
the Company, including executive officers, began to accrue a
pension benefit under the Sprint plan. Prior to that date, the
pension benefit for certain executive officers of Central
Telephone, including Mr. Frazee, was determined under provisions
of the Centel plan.
Under the Centel plan, the benefit for service prior to 1985
(calculated as a life annuity payable upon retirement at or after
age 65) is based upon average monthly cash compensation for the
highest 60 consecutive months during the last 15 years of
credited service times 1.125% for cash compensation below $9,000
and 1.5% for cash compensation in excess of that amount.
Compensation earned prior to 1990 was used to determine the
average monthly cash compensation to be applied to service prior
to 1985. For service beginning January 1, 1985 or thereafter,
the benefit is based upon career average monthly cash
compensation subsequent to that date times 1.7% for each year of
credited service. No amounts are offset against benefits.
The Centel plan permits early retirement at or after age 55
and five years service but the benefit is reduced 3.6% for each
year prior to age 60 that benefit payments are made. Various
benefit payment options are available including joint and
survivor benefits and a 10-year certain benefit. Credited
service under the plan for Mr. Frazee is 22 years. In 1993, the
normal retirement benefit at age 65 was limited by law to
$115,641. This limit is subject to annual adjustment by the
Internal Revenue Service. Centel has adopted a Defined Benefit
Restoration Plan under which it will pay any difference between
the amount limited by law and the amount otherwise payable under
the Centel plan.
The following table shows estimated normal retirement
benefits at age 65 under the Centel Retirement Pension Plan and
Defined Benefit Restoration Plan, assuming that retirement
occurred on January 1, 1994, and that annual pay increases since
1985 have occurred at the same average annual budgeted increase
for all management employees using the annual cash compensation
(salary plus bonus) during the final year of employment.
<TABLE>
Centel Pension Plan Table
<CAPTION>
Final Annual Cash Years of Credited Service
Compensation 10 20 30 40
<S> <C> <C> <C> <C>
$200,000 $26,586 $48,483 $70,380 $92,276
400,000 53,240 97,371 141,502 185,633
600,000 79,894 146,259 212,624 278,989
800,000 106,548 195,147 283,746 372,345
1,000,000 133,202 244,035 354,868 465,701
1,200,000 159,855 292,923 425,990 559,058
</TABLE>
Under the Sprint plan, employees earn a benefit for services
beginning after 1993 equal to 1.5% of actual yearly salary. For
each year of service prior to 1994, employees earn a benefit
equal to 1.5% of average pay for the five years ending in 1993.
Prior to 1990, the Sprint plan provided pension benefits based
on an employee's five highest consecutive years' compensation in
the last ten years before retirement. The benefit was determined
by taking 1.2% of such average compensation plus .35% of such
average compensation in excess of a certain amount ($22,200 in
1994) and multiplying the result by the individual's years of
credited service. Employees who retire before the year 2000 will
have their pension benefit calculated under both the new and old
formulas and will receive the greater of the two benefits.
Because the benefit for Mr. Peterson is expected to be greater
under the old formula, the table below reflects the estimated
annual pension benefit payable to an individual retiring in 1994
at age 65 under the old formula. The amounts include all
prospective benefits under Sprint's plans, whether tax-qualified
or not.
<TABLE>
Sprint Pension Plan Table
<CAPTION>
Remuneration<F1> Years of Service <F2>
___________________________________________________
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$400,000 $91,835 $122,446 $153,058 $183,669 $214,281
500,000 115,085 153,446 191,808 230,169 268,531
600,000 138,335 184,446 230,558 276,669 322,781
700,000 161,585 215,446 269,308 323,169 377,031
800,000 184,835 246,446 308,058 369,669 431,281
900,000 208,085 277,446 346,808 416,169 485,531
1,000,000 231,335 308,446 385,558 462,669 539,781
____________
<FN>
<F1> Compensation, for purposes of estimating a pension
benefit, includes salary and bonus as reflected under Annual
Compensation in the Summary Compensation Table. The
calculation of benefits under the pension plans generally is
based upon average compensation for the highest five
consecutive years of the ten years preceding retirement.
<F2> These amounts are straight life annuity amounts and would
not be subject to reduction because of Social Security
benefits. For purposes of estimating a pension benefit, the
years of service credited for Mr. Peterson is 26 years.
</TABLE>
Ms. Ursick's pension benefit is determined primarily by a
career average formula and is not disclosed under either of the
two tables above. Assuming she continues in her current position
with the Company at current compensation levels and retires at
age 65, her annual pension benefit payable would be approximately
$84,150. This amount is a straight life annuity amount.
Employment Contracts
Mr. Peterson has signed a non-competition agreement with
Sprint which provides, in general, that he may receive 18 months
of compensation and benefits following his involuntary
termination of employment if he does not associate himself with a
competitor during that period.
Sprint has a Key Management Benefit Plan providing for a
survivor benefit in the event of the death of a participant or,
in the alternative, a supplemental retirement benefit.
Participants are key executives of Sprint and its subsidiaries as
designated by the Chief Executive Officer of Sprint and approved
by the Organization and Compensation Committee. Under the plan,
if a participant dies prior to retirement, the participant's
beneficiary will receive ten annual payments each equal to 25% of
the participant's highest annual salary during the five-year
period immediately prior to the time of death. If a participant
dies after retiring or becoming permanently disabled, the
participant's beneficiary will receive a benefit equal to 300%
(or a reduced percentage if the participant retires before age
60) of the participant's highest annual salary during the five-
year period immediately prior to the time of retirement or
disability, payable either in a lump sum or in installments at
the election of the participant. Prior to reaching age 60 and at
least 13 months before retirement, a participant may elect a
supplemental retirement benefit in lieu of all or a portion of
the survivor benefit. The supplemental retirement benefit will
be the actuarial equivalent of the survivor benefit and will be
paid in a lump sum, in installments, or as a single life or joint
and survivor annuity, at the election of the participant. Mr.
Peterson is a participant in the plan.
Directors' Compensation
Following the Merger, all Directors of Central Telephone
were employed by Sprint or its subsidiaries and received no
compensation for serving as a Director of Central Telephone.
Prior to the Merger, Directors not employed as officers of the
Company or Centel received basic annual compensation of $25,000.
In addition, if he or she was an outside Director, the vice
chairman of the Executive Committee received $20,000 and the
chairman of each other committee received $2,500. Outside
Directors received an additional $1,000 for each meeting attended
and $750 for each telephone call meeting.
Prior to the Merger, outside Directors could defer their
compensation and elect to have amounts deferred earn interest at
the prime rate compounded quarterly, or be converted into units
equivalent to shares of Centel common stock. Deferred amounts
would be paid following termination of service as a Director or,
upon election, prime rate accounts would be paid in the fifth
year following the deferral election.
Outside Directors who retired after age 65 received an
annual retirement benefit equal to the basic annual rate of
compensation then in effect (a) for life, if the outside Director
served for 10 or more years, or (b) for the number of full
quarters served by the outside Director, if less than 10 years.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information about the only
known beneficial owner of more than five percent of Central
Telephone's outstanding voting securities as of December 31,
1993:
<TABLE>
<CAPTION>
Name and Address Title of Number Percent
of Beneficial Owner Class of Shares of Class
<S> <C> <C> <C>
Centel Corporation Common Stock 9,000,000 100%
2330 Shawnee Mission
Parkway
Westwood, Kansas 66205
</TABLE>
The following table sets forth information as of December
31, 1993, with respect to the shares of Sprint common stock owned
by each current Director, each of the executive officers named in
the executive compensation tables, and by all Directors and
executive officers as a group. No Director or executive officer
owns any equity security of Central Telephone.
<TABLE>
<CAPTION>
Sprint Common Stock
Name of Individual or Beneficially Owned <F1>
Identity of Group Number of Shares
<S> <C>
Stephen M. Bailor 46,853 <F2>
John P. Frazee, Jr. 31,681 <F3>
Don A. Jensen 35,358 <F2>
William E. McDonald 63,249 <F2>
D. Wayne Peterson 88,487 <F2>
M. Jeannine Strandjord 43,013 <F2>
Alan J. Sykes 24,678 <F2><F3>
Dianne Ursick 23,979 <F2>
All Directors and executive officers
as a group (13 persons) 639,604 <F2><F4>
___________
Notes:
<FN>
<F1> Unless otherwise noted, the persons for whom the information
is provided had sole voting and investment power over the
shares of stock shown as beneficially owned.
<F2> Includes shares which may be acquired upon the exercise of
stock options exercisable on or within 60 days after
December 31, 1993, under Sprint's stock option plans as
follows: 37,367, 17,764, 43,000, 60,950, 31,750, 19,500 and
1,233 shares for Mr. Bailor, Mr. Jensen, Mr. McDonald, Mr.
Peterson, Ms. Strandjord, Mr. Sykes and Ms. Ursick,
respectively, and 433,490 shares for all Directors and
executive officers as a group.
