EXHIBIT (10)(n)
MANAGEMENT INCENTIVE STOCK OPTION PLAN
1. Establishment and Purpose. Sprint Corporation, a Kansas corporation (the
"Company"), hereby establishes a stock option plan to be named the
Management Incentive Stock Option Plan (the "Plan") The purpose of the Plan
is to permit employees of the Company and its subsidiaries who are eligible
to receive annual incentive compensation to receive nonqualified stock
options in lieu of a portion of the target incentive under the Company's
management incentive plans ("MIPs"), thereby encouraging the employees to
focus on the growth and profitability of the Company and the performance of
its common stock. Subject to approval of the Company's stockholders, the
Plan provides for options to be granted beginning March 15, 1995, and
ending April 18, 2005. Stock options granted prior to or as of April 18,
2005, may extend beyond that date.
2. Administration. The Plan shall be administered by the Organization and
Compensation Committee of the Board of Directors (the "Committee"). The
Company shall grant options under the Plan in accordance with
determinations made by the Committee pursuant to the provisions of the
Plan. The Committee from time to time may adopt (and thereafter amend and
rescind) such rules and regulations for carrying out the Plan and take such
action in the administration of the Plan, not inconsistent with the
provisions of the Plan, as it shall deem proper. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan,
or in any option or restricted shares of common stock granted or issued
pursuant to the Plan, in the manner and to the extent it shall deem
desirable to effect the terms of the Plan. With respect to any option or
restricted stock issued under the Plan, the Committee may determine the
option may become exercisable or the restrictions on restricted stock shall
lapse, as the case may be, whenever, in the judgement of the committee,
doing so would be in the best interest of the Corporation. The
interpretation and construction of any provisions of the Plan by the
Committee shall, unless otherwise determined by the Board of Directors of
the Company, be final and conclusive. No member of the Board of Directors
or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any option granted under it. The
Corporate Secretary shall act as Plan Administrator carrying out the
day-to-day administration of the Plan unless the Committee appoints another
officer or employee of the Company as Plan Administrator.
3. Eligibility. The Committee will determine each year whether options will be
granted in such year, whether participation will be elective or automatic,
which class or classes of common stock will be subject to purchase by
participants (which may different for different groups of employees) and
the amount of incentive compensation to be given up for each stock option.
Any salaried employee of the Company and its subsidiaries shall be eligible
to be selected for participation in the MIPs. The Committee will, in its
discretion, determine the employees who participate in the MIPs and,
therefore, who will be eligible for
options, the dates on which options shall be granted, and any conditions on
the exercise of the options.
No option may be granted to any individual who immediately after the option
grant owns directly or indirectly stock possessing more than five percent
(5%) of the total combined voting power or value of all classes of stock of
the Company or any subsidiary.
4. Common Stock Subject to the Plan. The shares of any class of publicly
traded common stock of the Company to be issued upon the exercise of a
nonqualified option to purchase such common stock granted in lieu of MIP
payout may be made available from the authorized but unissued common stock
of the Company, shares of common stock held in the treasury, or common
stock purchased on the open market or otherwise.
Approval of the Plan by the Stockholders of the Company shall constitute
authorization to use such shares for the Plan subject to the discretion of
the Board or as such discretion may be delegated to the Committee.
Subject to the provisions of the following paragraph, the total number of
shares for which options may be granted under the Plan each year shall be
0.9% of the total outstanding shares of each class of common stock of the
Company (including, with respect to the PCS Stock, both Series 1 and Series
2 PCS Stock) as of the first day of such year; provided, however, that such
number shall be increased in any year by the number of shares available in
previous years for which options have not been granted. If and when an
option granted under the Plan is terminated without having been exercised
in full, the unpurchased or forfeited shares shall become available for
grant to other employees.
The number and kind of shares subject to the Plan may be appropriately
adjusted by the Committee in the circumstances outlined in Section 5(k).
