SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported) May 26, 1998
SPRINT CORPORATION
(Exact name of Registrant as specified in its charter)
Kansas 0-4721 48-0457967
(State of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
2330 Shawnee Mission Parkway, Westwood, Kansas 66205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 624-3000
(Former name or former address, if changed since last report)
P. O. Box 11315, Kansas City, Missouri 64112
(Mailing address of principal executive offices)
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Item 5. Other Events.
Agreement Regarding Restructuring of Wireless Operations
On May 26, 1998, the registrant announced that it had entered
into an agreement with Tele-Communications, Inc. (TCI), Comcast
Corporation (Comcast) and Cox Communications, Inc. (Cox) to assume
ownership and management control of Sprint Spectrum Holding Company,
L.P. (Sprint PCS), the registrant's wireless joint venture with the
three cable companies. The registrant will issue shares of a new
common stock that tracks its wireless operations ("Sprint PCS Stock")
to the cable companies in exchange for their interests in Sprint PCS
and PhillieCo, L.P. (a partnership of the registrant, TCI and Cox
offering PCS service in the Philadelphia MTA) and will issue Sprint
PCS Stock to the public in an initial public offering.
The agreement provides that the registrant will assume full
ownership and management control of Sprint PCS and PhillieCo in a
series of steps over the next several months.
Initially, the cable companies will receive a 47 percent
economic interest in Sprint PCS Stock in exchange for their interests
in Sprint PCS and PhillieCo. The registrant's initial share will be
53 percent. The cable companies will not have special governance
rights in Sprint PCS or the registrant and will be issued low vote
shares of Series 2 PCS Stock.
The next step will be to combine, under the Sprint PCS name,
Sprint PCS, PhillieCo and the PCS licenses wholly-owned by the
registrant through its subsidiary, SprintCom, Inc.
The agreement also contemplates an initial public offering of
Sprint PCS Stock (IPO) to occur concurrently with the above steps.
The IPO would be targeted to raise between $500 million and $1
billion for the wireless operations. The ownership split established
after the initial allocation of shares (i.e., the 53-47 split) would
be proportionately reduced by the amount of ownership interests issued
in connection with the IPO.
Approximately 90 days after the restructuring and the IPO, the
registrant will recapitalize itself with two new common stocks.
Sprint FON Stock will track the performance of the registrant's local
and long distance operations, as well as its directories and
distribution businesses, emerging businesses and Global One joint
venture. Sprint PCS Stock will track the registrant's wireless
holdings.
It is expected that each share of the registrant's existing
common stock will be converted into one share of Sprint FON Stock
and a fractional share of Sprint PCS Stock in a tax-free transaction.
The registrant's stockholders will then own shares of both the Sprint
FON Stock and Sprint PCS Stock. The restructuring agreement provides
the registrant with the option to reverse the sequence of the IPO and
the recapitalization. The transaction is subject to approval by the
registrant's stockholders.
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At the time of the restructuring and the IPO, France Telecom
and Deutsche Telekom will purchase a sufficient number of shares of
Series 3 PCS Stock to maintain their overall 20 percent voting
interest in the registrant.
France Telecom and Deutsche Telekom will retain their existing
Class A Common Stock. Following the recapitalization, the Class A
Common Stock will represent interests in both the Sprint FON Stock
and the Sprint PCS Stock. Voting rights of the Class A Common Stock
will be based on the voting power of the underlying stocks.
France Telecom and Deutsche Telekom together have anti-dilution
rights allowing them to maintain a 20 percent voting interest in the
registrant. Stock purchases at or subsequent to the restructuring
and the IPO will be in voting Series 3 FON Stock and Series 3 PCS
Stock. Board representation for France Telecom and Deutsche Telekom
would be based on the aggregate voting power of the Class A Common
Stock, the Series 3 FON Stock and the Series 3 PCS Stock.
Additional information concerning the restructuring is contained
in the news release, a copy of which is filed as Exhibit 99(A) hereto
and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
2 Restructuring and Merger Agreement By and Among Sprint
Corporation, Tele-Communications, Inc., Comcast Corporation,
Cox Communications, Inc. and certain of their subsidiaries,
dated as of May 26, 1998.
99(A) News Release relating to the execution of an Agreement with
Tele-Communications, Inc., Comcast Corporation, Cox
Communications, Inc. and certain of their subsidiaries.
99(B) Master Restructuring and Investment Agreement Among Sprint
Corporation, France Telecom S.A. and Deutsche Telekom AG,
dated as of May 26, 1998.
Sprint Corporation agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of the schedules and exhibits to
Exhibit No. 2 and Exhibit No. 99(B).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
SPRINT CORPORATION
Date: June 1, 1998 By: /s/ Michael T. Hyde
Michael T. Hyde, Assistant
Secretary
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EXHIBIT INDEX
Exhibit
Number Description Page
2 Restructuring and Merger Agreement By and
Among Sprint Corporation, Tele-Communications,
Inc., Comcast Corporation, Cox Communications,
Inc. and certain of their subsidiaries, dated
as of May 26, 1998.
99(A) News Release relating to the execution of an
Agreement with Tele-Communications, Inc., Comcast
Corporation, Cox Communications, Inc. and certain
of their subsidiaries.
99(B) Master Restructuring and Investment Agreement
Among Sprint Corporation, France Telecom S.A. and
Deutsche Telekom AG, dated as of May 26, 1998.
5
Exhibit 2
RESTRUCTURING AND MERGER AGREEMENT
BY AND AMONG
SPRINT CORPORATION
TELE-COMMUNICATIONS, INC.
COMCAST CORPORATION
COX COMMUNICATIONS, INC.
SPRINT ENTERPRISES, L.P.
TCI SPECTRUM HOLDINGS, INC.
COMCAST TELEPHONY SERVICES
COX TELEPHONY PARTNERSHIP
TCI PHILADELPHIA HOLDINGS, INC.
COMCAST TELEPHONY SERVICES, INC.
COM TELEPHONY SERVICES, INC.
COX TELEPHONY PARTNERS, INC.
COX COMMUNICATIONS WIRELESS, INC.
SWV ONE, INC.
SWV TWO, INC.
SWV THREE, INC.
SWV FOUR, INC.
SWV FIVE, INC.
SWV SIX, INC.