<F3> Includes shares held by or for the benefit of family members
in which beneficial ownership has been disclaimed: 704
shares owned by Mr. Frazee's wife and 4,377 shares held by
Mr. Frazee as custodian for his children, and 86 shares held
by Mr. Sykes as custodian for his son.
<F4> Represents less than 1% of class.
</TABLE>
Item 13. Certain Relationships and Related Transactions
DuBose Ausley, who was a Director of Central Telephone
through March 9, 1993, is President of the law firm of Ausley,
McMullen, McGehee, Carothers & Proctor, P.A., which provided
legal services to a subsidiary of Central Telephone in 1993 for
which it billed $403,950.
For information pertaining to transactions with affiliated
companies, refer to footnote 7 to the consolidated financial
statements in Part II of this report.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
CENTRAL TELEPHONE COMPANY
(Registrant)
Date: April 28, 1994 By /s/ RALPH J. HODGE
Ralph J. Hodge
Vice President - Controller
<PAGE>
EXHIBIT INDEX
3(a) Certificate of Incorporation of Central Telephone,
as amended
3(b) Bylaws of Central Telephone, as amended
4(a) Indenture dated June 1, 1944, between Central
Telephone and The First National Bank of Chicago
and Robert L. Grinnell, as Trustees (under which
J. G. Finley is successor to Robert L. Grinnell),
as amended and supplemented by indentures
supplemental thereto through and including a
Thirty-third Supplemental Indenture dated as of
August 15, 1982 (Incorporated by reference to
Exhibit No. 4A to Central Telephone's Registration
Statement No. 33-10475 filed December 1, 1986)
4(b) Thirty-fourth Supplemental Indenture, dated as of
December 15, 1986 (Incorporated by reference to
Exhibit No. 4B to Central Telephone's Registration
Statement No. 33-35411 filed June 14, 1990)
4(c) Thirty-fifth Supplemental Indenture, dated as of
October 15, 1990 (Incorporated by reference to
Central Telephone's Current Report on Form 8-K
dated October 26, 1990)
4(d) Thirty-sixth Supplemental Indenture, dated as of
March 15, 1991 (Incorporated by reference to
Central Telephone's Current Report on Form 8-K
dated June 14, 1991)
4(e) Thirty-seventh Supplemental Indenture dated as of
August 15, 1992.
12 Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant.
23(a) Consent of Ernst & Young.
23(b) Consent of Arthur Andersen & Co.
<PAGE> 1
Exhibit 3(a)
CERTIFICATE OF INCORPORATION
of
CENTRAL TELEPHONE COMPANY
Original Certificate of Incorporation
Filed under the Name of
New Centel, Inc.
December 14,1970
(Amended March 16, 1994)
First: The name of the corporation (which is hereinafter
referred to as the "Corporation") is
CENTRAL TELEPHONE COMPANY
Second: The principal office of the Corporation in the State
of Delaware is to be located at 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its resident
agent therein is The Corporation Trust Company, and the address
of said resident agent is 1209 Orange Street, in said City,
County and State.
Third: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
Fourth: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is eleven
million twenty-five thousand seven hundred three (11,025,703)
shares, of which nine hundred seventy-two thousand three hundred
ninety-nine (972,399) shares shall be Cumulative Preferred Stock
without par value, fifty-three thousand three hundred four
(53,304) shares shall be Convertible Junior Preferred Stock
without par value and ten million (10,000,000) shares shall be
Common Stock without par value.
A description of said different classes of stock and a
statement of the relative rights of the holders of stock of such
classes and the designations, preferences and participating,
voting, optional or other special rights and the qualifications,
limitations or restrictions thereof, of the stock of such classes
are as follows:
(1) The authorized shares of Cumulative Preferred Stock
without par value shall be issued in series, as follows:
35,000shares of the stated value of $50 per share as
Cumulative Preferred Stock, $2.50 Dividend Series,
144,975shares of the stated value of $25 per share as
Cumulative Preferred Stock, $1.24 Dividend Series,
4,852shares of the stated value of $100 per share as
Cumulative Preferred Stock, $5 Dividend Series,
26,400 shares of the stated value of $100 per share
as Cumulative Preferred Stock, $4.70 Dividend Series,
and the authorized shares of Cumulative Preferred Stock without
par value not so issued shall be issued in one or more other
series and with such designation for each such series sufficient
to distinguish the shares thereof from the shares of all other
series and classes as shall be stated and expressed in the
resolution or resolutions providing for the issue of each such
series adopted by the Board of Directors. Authority is hereby
expressly vested in the Board of Directors to divide, and to
provide for the issue from time to time of, authorized and
unissued Cumulative Preferred Stock in series and to fix, prior
to the issue of any shares of such series, to the extent
permitted by the law of the State of Delaware, the voting powers,
designations, preferences and relative, participating, optional
or other rights not fixed herein or in an amendment hereto of
shares of such series. All shares of Cumulative Preferred Stock
of any one series shall be identical with each other share of the
same series in all respects, except that if issued at different
times such shares of the same series may, as hereinafter in
Section (2) in this Article Fourth provided, differ as to the
dates from which dividends thereon shall be cumulative.
The shares of Cumulative Preferred Stock of all series are
for convenience of reference sometimes collectively designated in
this Certificate of Incorporation as "Cumulative Preferred
Stock."
All authorized shares of Convertible Junior Preferred Stock
shall be issued as one class of the stated value of $10 per
share.
(2) The holders of the Cumulative Preferred Stock of each
series shall be entitled to receive out of the net profits or the
net assets in excess of capital or any surplus of the Corporation
at the time legally available for the payment of dividends under
the law of the State of Delaware, hereinafter in this Certificate
of Incorporation referred to as "net profits or surplus", but
only as and when declared by the Board of Directors, dividends on
each share at the rate fixed for such series herein or in the
resolution or resolutions providing for the issue of such series
adopted by the Board of Directors, and no more, payable in cash.
Such dividends shall be payable quarterly on the last days of
March, June, September and December in each year. Such dividends
may be declared and/or paid before, during or after the period
with respect to which they are payable, but shall not be in
arrears until after the date as of which such dividends for any
such period are payable.
Such dividends on the Cumulative Preferred Stock shall be
deemed to accrue from day to day, whether or not earned or
declared, and shall commence to accrue on each share thereof:
(a) from such date, if any, as may be fixed by the
Board of Directors prior to the issue thereof; or
(b) if no such date is fixed, then from the date of
issue thereof;
and shall be cumulative from the date on which such dividends
commence to accrue.
If cumulative dividends shall not have been fully paid or
declared and set apart for payment on each share of the
Cumulative Preferred Stock, the amount of the deficiency (without
interest) shall be fully paid, or dividends in such amount
declared and set apart for payment, before any dividends are paid
or declared or set apart for payment on the Convertible Junior
Preferred Stock or the Common Stock and before any sum or sums
shall be paid or set apart for the purchase, retirement or
redemption of any shares of any class of stock of the
Corporation. No dividend shall be declared or paid on any share
of Cumulative Preferred Stock at any time when less than the full
amount of cumulative dividends which have accrued and become
payable on all shares of the Cumulative Preferred Stock have been
paid or declared and set apart for payment on such shares, unless
the same proportion of the amount of the dividends then accrued
and which have become payable on each share of the Cumulative
Preferred Stock is paid or declared and set apart for payment on
each such share.
Dividends on the Convertible Junior Preferred Stock shall,
in like manner as in respect of the Cumulative Preferred Stock,
be cumulative quarterly at the rate fixed therefor herein, so
that in case quarterly dividends at said rate on each share of
the Convertible Junior Preferred Stock shall not have been fully
paid or declared and set apart for payment from the date
dividends commence to accrue thereon, as hereinafter provided,
the amount of the deficiency (without interest), together with
the current quarterly dividend, shall be fully paid, or dividends
in such amount declared and set apart for payment, before any
dividends are paid or declared or set apart for payment on the
Common Stock and before any sum or sums are paid or set apart for
the purchase, retirement or redemption of any shares of
Convertible Junior Preferred Stock or Common Stock. At any time
less than full cumulative dividends then accrued on each share of
Convertible Junior Preferred Stock are declared and paid, no
dividends shall be declared or paid on any share of Convertible
Junior Preferred Stock unless the same proportionate amount of
the dividends then accrued is declared and paid on each share of
the Convertible Junior Preferred Stock.
Such dividends on the Convertible Junior Preferred Stock
shall be deemed to accrue from day to day, whether or not earned
or declared, and shall commence to accrue on each share thereof
(a) from such date, if any, as may be fixed by the
Board of Directors prior to the issue thereof; or
(b) if no such date is fixed, then from the date of
issue thereof;
and shall be cumulative from the date on which such dividends
commence to accrue. Such dividends shall be payable quarterly on
the last days of March, June, September and December in each
year, if declared by the Board of Directors. They may be
declared and/or paid before, during or after the period with
respect to which they are payable, but shall not be in arrears
until after the date as of which such dividends for any such
period are payable.