5. Stock Options; Terms and Conditions. Each option will represent the right
to purchase a specific class and number of shares of common stock of the
Company and shall be subject to the following terms and conditions and to
such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
a. Consideration for and Class and Number of Options. Each option shall
be granted in lieu of a portion of the optionee's cash payout under
the MIPs. The Committee shall determine the class and the number of
shares or the manner of determining the class and number of shares
available for each option each year, subject to the total number of
shares available under the Plan for such year, and the amount or the
method of determining the amount of annual incentive compensation to
be given up by each participant in return for an option, taking into
consideration appropriate factors in making such determinations, such
as interest rates, volatility of the market price of the class of
common stock of the Company and the term of the option, provided,
however that shares subject to options granted to any individual
employee during any calendar year shall not exceed a total of 500,000
shares of
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FON Stock (as defined in the Company's articles of incorporation) or
250,000 shares of Series 1 PCS Stock (as defined in the Company's
articles of incorporation).
b. Participation in the Plan. Participation in the Plan may be voluntary
or automatic, as determined by the Committee. The rules and procedures
for voluntary participation, when applicable, shall be established and
implemented by the Plan Administrator.
c. Exercise Price. The price at which each share covered by an option may
be purchased shall be one hundred percent (100%) of the fair market
value of the Company's common stock on the date the option is granted.
Fair market value shall be deemed to be the average of the high and
low prices of the Company's common stock for composite transactions as
published by major newspapers for the date the option is granted or,
if no sale of the Company's common stock shall have been made on that
day, the next preceding day on which there was a sale of such stock.
d. Vesting. Unless the Committee determines otherwise, stock option
grants shall provide: (i) with respect to options issued in lieu of
annual management incentive compensation, that the total number of
shares subject to an option shall become exercisable December 31 in
the year of the date of grant and (ii) with respect to options issued
in lieu of or as part of long-term incentive compensation ("LTIP
Options") that the total number of shares subject to the option shall
become exercisable in full on the third December 31 following the
grant date. Unless the Committee provides otherwise, if the grantee of
an LTIP Option terminates employment by reason of the grantee's death,
total disability, or normal retirement, the LTIP Option shall become
exercisable in full on the grantee's termination date. Unless the
Committee provides otherwise, if the grantee of any other option
terminates employment for any reason other than termination for good
cause, the option shall be forfeited and any incentive compensation
foregone to acquire the options shall be restored to the grantee as if
an election to acquire options were not made.
e. Term of Option. Options shall not be exercisable after the expiration
of ten (10) years from the date of grant.
f. Payment of Exercise Price. Options shall be exercisable only upon
payment to the Company of the full purchase price of the shares with
respect to which options are exercised. Payment for the shares shall
be either in United States dollars, payable in cash or by check, or by
surrender of stock certificates representing the same class of common
stock of the Company having an aggregate fair market value, determined
as of the date of exercise, equal to the number of shares with respect
to which such options are exercised multiplied by the Certain
optionees may use restricted stock as
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payment for the exercise price in accordance with Section 6 hereof. In
that event, fair market value of the shares of restricted stock will
be determined as if the shares were not restricted. In lieu of the
delivery of physical certificates, the optionee may deliver shares in
payment of the exercise price by attesting, on a form established for
such purpose by the Secretary, to the ownership, either outright or
through ownership of a broker account, of a sufficient number of
shares held for a period of at least six months to pay the exercise
price. The attestation must be notarized andsigned by the optionee's
spouse if the spouse is a joint owner of the shares with respect to
which such attestation is made and must be accompanied by such
documentation as the Corporate Secretary may consider necessary to
evidence actual ownership of such shares.
g. Manner of Exercise. A completed exercise form and the exercise price,
whether in the form of cash or stock, must be delivered to the Plan
Administrator in order to exercise an option. An option shall be
deemed exercised on the date such exercise form and payment are
received by the Plan Administrator.
h. Time for Exercise. Each option expires if it has not been exercised
within its term. Once an option has expired for any reason, it can no
longer be exercised. If the grantee's employment with the Company or a
subsidiary of the Company is terminated, the optionee may exercise
options that are exercisable on the date of termination of employment
until the earlier of (1) the date on which the option expires and (2)
the end of the applicable period below, beginning on the grantee's:
(i) retirement: five years after the grantee's retirement date.
