Exhibit 10.1
Directors' Deferred Fee Plan
ARTICLE I
PURPOSE
The purpose of the Sprint Corporation Directors' Deferred Fee Plan (hereinafter
referred to as the "Plan") is to provide funds upon termination of service or
death for Directors (and their Beneficiaries) of Sprint Corporation. It is
intended that the Plan will aid in retaining and attracting Directors of
exceptional ability by providing such Directors with a means to supplement their
standard of living.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 Account Transfer Request. "Account Transfer Request" means a written notice,
in a form prescribed by the Company, by a Participant to transfer all or any
portion of one Deferred Benefit Account to another Deferred Benefit Account as
provided for in paragraph 6.7.
2.2 Amendment of Payment Election Form. "Amendment of Payment Election Form"
means a written notice, in a form prescribed by the Company, filed with the
Company by a Participant to change the manner in which such Participant's
Deferral Benefits are to be paid.
2.3 Beneficiary. "Beneficiary" means the person, persons, or entity designated
by the Participant, as provided in Article VIII, to receive any benefits payable
under the Plan. Any Participant Beneficiary Designation shall be made in a
written instrument filed with the Company and shall become effective only when
received, accepted, and acknowledged in writing by the Company.
2.4 Board "Board" means the Board of Directors of the Company.
2.5 Committee. "Committee" means the Compensation Committee of the Board.
2.6 Company. "Company" means Sprint Corporation, or any successor thereto.
2.7 Deferral Benefit. "Deferral Benefit" means the benefit payable to a
Participant on the Participant's death or termination of service as a Director,
as calculated in Article VII hereof.
2.8 Deferred Benefit Account. "Deferred Benefit Account" means the accounts
maintained on the books of account of the Company for each Participant pursuant
to Article VI. Separate Deferred Benefit Accounts shall be maintained for each
Participant. More than one Deferred Benefit Account shall be maintained for each
Participant to reflect (a) separate deferral elections made pursuant to
separately executed Participation Agreements, (b) Account A, Account B, Account
D, Account AA, Account BB, and Account DD elections made by each Participant in
each such Participation Agreement, and (c) One Time Grants.
A Participant's Deferred Benefit Account shall be used solely as a device for
the measurement and determination of the amounts to be paid to the Participant
or the Participant's Beneficiary pursuant to this Plan. A Participant's Deferred
Benefit Account shall not constitute or be treated as a trust fund of any kind.
2.9 Determination Date. "Determination Date" means the date on which the amount
of a Participant's Deferred Benefit Account is determined as provided in Article
VI hereof. The last day of each calendar month shall be a Determination Date.
2.10 Director. "Director" means a member of the Board of Directors of the
Company who is not an employee of the Company or its subsidiaries.
2.11 Fee. "Fee" means any cash compensation paid to a Director for his services
as a Director other than a distribution under this Plan.
2.12 FON Share Unit. "FON Share Unit" means a measure of participation under the
Plan having a value based on the market value of one share of FON Common Stock,
Series 1, of the Company.
2.13 Interest Yield. "Interest Yield" means, with respect to any calendar month,
(a) in the case of balances in Account AA, three percentage points over the
composite yield on Moody's Seasoned Corporate Bond Yield Index for the preceding
calendar month as determined from Moody's Bond Record published by Moody's
Investors Services, Inc. (or any successor thereto), or, if such monthly yield
is no longer published, a substantially similar average selected by the Company,
and (b) in the case of balances in Account A, the greater of (i) the prime rate
in effect at Citibank, N.A., at the opening of business on the first business
day of the month, or if said bank, for any reason, no longer publishes its prime
rate,
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the prime rate similarly determined of another major bank selected by the
Company and (ii) six percent per annum.
2.14 New Director. "New Director" means a Director who had not accumulated at
least five years of service as a Director as of December 10, 1996 and any
Director who is first elected after such date. Each New Director is entitled to
a One Time Grant.