(3) Out of any net profits or surplus of the Corporation
remaining after cumulative dividends upon the Cumulative
Preferred Stock for all past dividend periods, together with the
current quarterly dividends, shall have been fully paid or
declared and set apart for payment and provided that the
Corporation shall not be in default in respect of any sinking or
purchase fund requirement applicable in respect of any of the
Cumulative Preferred Stock, then and not otherwise and subject to
such limitations as may be provided herein for the benefit of any
series of Cumulative Preferred Stock or in the resolution or
resolutions of the Board of Directors providing for the issue of
any series of Cumulative Preferred Stock, (i) the Board of
Directors may declare and pay dividends upon the Convertible
Junior Preferred Stock of the Corporation, and no holder of
Cumulative Preferred Stock as such shall be entitled to share in
such dividends, and (ii) if cumulative dividends as aforesaid
upon the Convertible Junior Preferred Stock for all past dividend
periods, together with the current quarterly dividend, shall have
been fully paid or declared and set apart for payment, and all
other conditions thereto hereinabove referred to have been met,
then the Board of Directors may declare and pay dividends or
declare and make distributions upon the Common Stock of the
Corporation, and no holder of Cumulative Preferred Stock or of
Convertible Junior Preferred Stock shall, as such, be entitled to
share in such dividends or distributions.
(4) The Cumulative Preferred Stock shall be preferred over
the Convertible Junior Preferred Stock and the Convertible Junior
Preferred Stock shall be preferred over the Common Stock as to
both earnings and assets, and in the event of any liquidation,
dissolution or winding up of the Corporation or any reduction of
its capital resulting in the distribution of any of its assets to
its stockholders, the holders of the Cumulative Preferred Stock
shall be entitled to receive for each share thereof an amount
equal to the stated value thereof, if such liquidation,
dissolution, winding up or reduction of capital be involuntary,
and the current redemption price thereof payable upon redemption
at the option of the Corporation (unless any such shares shall
not be redeemable at the option of the Corporation, in which case
the stated value thereof shall be distributable in respect of
such shares) if such liquidation, dissolution, winding up or
reduction of capital be voluntary, together in all cases with an
amount equal to cumulative dividends accrued and unpaid thereon
to the date of distribution, before any distribution of any
assets shall be made to the holders of the Convertible Junior
Preferred Stock or the Common Stock; and after payment to the
holders of the Cumulative Preferred Stock, as aforesaid, the
holders of the Convertible Junior Preferred Stock shall be
entitled to receive for each share thereof an amount equal to the
current redemption price thereof payable upon redemption at the
option of the Corporation whether such liquidation, dissolution,
winding up or reduction of capital be voluntary or involuntary,
together with an amount equal to cumulative dividends accrued and
unpaid thereon to the date of distribution, before any
distribution of any assets shall be made to the holders of the
Common Stock. After receipt in the order and of the amounts to
which they are respectively entitled, as aforesaid, the holders
of the Cumulative Preferred Stock and the Convertible Junior
Preferred Stock shall be entitled to no further participation in
such distribution and the holders of the Common Stock shall be
entitled, to the exclusion of the holders of the Cumulative
Preferred Stock and the holders of the Convertible Junior
Preferred Stock, to share, ratably, in all assets of the
Corporation remaining. If, upon any such liquidation,
dissolution, winding up or reduction of its capital resulting in
the distribution of any of its assets to its stockholders, the
assets distributable among the holders of the Cumulative
Preferred Stock shall be insufficient to permit the payment in
full to such holders of the full preferential amounts aforesaid,
then the entire assets of the Corporation to be distributed shall
be distributed among the holders of the Cumulative Preferred
Stock then outstanding, ratably, in proportion to the full
preferential amounts to which they are respectively entitled;
and, similarly, if after payment to the holders of the Cumulative
Preferred Stock, of the full preferential amounts to which they
are entitled, the remaining assets shall be insufficient to
permit the payment in full to the holders of the Convertible
Junior Preferred Stock of the amounts to which they are entitled
in priority to the holders of the Common Stock, then said
remaining assets shall be distributed among the holders of the
Convertible Junior Preferred Stock then outstanding, ratably, in
proportion to the amounts to which they are entitled in priority
to the holders of the Common Stock.
Neither the consolidation nor merger of the Corporation with
or into any other corporation or corporations, nor the sale of
all or substantially all of the assets of the Corporation, shall
be deemed to be a liquidation, dissolution or distribution of
assets within the meaning of any of the provisions of this
Certificate of Incorporation; provided, however, that this
paragraph shall not be construed to be a limitation of or a
restriction upon the preferential rights of the holders of the
Cumulative Preferred Stock or the holders of the Convertible
Junior Preferred Stock.
(5) Subject to the limitations imposed by Section (2) of
this Article Fourth and to any other limitations as to any series
provided herein or in the resolution or resolutions providing for
the issue of such series adopted by the Board of Directors, at
the election of the Corporation, to be exercised by resolution of
its Board of Directors, the whole or any part of any one or more
series of the Cumulative Preferred Stock or the whole or any part
of the Convertible Junior Preferred Stock (but not sooner, in the
case of the Convertible Junior Preferred Stock, than five years
and thirty days after the initial issue of shares of such class)
may be redeemed at any time and from time to time upon not less
than thirty nor more than sixty days' previous notice given in
such manner as may be prescribed by the by-laws or by resolution
of the Board of Directors at the price for the shares to be
redeemed fixed herein or in the resolution or resolutions
providing for the issue of such shares adopted by the Board of
Directors and, in all cases, plus an amount equal to all
cumulative dividends accrued and unpaid on such shares to the
date of redemption, but without interest on the amount so
payable. In the event that a part and not the whole of any series
of the Cumulative Preferred Stock or a part and not the whole of
the Convertible Junior Preferred Stock shall be redeemed, the
shares to be redeemed shall be determined in such manner, either
by lot or pro rata among the holders of shares of such series or
of the Convertible Junior Preferred Stock, as the case may be or
otherwise, as shall be prescribed herein or, in the absence of
such prescription, by the by-laws or by resolution of the Board
of Directors. The Board of Directors shall have the authority to
increase or decrease the amount to be redeemed from any holder so
as to avoid fractional shares. From and after the date fixed in
any such notice as the date of redemption, unless default shall
be made by the Corporation in the payment of the redemption price
not later than the redemption date so fixed, all dividends on the
shares so called for redemption shall cease to accumulate or
accrue, and all rights of the holders thereof as stockholders of
the Corporation, except the right to receive the redemption
price, including all cumulative dividends accrued and unpaid to
the date of redemption (without interest thereon as aforesaid),
shall cease and determine. At any time before the redemption
date the Corporation may deposit in trust the funds necessary for
such redemption with a bank or trust company, to be designated in
the notice of such redemption, doing business in the City of
Chicago and State of Illinois or in the City and State of New
York, and having capital, surplus and undivided profits
aggregating at least $5,000,000. In the event such deposit is
made so that the deposited funds shall be forthwith available to
the holders of the shares to be redeemed upon surrender of the
certificates evidencing such shares, then, upon the giving of the
notice of such redemption, as herein above provided, or upon the
earlier delivery to such bank or trust company of irrevocable
authorization and direction so to give such notice, all shares
with respect to the redemption of which such deposit shall have
been made and the giving of such notice effected or authorization
therefor given shall, whether or not the certificates for such
shares shall be surrendered for cancellation, be deemed to be no
longer outstanding for any purpose and all rights with respect to
such shares shall thereupon cease and terminate, except only the
right of the holders of the certificates for such shares (i) to
receive, out of the funds so deposited in trust, from and after
the time of such deposit, the amount payable upon the redemption
thereof, without interest, or (ii) to exercise any privilege of
conversion which shall not theretofore have terminated. Any
funds so deposited, which shall not be required for the payment
of the redemption price of such shares by reason of the exercise
of any right of conversion subsequent to the date of such deposit
shall be paid over to the Corporation forthwith. At the
expiration of six years after the redemption date, any such funds
then remaining on deposit with such bank or trust company shall
be paid over to the Corporation, free of trust, and thereafter
the holders of the certificates for such shares shall have no
claims against such bank or trust company, but only claims as
unsecured creditors against the Corporation for amounts equal to
their pro rata portion of the funds so paid over, without
interest. Any interest or other accretions to funds deposited
with such bank or trust company shall belong to the Corporation.
The provisions of this Section (5) with respect to the
method and effect of redemption shall be applicable to the
redemption of shares pursuant to any sinking fund created for any
series of the Cumulative Preferred Stock as well as to the
optional redemption of shares of Cumulative Preferred Stock or
Convertible Junior Preferred Stock, except to the extent, if any,
that the terms of such sinking fund, as fixed herein or in the
resolution or resolutions providing for the issue of such series
adopted by the Board of Directors, shall expressly otherwise
provide. Subject to the provisions hereof, the Board of
Directors shall have power to prescribe from time to time the
manner in which Cumulative Preferred Stock or Convertible Junior
Preferred Stock shall be redeemed.
