SPRINT SPECTRUM L.P.
1997 LONG-TERM INCENTIVE COMPENSATION PLAN
GENERAL
PLAN EFFECTIVE DATE AND OBJECTIVES
This plan is effective July 1, 1997, and will continue in effect unless
terminated as provided by program guidelines. The objectives of the plan are:
- to promote an "owner" orientation among key leaders;
- to provide for competitive levels of compensation based on superior
Company performance;
- to provide upside compensation potential similar to what would be
available in comparable start-up situations within public and nonpublic
ventures.
DEFINITIONS
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TERMS DEFINITION
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Appraised Value The value of a Plan Unit based upon SPRINT PCS as
performed by two independent appraisers selected
by the Company. Each valuation applies to a
specific point in time and is used to determine
the value of Plan Units of a specific date.
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Board The Partnership Board.
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Cause Conduct which is detrimental to the Company or its
affiliates.
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Change of Control A situation wherein any person, corporation,
trust, partnership or other entity other than
(i) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any of its affiliates, or
(ii) a current partner of the Company or any
person or entity that directly or indirectly owns
or controls, is owned or controlled by, or is
under common ownership of a current partner of the
Company, is or becomes the owner directly or
indirectly of 50 percent or more of the out-
standing partnership interests in the Company.
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Committee The Compensation Committee.
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Company SPRINT PCS(Legal Entity - SPRINT SPECTRUM HOLDING
COMPANY L.P).
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Constructive Discharge Termination from employment as described under a
constructive discharge section of an applicable
employment agreement.
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Disability Totally disabled as determined under the Company
long-term disability program.
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Participant Any employee or class of employees approved by
the Board to be included in the Plan.
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Participating Position A position or class of positions approved by the
Board to participate in the Plan.
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Unit An accounting tool used to measure the base and
appreciated value of the Company as well as to
determine the extent to which a given participant
may or may not have benefited from changes in the
value of the Company. Participants derive
appreciation in unit value, not in the units
themselves.
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Initial Unit Value The value established for the unit(s)at the time
of grant.
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ADMINISTRATION
The Partnership Board (or Committee, when authorized by the Board) shall be
responsible for the administration of the Plan. The Board's authority with
respect to the Plan includes, but is not limited to, the following:
- to interpret the Plan;
- to determine membership in the Plan;
- to amend or terminate portions of all provisions of the Plan;
- to establish target opportunities, Plan units and all features of the Plan;
- to make all other decisions it feels necessary with respect to the Plan.
1997 UNIT APPRECIATION GRANTS
GENERAL
Unit Appreciation Grants provide the opportunity for long-term compensation
based on the increased value of units granted to participants. Actual plan
payouts are based on the appreciation in unit value, and participants derive no
benefit from the units themselves.
Grants are based upon the long-term incentive target for each position and the
targeted unit appreciation during the exercise period, according to Plan
provisions.
UNIT STRUCTURE
A phantom unit structure has been created based upon the fair market value of
the partnership equity in SPRINT PCS. This value is the result of an appraisal
completed at the end of each Plan year based upon a methodology which is as
consistent as practical from valuation to valuation . The valuations are
performed by two independent appraisers. The appraised value is divided by the
total number of units generated (not just those awarded) to derive the current
unit value. The current value is compared to the initial unit value to determine
whether or not the unit has appreciated and to what extent participants may have
benefited.
Additional equity contributions increase the number of units outstanding. The
number of additional units will be derived by dividing the equity contributions,
plus an accretion rate of 10 percent per annum simple interest, for the period
of time from the contribution to the next appraisal valuation date by the most
recent unit value.
ELIGIBILITY
Eligibility requirements for 1997 unit appreciation grants are as follows:
All other individuals who occupy participating positions on or
before April 1, 1998 and who have not received multiple grants
covering the period.
(Participation in the plan will not extend below Director level.)
TARGET OPPORTUNITY
Each participant will have an annualized long-term incentive target. This target
is established as a part of compensation planning for the Company.