2.15 One Time Grant, "One Time Grant" means a one time grant to New Directors of
FON Share Units credited into Account B and PCS Share Units credited into
Account D. The number of FON Share Units and the number of PCS Share Units to be
granted to each New Director are determined by the Committee.
2.16 Participant. "Participant" means any New Director and any Director who
elects to participate by filing a Participation Agreement as provided in Article
IV.
2.17 Participation Agreement. "Participation Agreement" means the agreement, in
a form prescribed by the Company, filed by a Participant before the beginning of
the period in which the Participant's Fees are to be deferred pursuant to the
Plan. A new Participation Agreement shall be filed by the Participant for each
separate Fee deferral election.
2.18 PCS Share Unit. "PCS Share Unit" means a measure of participation under the
Plan having a value based on the market value of a share of PCS Common Stock,
Series 1, of the Company.
2.19 Plan. "Plan" means the Sprint Corporation Directors' Deferred Fee Plan as
set forth in this document. This Plan is the successor to, and comprises an
amendment and revision of, the United Telecommunications, Inc., 1985 Directors'
Deferred Fee Plan adopted February 12, 1985.
2.20 Plan Administrator. "Plan Administrator" means the person appointed by the
Company to represent the Company in the administration of this Plan.
2.21 Plan Year. Until the 2005 Plan Year, "Plan Year" means a twelve-month
period commencing May 1st and ending the following April 30th. The first Plan
Year commenced May 1, 1985. The 2005 Plan Year will be the eight month period
commencing May 1, 2005 and ending December 31, 2005, and all subsequent Plan
Years will be twelve month periods commencing January 1 of a year and ending on
December 31 of the same year.
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2.22 Recapitalization Date. "Recapitalization Date" means November 23, 1998.
2.23 Share Units. "Share Units" means the Share Units credited to Accounts B and
BB prior to the recapitalization of the Company's Common Stock on the
Recapitalization Date.
2.24 Spouse. "Spouse" means a Participant's wife or husband who was lawfully
married to the Participant upon the Participant's death or severance from
service.
2.25 Transition Date. "Transition Date" means May 1, 1990.
ARTICLE III
ADMINISTRATION
3.1 Plan Administrator; Company and Committee; Duties. This Plan shall be
administered by the Plan Administrator. Decisions of the Plan Administrator may
be reviewed by the Company through the Committee. Members of the Committee may
be Participants under this Plan. The Company shall also have the authority to
make, amend interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and decide or resolve any and all questions
including interpretations of this Plan as may arise in connection with the Plan.
3.2 Binding Effect of Decisions. The decision or action of the Company in
respect to any question aris ing out of or in connection with the
administration, interpretation, and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan unless a written appeal is received
by the Company within sixty days of the disputed action. The appeal will be
reviewed by the Committee, and its decision shall be final, conclusive, and
binding on the Participant and on all persons claiming by, through, or under the
Participant.
ARTICLE IV
PARTICIPATION
4.1 Participation. Participation in the Plan shall be limited to New Directors
and Directors, under age 70, who elect to participate in the Plan by filing a
Participation Agreement with the Company. A New Director shall become eligible
to participate in the Plan on the first day of the calendar month immediately
following the date on which the New Director
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has served 15 days on the Board. Except as provided below, a Participation
Agreement must be filed by the enrollment deadline established by the Plan
Administrator for a Plan Year, which deadline must be no later than the last
business day of the calendar year immediately preceding the Plan Year in which
the Participant's participation under the agreement will commence. The election
to participate shall apply to Fees earned on or after the first day of the Plan
Year following receipt by the Company of a properly completed and executed
Participation Agreement. With respect to an individual becoming a Director
during a Plan Year who thereby becomes eligible to participate in the Plan, an
initial Participation Agreement may be filed within 30 days of the date on which
the Director becomes eligible, and such election to participate shall be
effective on the first day of the month following the Company's receipt thereof,
except that elections not received by the Company before the 15th day of any
calendar month shall be effective no earlier than the first day of the second
month following the month of receipt.