(6) Subject to the limitations imposed by Section (2) of
this Article Fourth, nothing herein contained shall limit the
right of the Corporation to purchase any shares of the Cumulative
Preferred Stock or any shares of the Convertible Junior Preferred
Stock for any legal purpose.
(7) So long as any shares of the Cumulative Preferred Stock
shall be outstanding:
(a) the Corporation shall not, without the affirmative
vote or the written consent of the holders of two-thirds of
all shares of the Cumulative Preferred Stock, as one class,
outstanding at the time or as of a record date fixed by the
Board of Directors or by the by-laws, create or authorize
any stock of any class which shall be prior in rank to such
shares of the Cumulative Preferred Stock with respect to the
payment of dividends or the distribution of assets, or amend
this Certificate of Incorporation so as adversely to affect
any of the preferences or other rights of the holders of the
Cumulative Preferred Stock; provided, that if any such
amendment would adversely affect any of the preferences or
other rights of the holders of one or more, but less than
all, of the respective series of the Cumulative Preferred
Stock, the holders of two-thirds or more of the shares of
the Cumulative Preferred Stock outstanding and voting
affirmatively for or consenting to such amendment, as
required, shall include the holders of at least two-thirds
of the shares of each such series so adversely affected; and
(b) the Corporation shall not, without the affirmative
vote or the written consent of the holders of a majority of
the shares of the Cumulative Preferred Stock, as one class,
outstanding at the time or as of a record date fixed by the
Board of Directors or by the by-laws, (i) create or
authorize any stock of any class ranking on a parity with
the Cumulative Preferred Stock with respect to the payment
of dividends or the distribution of assets or increase the
number of authorized shares of the Cumulative Preferred
Stock, or (ii) dissolve, liquidate or wind up the
Corporation or its affairs or consolidate with or merge into
any other corporation under applicable statutory procedure
or make any sale, transfer, lease or exchange of the
property and business of the Corporation as or substantially
as an entirety, but this provision shall not be applicable
to a mortgage or pledge.
(8) If no dividends or less than full cumulative dividends
shall have been paid for four quarterly dividend periods, whether
or not such periods are consecutive, on any of the Cumulative
Preferred Stock or if the Corporation shall fail in any year to
fulfill the requirements of the sinking fund or purchase fund
with respect to any series of the Cumulative Preferred Stock
entitled to the benefit of a sinking fund or purchase fund and
the terms of such sinking fund or purchase fund shall so provide,
the holders of the Cumulative Preferred Stock, as a class, shall,
at all meetings held for the election of directors until full
cumulative dividends for all past quarterly dividend periods and
the current quarterly dividend period on all of the Cumulative
Preferred Stock shall have been paid or declared and set apart
for payment and until all such sinking fund or purchase fund
requirements which have matured shall have been fulfilled,
possess voting power to the exclusion of the holders of the
Convertible Junior Preferred Stock and the Common Stock to elect
the smallest number constituting a majority of the directors to
be elected and the holders of the Convertible Junior Preferred
Stock and the Common Stock, as if they were one class, shall
possess voting power to the exclusion of the holders of the
Cumulative Preferred Stock to elect the largest number
constituting a minority of the directors then to be elected.
Whenever the holders of shares of the Cumulative Preferred Stock
shall acquire the right to elect a majority of the directors, a
special meeting of the stockholders shall be called by or on the
order of a majority of the directors or by or on the written
request of any holder of shares of the Cumulative Preferred Stock
then outstanding who has held his stock for a period of not less
than six months, for the purpose of electing a new Board of
Directors, such meeting to be held on not less than fifteen nor
more than thirty days' notice, provided, however, that no such
special meeting shall be called if an annual meeting of the
stockholders is to be held within sixty days after the holders of
shares of the Cumulative Preferred Stock shall have become
entitled to exercise such right of election. The terms of office
of all persons who may be directors of the Corporation at the
time shall terminate upon any election of directors by the
holders of shares of the Cumulative Preferred Stock in accordance
with the foregoing provisions, regardless of whether or not the
holders of shares of the Convertible Junior Preferred Stock and
the Common Stock shall have elected the remaining directors of
the Corporation; and unless and until such remaining directors of
the Corporation shall be elected by the holders of shares of the
Convertible Junior Preferred Stock and the Common Stock, the
number of directors, for the purpose of determining the existence
of a quorum or the validity of any action taken, shall,
notwithstanding any other provision hereof, be deemed to be the
number of directors elected by the holders of shares of the
Cumulative Preferred Stock. Whenever the right of the holders of
shares of the Cumulative Preferred Stock to elect a majority of
the directors shall terminate, a special meeting of the
stockholders shall be called by or on the order of a majority of
the directors or by or on the written request of any holder of
shares of the Convertible Junior Preferred Stock or the Common
Stock then outstanding who has held his stock for a period of not
less than six months, for the purpose of electing a new Board of
Directors, such meeting to be held on not less than fifteen nor
more than thirty days' notice, provided, however, that no such
special meeting shall be called if an annual meeting of the
stockholders is to be held within sixty days after the right of
the holders of shares of the Cumulative Preferred Stock to elect
a majority of the directors shall terminate. The terms of office
of all persons who may be directors of the Corporation at the
time shall terminate upon the election of directors by the
holders of shares of the Cumulative Preferred Stock, the
Convertible Junior Preferred Stock and the Common Stock with
equal voting rights per share in respect of all the directors
then to be elected. If, during any interval between meetings of
stockholders for the election of directors while the holders of
shares of the Cumulative Preferred Stock shall be entitled to
elect a majority of the directors, the number of directors in
office who have been elected by the holders of shares of the
Cumulative Preferred Stock or the Convertible Junior Preferred
Stock and the Common Stock, as the case may be, shall become less
than the total number of directors which the holders of shares of
such class are entitled to elect, whether by reason of the
resignation, death or removal of any director or directors, or an
increase in the total number of directors, the vacancy or
vacancies shall be filled by a majority vote of the directors
then in office who were elected by the holders of the shares of
such class or whose predecessors were so elected. Any director
may be removed from office by vote of the holders of a majority
of the shares of the class of stock voted for his election or for
his predecessor in cases where such director was elected by other
directors. A special meeting of the holders of shares of either
class may be called by a majority of the directors then in office
who were elected by the holders of the shares of such class or
whose predecessors were so elected, for the purpose of removing a
director in accordance with the foregoing provisions and shall be
called by or on the written request of the holders of not less
than 15% of the outstanding shares of the class entitled to vote
with respect to the removal of any such director, such meeting to
be held on not less than fifteen nor more than thirty days'
notice. At any meeting of stockholders when the holders of shares
of the Cumulative Preferred Stock shall be entitled to vote for
the election of a majority of the directors, the absence of a
quorum of the holders of shares of the Cumulative Preferred Stock
or of the holders of shares of the Convertible Junior Preferred
Stock and the Common Stock shall not prevent an election at any
such meeting or adjournment thereof of directors by the other
such class if the necessary quorum of the holders of shares of
such other class is present in person or by proxy at such
meeting. For the purposes of such election, a quorum shall
consist of holders of not less than a majority of the issued and
outstanding shares of the class. In the absence of a quorum of
the holders of shares of either such class, a majority of those
holders of shares of such class who are present in person or by
proxy shall have power to adjourn the election of the directors
to be elected by such class from time to time without notice
other than announcement at the meeting until the holders of the
requisite number of shares of such class shall be present in
person or by proxy.
(9) Except as otherwise specifically provided in this
Article Fourth or as may be provided by the Board of Directors in
respect of any series of Cumulative Preferred Stock prior to the
issue of any shares of such series pursuant to the authority
vested in the Board of Directors by Section (1) of this Article
Fourth or as required by law, each share of each class of stock
of the Corporation shall represent one vote which may be voted
upon all measures, including the election of directors. The
election of directors need not be by ballot unless so provided in
the by-laws. Except as otherwise expressly provided in this
Article Fourth or by law, at all meetings of stockholders a
quorum for the transaction of any business shall consist of the
holders of such number of shares, represented in person or by
proxy, as shall be entitled to cast a majority of the votes which
might be cast by the holders of all of the shares of the
Corporation issued, outstanding and entitled to be voted upon
such business and, except as otherwise expressly provided in this
Article Fourth or by law, the affirmative vote of a majority of
such quorum shall suffice to adopt any measure.
(10) Additional terms of the respective series of Cumulative
Preferred Stock and of the Convertible Junior Preferred Stock
are:
A.
THE CUMULATIVE PREFERRED STOCK, $2.50 DIVIDEND SERIES
1. The dividend rate on the Cumulative Preferred Stock,
$2.50 Dividend Series, shall be $2.50 per annum.