May 26, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS 3
Section 1.1 Certain Definitions 3
Section 1.2 Other Defined Terms 12
Section 1.3 Terms Generally 14
ARTICLE 2
THE MERGERS; EFFECTIVE TIME 14
Section 2.1 The Mergers 14
Section 2.2 The Mergers; Adoption
and Approval; Effective Time 15
ARTICLE 3
TERMS OF THE MERGERS 15
Section 3.1 Charters 15
Section 3.2 The By-Laws 15
Section 3.3 Directors 15
Section 3.4 Officers 16
ARTICLE 4
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGERS 16
Section 4.1 Share Consideration;
Conversion or Cancellation of Shares
in the Mergers 16
Section 4.2 Payment for Shares in
the Mergers 18
Section 4.3 Warrant Intergroup Interest 18
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARTIES 19
Section 5.1 Mutual Representations 19
(a) Due Incorporation or
Formation; Authorization of
Agreements 19
(b) No Conflict; No Default 19
(c) Litigation 20
(d) Finders Fees 20
Section 5.2 Representations and
Warranties of the Cable Parents 20
(a) Interests in Sprint PCS
Owned by the Cable Partners 20
(b) Partnership Interests in
Cable Partners Owned by
HoldCo Entities 21
(c) Capital Stock of the HoldCo
Entities and TCI Partner 21
(d) Availability 22
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(e) Consents, Approvals and
Authorizations 22
(f) Contracts 22
(g) Taxes 22
(h) Tax Opinions 25
(i) Ownership of Sprint
Securities 25
Section 5.3 Representations and
Warranties of Sprint 25
(a) Merger Subs 25
(b) Consents, Approvals and
Notifications 25
(c) Sprint Board Action 25
(d) FT/DT Agreements 26
(e) PCS Percentage Group
Interests; Intergroup
Interests 26
(f) PCS Group Constituents 26
(g) King & Spalding Opinion 26
(h) Representations and
Warranties Regarding Sprint
Partner 27
(i) Reports and Financial
Statements 30
(j) Capitalization of Sprint 30
Section 5.4 Representations and
Warranties Concerning PhillieCo 30
(a) Due Organization 30
(b) Interests in PhillieCo Owned
by the PhillieCo Partners 30
(c) Licenses 31
(d) Compliance with Laws 31
(e) Litigation 31
(f) Title to Licenses 32
(g) No Breach 32
(h) Environmental Protection 32
(i) Intellectual Property 32
(j) Financial Information 32
(k) Sole Line of Business 33
(l) Liabilities 33
Section 5.5 Representations and
Warranties Concerning SprintCom and
EquipmentCo 33
(a) Due Organization; Title 33
(b) Licenses 34
(c) Compliance with Laws 34
(d) Litigation 34
(e) Title to Licenses 34
(f) No Breach 34
(g) Environmental Protection 35
(h) Intellectual Property 35
(i) Financial Information 35
(j) Sole Line of Business; 36
(k) Liabilities 36
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ARTICLE 6
COVENANTS OF THE PARTIES 36
Section 6.1 Cooperation 36
Section 6.2 Certain Actions by Sprint 37
(a) SEC Filings 37
(b) Stockholders Meeting 38
(c) Concurrent IPO 39
(d) Concurrent Recapitalization 39
(e) Extension of Trigger Date 40
Section 6.3 IPO Matters 40
Section 6.4 Capital Requirements of
Sprint PCS Prior to Closing 41
Section 6.5 Capital Requirements of
SprintCom Prior to Closing 42
Section 6.6 Capitalization or Purchase
of PCS Notes and SprintCom Loans 42
Section 6.7 Loans to PhillieCo 46
Section 6.8 Equity Purchase Rights 46
Section 6.9 Conduct of Business of
the HoldCo Entities and Cable Partners 51
Section 6.10 Conduct of Business of
SprintCom and EquipmentCo. 52
Section 6.11 Access to Information 53
Section 6.12 Tax Matters 54
Section 6.13 Chairman of Sprint PCS 55
Section 6.14 Agreement Not to Trigger
Buy/Sell 55
Section 6.15 Management and Allocation
Policies 55
Section 6.16 Informational Rights 55
Section 6.17 Transfer of Series 2 PCS
Stock 56
Section 6.18 Spin-off 56
Section 6.19 Parents Agreements:
Non-Competition 56
Section 6.20 Confidentiality 57
Section 6.21 Conduct of Business of
Phillieco 57
Section 6.22 Intergroup Interests 58
Section 6.23 Rights Plan 58
ARTICLE 7
TAX MATTERS 58
Section 7.1 Tax Returns 58
Section 7.2 Termination of Prior Tax
Settlement Agreements 59
Section 7.3 Pre-Closing Taxes 59
Section 7.4 Transfer Taxes 60
Section 7.5 Post-Closing Taxes 61
Section 7.6 Carrybacks 61
Section 7.7 Tax Cooperation 61
Section 7.8 Notification of Proceedings 62
Section 7.9 Audits 62
Section 7.10 SRLY Losses 63
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Section 7.11 Tax Indemnification 68
ARTICLE 8
CONDITIONS TO CLOSING 69
Section 8.1 Conditions of All Parties
to Closing 69
(a) Sprint Stockholder Approval 69
(b) HSR Act; FCC 69
(c) No Injunction 70
(d) Listing of Series 1 PCS Stock 70
(e) IPO or Recapitalization 70
(f) Initial Charter Amendment;
Certificate of Designations 70
(g) Certificates of Merger 70
Section 8.2 Sprint's Conditions Precedent
to Closing 70
(a) Correctness of Representations
and Warranties 70
(b) Performance of Agreements 71
(c) Tax Opinion 71
Section 8.3 Cable Parents' Conditions
Precedent to Closing 71