4.2 Amount of Deferral and Length of Participation. A Participant may elect in
any Participation Agreement to defer up to 100% of the Fees that are expected at
the time of election to be earned in the Plan Year to which the Participation
Agreement relates and all subsequent Plan Years until changed by the
Participant's filing of a new Participant Agreement, provided, the minimum
amount of Fees that may be deferred shall, in each case, be $5,000 per year or
100% of Fees payable, whichever is less.
(a) The deferral percentage in each Participation Agreement shall be applied to
the Participant's Fees earned during the period of election.
(b) A Participant's election to defer Fees shall be irrevocable upon the filing
of the respective Participation Agreement; provided, however, that the
deferral of Fees under any Participation Agreement may be suspended or
amended as provided in paragraphs 7.3 or 9.1.
If a Participant desires to change the percentage of Fees deferred or desires to
cease deferring Fees, the Participant must file a new Participation Agreement.
Such new Participation Agreement must be filed no later than the last business
day of the calendar year immediately preceding the Plan Year in which the new
Participation Agreement is to take effect. The new Participation Agreement shall
be effective as to Fees earned in Plan Years beginning after the last day of the
Plan Year in
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which the agreement is filed with the Company. Any previously filed
Participation Agreement will no longer apply to the deferral of fees. Only one
Participation Agreement will be in effect for new deferrals in each Plan Year.
In the event a Participant elects to defer Fees pursuant to a new Participation
Agreement, the new election shall be treated as an arrangement for which a
separate Deferred Benefit Account shall be maintained and separate Deferral
Benefits shall be payable.
ARTICLE V
DEFERRED FEES
5.1 Elective Deferred Fees. The amount of Fees that a Participant elects to
defer in the Participation Agreement executed by the Participant, with respect
to each Plan Year of participation in the Plan, shall be credited by the Company
to the Participant's Deferred Benefit Account throughout each Plan Year as the
Participant is paid. The amount credited to a Participant's Deferred Benefit
Account shall equal the amount deferred, except to the extent that the Company
is required to withhold any taxes or other amounts related to the Participant's
deferred fees pursuant to any federal, state or local law. In the event
withholding is required, the amount required to be withheld shall first be taken
from the Participant's fees that have not been deferred. If these fees are not
sufficient to meet the withholding obligation, the remainder will be taken from
the amount deferred.
5.2 Vesting of Deferred Benefit Account.
(a) Vesting provisions before February 8, 2005. Participants shall be 100%
vested in their Deferred Benefit Accounts, except for the Account B resulting
from a One Time Grant. The Share Units granted as part of a One Time Grant will
vest at the rate of 50% on the fifth anniversary of the Participant's election
as a Director and 10% per year on the sixth through tenth anniversaries of such
election. The Share Units resulting from dividend credits on such Share Units
will vest at the same time as such Share Units vest. Any Share Units that have
not vested at the time of the Participant's termination of service as a Director
shall be forfeited.
(b) Vesting provisions on and after February 8, 2005. Participants shall be 100%
vested in their Deferred Benefit Accounts, except for the Account B resulting
from a One Time Grant. The Share Units granted as part of a One Time Grant
(including One Time Grants made before February 8, 2005) shall be 100% vested on
the third anniversary of the Participant's election as a Director, except as
follows:
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(1) if a Participant departs from the Board at his or her convenience
before the third anniversary, the One Time Grant would vest on a pro rata basis
in a proportional amount equivalent to the number of full years of service
completed since the grant date;
(2) If a Participant departs from the board because of a change in control
(as defined in the 1997 Long-term Stock Incentive Program), a change in policy
or otherwise at the convenience of the Board, vesting of the One Time Grant
would accelerate upon his or her departure.
The Share Units resulting from dividend credits on such Share Units will
vest at the same time as such Share Units vest. Any Share Units that have not
vested at the time of the Participant's termination of service as a Director
shall be forfeited. The vesting provided for in this Section 5.2(b) shall not
apply to any amount that was earned and vested as of December 31, 2004 pursuant
to Section 5.2(a).