2. The price payable upon redemption at the option of the
Corporation of Cumulative Preferred Stock, $2.50 Dividend Series,
shall be Fifty Two Dollars and Fifty Cents ($52.50) per share.
B.
THE CUMULATIVE PREFERRED STOCK, $1.24 DIVIDEND SERIES
1. The dividend rate on the Cumulative Preferred Stock,
$1.24 Dividend Series, shall be $1.24 per annum.
2. The price payable upon redemption at the option of the
Corporation of Cumulative Preferred Stock, $1.24 Dividend Series,
shall be Twenty-six Dollars ($26) per share to and including
September 30, 1972, and Twenty-five Dollars and Fifty Cents
($25.50) per share thereafter.
3. At least twenty (20) and not more than sixty (60) days
prior to October 31 of each year the Corporation shall mail to
each holder of shares of Cumulative Preferred Stock, $1.24
Dividend Series, of record as of a date not more than fifty (50)
days preceding such mailing, at the address of such holder then
appearing on the books of the Corporation, a notice in writing of
its intention to accept tenders of not more than thirty-seven
hundred fifty (3,750) shares of Cumulative Preferred Stock, $1.24
Dividend Series, tendered to the Corporation on or before such
October 31 for purchase at a price per share not exceeding Twenty
Five Dollars ($25.00) plus accrued dividends (the "maximum
purchase price"). Not later than October 31 of each year the
Corporation shall, out of any funds from which dividends might
lawfully be paid, deposit with a bank or trust company doing
business in the City of Chicago, State of Illinois, selected by
the Corporation and designated in the aforesaid notice as the
place to which tenders shall be delivered, a sum equal to the
maximum purchase price of thirty-seven hundred fifty (3,750)
shares of Cumulative Preferred Stock, $1.24 Dividend Series.
Tenders shall be accepted on October 31 in the order of the
prices at which they are made; those shares tendered at the
lowest price to be the first purchased. Among tenders at the
same price the Corporation may make selection of the shares which
it will purchase so that as nearly as may be tenders may be
accepted in their entirety rather than partially. The
Corporation may make partial acceptance of one or more tenders so
that the total number of shares purchased will not exceed thirty-
seven hundred fifty (3,750). If the Corporation shall purchase
less than all of the shares represented by any certificate, a new
certificate for the shares not purchased will be issued to the
holder of such shares.
If after notice has been given and deposit of funds made as
aforesaid, less than thirty-seven hundred fifty (3,750) shares of
Cumulative Preferred Stock, $1.24 Dividend Series, shall be
tendered for purchase at not more than the maximum purchase
price, the purchase of such number of shares as shall have been
so tendered at not more than the maximum purchase price shall
constitute compliance by the Corporation for such year with the
provisions hereof. Any funds deposited for the purpose of
compliance with the provisions hereof and not required for such
purpose shall be returned to the Corporation upon such
compliance.
Shares will not be deemed tendered unless and until the
certificate or certificates therefor have been received by the
bank or trust company designated for the purpose nor unless, if
payment upon acceptance of tender thereof is to be made other
than to the record holder, such certificate or certificates have
been duly endorsed or are otherwise in proper form for transfer,
with all transfer taxes in respect thereof paid or provided for.
Default by the Corporation in complying with the provisions
of this paragraph 3 shall preclude the declaration or the payment
of dividends or the making of any other distribution whatsoever
upon the Convertible Junior Preferred Stock and the Common Stock
of the Corporation until the Corporation shall have cured such
default by soliciting tenders and depositing the funds necessary
to the purchase in the manner and upon the terms herein provided
of such number of shares of Cumulative Preferred Stock, $1.24
Dividend Series, as shall equal the difference between (a) the
product of thirty-seven hundred fifty (3,750) multiplied by the
number of full twelve month periods elapsed since October 31,
1970; and (b) the product of thirty-seven hundred fifty (3,750)
multiplied by the number of full twelve month periods since
October 31, 1970 for which the Corporation has complied with the
provisions of this paragraph 3; but neither the holder of any
shares of Cumulative Preferred Stock, $1.24 Dividend Series, as
such, nor the holders of all shares of Cumulative Preferred
Stock, $1.24 Dividend Series, as a class, shall be entitled to
apply to any court of law or equity for a money judgment or a
decree of specific performance or similar relief or remedy on
account of any such default other than to restrain the
Corporation from the declaration or payment of dividends or the
making of any distribution upon the Convertible Junior Preferred
Stock and the Common Stock of the Corporation until such default
shall have been cured.
4. Shares of Cumulative Preferred Stock, $1.24 Dividend
Series, redeemed, purchased upon tender, or otherwise reacquired
by the Corporation shall be canceled and upon such cancellation
shall be deemed to be authorized and unissued shares of
Cumulative Preferred Stock, but shall not be reissued as shares
of the same or any theretofore outstanding series.
5. So long as any shares of Cumulative Preferred Stock,
$1.24 Dividend Series, shall be outstanding (and unless the vote
or assent of a greater number of shares of such series shall then
be required by law), without the assent, given by vote at a
meeting thereof called for the purpose, of the holders of a
majority in interest of the outstanding shares of Cumulative
Preferred Stock, $1.24 Dividend Series, the Corporation shall not
issue any shares of "preferred stock" or issue any "funded debt"
unless the "net earnings" of the Corporation for 12 consecutive
calendar months during the 15 months immediately preceding the
month in which such issue is to be made are at least one and one-
half (1 1/2) times the aggregate of the annual interest charges on
all indebtedness for borrowed money and the annual dividend
requirements on all preferred stock of the Corporation to be
outstanding immediately after the proposed issue.
As used in this paragraph 5, "preferred stock" means the
Cumulative Preferred Stock, $1.24 Dividend Series, and all shares
of any class of stock ranking in respect of dividends or assets
equally with or prior to the Cumulative Preferred Stock, $1.24
Dividend Series; "funded debt" means all indebtedness for
borrowed money of the Corporation maturing one year or more after
the date of issuance thereof (excluding renewals in such
computations of time); and "net earnings" means net income after
depreciation, Federal income taxes and other appropriate charges,
but before interest charges and dividends on preferred computed
in accordance with generally accepted accounting principles and
without recognition of any charges or credits to earned surplus
and after excluding from the computation of such net income all
profits realized and losses sustained from the sale or other
disposition of capital assets and resulting increases in and
reductions of taxes based on income. If notice of redemption of
securities has been given or irrevocably authorized to be given
by or on behalf of the Corporation and the funds necessary to
effect the redemption of such securities have been irrevocably
deposited in trust for such purpose, such securities shall not be
deemed to be outstanding for purposes of this paragraph 5.
C.
THE CUMULATIVE PREFERRED STOCK, $5 DIVIDEND SERIES
1. The dividend rate on the Cumulative Preferred Stock, $5
Dividend Series, shall be $5 per annum.
2. The price payable upon redemption at the option of the
Corporation of Cumulative Preferred Stock, $5 Dividend Series,
shall be One Hundred Two Dollars ($102) per share.
D.
THE CUMULATIVE PREFERRED STOCK, $4.70 DIVIDEND SERIES
1. The dividend rate on the Cumulative Preferred Stock,
$4.70 Dividend Series, shall be $4.70 per annum.
2. The price payable upon redemption at the option of the
Corporation of Cumulative Preferred Stock, $4.70 Dividend Series,
shall be One Hundred Three Dollars and Fifty Cents ($103.50) to
and including June 30, 1972; One Hundred Three Dollars ($103) and
One Hundred Two Dollars and Fifty Cents ($102.50) in each of the
two (2) succeeding twelve month periods, respectively; and One
Hundred Two Dollars ($102) after June 30, 1974.
3. At least twenty (20) and not more than sixty (60) days
prior to July 31 of each year, the Corporation shall mail to each
holder of shares of Cumulative Preferred Stock, $4.70 Dividend
Series, of record as of a date not more than fifty (50) days
preceding such mailing, at the address of such holder then
appearing on the books of the Corporation, a notice in writing of
its intention to accept tenders of not more than twelve hundred
(1,200) shares of Cumulative Preferred Stock, $4.70 Dividend
Series, tendered to the Corporation on or before such July 31 for
purchase at a price per share not exceeding $100 plus accrued
dividends (the "maximum purchase price"). Not later than July 31
of each year the Corporation shall, out of any funds from which
dividends might lawfully be paid, deposit with a bank or trust
company doing business in the City of Chicago, selected by the
Corporation and designated in the aforesaid notice as the place
to which tenders shall be delivered, a sum equal to the maximum
purchase price of twelve hundred (1,200) shares of Cumulative
Preferred Stock, $4.70 Dividend Series.
Tenders shall be accepted on July 31 in the order of the
prices at which they are made; those shares tendered at the
lowest price to be the first purchased. Among tenders at the
same price the Corporation may prorate the available funds
according to the number of shares held or the number of shares
tendered by each holder making a tender at such price or may make
selection of the shares which it will purchase so that as nearly
as may be tenders may be accepted in their entirety rather than
partially. The Corporation may make partial acceptance of one or
more tenders so that the total number of shares purchased will
not exceed twelve hundred (1,200). If the Corporation shall
purchase less than all of the shares represented by any
certificate, a new certificate for the shares not purchased will
be issued to the holder of such shares.