(a) Correctness of Representations
and Warranties 71
(b) Performance of Agreements 71
(c) Tax Opinions 72
ARTICLE 9
CLOSING 72
Section 9.1 Closing 72
ARTICLE 10
TERMINATION 74
Section 10.1 Events of Termination 74
Section 10.2 Effect of Termination 74
ARTICLE 11
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES,COVENANTS AND AGREEMENTS;
INDEMNIFICATION 75
Section 11.1 Scope of Representations
of the Parties 75
Section 11.2 Indemnification of Parties 76
Section 11.3 Survival 77
Section 11.4 Indemnification Procedures 77
Section 11.5 Acknowledgment of the
Parties 79
Section 11.6 Limitation on Obligation
to Indemnify 79
Section 11.7 Allocation of Losses 80
ARTICLE 12
MISCELLANEOUS 80
Section 12.1 Notices 80
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Section 12.2 Binding Effect 82
Section 12.3 Construction 82
Section 12.4 Expenses 82
Section 12.5 Table of Contents; Headings 83
Section 12.6 Governing Law 83
Section 12.7 Severability 83
Section 12.8 Amendments 83
Section 12.9 Entire Agreement 83
Section 12.10 Confidentiality 83
Section 12.11 Assignment 83
Section 12.12 Waivers; Remedies 83
Section 12.13 Consent to Jurisdiction;
Specific Performance 84
Section 12.14 WAIVER OF JURY TRIAL 84
Section 12.15 Further Assurances 84
Section 12.16 Counterparts 84
Section 12.17 Limitation on Rights of
Others 85
Section 12.18 Restrictive Legends 85
v
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EXHIBITS
Exhibit A - Certificate of Designations
Exhibit B-1 - Form of Delaware Certificates of Merger
Exhibit B-2 - Form of Colorado Articles of Merger
Exhibit C-1 - Amendment to Cox L.A. Partnership
Agreement
Exhibit C-2 - Amendment to Cox L.A. Affiliation
Agreement
Exhibit D - Intentionally Omitted
Exhibit E - Initial Charter Amendment
Exhibit F - Management and Allocation Policies
Exhibit G - Mutual Release and Waiver
Exhibit H - Registration Rights Agreement
Exhibit I - Standstill Agreements
Exhibit J - Subsequent Charter Amendment
Exhibit K - Tax Sharing Agreement
Exhibit M - Voting Agreements
Exhibit N - Warrant Agreements
Exhibit O - Bylaw Amendment
Exhibit P - FT/DT Agreements
Exhibit Q - Proxy Statement Excerpts
Exhibit R - Form of Promissory Note for PCS Loans
Exhibit S - Form of Promissory Note for SprintCom
Loans
Exhibit T - Tax Matters Certificate
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SCHEDULES
Schedule 5.2(a) - Cable Partners' Ownership Interest
in Sprint PCS
Schedule 5.2(b) - Owned Interests
Schedule 5.2(c) - HoldCo Entities and TCI Partner
Capital Stock
Schedule 5.2(f)(i) - Contracts
Schedule 5.2(g)(ii) - Tax Attributes
Schedule 5.2(g)(v) - Other Tax Matters
Schedule 5.2(g)(viii) - Tax Returns
Schedule 5.3(f) - PCS Group Constituent Entities
Schedule 5.3(h)(ii) - Interests in Sprint Partner
Schedule 5.4(b) - PhillieCo Ownership Interests
Schedule 5.4(c) - PhillieCo Licenses
Schedule 5.5(b) - SprintCom Licenses
Schedule 5.5(d) - SprintCom Litigation
<PAGE>
THIS RESTRUCTURING AND MERGER AGREEMENT is made as
of this 26th day of May, 1998, by and among
TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI"),
COMCAST CORPORATION, a Pennsylvania corporation ("Comcast"),
COX COMMUNICATIONS, INC., a Delaware corporation ("Cox",
and together with TCI and Comcast, the "Cable Parents"),
SPRINT CORPORATION, a Kansas corporation ("Sprint", and
together with the Cable Parents, the "Parents"), TCI
SPECTRUM HOLDINGS, INC., a Colorado corporation ("TCI
Partner"), COMCAST TELEPHONY SERVICES, a Delaware general
partnership ("Comcast Partner"), COX TELEPHONY PARTNERSHIP,
a Delaware general partnership ("Cox Partner", and together
with TCI Partner and Comcast Partner, the "Cable Partners"),
SPRINT ENTERPRISES, L.P., a Delaware limited partnership
("Sprint Partner", and together with the Cable Partners, the
"PCS Partners"), TCI PHILADELPHIA HOLDINGS, INC., a Delaware
corporation ("TCI PhillieCo Sub"), COM TELEPHONY SERVICES,
INC., a Delaware corporation ("Comcast HoldCo Sub1"), COMCAST
TELEPHONY SERVICES, INC., a Delaware corporation ("Comcast
HoldCo Sub2"), COX TELEPHONY PARTNERS, INC., a Delaware
corporation ("Cox HoldCo Sub1") and COX COMMUNICATIONS
WIRELESS, INC., a Delaware corporation ("Cox HoldCo Sub2",
and together with TCI PhillieCo Sub, Comcast HoldCo Sub1,
Comcast HoldCo Sub2 and Cox HoldCo Sub1, the "HoldCo
Entities"), SWV ONE, INC., a Delaware corporation ("Comcast
Merger Sub1"), SWV TWO, INC., a Delaware corporation
("Comcast Merger Sub2"), SWV THREE, INC., a Delaware
corporation ("Cox Merger Sub1"), SWV FOUR, INC., a Delaware
corporation ("Cox Merger Sub2"), SWV FIVE, INC., a Delaware
corporation ("TCI Merger Sub1"), and SWV SIX, INC., a
Colorado corporation ("TCI Merger Sub2", and together with
Cox Merger Sub1, Cox Merger Sub2, Comcast Merger Sub1,
Comcast Merger Sub2 and TCI Merger Sub1, the "Merger Subs").