If any vesting under this Section 5.2(b) is treated as a parachute payment
within the meaning of section 280G of the Internal Revenue Code ("280G"), and
together with all other payments or benefits contingent on the change in control
within the meaning of 280G, results in any portion of such payments or benefits
not being deductible by the Company as a result of the application of 280G, the
benefits shall be reduced until the entire amount of the benefits is deductible.
The reduction shall be effected by reduction of the benefits under the One Time
Grant, the exclusion of acceleration of vesting of equity grants under the 1997
Long-term Stock Incentive Program, or portions thereof, in the order elected by
Participant until no portion of such benefits is rendered non-deductible by
application of 280G.
ARTICLE VI
DEFERRED BENEFIT ACCOUNT
6.1 Determination of Account. Each Participant's Deferred Benefit Account, as of
each Determination Date, shall consist of the balance of the Participant's
Deferred Benefit Account as of the immediately preceding Determination Date plus
the Participant's elective deferred Fees withheld since the immediately
preceding Determination Date pursuant to paragraph 5.1 and plus amounts credited
to the Participant's Deferred Benefit Account pursuant to paragraphs 6.4 and
6.5. The
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Deferred Benefit Account of each Participant shall be reduced by the amount of
all distributions, if any, made from such Deferred Benefit Account since the
preceding Determination Date.
6.2 Type of Deferral. A Participant may elect to have any portion of the amount
deferred credited to Account A (fixed income return), or to Account B (FON Share
Units). The initial election shall be made by a properly executed Participation
Agreement. An election to change the apportionment of deferred amounts between
Accounts A and B may be made by a Participant filing with the Plan Administrator
a revised Participation Agreement indicating such change on or before the last
business day of a calendar year. The revised Participation Agreement shall be
deemed a continuation of the initial Participation Agreement to which it
relates. The revised Participation Agreement shall be effective for Fees earned
in Plan Years beginning after the date it is filed.
Deferrals in such Plan Years shall be credited in accordance with the election
of the revised Participation Agreement.
6.3 Creation of Accounts AA, BB, D, and DD.
(a) Accounts AA and BB. As of the start of business on the Transition Date, all
amounts standing to the credit of each Participant in Account A were
transferred to an Account AA. As of the start of business on the Transition
Date, amounts standing to the credit of each Participant in Account B that
were attributable to prior transfers from Account A into Account B were
transferred to an Account BB. The amount of such transfers was an amount
equal to the sum of the dollar amount of all transfers from Account A to
Account B during the period beginning on the effective date of the
Participation Agreement and ending on the Transition Date. For all purposes
of this Plan, except as otherwise noted in this Plan, Account AA shall be
treated in the same manner as Account A, and Account BB shall be treated in
the same manner as Account B.
(b) Accounts D and DD. As of the Recapitalization Date, there was credited to
an Account D and DD, created for each Participant having a positive balance
in an Account B or BB with respect to any Plan Year, a number of PCS Share
Units determined as follows:
(1) one-half of a PCS Share Unit in Account D for each Share Unit in
Account B for such Participant for such Plan Year as of the
Recapitalization Date; and
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(2) one-half of a PCS Share Unit in Account DD for each Share Unit in
Account BB for such Participant for such Plan Year as of the
Recapitalization Date.
6.4 Maintenance of Accounts A and AA. As of each Determination Date, the
Participant's Deferred Benefit Accounts A and AA shall be increased by the
amount of interest earned since the preceding Determination Date based on the
Interest Yield. Interest shall be credited on the average of the balances of the
Deferred Benefit Account on the Determination Date (before crediting the
interest) and on the last preceding Determination Date, but after the Deferred
Benefit Account has been adjusted for any contributions or distributions to be
credited or deducted for each such day.
6.5 Maintenance of Share Unit Accounts. Accounts B and BB and Accounts D and DD
shall maintain balances in FON Share Units and PCS Share Units, respectively.
(a) Maintenance of Accounts B and BB.