(ii) disability (qualifying for long-term disability benefits under
the Company's Basic Long-Term Disability Plan): five years after
the grantee's qualification date.
(iii) death: one year after the grantee's death for the estate or
designated beneficiary to exercise the decedent's options.
(iv) involuntary termination other than for cause: the date on which
the option expires.
(v) voluntary termination: three months from the grantee's date of
termination of employment.
If a grantee's employment is terminated for a reason constituting good
cause, any outstanding options granted under the Plan shall
automatically terminate. "Good cause" means conduct by the grantee
that reflects adversely on the grantee's honesty, trustworthiness or
fitness as an employee, or the grantee's willful engagement in conduct
which is demonstrably and materially injurious to the Company.
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If a grantee becomes associated with, becomes employed by, renders
services to, or owns any interest in (other than an insubstantial
interest, as determined by the Committee) any business in competition
with the Company, all outstanding options granted to the grantee
whether vested or unvested shall automatically terminate and shares of
restricted stock received upon the exercise of an option pursuant to
Section 6 hereof that continue to be restricted shall be forfeited.
For purposes of this Plan, an employee who becomes employed by certain
non- subsidiary affiliates designated by the Committee (each, together
with their subsidiaries, an "Affiliated Entity"), shall not, except
with respect to incentive stock options, be considered to have
terminated employment with the Company or a subsidiary of the Company
until his employment is terminated with all Affiliated Entities
without becoming re-employed by the Company or its subsidiaries.
i. Restricted Stock. Certain grantees may elect to deliver restricted
shares or receive restricted shares in connection with an exercise of
an option by the grantee, as provided in Section 6 hereof.
j. Beneficiary Designations. The grantee of an option may designate a
beneficiary or beneficiaries to exercise unexpired options held by the
grantee and to own shares issued upon any such exercise after the
grantee's death without order of any probate court or otherwise. A
beneficiary so designated may exercise an option upon presentation to
the Company of evidence satisfactory to the Corporate Secretary of (1)
the beneficiary's identity and (2) the death of the grantee. A
grantee may change any beneficiary designation of options held by the
grantee at anytime before his death but may not do so by testamentary
designation in his will or otherwise. Beneficiary designations
must be made in writing on a form provided by the Corporate Secretary.
Beneficiary designations shall become effective on the date that the
form, properly completed, signed and notarized, is received by the
Secretary. Any designation of a beneficiary with respect to any option
shall be deemed canceled upon the transfer of such option to a trust
in accordance with the terms of the Plan.
k. Change in Stock, Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend,
spin-off, or other change in the corporate structure affecting the
shares, such adjustment shall be made in the aggregate number and
class of shares that may be delivered under the Plan, in the number
and class of shares that may be subject to an option granted to any
individual in any year under the Plan, and in the number, class, and
option price of shares subject to outstanding options granted under
the Plan, as may be determined to be appropriate by the Committee, in
its sole discretion, provided that the number of shares subject to
any option shall always be a whole number.
l. Limitations on Transfer. Options may not be transferred, levied,
garnished, executed upon, subjected to a security interest, or
assigned to any person other than the grantee, except that the
grantee may
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transfer an option to a trust of the kind described in Section 6(b).
Any such trust as transferee of an option may not (1) dispose of
shares received in an exercise of such options until such shares are
validly registered or exempt from registration under any applicable
exemption from registration under the Securities Act of 1933, as
amended, in the opinion of the Corporate Secretary or (2) while
continuing to hold options issued under this plan, be amended to
change beneficiaries to persons other than those permissible under
Section 6(b). Documents evidencing the transfer of any option and the
identity of the transferee shall be in such form as may be required by
the Corporate Secretary.