RECITALS:
WHEREAS, each of the PCS Partners is a general partner
and a limited partner of each of Sprint Spectrum Holding
Company, L.P., a Delaware limited partnership ("Sprint PCS
GP"), and MinorCo, L.P., a Delaware limited partnership
("Sprint PCS LP");
WHEREAS, Sprint PCS GP is the sole general partner
and Sprint PCS LP is the sole limited partner of Sprint
Spectrum, L.P., a Delaware limited partnership ("Sprint
PCS");
WHEREAS, TCI Partner is an indirect Wholly-Owned
Subsidiary of TCI, Comcast Partner is wholly owned by
Comcast HoldCo Sub1 and Comcast HoldCo Sub2 (which in turn
are indirect Wholly-Owned Subsidiaries of Comcast), and Cox
Partner is wholly owned by Cox HoldCo Sub1 and Cox HoldCo
Sub2 (which in turn are Wholly-Owned Subsidiaries of Cox);
WHEREAS, TCI PhillieCo Sub, Cox HoldCo Sub2 and
Sprint Partner (collectively, the "PhillieCo Partners")
are the sole partners, each holding a general partnership
and a limited partnership interest, in PhillieCo Partners
I, L.P., a Delaware limited partnership ("PhillieCo GP"),
and PhillieCo Partners II, L.P., a Delaware limited
partnership ("PhillieCo LP");
WHEREAS, PhillieCo GP is the sole general partner
and PhillieCo LP is the sole limited partner of PhillieCo
Sub, L.P., a Delaware limited partnership ("PhillieCo Sub"),
which in turn is the sole general partner of PhillieCo,
L.P., a Delaware limited partnership ("PhillieCo1"), and
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PhillieCo Equipment & Realty Company, L.P., a Delaware
limited partnership ("PhillieCo2") (PhillieCo Sub,
PhillieCo1 and PhillieCo2 are collectively referred to
herein as "PhillieCo");
WHEREAS, each of the Merger Subs is a direct
Wholly-Owned Subsidiary of Sprint;
WHEREAS, SprintCom, Inc., a Kansas corporation
("SprintCom"), and SprintCom Equipment Company, L.P.,
a Delaware limited partnership ("EquipmentCo"), are
Wholly-Owned Subsidiaries of Sprint;
WHEREAS, the Board of Directors of each of the
Parents, TCI Partner, the HoldCo Entities and the Merger
Subs has determined that it is in the best interests of
their respective stockholders for (A) TCI Merger Sub1 to
merge with and into TCI PhillieCo Sub, (B) TCI Merger
Sub2 to merge with and into TCI Partner, (C) Comcast
Merger Sub1 to merge with and into Comcast HoldCo Sub1,
(D) Comcast Merger Sub2 to merge with and into Comcast
HoldCo Sub2, (E) Cox Merger Sub1 to merge with and into
Cox HoldCo Sub1 and (F) Cox Merger Sub2 to merge with
and into Cox HoldCo Sub2, all upon the terms and subject
to the conditions of this Agreement (each, a "Merger"
and together, the "Mergers");
WHEREAS, the outstanding stock of TCI Partner
and the HoldCo Entities will be converted in the Mergers
into (i) shares of a special series of a new class of
common stock of Sprint that will reflect the performance
of the PCS Group (as defined herein), (ii) certain warrants
to acquire additional shares of such special series of
common stock and (iii) in certain cases, shares of a new
series of preferred stock of Sprint;
WHEREAS, concurrently with the Closing of the
Mergers, Sprint currently intends to complete the IPO
(as defined herein) and, within 120 days thereafter, to
complete the Recapitalization (as defined herein);
WHEREAS, if the IPO is not completed on the
Closing Date, Sprint will effect the Recapitalization
concurrently with the Closing and intends to complete the
IPO within 120 days following the Closing;
WHEREAS, immediately following the Mergers, TCI,
Comcast and Cox will hold (directly or indirectly
through their respective Subsidiaries) shares of such
special series of common stock and Warrants (as defined
herein) representing Initial PCS Group Percentage Interests
(as defined herein) of 23.83074%, 11.42370%, and 11.91537%,
respectively, and the Sprint FON Group (as defined herein)
will hold a notional equity "intergroup" interest in the
PCS Group equal to a 52.83019% Initial PCS Group Percentage
Interest; and
WHEREAS, in connection with the Mergers, the parties
hereto intend to enter into other agreements and covenants
as specified herein;
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements
contained herein and in the Other Agreements (as defined
herein), and
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for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions. As used in
this Agreement, the following terms shall have the
meanings specified below:
"Act" means the Delaware Revised Uniform Limited
Partnership Act, as set forth in Del. Code Ann. tit.6,
Sections 17-101 to 17-1111.
"Additional Capital Contribution" has the meaning
set forth in Section 1.10 of the PCS Partnership Agreement.
"Affiliate" means, with respect to any Person, any
other Person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under
common control with such Person. For purposes of this
definition, the term "controls" (including its correlative
meanings "controlled by" and "under common control with")
shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and
policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
Notwithstanding the foregoing, (i) neither Sprint PCS LP,
Sprint PCS GP, Sprint PCS or any of its Subsidiaries,
PhillieCo GP, PhillieCo LP, PhillieCo or any of its
Subsidiaries nor any Person controlled by any of such
entities, shall be deemed to be an Affiliate of any Parent
or of any Affiliate of any Parent prior to the Closing
and (ii) no Parent or any Affiliate thereof shall be deemed
to be an Affiliate of any other Parent or any Affiliate
thereof solely by virtue of the ownership by such Parent or
any of its Affiliates of interests in Sprint PCS LP, Sprint
PCS GP, PhillieCo GP or PhillieCo LP.
"Agreement" means this Restructuring and Merger
Agreement, including the Schedules and Exhibits attached
hereto.
"Business Day" means a day of the year on which
banks are not required or authorized to be closed in the
State of New York.
"Capital Contribution" has the meaning set forth
in Section 1.10 of the PCS Partnership Agreement.
"CBCA" means the Colorado Business Corporation Act.
"Certificate of Designations" means the form of
certificate of designations attached hereto as Exhibit A
setting forth the rights, preferences and limitations of
the PCS Preferred Stock, which will be filed with the
Kansas Secretary of State on the Closing Date.
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"Certificates of Merger" means, collectively, the
Colorado Articles of Merger and the Delaware Certificates
of Merger.
"Class A Stock" means the Class A Common Stock, par
value $2.50 per share, of Sprint, as provided for in the
Current Sprint Charter.
"Closing" means the consummation of the Mergers and
the other transactions contemplated by this Agreement
(including those set forth in Article 9), concurrently with
either the IPO or the Recapitalization, as contemplated by
this Agreement, held on the date and at the place fixed in
accordance with Article 9.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Colorado Articles of Merger" means the articles of
merger in the form of Exhibit B-2, to be filed with the
Colorado Secretary of State to effect the Merger of TCI
Merger Sub2 with and into TCI Partner.
"Colorado Plan of Merger" means the plan of merger in
the form of Annex 1 to Exhibit B-2, to be filed with the
Colorado Secretary of State to effect the Merger of TCI
Merger Sub2 with and into TCI Partner.
"Comcast" means Comcast Corporation, a Pennsylvania
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Controlled Affiliate" of (i) any Person (other than
a Parent or any Subsidiary of a Parent) means the Parent
Entity of such Person as of the date of this Agreement and
each Subsidiary of such Parent Entity as of the date of
determination, and (ii) any Parent or its Subsidiary means
such Parent and each Subsidiary of such Parent as of the
date of determination.
"Cox" means Cox Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Cox L.A. Amendments" means (i) the amendment to the
Agreement of Limited Partnership of Cox Communications PCS,
L.P. by and between Sprint PCS GP and Cox Pioneer
Partnership dated as of December 31, 1996, as amended, in
the form of Exhibit C-1, to be entered into at the Closing
among Sprint, Sprint PCS GP and Cox Pioneer Partnership;
and (ii) the amendment to the Affiliation Agreement by and
between Sprint PCS and Cox Communications PCS, L.P. dated
as of December 31, 1996, as amended, in the form of Exhibit
C-2, to be entered into at the Closing by Sprint PCS and
Cox Communications PCS, L.P.