(1) Conversion of Share Units into FON Share Units. As of the
Recapitalization Date, each Share Unit in Accounts B and BB was
converted into a FON Share Unit.
(2) Conversion between Dollar Amounts and FON Share Units in Accounts B
and BB. When an amount is to be added to a Participant's Deferred
Benefit Accounts B or BB, it shall be converted into FON Share Units,
or fractions thereof, by dividing the amount to be credited by the
closing price of the FON Common Stock, Series 1, as reported by the
New York Stock Exchange on the last trading day on or before the
Determination Date. When a number of FON Share Units is to be
subtracted from a Participant's Deferred Benefit Accounts B or BB,
such number of FON Share Units shall be converted into a dollar amount
by multiplying such number of FON Share Units by the closing price of
the FON Common Stock, Series 1, as reported by the New York Stock
Exchange on the last trading day on or before the Determination Date.
(3) Dividends on FON Share Units. When a dividend is declared and paid by
the Company on its FON Common Stock, Series 1, an amount shall be
credited to the Participant's Accounts B and BB as though the same
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dividend had been paid on the FON Share Units in such accounts as of
the Determination Date immediately preceding the record date for the
dividend, and such amount shall be converted to FON Share Units. Such
amount shall be valued as of the Determination Date immediately
following the payment of the dividend.
(4) Effect of Recapitalization. In the event of a stock dividend, stock
split, or other corporate reorganization involving the FON Common
Stock, Series 1, the Company shall make equitable adjustment to a
Participant's Accounts B and BB as may be necessary to give effect to
such change in the Company's capital structure.
(5) Conversion of FON Share Units to Dollars on Distribution. FON Share
Units in Accounts B and BB shall be converted to an equivalent dollar
amount before any distribution thereof to a Participant pursuant to
Article VII. For purposes of distribution, the value of a FON Share
Unit shall be the average closing price of the FON Common Stock,
Series 1, on the New York Stock Exchange on the last trading day of
each of (i) the 12 calendar months immediately preceding the date of
distribution or (ii) the smaller number of calendar months (including
part of a month) elapsed from the Recapitalization Date to such
distribution. If a Participant elects payment in other than a lump
sum, Share Units shall be so converted to a dollar amount with respect
to each payment made in the distribution. During the period of
distribution, dividends and other equitable adjustments shall be
credited to the Participant's Accounts B and BB in accordance with
paragraphs 6.5(a)(3) and 6.5(a)(4).
(b) Maintenance of Accounts D and DD.
(1) Conversion between Dollar Amounts and PCS Share Units in Accounts D
and DD. When an amount is to be added to a Participant's Deferred
Benefit Accounts D or DD, it shall be converted into PCS Share Units,
or fractions thereof, by dividing the amount to be credited by the
closing price of the PCS Common Stock, Series 1, as reported by the
New York Stock Exchange on the last trading day on or before the
Determination Date. When a number of PCS
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Share Units is to be subtracted from a Participant's Deferred Benefit
Accounts D or DD, such number of PCS Share Units shall be converted
into a dollar amount by multiplying such number of PCS Share Units by
the closing price of the PCS Common Stock, Series 1, as reported by
the New York Stock Exchange on the last trading day on or before the
Determination Date.
(2) Dividends on PCS Share Units. When a dividend is declared and paid by
the Company on its PCS Common Stock, Series 1, an amount shall be
credited to the Participant's Accounts D and DD as though the same
dividend had been paid on the PCS Share Units in such accounts as of
the Determination Date immediately preceding the record date for the
dividend, and such amount shall be converted to PCS Share Units. Such
amount shall be valued as of the Determination Date immediately
following the payment of the dividend.
(3) Effect of Recapitalization. In the event of a stock dividend, stock
split, or other corporate reorganization involving the PCS Common
Stock, Series 1, the Company shall make equitable adjustment to a
Participant's Accounts D and DD as may be necessary to give effect to
such change in the Company's capital structure. In the event a
corporate reorganization results in the conversion of PCS Share Units
into FON Share Units, all FON Share Units held in Accounts D and DD
following the reorganization shall be transferred to the Accounts B
and BB, respectively. The Accounts D and DD shall then be eliminated.