If after notice has been given and deposit of funds made as
aforesaid, less than twelve hundred (1,200) shares of Cumulative
Preferred Stock, $4.70 Dividend Series, shall be tendered for
purchase at not more than the maximum purchase price, the
purchase of such number of shares as shall have been so tendered
at not more than the maximum purchase price shall constitute
compliance by the Corporation for such year with the provisions
hereof. Any funds deposited for the purpose of compliance with
the provisions hereof and not required for such purpose shall be
returned to the Corporation upon such compliance.
Shares will not be deemed tendered unless and until the
certificate or certificates therefor have been received by the
bank or trust company designated for the purpose nor unless, if
payment upon acceptance of tender thereof is to be made other
than to the record holder, such certificate or certificates have
been duly endorsed or are otherwise in proper form for transfer,
with all transfer taxes due in respect thereof paid or provided
for.
Default by the Corporation in complying with the provisions
of this paragraph 3 shall preclude the declaration or the payment
of dividends or the making of any other distribution whatsoever
upon the Convertible Junior Preferred Stock and the Common Stock
of the Corporation until the Corporation shall have cured such
default by soliciting tenders and depositing the funds necessary
to the purchase in the manner and upon the terms herein provided
of such number of shares of Cumulative Preferred Stock, $4.70
Dividend Series, as shall equal the difference between (a) the
product of twelve hundred (1,200) multiplied by the number of
full twelve month periods elapsed from and after July 31, 1970,
and (b) the product of twelve hundred (1,200) multiplied by the
number of full twelve month periods from and after July 31, 1970
for which the Corporation has complied with the provisions of
this paragraph 3; but neither the holder of any shares of
Cumulative Preferred Stock, $4.70 Dividend Series, as such, nor
the holders of all shares of Cumulative Preferred Stock, $4.70
Dividend Series, as a class, shall be entitled to apply to court
of law or equity for a money judgment or a decree of specific
performance or similar relief or remedy on account of any such
default other than to restrain the Corporation from the
declaration or payment of dividends or the making of any
distribution upon the Convertible Junior Preferred Stock and the
Common Stock of the Corporation until such default shall have
been cured.
4. Shares of Cumulative Preferred Stock, $4.70 Dividend
Series, purchased upon tender as herein provided shall be
canceled and shall not be reissued.
5. So long as any shares of Cumulative Preferred Stock,
$4.70 Dividend Series, shall be outstanding (and unless the vote
or assent of a greater number of shares of such series shall then
be required by law), without the assent, given by vote at a
meeting thereof called for the purpose, of the holders of a
majority in interest of the outstanding shares of Cumulative
Preferred Stock, $4.70 Dividend Series, the Corporation shall
not issue any shares of "preferred stock" or issue any "funded
debt" unless the "net earnings" of the Corporation for 12
consecutive calendar months during the 15 months immediately
preceding the month in which such issue is to be made are at
least one and one-half (1 1/2) times the aggregate of the annual
interest charges on all indebtedness for borrowed money and the
annual dividend requirements on all preferred stock of the
Corporation to be outstanding immediately after the proposed
issue. As used in this paragraph 5, "preferred stock" means the
Cumulative Preferred Stock, $4.70 Dividend Series, and all shares
of any class of stock ranking in respect of dividends or assets
equally with or prior to the Cumulative Preferred Stock, $4.70
Dividend Series; "funded debt" means all indebtedness for
borrowed money of the Corporation maturing one year or more after
the date of issuance thereof (excluding renewals in such
computations of time); and "net earnings" means net income after
depreciation, Federal income taxes and other appropriate charges,
but before interest charges and dividends on preferred stock,
computed in accordance with generally accepted accounting
principles and without recognition of any charges or credits to
earned surplus and after excluding from the computation of such
net income all profits realized and losses sustained from the
sale or other disposition of capital assets and resulting
increases in and reductions of taxes based on income. If notice
of redemption of securities has been given or irrevocably
authorized to be given by or on behalf of the Corporation and the
funds necessary to effect the redemption of such securities have
been irrevocably deposited in trust for such purpose, such
securities shall not be deemed to be outstanding for purposes of
this paragraph 5.
E.
THE CONVERTIBLE JUNIOR PREFERRED STOCK
1. The dividend rate on the Convertible Junior Preferred
Stock shall be $2 per annum.
2. The price payable upon redemption at the option of the
Corporation of Convertible Junior Preferred Stock shall be $25
per share.
3. (a) The shares of Convertible Junior Preferred Stock
(hereinafter in this subdivision E sometimes called the
"Convertible Preferred") shall be convertible at the option of
the respective holders thereof into fully paid and nonassessable
shares of Common Stock (hereinafter sometimes called "Sprint
Common Stock") of the par value of $2.50 per share of Sprint
Corporation, a Kansas corporation (hereinafter in this paragraph
3 sometimes called 'Sprint"), at the initial conversion price as
of March 9, 1993 (taking the shares of the Convertible Preferred
at $25 per share) of $3.86 per share of Sprint Common Stock (a
basis of 6.47325 shares of Sprint Common Stock for each share of
the Convertible Preferred). In order to exercise the conversion
privilege, the holder of any share or shares of Convertible
Preferred that is or are to be converted shall surrender the
certificate or certificates therefor to the Corporation at the
designated office of the Conversion Agent in the city of Chicago,
Illinois, accompanied by written notice to the Corporation that
such holder elects to convert such share or shares of Convertible
Preferred. Such notice shall state the name (with address) of
the holder of such share or shares of Convertible Preferred and
the name (with address) in which the certificate or certificates
for shares of Sprint Common Stock that shall be issuable on such
conversion shall be issued. Each certificate for a share or
shares of Convertible Preferred surrendered for conversion into
shares of Sprint Common Stock to be issued in a different name
shall also be accompanied by a proper instrument of transfer
thereof endorsed in blank. As promptly as practicable after the
receipt of such notice and the surrender of such certificate or
certificates, as aforesaid, the Corporation shall deliver at the
designated office of the Conversion Agent to such holder or upon
his written order a certificate or certificates for the number of
full shares of Sprint Common Stock issuable upon the conversion
of such share or shares of Convertible Preferred in accordance
with the provisions of this paragraph 3 and cash, as hereinafter
provided, in respect of any fraction of a share of Sprint Common
Stock otherwise issuable upon such conversion. Subject to the
exceptions hereinafter made, such conversion shall be deemed to
have been effected on the date on which such notice shall have
been received by the Corporation and the certificate or
certificates for the share or shares of Convertible Preferred to
be converted shall have been surrendered, as aforesaid, and the
person or persons in whose name or names any certificate or
certificates for shares of Sprint Common Stock shall be issuable
upon such conversion shall be deemed to have become on said date
the holder or holders of record of the shares represented
thereby. No adjustment shall be made for dividends on any shares
of Convertible Preferred that shall be converted or for dividends
on any Sprint Common Stock that shall be issued upon the
conversion of such share or shares of Convertible Preferred. In
case less than all of the shares of Convertible Preferred
represented by one certificate are to be converted, there shall
be issued and delivered to or upon the order of the holder of
such certificate a new certificate for the number of shares of
Convertible Preferred not converted.
The Corporation shall not be required to deliver
certificates for shares of Sprint Common Stock upon conversion
while Sprint's stock transfer books are closed for any meeting of
stockholders or for the payment of dividends, or for any other
purpose, and the person or persons in whose name or names any
certificate for shares of Sprint Common Stock are issuable upon
such conversion shall not be deemed to have become the holder or
holders of record of such shares of Sprint Common Stock until the
date on which such transfer books shall be reopened; provided,
however, that such certificate or certificates for shares of
Sprint Common Stock shall be issued and delivered as soon as the
stock transfer books shall again be opened.
No fractions of shares of Sprint Common Stock will be issued
upon conversions. The number of full shares of Sprint Common
Stock that shall be issuable upon conversion of shares of
Convertible Preferred shall be computed on the basis of the
aggregate number of shares represented by the certificate or
certificates surrendered for conversion or such lesser number of
shares as the holder shall specify in the notice of conversion.
If any fractional interest in a share of Sprint Common Stock
would otherwise be issuable upon the conversion of any share or
shares of Convertible Preferred, the Corporation shall pay cash
equal to the product of (i) the closing sale price per share of
Sprint Common Stock on the New York Stock Exchange on the trading
day next preceding the date of conversion and (ii) the fraction
of a share of Sprint Common Stock to which the holder would
otherwise have been entitled.