"Current Sprint Charter" means the Restated Articles
of Incorporation of Sprint as in effect on the date hereof.
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"Delaware Certificates of Merger" means each of the
five certificates of merger in the form of Exhibit B-1 to
be filed with the Delaware Secretary of State to effect the
Mergers other than the Merger of TCI Merger Sub2 with and
into TCI Partner.
"DGCL" means the Delaware General Corporation Law.
"DT" means Deutsche Telekom AG, an Aktiengesellschaft
formed under the laws of Germany.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"FCC" means the Federal Communications Commission.
"FT" means France Telecom, S.A., a societe anonyme
formed under the laws of France.
"FT/DT Agreements" means the following agreements
to be entered into among Sprint, FT and DT in connection
with the transactions contemplated by this Agreement:
(i) Master Restructuring Agreement; (ii) Amended and
Restated Stockholders' Agreement; (iii) Amended and
Restated Registration Rights Agreement; (iv) Amended and
Restated Standstill Agreement; (v) Amended and Restated
Acquiring Person's Statement; (vi) Amended and Restated
Investor Confidentiality Agreement (DT only); and (vii)
Amended and Restated Investor Confidentiality Agreement
(FT only).
"GAAP" means generally accepted accounting principles
in effect from time to time in the United States of America.
"Governmental Authority" means any federation,
nation, state, sovereign, or government, any federal,
supranational, regional, state, local or political
subdivision, any governmental or administrative body,
instrumentality, department or agency or any court,
administrative hearing body, arbitration tribunal,
commission or other similar dispute resolving panel or
body, and any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of a
government.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Initial Charter Amendment" means the Amended and
Restated Articles of Incorporation of Sprint effecting
the creation of the PCS Stock and the creation of the PCS
Group and the Sprint FON Group, the form of which is attached
hereto as Exhibit E.
"Initial PCS Group Percentage Interest" means, for
any Person, the PCS Group Percentage Interest owned by
such Person at the Effective Time, after giving effect to
the issuance of the Series 2 PCS Stock and the Warrants in
the Mergers and the creation of the Warrant Intergroup
Interest, but without giving effect to (i) the IPO, (ii)
the Recapitalization, (iii) the issuance of the PCS
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Preferred Stock, (iv) the creation of the Preferred
Intergroup Interest, or (v) the exercise of any Top-Up
Rights.
"IPO" means the initial primary underwritten
public offering of Series 1 PCS Stock, proposed to be
conducted by Sprint in accordance with Sections 6.2 and
6.3.
"IPO Price" means the initial price per share at
which shares of Series 1 PCS Stock are purchased by the
public in the IPO.
"Knowledge", or any phrase or term of similar
meaning, when used with respect to any of the Parents,
means the actual knowledge of the executive officers of
such Parent, without having made any special
investigation or inquiry regarding the applicable subject
matter.
"IRS" means the Internal Revenue Service or any
successor agency or entity performing substantially the
same functions.
"Law" means any foreign or domestic law, statute,
code, ordinance, rule or regulation promulgated, or any
order, judgment, writ, stipulation, award, injunction or
decree entered, by a Governmental Authority.
"Lien" means any lien, pledge, claim, encumbrance,
mortgage or security interest in real or personal property.
"Management and Allocation Policies" means those
policies in the form of Exhibit F (which include the Tax
Sharing Agreement) to be adopted by the Sprint Board of
Directors, effective as of the Closing Date, addressing
the relationship between the PCS Group (on the one hand)
and the Sprint FON Group (on the other hand).
"Material Adverse Effect" on any party hereto
means (i) with respect to any party to this Agreement an
adverse change in, or an adverse effect on, the ability
of such party to perform its obligations in any material
respect under this Agreement or the Other Agreements
and (ii) with respect to PhillieCo GP, PhillieCo LP,
PhillieCo, SprintCom, EquipmentCo, any of the HoldCo
Entities, or the Cable Partners, a material adverse
effect on the business, properties, operations or
financial condition of such party and its Subsidiaries
taken as a whole, other than any such effect resulting
primarily from (A) general economic or industry conditions
(including any changes in applicable Law), (B) the
announcement or proposed consummation of the transactions
contemplated by this Agreement or (C) any adverse change
in the business, properties, operations or financial
condition of Sprint PCS or PhillieCo.
"MinorCo Partnership Agreement" means the Amended
and Restated Agreement of Limited Partnership of
MinorCo, L.P. dated as of January 31, 1996, among Sprint
Partner, TCI Partner, Comcast Partner and Cox Partner.
"Mutual Release and Waiver" means the Mutual
Release and Waiver to be executed at the Closing by
Sprint and the Cable Parents, in the form of Exhibit G.
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"Other Agreements" means (i) the Registration
Rights Agreement, (ii) the Standstill Agreements, (iii)
the Tax Sharing Agreement, (iv) the Cox L.A. Amendments,
(v) the Warrant Agreements, (vi) the Mutual Release and
Waiver, (vii) the FT/DT Purchase Rights Agreement and
(viii) the Voting Agreements, (ix) the Cable Parent PCS
Notes, (x) the Sprint PCS Notes and (xi) the SprintCom
Notes.
"Parent Entity" of any Person means the ultimate
parent entity (as determined in accordance with the HSR
Act) of such Person.
"Parent" (i) with respect to Cox (and its
Controlled Affiliates) means Cox, (ii) with respect to
Comcast (and its Controlled Affiliates) means Comcast,
(iii) with respect to TCI (and its Controlled Affiliates)
means TCI and (iv) with respect to Sprint (and its
Controlled Affiliates) means Sprint.
"Parents Agreements" means the three Parents
Agreements, dated January 31, 1996, between Sprint and
each Cable Parent.
"PCS Group" has the meaning set forth in the
Initial Charter Amendment.