(4) Conversion of PCS Share Units to Dollars on Distribution. PCS Share
Units in Accounts D and DD shall be converted to an equivalent dollar
amount before any distribution thereof to a Participant pursuant to
Article VII. For purposes of distribution, the value of a PCS Share
Unit shall be the average closing price of the PCS Common Stock,
Series 1, on the New York Stock Exchange on the last trading day of
each of (i) the 12 calendar months immediately preceding the date of
distribution or (ii) the smaller number of calendar months (including
part of a month) elapsed from the Recapitalization Date to such
distribution. If a Participant elects payment in other than a
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lump sum, PCS Share Units shall be so converted to a dollar amount
with respect to each payment made in the distribution. During the
period of distribution, dividends and other equitable adjustments
shall be credited to the Participant's Accounts D, and DD in
accordance with paragraphs 6.5(b)(2) and 6.5(b)(3).
6.6 Statement of Accounts. The Company shall submit to each Participant, within
120 days after the close of each Plan Year, a statement in such form as the
Company deems desirable, setting forth the balance to the credit of such
Participant in the Participant's Deferred Benefit Accounts A and AA, B and BB,
and D and DD, in each case as of the last day of the preceding Plan Year.
6.7 Transfer Between Accounts. Within the limitations of this paragraph 6.7, a
Participant may elect, by executing an Account Transfer Request: (1) to transfer
all or any portion of the Participant's Account A to Account B or Account D, (2)
to transfer all or any portion of the Participant's Account B to Account A or
Account D, (3) to transfer all or any portion of the Participant's Account D to
Account A or Account B, (4) to transfer all or any portion of the Participant's
Account AA to Account BB or Account DD, (5) to transfer all or any portion of
his Account BB to Account AA or Account DD, and (6) to transfer all or any
portion of his Account DD to Account AA or Account BB. Such election shall be
effective on the last day of the calendar month in which the Plan Administrator
receives the Participant's executed Account Transfer Request. Transfers may not
be made more than four times in any Plan Year, and no such transfer may be made
unless a period of at least three months shall have elapsed from the effective
date of the most recent such transfer (whether it occurred in the current Plan
Year or not) to the effective date of the current transfer. No part of the
Account B or the Account D resulting from a One Time Grant may be transferred to
any other account.
ARTICLE VII
BENEFITS
7.1 Termination of Service as Director. Subject to paragraph 7.4 below, upon any
termination of service of the Participant for reasons other than the
Participant's death, the Company shall pay to the Participant a Deferral Benefit
equal to the amount of the Participant's Deferred Benefit Account determined
under paragraph 6.1 thereof, but excluding any unvested FON Share Units or PCS
Share Units.
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7.2 Death. If a Participant dies after the commencement of payments of the
Participant's Deferral Benefit, the Participant's Beneficiary shall continue to
receive the remaining balance of the Participant's Deferred Benefit Account in
accordance with the Participant's election pursuant to paragraph 7.4.
If a Participant dies before any payments of a Deferral Benefit, the amounts to
which the Participant's Beneficiary is entitled shall be determined as follows:
(a) Accounts A, B, BB, D, and DD shall be the Deferred Benefit Account values
thereof excluding any unvested FON Share Units or PCS Share Units, and
(b) Account AA shall be the greater of (i) the Deferred Benefit Account value
thereof and (ii) ten times the amount of the elected annual fee deferral
allocated to Account AA pursuant to the Participation Agreement as revised
on the date of the Participant's death, subject to such conditions relating
to the Participant's health as the Company may impose.
The Deferral Benefit shall be payable as provided for in paragraph 7.4.
If a Participant's Beneficiary dies before payments of the Participant's
Deferral Benefit are complete, payments will continue to be made to the estate
of the beneficiary in accordance with the Participant's election pursuant to
paragraph 7.4.