6. Restricted Stock. Certain grantees, as determined by the Committee, may
elect to receive restricted shares upon payment for the exercise of an
option in the form of unrestricted common stock. The grantee will
receive the same number of unrestricted shares as the number of shares
surrendered to pay the exercise price, while the shares received in excess
of the number surrendered to pay the exercise price may be restricted.
Such grantees may also elect to deliver restricted shares of the Company's
common stock in payment of the exercise price notwithstanding restrictions
on transferability to which such shares are subject. The Company shall be
authorized to issue restricted shares of common stock upon such exercises
of stock options, subject to the following conditions:
a. The grantee shall elect a vesting period for the restricted common
stock to be received upon exercise of the option of between 6 months
and 10 years, subject to rules and procedures established by the Plan
Administrator, but in no event may a grantee elect a vesting period
shorter than the period provided in paragraph (d) of this Section 6.
At any time on or before the 13th calendar month preceding the date on
which restrictions on shares of restricted stock would otherwise
lapse, the grantee may elect to extend the vesting period on all but
not a portion of such shares by six months or any multiple of six
months.
b. The grantee who receives restricted stock may not sell, transfer,
assign, pledge or otherwise encumber or dispose of shares of
restricted stock until such time as all restrictions on such stock
have lapsed except: (i) to the Company in payment of the exercise
price of a stock option issued by the Company under any employee
stock option plan adopted by the Company that provides for payment
of the exercise price in the form of restricted stock, provided that
such payment is made in accordance with the terms of such plan; or
(ii) to a trust of which the grantee, the grantee's spouse, or
descendants (by blood, adoption, or marriage) of the grantee are the
primary beneficiaries and which is a grantor trust treated as owned by
the grantee under Subchapter J of the Internal Revenue Code, upon the
following terms:
(A) the Company receives, prior to such transfer, a true copy of the
trust agreement and an opinion from grantee's counsel (1) that
the trust will be treated as a grantor trust owned by the grantee
under Subchapter J of the Internal Revenue Code at all times
until the restrictions on such stock lapse or the stock is
forfeited under the terms of its grant, (2) that the terms of the
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trust provide that upon the forfeiture of the restricted stock
under the terms of its grant or the earlier termination of the
trust for whatever reason, ownership of the restricted stock
shall revert to the grantee or to the Company, (3) that the
trustee of such trust may not, prior to the lapsing of
restrictions on such stock, sell, transfer, assign, pledge, or
otherwise encumber or dispose of shares of restricted stock
except to the Company or to the grantee, subject to the
restrictions provided for in this Plan, and (4) that, until the
restrictions lapse, the trustee is not authorized to incur
liabilities on behalf of the trust, other than to the
beneficiaries of the trust; and
(B) the grantee and the trustee of the trust shall execute stock
powers in blank to be held in the custody of the Company; and
(C) the Corporate Secretary of the Company may, in his discretion,
enforce the foregoing transfer restrictions by maintaining
physical custody of the certificate or certificates representing
such shares of restricted stock, by placing a restrictive legend
on such certificates, by requiring the grantee and the trustee to
execute other documents as a pre-condition to such transfer, or
otherwise.
c. A grantee who elects to receive restricted common stock upon an
exercise shall have the right to satisfy tax withholding obligations
in the manner provided in Section 8 hereof.
d. Restricted common stock received in such an exercise or from other
plans of the Company may be used for payment of the exercise price of
a stock option to purchase shares of the same class, so long as all
the shares received as a result of such an exercise are restricted for
a period at least as long as, and shall have other terms consistent
with the terms of, the restricted common stock used in payment.
e. The shares of restricted common stock received in an exercise of a
stock option that continue to be restricted shall be forfeited in the
event that vesting conditions are not satisfied, subject to the
discretion of the Committee, except in the case of death, disability,
normal retirement, or involuntary termination for reasons other than
for good cause, in which case all restrictions lapse; provided,
however, that in no event shall restrictions lapse if the restrictions
on shares used to pay for the exercise price pursuant to Section 6(d)
would not have lapsed under the same conditions. If restricted shares
are forfeited, the grantee or his representative shall sign any
document and take any other action required to assign said restricted
shares back to the Company.