"PCS Group Percentage Interest" means, with
respect to any Person at any given time, the percentage
of the notional equity interest in the PCS Group owned
by such Person, taking into account (i) the outstanding
shares of PCS Stock, (ii) the shares of PCS Stock that
would be outstanding if the intergroup interest in the
PCS Group then held by the Sprint FON Group were
represented by shares of PCS Stock, (iii) after the
Recapitalization, the shares of PCS Stock that would be
outstanding if all of the outstanding shares of Class A
Stock were converted into Series 3 PCS Stock and Series
3 FON Stock pursuant to Article SIXTH, Section 8.5 of
the Subsequent Charter Amendment, and (iv) the maximum
number of shares of PCS Stock that are issuable upon the
exercise, conversion or exchange of the PCS Options (or
that would be issuable in the case of a PCS Option
represented by an intergroup interest held by the Sprint
FON Group in the PCS Group), excluding from clause (iv)
any Pre-Closing Options to the extent reflected as part
of the intergroup interest referred to in clause (ii).
"PCS Interest" means, as to any PCS Partner, all
of the interests of such PCS Partner in Sprint PCS GP
and Sprint PCS LP, including any and all benefits to
which the holder of an interest in Sprint PCS GP and
Sprint PCS LP may be entitled as provided in the PCS
Partnership Agreement and the MinorCo Partnership
Agreement and under the Act, together with all
obligations of such PCS Partner to comply with the terms
and provisions of the PCS Partnership Agreement and the
MinorCo Partnership Agreement.
"PCS Options" means, at any time of determination,
(i) the options, warrants or other securities of Sprint
or any of its Controlled Affiliates outstanding at such
time that are exercisable or exchangeable for or
convertible into shares of PCS Stock, but excluding (A)
any rights of Cox Pioneer Partnership or its Affiliates
under the Agreement of Limited Partnership of Cox
Communications, PCS, L.P., dated as of December 31,
1996, as it is to be amended pursuant to the Cox L.A.
Amendments,(B) the outstanding shares of Class A Common
Stock, and (C) any such
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options, warrants or other securities that will be
satisfied by Sprint without the allocation of any cost
or expense to the PCS Group or otherwise economically
diluting the PCS Group Percentage Interest of any Cable
Parent, and (ii) the Preferred Intergroup Interest,
the Warrant Intergroup Interest and any other intergroup
interests held by the Sprint FON Group in the PCS Group
that have the same effect as the options, warrants and
other securities referred to in clause (i) above.
"PCS Partner" means Sprint Partner and the
Cable Partners in their capacities as general and/or
limited partners of Sprint PCS GP and Sprint PCS LP.
"PCS Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Sprint
Spectrum Holding Company, L.P. dated as of January 31,
1996, among Sprint Partner, TCI Partner, Comcast
Partner and Cox Partner.
"PCS Percentage Interest" means, with respect to
any PCS Partner as of any relevant date prior to the
Closing, the "Percentage Interest" of such PCS Partner
as defined in Section 1.10 of the PCS Partnership
Agreement.
"PCS Preferred Stock" means the Seventh Series,
Convertible Preferred Stock of Sprint, no par value,
which shall be created by the filing of the Certificate
of Designations.
"PCS Stock" means the Series 1 PCS Stock, the
Series 2 PCS Stock, the Series 3 PCS Stock and any
other series of common stock hereafter created by Sprint
that tracks the performance of the PCS Group.
"Permitted Liens" means (i) Liens for Taxes not
yet due and payable, (ii) Liens for Taxes, the validity
of which is being contested in good faith in appropriate
proceedings and with respect to which appropriate
reserves have been set aside on the books of the party
against which such Liens have been created and (iii)
Liens arising under this Agreement, the Other Agreements,
the PCS Partnership Agreement, the MinorCo Partnership
Agreement, the PhillieCo Partnership Agreement and the
PhillieCo LP Partnership Agreement.
"Person" means any individual, corporation,
partnership, limited liability company, trust,
unincorporated association or other entity.
"PhillieCo Interest" means, as to any PhillieCo
Partner, all of the interests of such partner in
PhillieCo GP and PhillieCo LP, including any and all
benefits to which the holder of an interest in
PhillieCo GP and PhillieCo LP may be entitled as provided
in the PhillieCo Partnership Agreement, the PhillieCo LP
Partnership Agreement and under the Act, together with
all obligations of such PhillieCo Partner to comply with
the terms and provisions of the PhillieCo Partnership
Agreement and the PhillieCo LP Partnership Agreement.
"PhillieCo LP Partnership Agreement" means the
Agreement of Limited Partnership of PhillieCo Partners
II, L.P., dated March 12, 1997, among the PhillieCo
Partners.
"PhillieCo Parents" means Sprint, TCI and Cox.
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"PhillieCo Partners" means TCI PhillieCo Sub, Cox
HoldCo Sub2 and Sprint Partner in their capacities as
general and/or limited partners of PhillieCo GP and
PhillieCo LP.
"PhillieCo Partnership Agreement" means the
Agreement of Limited Partnership of PhillieCo Partners
I, L.P., dated March 12, 1997, by and among the PhillieCo
Partners.
"Pre-Closing Options" means the options, warrants
and other securities of Sprint or any of its Subsidiaries
that were issued prior to and are outstanding as of the
Closing and that are exercisable or exchangeable for or
convertible into shares of Sprint Common Stock, which, in
connection with the Recapitalization, will become, in
whole or in part, options, warrants or other securities
that are exercisable or exchangeable for or convertible
into shares of Series 1 PCS Stock (but excluding any PCS
Options held by FT or DT).
"Preferred Intergroup Interest" means the intergroup
interest of the Sprint FON Group in the PCS Group created
by the Sprint Board of Directors in accordance with Section
6.6 hereof that will have terms equivalent to the PCS
Preferred Stock.
"Recapitalization" means (i) the reclassification of
each outstanding share of Sprint Common Stock into one share
of FON Stock and a certain number of shares of Series 1 PCS
Stock and (ii) the amendment of the terms of the Class A
Stock to represent interests in the PCS Group and the Sprint
FON Group, in each case to be effected by the filing of the
Subsequent Charter Amendment.
"Registration Rights Agreement" means the Registration
Rights Agreement in the form of Exhibit H to be entered into
at the Closing among Sprint, TCI, Comcast and Cox.
"Registration Rights Commencement Date" has the meaning
set forth in the Registration Rights Agreement.
"Required Approvals" means the events contemplated in
Sections 8.1(a), 8.1(b) and 8.1(d).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Series 1 FON Stock" means the Series 1 FON Group
Common Stock, par value per share to be determined, of
Sprint, which will be created by the filing of the Subsequent
Charter Amendment and which, together with the Series 1 PCS
Stock, will be exchanged for the outstanding Sprint Common
Stock upon completion of the Recapitalization.
"Series 3 FON Stock" means the Series 3 FON Group
Common Stock, par value per share to be determined, of Sprint,
which will be created by the filing of the Subsequent Charter
Amendment.