For the purposes of this paragraph 3:
(i) The "conversion prices" or the "applicable
conversion price" means the initial conversion price as of
March 9, 1993, or such conversion price as adjusted and at
the time in effect. The conversion price shall never be
stated in terms of a fraction of a cent but shall always be
rounded to the nearest full cent, or, if there is no nearest
full cent, to the next full cent upward;
(ii) A "change" in the conversion price means any
difference between the applicable conversion price and the
amount resulting from a recomputation pursuant to such
formula provided in subparagraph (c) of this paragraph 3 as
shall be applicable under the circumstances; and
(iii) An "adjustment" in the conversion price
means a required reduction or increase in the applicable
conversion price. A reduction or increase in the conversion
price (i.e., an adjustment in the conversion price) will be
required in the event of a change which, together with all
cumulated changes, if any, is an amount not less than 50 cents.
In the cumulation of changes, upward and downward changes
will be offset and only the net amount of changes will be
given effect in determining whether an adjustment in the
conversion price should be made.
(b) At any time and from time to time a change in the
conversion price shall be made:
(i) If Sprint shall issue
(A) any additional shares of Sprint Common Stock
without receiving therefor a consideration, if any, per
share at least equal to the then applicable conversion
price;
(B) any shares convertible into shares of Sprint
Common Stock, or any obligations so convertible, for a
consideration, if any, which together with the
consideration, if any, to be received by Sprint upon
conversion thereof into shares of Sprint Common Stock, shall
be less per share of Sprint Common Stock issuable upon
conversion thereof than the conversion price applicable
immediately prior to the issuance of such convertible shares
or obligations; or
(C) any options or warrants, subject to the
specific exceptions hereinafter provided, to purchase or
subscribe for any shares of Sprint Common Stock for a
consideration, if any, which, together with the
consideration, if any, received by Sprint for such options
or warrants shall be less per share of Sprint Common Stock
issuable upon exercise of such options or warrants than the
conversion price applicable immediately prior to the
issuance of such options or warrants;
(ii) Upon the termination of the right to convert into
shares of Sprint Common Stock any convertible shares or
obligations issued by Sprint or upon the expiration of any
options or warrants issued by Sprint to purchase or subscribe for
shares of Sprint Common Stock, if at any time a change in the
conversion price was made on account thereof and if upon such
termination or expiration the number of shares theretofore issued
upon conversions of such convertible shares or obligations or
upon exercise of such options or warrants is less than the
maximum number (or such number as adjusted by antidilution
provisions) of shares of Sprint Common Stock deemed issued at the
time such change in the conversion price was made;
(iii) If, except as the result of antidilution
provisions, there shall be an increase or decrease in the amount
of Sprint Common Stock issuable upon conversion of one
convertible share issued by Sprint or a specified principal
amount of convertible obligations issued by Sprint or an increase
or decrease in the purchase or subscription price of shares of
Sprint Common Stock to be paid upon exercise of options or
warrants; provided that a change in the conversion price was made
upon the issuance of such convertible shares or obligations or
such options or warrants or that a change in the conversion price
would be required to be made if such convertible shares or
obligations or such options or warrants were then being issued;
(iv) In case of any combination, subdivision,
reclassification or other reorganization of the Sprint Common
Stock (excluding such events in respect of which other specific
provisions are made herein).
The consideration, if any, received for the issuance of any
additional shares of Sprint Common Stock or any shares
convertible into shares of Sprint Common Stock or any obligations
so convertible or any options or warrants to purchase or
subscribe for shares of Sprint Common Stock shall at all times be
deemed to be the proceeds thereof to Sprint, without deducting
from the total amount received any expenses incurred or any
underwriting commissions or concessions paid or allowed by Sprint
in connection therewith. If the consideration received by Sprint
shall be in a form other than cash, the amount of such
consideration shall be deemed to be the fair value thereof, as
determined by the Board of Directors of Sprint at or before the
time of issuance of the shares, obligations, options or warrants
issued for such consideration.
For the purposes of this paragraph 3, there shall at all
times be deemed to have been issued and to be outstanding as of
March 9, 1993, all shares of Sprint Common Stock reserved for
issuance:
(x) upon the conversion of any convertible
debt outstanding as of March 9, 1993;
(y) pursuant to any Sprint stock purchase
program in effect as of March 9, 1993; and
(z) pursuant to options granted or which
may be granted under any Sprint stock option plan in effect
as of March 9, 1993.
There are excepted from the operation of these
antidilution provisions and no change in the conversion price
shall be required as a result of the issuance after March 9, 1993
of:
Subscription rights for shares of Sprint Common Stock
or the issuance of shares of Common Stock pursuant to
further employees' stock purchase programs substantially
similar to such programs heretofore established by Sprint,
not involving an offering of shares in any one fiscal year
of Sprint in a number exceeding 1% of the number of shares
of Sprint Common Stock outstanding at the beginning of such
fiscal year;
Options to purchase shares of Sprint Common Stock or
the issuance of shares of Common Stock upon exercise of such
options, pursuant to any Stock Option Plan hereafter
approved pursuant to the provisions of the Internal Revenue
Code as then in force by the Sprint stockholders under which
the option price shall be at least 100% of market value at
the date of grant of such options; or
Shares of Sprint Common Stock payable as a dividend
upon the Common Stock of Sprint; provided that the maximum
number of shares of Sprint Common Stock issuable in payment
of such dividend, together with the number of shares of
Sprint Common Stock theretofore issued as a dividend or
dividends upon the Common Stock of Sprint within the same
fiscal year of Sprint, shall not exceed 2% of the shares of
Sprint Common Stock outstanding at the record date or other
date for the determination of the holders of shares of
Sprint Common Stock entitled to participate in such
dividend.
(c) Upon the occurrence of any of the events specified
above as requiring a change in the conversion price because
additional shares of Sprint Common Stock are issued or deemed to
be issued or because a revision of the number of such shares of
Common Stock so deemed to be issued is required, such change
shall be computed by
(i) multiplying the total number of shares of Sprint
Common Stock outstanding (or deemed to be outstanding for
the purposes of this paragraph 3) immediately prior to such
event by the then applicable conversion price;
(ii) adding to the product the total amount of the
consideration, if any, received (or deemed to have been
received) by Sprint upon the issuance of the additional
number of shares of Sprint Common Stock issued (or deemed to
have been issued for the purposes of this paragraph 3) upon
such event; and
(iii) dividing the resulting sum by the total
number of shares of Sprint Common Stock outstanding (or
deemed to be outstanding for the purpose of this paragraph
3) immediately after such event.
For the purposes of the foregoing formula there shall (except as
otherwise provided in subparagraph (b) of this paragraph 3) be
deemed to have been issued at the time of issuance of any shares
convertible into shares of Sprint Common Stock or any obligations
so convertible or any options or warrants to purchase or
subscribe for any shares of Sprint Common Stock the aggregate
maximum number of shares of Sprint Common Stock issuable upon
conversion of such shares or obligations or upon the exercise of
such options or warrants. The consideration received for the
shares of Sprint Common Stock deemed to have been issued upon the
issuance of such convertible shares or obligations or such
options or warrants shall be deemed to be the consideration, if
any, received by Sprint for such convertible shares or
obligations or options or warrants plus the minimum
consideration, if any, to be received by Sprint upon conversion
into shares of Sprint Common Stock of such convertible shares or
obligations or upon the exercise of such options or warrants.
Upon the termination of the right to convert into shares of
Sprint Common Stock any convertible shares or obligations issued
by Sprint, or the expiration of any options or warrants issued by
Sprint, to purchase or subscribe for shares of Sprint Common
Stock (if at any time a change in the conversion price was made
on account thereof), a change in the conversion price shall
forthwith be made to such conversion price as would then be
applicable had the change in the conversion price been made upon
the basis of the delivery of only the number of shares of Sprint
Common Stock actually delivered upon conversions of such shares
or obligations or upon exercise of such options or warrants.
If, except as the result of antidilution provisions
applicable thereto, there shall be an increase or decrease in the
amount of Sprint Common Stock issuable upon conversion of one
convertible share issued by Sprint or a specified principal
amount of convertible obligations issued by Sprint or an increase
or decrease in the purchase or subscription price of shares of
Sprint Common Stock to be paid upon exercise of options or
warrants issued by Sprint and if a change in the conversion price
was made upon the issuance of such convertible shares,
obligations, options or warrants or would be required to be made
if such convertible shares or obligations or such options or
warrants were at the time being issued, then any such increase or
decrease in the amount of Sprint Common Stock issuable upon
conversion of one convertible share or a specified principal
amount of convertible obligations shall be deemed to effect the
termination of the right to convert at the former rate any such
convertible shares or obligations remaining unconverted and to
effect the issuance of such remaining convertible shares or
obligations as a new issue of shares or obligations convertible
at the new rate, and any such increase or decrease in the
purchase or subscription price to be paid upon exercise of such
options or warrants shall be deemed to effect the expiration of
any unexercised options or warrants to purchase or subscribe at
the former price and to effect the issuance of such unexercised
options or warrants as a new issue of options or warrants to
purchase at the new price.