f. The grantee will have all the rights of a stockholder with respect to
shares of restricted stock received upon the exercise of an option,
including the right to vote the shares of stock and the right to
dividends
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on the stock. Unless the Plan Administrator establishes alternative
procedures, the shares of restricted stock will be registered in the
name of the grantee and the certificates evidencing such shares shall
bear an appropriate legend referring to the terms, conditions and
restrictions applicable to the award and shall be held in escrow by
the Company. The grantee shall execute a stock power or powers
assigning the shares of restricted stock back to the Company, which
stock powers shall be held in escrow by the Company and used only in
the event of the forfeiture of any of the shares of restricted stock.
A certificate evidencing unrestricted shares of common stock shall be
issued to the grantee promptly after the restrictions lapse on any
restricted shares.
g. The Plan Administrator shall have the discretion and authority to
establish any rules in connection with the use of restricted stock,
including but not limited to regulating the timing of the lapse of
restrictions within the six-month to ten-year period and prescribing
election forms as the Plan Administrator deems necessary or desirable
for the orderly administration of such exercises.
7. Reload Options. The Committee may provide that optionees have the right to
a reload option, which shall be subject to the following terms and
conditions:
a. Grant of the Reload Option; Number of Shares; Price. Subject to
subsections (b) and (c) of this Section 7 and to the availability of
shares to be optioned under the Plan, if an optionee has an option to
purchase shares of any class of common stock (the "original option")
with reload rights and pays for the exercise of the original option by
surrendering common stock of the same class, the optionee shall
receive a new option ("reload option") to purchase the number and
class of shares so surrendered (or, if applicable, the number of
shares provided for in paragraph (h) of this Section 7) at an exercise
price equal to the fair market value of the class of stock on the date
of the exercise of the original option.
b. Minimum Purchase Required. A reload option will be granted only if the
exercise of the original option is an exercise of at least 25% of the
total number of shares granted under the original option (or an
exercise of all the shares remaining under the original option if less
than 25% of the shares remain to be exercised).
c. Other Requirements. A reload option: (1) will not be granted if the
market value of the common stock of the Company on the date of
exercise of the original option is less than the exercise price of the
original option; (2) will not be granted if the grantee is not, on the
exercise date, an employee of Sprint or a Sprint subsidiary; (3) will
not be granted if the original option is exercised less than one year
before the expiration of the original option; and (4) with respect to
options transferred by the grantee to another person in accordance
with this Plan, reload options shall be granted to the grantee upon a
stock-for-stock exercise by the optionee to the same extent as if the
grantee had exercised the option in a similar manner.
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d. Term of Option. The reload option shall expire on the same date as the
original option.
e. Type of Option. The reload option shall be a nonqualified option to
purchase shares of the same class of shares as the original option.
f. No Additional Reload Options. The reload options shall not include any
right to a second reload option.
g. Date of Grant, Vesting. The date of grant of the reload option shall
be the date of the exercise of the original option. The reload options
shall be exercisable in full beginning one year from date of grant;
provided, however, that all shares purchased upon the exercise of the
original option (except for any shares withheld for tax withholding
obligations) shall not be sold, transferred or pledged within six
months from the date of exercise of the original option. The reload
option shall become exercisable in full if the optionee terminates
employment by reason of the grantee's death, disability, or normal
retirement. In no event shall a reload option be exercised after the
original option expires as provided in subsection (d) of this Section
7.
h. Stock Withholding; Grants of Reload Options. If the other requirements
of this Section 7 are satisfied, and if shares are withheld or shares
surrendered for tax withholding, a reload option will be granted for
the number of shares surrendered as payment for the exercise of the
original option plus the number of shares surrendered or withheld to
satisfy tax withholding. In connection with reload options for
officers who are subject to Section 16 of the Securities Exchange Act
of 1934, the Committee may at any time impose any limitations which,
in the Committee's sole discretion, are necessary or desirable in
order to comply with Section 16(b) of the Securities Exchange Act of
1934 and the rules and regulations thereunder, or in order to obtain
any exemption therefrom.
i. Other Terms and Conditions. Except as otherwise provided in this
Section 7, all the provisions of the Plan shall apply to reload
options.