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"Series 1 PCS Stock" means the Series 1 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Series 2 PCS Stock" means the Series 2 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Series 3 PCS Stock" means the Series 3 PCS Group
Common Stock, par value per share to be determined, of
Sprint, which will be created on the Closing Date by the
filing of the Initial Charter Amendment.
"Sprint" means Sprint Corporation, a Kansas
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business or assets.
"Sprint Common Stock" means the Common Stock, par
value $2.50 per share, of Sprint, as provided for in the
Current Sprint Charter.
"Sprint FON Group" has the meaning set forth in the
Initial Charter Amendment.
"Standstill Agreements" means the Standstill
Agreements in the form of Exhibit I entered into on the date
hereof between Sprint and each of TCI, Comcast and Cox.
"Subsequent Charter Amendment" means the Amendment to
the Restated Articles of Incorporation of Sprint effecting
the Recapitalization, the form of which is attached hereto as
Exhibit J.
"Subsidiary" of any Person as of any relevant date
means a corporation, company or other entity (i) more than 50%
of whose outstanding shares or equity securities are, as of
such date, owned or controlled, directly or indirectly through
one or more Subsidiaries, by such Person, and the shares or
securities so owned entitle such Person and/or its Subsidiaries
to elect at least a majority of the members of the board of
directors or other managing authority of such corporation,
company or other entity notwithstanding the vote of the holders
of the remaining shares or equity securities so entitled to
vote or (ii) which does not have outstanding shares or securities,
as may be the case in a partnership, joint venture or
unincorporated association, but more than 50% of whose
ownership interest is, as of such date, owned or controlled,
directly or indirectly through one or more Subsidiaries, by such
Person, and in which the ownership interest so owned entitles
such Person and/or Subsidiaries to make the decisions for such
corporation, company or other entity.
"Surviving Corporation" means the surviving corporation in
each Merger as set forth herein.
"Tax" or "Taxes" means all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes,
duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed
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with respect to such amounts; provided, however, that "Tax" and
"Taxes" shall not include amounts paid to municipalities with
respect to operating franchise arrangements.
"Tax Return" or "Tax Returns" means all returns or reports
required to be filed under any statute, rule or regulation
relating to Taxes.
"Tax Sharing Agreement" means the Tax Sharing Agreement
in the form of Exhibit K to be executed at the Closing by Sprint
for the benefit of each entity in the PCS Group and the Sprint
FON Group.
"TCI" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer
or otherwise) to all or substantially all of its business or
assets.
"Top-Up Rights" means (i) the "Equity Purchase Rights" of
FT and DT pursuant to Article 5 of the Amended and Restated
Stockholders Agreement to be entered into on the Closing Date
among Sprint, FT and DT and (ii) the Equity Purchase Rights of
the Cable Parents pursuant to Section 6.8 of this Agreement.
"Transfer" means any act pursuant to which, directly or
indirectly, the ownership of assets or securities in question is
sold, exchanged, assigned, transferred, conveyed, delivered or
otherwise disposed of.
"Voting Agreements" means the three Irrevocable Proxy and
Voting Agreements in the form of Exhibit M to be entered into at
the Closing between Sprint and each of the Cable Parents.
"Warrant Agreements" means the three Warrant Agreements in
the form of Exhibit N to be entered into at the Closing between
Sprint and each initial holder of the Warrants.
"Warrant Intergroup Interest" means the intergroup
interest of the Sprint FON Group in the PCS Group created by
the Sprint Board of Directors in accordance with Section 4.3
hereof on terms equivalent to the Warrants.
"Warrants" means those warrants to be issued in the
Mergers as described in Section 4.1, which shall be in the form
attached to the Warrant Agreement.
"Wholly-Owned Subsidiary" means, as to any Person, a
Subsidiary of such Person in which 100% of the equity and
voting interest is owned, directly or indirectly, by such Person.
"Year 2000 Liability" means, with respect to any Person,
any cost, expense, liability or obligation (actual, potential,
contingent or otherwise) of such Person and its Subsidiaries
arising out of the failure or inability of any software,
hardware, or systems (whether owned or used by such Person and
its Subsidiaries or any of their vendors, customers or other
third parties) to correctly (i) process, provide and receive date
data within and between the years 1999 and 2000 and (ii) account
for all required leap year calculations for the year 2000.
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Section 1.2 Other Defined Terms.
Defined Term Defined In
"Acquired PCS Sub" Section 7.10(a)
"Additional Securities" Section 6.8(a)
"Affiliated Group" Section 5.2(g)(i)
"Allocated Cash Proceeds" Section 6.6(d)(v)(D)
"Available Cash Proceeds" Section 6.6(d)(v)(A)
"Available Proceeds" Section 6.6(v)(A)
"Basket Claims" Section 11.2(a)
"Basket Limitation" Section 11.2(a)
"Bylaw Amendment" Section 5.3(c)
"Cable Holder" Section 6.8(a)
"Cable Parent PCS Loan" Section 6.4(b)
"Cable Parent PCS Notes" Section 6.4(b)
"Cable Partners" Recitals
"Cash Request Amount" Section 6.6(d)(ii)
and (iii)
"Chairman" Section 6.13
"Claim Notice" Section 11.4(a)
"Colorado Merger" Section 2.2
"Colorado Plan of Merger" Section 2.2
"Comcast HoldCo Sub1" Recitals
"Comcast HoldCo Sub2" Recitals
"Comcast Merger Sub1" Recitals
"Comcast Merger Sub2" Recitals
"Comcast Partner" Recitals
"Contractual Liens" Section 5.2(a)
"Contribution Date" Section 6.4(a)
"Cox HoldCo Sub1" Recitals
"Cox HoldCo Sub2" Recitals
"Cox L.A. Amendments" Recitals
"Cox Merger Sub1" Recitals
"Cox Merger Sub2" Recitals
"Cox Partner" Recitals
"CP Contracts" Section 5.2(f)
"CP Representatives" Section 6.11(b)
"Determination Date" Section 7.10(i)(ii)