In case of a distribution of securities or assets to the
holders of Sprint Common Stock (excluding cash dividends payable
out of earned surplus and distributions in respect of which other
specific provisions are made herein), a change in the conversion
price shall be made reducing it by an amount equal to the fair
value of the portion of such distribution applicable to one share
of such Sprint Common Stock as determined by the Board of
Directors of Sprint (or, if they shall not have made such
determination, by the Board of Directors of the Corporation),
whose determination, in the absence of fraud, shall be final and
conclusive.
Upon a combination, reclassification or reorganization of
the shares of Common Stock of Sprint into a smaller number of
shares, an upward change shall be made in the conversion price
which shall bear the same relationship to the conversion price
prior to such change as the reduction in the number of shares of
Common Stock of Sprint outstanding (and deemed to be outstanding
for the purposes of this paragraph 3) immediately prior to such
event bears to the number of shares of Sprint Common Stock
outstanding (and deemed to be outstanding for the purposes of
this paragraph 3) immediately after such combination,
reclassification or reorganization.
(d) As promptly as practicable after it has knowledge
of any occurrence which will or may result in a change in the
conversion price, the Corporation shall make an estimate of such
change in the conversion price and of the date as of which such
change will or may become effective and shall notify the
Conversion Agent in writing accordingly. If it appears from such
notice that such change will or may result in an adjustment in
the conversion price, the Conversion Agent shall, upon surrender
to it of Convertible Preferred for conversion, give written
advice to the holder of such Convertible Preferred of the notice
received from the Corporation. Such holder may, at any time
within five days after the mailing by the Conversion Agent of
such written advice, withdraw such holder's notice of election to
convert such Convertible Preferred, but if no such withdrawal
shall have been made within such five days, such Convertible
Preferred shall, subject to compliance with all conditions
precedent to conversion herein provided, be deemed to have been
converted on the date such notice of election to convert was
filed with the Conversion Agent.
(e) Whenever the conversion price is required to be
changed or adjusted as herein provided:
(i) the Corporation shall forthwith file with the
Conversion Agent a report setting forth such change and
showing in detail the events upon which such change is
based, including a statement of the consideration, if any,
received or to be received by Sprint for, and the number of,
any additional shares of Sprint Common Stock issued (or
deemed to have been issued) since the last preceding change;
and
(ii) if such change shall result in an adjustment in
the conversion price, the Corporation shall forthwith cause
a notice stating that such adjustment has been effected and
of the adjusted conversion price to be mailed first-class,
postage prepaid, to each holder of Convertible Preferred of
record at a date not more than 30 days prior to such mailing
at his address appearing on the stock records.
(f) Sprint has agreed with the Corporation for the
benefit of the holders of the Convertible Preferred that if
Sprint shall be consolidated with or merged into or shall sell or
dispose of all or substantially all of its property and assets to
any other corporation, Sprint will cause proper provision to be
made as part of the terms of such consolidation, merger or sale
or otherwise whereby the holders of the Convertible Preferred
shall thereafter be entitled to such conversion rights with
respect to securities of the corporation resulting from such
consolidation or merger or to which such sale shall be made as
shall be substantially equivalent to the conversion rights herein
granted. Notice thereof shall be given to the holders of the
Convertible Preferred as in the case of an adjustment in the
conversion price.
(g) The issuance of any certificates for Sprint
Common Stock on conversion of any share or shares of Convertible
Preferred shall be made without charge to the holder of the
Convertible Preferred so converted for any tax in respect of the
issuance of such certificates. The Corporation shall not,
however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance or delivery of
Sprint Common Stock in any name other than that of the holder of
the Convertible Preferred converted, and the Corporation shall
not be required to deliver any such certificate for the Sprint
Common Stock unless and until the person or persons requesting
the issuance thereof shall have paid to the Corporation the
amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid.
(h) Sprint has agreed with the Corporation for the
benefit of the holders of the Convertible Preferred that it will
at all times reserve and keep available out of its authorized but
unissued stock, for the purpose of making the same available for
effecting the conversions of the Convertible Preferred, such
number of its duly authorized shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding Convertible Preferred; and if at any time the number
of authorized but unissued shares of Common Stock of Sprint shall
not be sufficient to effect the conversion of all outstanding
Convertible Preferred at the conversion price then applicable,
Sprint has agreed that it will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its
authorized shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(i) If any shares of Sprint Common Stock, reserved or
to be reserved, for the purpose of conversion of the Convertible
Preferred hereunder, require registration with or approval of any
governmental authority under any federal or state law before such
shares may be validly issued upon conversion, then Sprint has
agreed with the Corporation for the benefit of the holders of the
Convertible Preferred that it will in good faith and as
expeditiously as possible endeavor to secure such registration or
approval, as the case may be.
(j) The Corporation covenants that all shares of
Sprint Common Stock which may be issued upon conversion of
Convertible Preferred will upon issuance be fully paid and
nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
(k) In case at any time
(i) Sprint shall declare any dividend payable in stock
upon its Common Stock or make any distribution (other than
cash dividends) to the holders of its Common Stock; or
(ii) Sprint shall offer for subscription to the holders
of its Common Stock, as a class, any additional shares of
stock of any class or grant to such holders, as a class, any
other rights or options; or
(iii) of any reclassification of Sprint Common
Stock or change, merger, consolidation, sale or conveyance
entitling the holders of the Convertible Preferred to a
security different from Sprint Common Stock; or
(iv) of the liquidation, dissolution or winding-up of
Sprint;
then the Corporation shall give notice of any such action at
least 10 days prior to the date on which the Sprint stock
transfer books shall close or a record is to be taken for such
stock dividend, distribution, offering or granting of rights or
options, or such reclassification, change, merger, consolidation,
sale, conveyance, liquidation, dissolution or winding-up is to be
effective, as the case may be, by mail, first-class postage
prepaid, to the Conversion Agent and to all holders of
Convertible Preferred of record at a date not more than 30 days
prior to such mailing, at their addresses as the same appear on
the stock records.
(l) The Corporation hereby appoints First Chicago
Trust Company of New York, Chicago, Illinois, as the Conversion
Agent. The Conversion Agent may resign at any time upon 60 days'
written notice to the Corporation and may be removed by the
Corporation at any time upon 60 days' written notice to the
Conversion Agent. The Corporation shall, within 20 days after
notice of resignation or removal of the Conversion Agent, appoint
a successor Conversion Agent, which shall be a bank or trust
company organized under the laws of the United States or any
state thereof having a combined capital and surplus of at least
$5,000,000, and having an office in the City of Chicago and State
of Illinois. Notice of such appointment and of the effective
date thereof shall be given by the Corporation, at least 30 days
prior to such effective date, by mail, first-class postage
prepaid, to the Conversion Agent, the successor Conversion Agent
and all holders of Convertible Preferred of record at a date not
more than 30 days prior to such mailing, at their addresses as
the same appear on the stock records.
4. Shares of the Convertible Preferred redeemed,
purchased, converted or otherwise reacquired by the Corporation
shall be cancelled and retired and shall not be reissued.
Fifth: The Board of Directors is expressly authorized to
make, amend, alter, change, add to or repeal the by-laws of the
Corporation without any action on the part of the stockholders.
By-laws made by the directors may, however, be amended, altered,
changed, added to or repealed at any annual meeting of the
stockholders or at any special meeting of the stockholders called
for that purpose, at which a quorum shall be present, by the
holders of a majority of each class of stock entitled to vote
thereat.
Sixth: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code, or on the application of trustees in dissolution
or of any receiver or receivers appointed for this Corporation
under the provisions of Section 279 of Title 8 of the Delaware
Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as
the said Court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if
sanctioned by the Court to which the said application has been
made, be binding on all the creditors or class of creditors,
and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
Seventh: In order to induce the directors, officers,
employees and agents of the Corporation and each person
(including a director, officer, employee or agent of the C
orporation) who, at the request of the Corporation, acts as a
director or officer of any other corporation in which the
Corporation has an interest to protect, to continue to serve as
such and in order to induce such other persons as may hereafter
be elected or appointed directors, officers, employees or agents
of the Corporation or such other corporation to serve as such,
and in consideration of such service and as additional
compensation therefor:
(1) No director of the Corporation shall be personally
liable to the Corporation or its stockholders for breach of
fiduciary duty as a director; provided, however, that this
Article Seventh shall not eliminate or limit the liability
of a director (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under the
provisions of Section 174 of the Delaware General
Corporation Law and amendments thereto, or (d) for any
transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law
is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be
eliminated or limited to the maximum extent permitted by the
Delaware General Corporation Law, as so amended.
(2) The Corporation shall have the power to indemnify
any person, advance expenses and purchase and maintain
insurance on behalf of any person to the fullest extent
permitted, from time to time, by the Delaware General
Corporation Law.
(3) Any repeal or modification of this Article Seventh
shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such
repeal or modification.