8. Stock Withholding Election. When taxes are withheld in connection with the
exercise of a stock option by delivering shares of stock in payment of the
exercise price, or upon the lapse of restrictions on restricted stock
received upon the exercise of an option (the date on which such exercise
occurs or such restrictions lapse hereinafter referred to as the "Tax
Date"), the optionee may elect to make payment for the withholding of
federal, state and local taxes, including Social Security and Medicare
("FICA") taxes, up to the optionee's marginal tax rate, by one or both of
the following methods:
(i) delivering part or all of the payment in previously-owned shares of
the same class (which shall be valued at fair market, as defined
herein, on the Tax Date) which shares, if acquired from the Company,
must have been held for at least six months;
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(ii) requesting the Company to withhold from those shares that would
otherwise be received upon exercise of the option or upon the lapse of
restrictions, a number of shares having a fair market value (as
defined herein) on the Tax Date equal to the amount to be withheld.
The amount of tax withholding to be satisfied by withholding shares
from the option exercise is limited to the minimum amount of taxes,
including FICA taxes, required to be withheld under federal, state and
local law.
Such election is irrevocable after the Tax Date. Any fractional share
amount and any additional withholding not paid by the withholding or
surrender of shares must be paid in cash. If no timely election is made,
cash must be delivered to satisfy all tax withholding requirements.
If the exercise of an option by an optionee other than the grantee after
transfer of the option pursuant to this plan from the grantee to the
optionee results in a withholding obligation on the part of the grantee,
the grantee may elect to satisfy his withholding obligation by delivery of
shares to the Company as permitted in clause (i) above.
9. Acceleration on a Change in Control
a. With respect to any LTIP Option outstanding for at least one year or
any restricted shares issued under the Plan other than pursuant to
Section 6(d), the options shall become exercisable in full and the
restrictions shall lapse, as the case may be, upon a change in control
of the Company.
b. For purposes of this Plan, a "change in control of the Company" shall
be deemed to have occurred whenever a "Change in Control" occurs for
purposes of the Company's 1990 Stock Option Plan, as amended from time
to time.
10. Miscellaneous.
a. Amendment. The Company reserves the right to amend the Plan at any
time by action of the Board of Directors provided that no such
amendment may materially and adversely affect any outstanding stock
options without the consent of the optionee, and provided that,
without the approval of the stockholders, no such amendment may
increase the total number of shares reserved for the purposes of the
Plan.
b. Effectiveness of Plan. This Plan shall be effective as of February 18,
1995, subject to approval of Stockholders of the Company prior to
February 18, 1996.
c. Rights in Securities. All certificates for shares delivered under the
Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any
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stock exchange upon which the shares are then listed, and any
applicable federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. No optionee or optionee's
beneficiary, executor or administrator, legatees or distributees, as
the case may be, will be, or will be deemed to be, a holder of any
shares subject to an option unless and until a stock certificate or
certificates for such shares are issued to such person or persons
under the terms of the Plan. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date
is prior to the date such stock certificate is issued, except as
provided in Section 5(k) hereof.
d. Date of Grant. The grant of an option shall be effective no earlier
than the date the Committee decides to grant the option, except that
grants of reload options shall be effective as provided in Section
7(g) hereof.
e. Application of Funds. The proceeds received by the Company from the
sale of stock subject to option are to be added to the general funds
of the Company and used for its corporate purposes.
f. No Obligation to Exercise Option. Granting of an option shall impose
no obligation on the optionee to exercise such option.
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