The Deferral Benefit provided above shall be in lieu of all other benefits under
this Plan.
7.3 Suspension of Participation; Failure to Continue Participation. The
Committee, in its sole discretion, may suspend the deferral of a Participant's
Fees upon the advanced written request of a Participant on account of financial
hardship suffered by that Participant. A Participant must file any request for
suspension on or before the 15th day preceding the regular payment date on which
the suspension is to take effect. The Committee, in its sole discretion, shall
determine the amount, if any, that will not be deferred by the Participant as a
result of the financial hardship. The suspension of any deferrals under this
paragraph shall not affect amounts deferred with respect to periods before the
effective date of the suspension. A Participant whose deferrals are suspended
may not execute a subsequent Participation Agreement that would take effect
before the beginning of the third Plan Year following the close of the Plan Year
in which the suspension first took effect.
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7.4 Form of Benefit Payment
(a) Upon the happening of an event described in paragraphs 7.1 or 7.2 above,
the Company shall pay to the Participant or the Participant's Beneficiary
the amount specified therein (at a time designated in the Participation
Agreement, but commencing no later than the Company's mandatory termination
date for Directors) in one of the following forms as elected by the
Participant, either in the Participation Agreement or the Amendment of
Payment Election Form filed by the Participant:
(1) a lump sum payment.
(2) with respect to balances in Accounts A and AA, an annual payment of a
fixed amount that shall amortize the Deferred Benefit Account balance
in equal annual payments of principal and interest over a period from
2 to 20 years. For purposes of determining the amount of the annual
payment, the assumed rate of interest on Accounts A and AA shall be
the average of the applicable Interest Yield as of each Determination
Date for the 60 months preceding the initial annual installment
payment.
(3) with respect to balances in Accounts B and BB, an annual payment over
a period from 2 to 20 years. Each payment shall be the value, as
determined pursuant to paragraph 6.5(a)(5), of the number of FON Share
Units equal to (i) the number of FON Share Units in the accounts on
the Determination Date immediately following the event described in
paragraphs 7.1 or 7.2, divided by (ii) the number of annual
installments elected.
During the period that a Participant is receiving a distribution from
Account B or BB, FON Share Unit dividends will be added to the
Accounts in accordance with subparagraph 6.5(a)(3). Such FON Share
Unit dividends shall be valued in the same manner as previously
described, and the value of all such FON Share Units accruing after a
distribution from Accounts B or BB is made shall be paid to the
Participant with the next distribution from the account.
(4) With respect to balances in Accounts D and DD, an annual payment over
a period from 2 to 20 years. Each payment shall be the value, as
determined pursuant to paragraph 6.5(b)(4), of the number of PCS Share
Units equal to (i) the
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number of PCS Share Units in the accounts on the Determination Date
immediately following the event described in paragraphs 7.1 or 7.2,
divided by (ii) the number of annual installments elected.
During the period that a Participant is receiving a distribution from
Account D or DD, PCS Share Unit dividends will be added to the
Accounts in accordance with subparagraph 6.5(b)(2) hereof. Such PCS
Share Unit dividends shall be valued in the same manner as previously
described, and the value of all such PCS Share Units accruing after a
distribution from Accounts D or DD is made shall be paid to the
Participant with the next distribution from the account.
(b) A Participant may change the form in which the Participant's benefits shall
be paid by filing an Amendment of Payment Election Form indicating such
change at least 13 months before the date upon which the initial payment to
be made is determined. No such Amendment of Payment Election Form shall
change the amount elected to be deferred in the Participation Agreement to
which it relates, nor the time elected for commencement of benefit
payments.
(c) In the absence of a Participant's election under subparagraph 7.4(a),
benefits shall be paid in the form specified in subparagraphs 7.4(a)(2),
7.4(a)(3), and 7.4(a)(4) over a 15 year period.
7.5 Withholding; Payroll Taxes. To the extent required by the law in effect at
the time payments are made, the Company shall withhold from payments made
hereunder any taxes required to be withheld from a Director's fees for the
federal or any state or local government.