DETERMINATION OF UNIT GRANTS AND EXERCISE PERIOD
The number of unit grants to a given participant will be determined by dividing
the annualized target (maybe pro rated) opportunity by the present value of the
targeted appreciation for the term during which the units are exerciseable.
Present value will be based upon a discount factor of __ percent. [To be
determined.]
The effective date of normal unit grant for all Plan participants will be July
1, 1997. Units are exerciseable through June 30, 2007, according to the terms
and conditions of the Plan.
Unit appreciation is targeted at a compounded rate of __ percent per year for
the 10 year period. Targeted final value of the unit is ____ based upon an
initial unit value of ____. [To be determined.]
Vested units may be exercised according to the Plan guidelines applying to the
exercise period. The value of the units exercised will be based upon the value
of the unit at the time of exercise less the initial unit value.
PRO RATA PARTICIPATION
Individuals who assume eligible positions after July 1, 1997 may participate in
the Plan on a pro rata basis as determined by the date upon which they assume
membership in the Plan. Pro rations will be computed on a per diem basis. In no
case, however, may an individual join the Plan on or after April 1, 1998. No
additional units, whether or not a pro rata basis, will be issued to
participants who have been granted units for the period and then have assumed a
new position having a higher long-term incentive opportunity. Likewise, units
which have been granted will not be reduced based upon the assumption of a
participating job having a lower incentive target.
VESTING SCHEDULE
The vesting schedule for full-term participants is as follows:
First Anniversary of grant (7/01/1998) 25% vested
Second Anniversary of grant (7/01/1999) 50% vested
Third Anniversary of grant (7/01/2000) 75% vested
Fourth Anniversary of grant (7/01/2001) 100% vested
Units granted to those participating on a pro rata basis will vest on the actual
anniversary date of the grant and will expire on the expiration date applying to
full term participants (June 30, 2007).
TERMINATION
Vesting provisions upon termination are as follows:
Death or Disability: Immediate vesting of all unvested units.
Immediate exercise of all vested units
based upon the most recent valuation.
Change of Control: Immediate vesting of all unvested units.
Immediate exercise of all vested units
based upon a valuation performed as of
the time of change of control.
Involuntary Separation Vested units will be exercised as soon as
Without Cause, Transfer possible following termination. The most
to a Partner, Reassignment recent valuation prior to the termination
to a Non-participating will apply. As a general guideline,
Position, Constructive participants who assume a non-participating
Discharge(not involving position or transfer to a partner may
Change of Control): exercise vested units upon transfer or
reassignment or at the time the next
valuation is available. Management
discretion will govern with respect to
vested and unvested units in such cases.
Voluntary Termination: Vested units will be exercised at termin-
ation, according to the most recent
valuation.
Discharge for Cause: All units, vested and unvested, are
terminated and cannot be exercised upon
separation.
Retirement: Vested units may be exercised in the five
year period following retirement, but not
later than the expiration date. For
purposes of this Plan, the minimum retire-
ment is age 55 and 10 years of credited
service.
NORMAL EXERCISE
Vested units may be exercised within 45 days following the most current
valuation. The normal exercise period is then closed until the 45-day period
following the next available valuation.
All units, vested or nonvested, granted in 1997 (including pro rata grants) will
expire in the 45 day period following the availability of the valuation for June
30, 2007.
PLAN PAYMENTS
Payments may be made in cash or, in the event the Company issues stock to the
public during the term of this Plan, payment may be made in cash, Company stock
or a combination of cash and Company stock.
The Company is entitled to withhold from Plan payments any amounts required to
be withheld under applicable state and federal laws. The Company may also offset
any amounts a Participant may owe to the Company from any amounts due under this
Plan.
Participants and designated beneficiaries may not assign benefits under this
Plan.
OTHER CONSIDERATIONS
This Plan is not a promise of continued employment to any participant.
Questions about the Plan may be directed to the participant's immediate
supervisor or to the Human Resources Department.