7.6 Commencement of Payments. Unless otherwise provided, payments under this
Plan shall begin within 60 days following receipt of notice by the Company of an
event that entitles a Participant (or a Beneficiary) to payments under this
Plan, or at such earlier date as may be determined by the Company pursuant to
the terms of the Plan. All payments shall be made as of the first day of the
month.
ARTICLE VIII
BENEFICIARY DESIGNATION
8.1 Beneficiary Designation. Each Participant shall have the right, at any time,
to designate any person or persons as the Participant's
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Beneficiary or Beneficiaries (both principal as well as contingent) to whom
payment under this Plan shall be paid in the event of the Participant's death
before complete distribution to the Participant of the benefits due the
Participant under the Plan.
8.2 Amendments. Any Beneficiary Designation may be changed by a Participant by
the written filing of such change on a form prescribed by the Company. The
filing of a new Beneficiary Designation form will cancel all Beneficiary
Designations previously filed.
8.3 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant's designated Beneficiary shall be deemed to be
the person or persons surviving the Participant in the first of the following
classes in which there is a survivor, share and share alike:
(a) The surviving Spouse;
(b) The Participant's children, except that if any of the children predecease
the Participant but leave issue surviving, then such issue shall take by
right of representation the share their parent would have taken if living;
(c) The Participant's personal representative (executor or administrator).
8.4 Effect of Payment. The payment to the Participant's Beneficiary or the
Beneficiaries' estate shall completely discharge the Company's obligations
relating to the Participant under this Plan.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment. The Board may at any time amend the Plan in whole or in part;
provided, however, that no amendment shall be effective to decrease or restrict
any Deferred Benefit Account at the time of such amendment.
9.2 Right to Terminate. The Board may at any time terminate the Plan with
respect to new elections to defer if, in its judgment, the continuance of the
Plan, the tax, accounting, or other effects thereof, or potential payments
thereunder would not be in the best interests of the Company. The Board may also
terminate the Plan in its entirety at any time, and upon any such termination,
each Participant (a) who is then
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receiving a Deferral Benefit shall be paid in a lump sum, or over such period of
time as determined by the Company, the then remaining balance in the
Participant's Deferred Benefit Account, and (b) who has not received a Deferral
Benefit shall be paid in a lump sum, or over such period of time as determined
by the Company, the balance in the Participant's Deferred Benefit Account.
ARTICLE X
MISCELLANEOUS
10.1 Unsecured General Creditor. Participants and their Beneficiaries shall have
no legal or equitable rights, claims, or interests in any property or assets of
the Company or its subsidiaries, nor shall they be Beneficiaries of, or have any
rights, claims, or interests in any life insurance policies, annuity contracts
or the proceeds therefrom owned or that may be acquired by the Company
("Policies"). Such Policies or other assets of the Company and its subsidiaries
shall not be held under any trust for the benefit of Participants or their
Beneficiaries or held in any way as collateral security for the fulfilling of
the obligations of the Company under this Plan. Any and all of such assets and
Policies shall be and remain the general, unpledged, unrestricted assets of the
Company and its subsidiaries. The Company's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Company to pay money in
the future.
10.2 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and non-transferable.
No part of the amounts payable shall, before actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony, or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
10.3 Not a Contract of Service. The terms and conditions of this Plan shall not
be deemed to constitute a contract of service between the Company and the
Participant, and the Participant (or the Participant's Beneficiary) shall have
no rights against the Company except as may otherwise be specifically provided
herein. Moreover, nothing in this Plan
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shall be deemed to give a Participant the right to be retained as a Director.
10.4 Protective Provisions. A Participant will cooperate with the Company by
furnishing any and all information requested by the Company, in order to
facilitate the payment of benefits hereunder, by taking such physical
examinations as the Company may deem necessary, and by taking such other action
as may be requested by the Company.
10.5 Applicable Law. The Plan, and any Participation Agreement related thereto,
shall be governed by the laws of the State of Kansas, without regard to the
principles of conflicts of law.
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