"Determination Summary" Section 7.10(f)
"Effective Time" Section 2.2
"Election Period" Section 11.4(a)
"EquipmentCo" Recitals
"Equity Purchase Right" Section 6.8(a)
"Historic Sprint PCS Section 7.10(a)
Business"
"HoldCo Entities" Recitals
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"Indemnified Loss" Section 11.2(a)
"Indemnified Party" Section 11.2(a)
"Indemnitor" Section 11.2(a)
"Indemnity Notice" Section 11.4(d)
"IPO Prospectus" Section 6.2(a)
"Loss" Section 11.2(a)
"Merger" Recitals
"Merger Subs" Recitals
"Net Equity" Section 10.2(b)
"Non-Basket Claim" Section 11.2(a)(i)
"Non-Controlled Affiliate" Section 6.19(a)
"Overpayment Rate" Section 7.11(a)
"Owned Interests" Section 5.2(b)
"Parent Response" Section 6.6(d)(ii)
"PCS Group Constituents" Section 5.3(f)
"PCS Partners" Recitals
"PhillieCo" Recitals
"PhillieCo1" Recitals
"PhillieCo2" Recitals
"PhillieCo GP" Recitals
"PhillieCo Licenses" Section 5.4(c)
"PhillieCo Loss" Section 11.6
"PhillieCo LP" Recitals
"PhillieCo Sub" Recitals
"Proposed Term" Section 6.4(d)
"Proxy Statement" Section 6.2(a)
"Registration Statement" Section 6.2(a)
"Rights" Section 5.2(a)
"Share Consideration" Section 4.1(b)
"Sprint Contracts" Section 5.3(h)(v)
"Sprint Notice" Section 6.6(d)(i)
"Sprint Partner Recitals
"Sprint PCS" Recitals
"Sprint PCS Loan" Section 6.4(b)
"Sprint PCS Notes" Section 6.4(b)
"Sprint PCS GP" Recitals
"Sprint PCS LP" Recitals
"SprintCom" Recitals
"SprintCom Licenses" Section 5.5(c)
"SprintCom Loans" Section 6.5
"SprintCom Notes" Section 6.5
"Sprint Representatives" Section 6.11
"Sprint SEC Reports" Section 5.3(i)
"SRLY Entity" Section 7.10(a)
"SRLY Measurement Period" Section 7.10(f)
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"SRLY Tax Benefit" Section 7.10(b)
"SRLY Tax Savings" Section 7.10(c)
"Stockholders Meeting" Section 6.2(a)
"Tax Benefit" Section 11.2(c)
"TCI Merger Sub1" Recitals
"TCI Merger Sub2" Recitals
"TCI Partner" Recitals
"TCI PhillieCo Sub" Recitals
"TCI Spectrum" Section 2.2
"Third Party Claim" Section 11.4(a)
"Total Proceeds" Section 6.3(a)
"Trigger Date" Section 6.2(c)
"Underwriters" Section 6.3(a)
Section 1.3 Terms Generally. The
definitions in Article 1 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The words "herein",
"hereof", "hereto" and "hereunder" and words of similar
import refer to this Agreement (including the Schedules
and Exhibits) in its entirety and not to any part hereof
unless the context shall otherwise require. All
references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references
to any agreement or other instrument (other than in the
Schedules hereto) or statute or regulation are to it as
amended and supplemented from time to time (and, in the
case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any
reference in this Agreement to a "day" or number of
"days" (without the explicit qualification of "Business")
shall be interpreted as a reference to a calendar day or
number of calendar days. If any action or notice is to
be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action
or notice shall be deferred until, or may be taken or
given on, the next Business Day.
ARTICLE 2
THE MERGERS; EFFECTIVE TIME
Section 2.1 The Mergers. Subject to the terms
and conditions of this Agreement (including the conditions
set forth in Article 8), on the Closing Date, (a) TCI
Merger Sub1 will be merged with and into TCI PhillieCo Sub,
(b) Comcast Merger Sub1 will be merged with and into
Comcast HoldCo Sub1, (c) Cox Merger Sub1 will be merged
with and into Cox HoldCo Sub1, (d) TCI Merger Sub2 will
be merged with and into TCI Partner, (e) Comcast Merger
Sub2 will be merged with and into Comcast HoldCo Sub2, and
(f) Cox Merger Sub2 will be merged with and into Cox HoldCo
Sub2, all in accordance with the provisions of applicable
Law. The separate corporate existence of each Merger Sub
shall thereupon cease. Each of TCI PhillieCo Sub, TCI
Partner, Comcast HoldCo Sub1, Comcast HoldCo Sub2, Cox
HoldCo Sub1 and Cox HoldCo Sub2
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shall be the Surviving Corporation in the applicable
Merger and shall continue its corporate existence as a
Wholly-Owned Subsidiary of Sprint. Each Merger shall
have the effects specified in the DGCL or the CBCA, as
applicable.
Section 2.2 The Mergers; Adoption and
Approval; Effective Time. This Agreement constitutes
an agreement of merger for the purposes of Section 251(b)
of the DGCL with respect to each of the Mergers other
than the Merger of TCI Merger Sub1 with and into TCI
Partner (the "Colorado Merger"). The plan of merger
attached hereto as Annex 1 to Exhibit B-2 constitutes a
plan of merger for the purposes of Section 7-111-101 of
the CBCA with respect to the Colorado Merger (the
"Colorado Plan of Merger"). Also, by executing and
delivering this Agreement, Sprint, as the sole
shareholder of TCI Merger Sub2, hereby approves and
adopts, and TCI, as the Parent Entity of TCI Spectrum
Investment, Inc. ("TCI Spectrum"), the sole shareholder
of TCI Partner, hereby agrees to cause TCI Spectrum to
approve and adopt, the Colorado Plan of Merger. Each
Merger shall become effective (a) if clause (b) does not
apply, at the time of filing of (i) the Colorado
Articles of Merger with the Secretary of State of the
State of Colorado in accordance with the provisions of
the CBCA, in the case of the Colorado Merger, or (ii)
the appropriate Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in accordance
with the provisions of the DGCL, in the case of the other
Mergers, or (b) at the time specified as the effective
time in the applicable Delaware Certificate of Merger or
Colorado Articles of Merger. The Delaware Certificates
of Merger and Colorado Articles of Merger shall be filed
on the Closing Date. The date and time when each Merger
shall become effective is hereinafter referred to as
the "Effective Time".
ARTICLE 3
TERMS OF THE MERGERS
Section 3.1 Charters. At the Effective Time,
the charter of each of TCI PhillieCo Sub, TCI Partner,
Comcast HoldCo Sub1, Comcast HoldCo Sub2, Cox HoldCo
Sub1 and Cox HoldCo Sub2 shall be amended pursuant to
the respective Certificates of Merger to be identical to
the charter of TCI Merger Sub1, TCI Merger Sub2,
Comcast Merger Sub1, Comcast Merger Sub2, Cox Merger
Sub1 and Cox Merger Sub2, respectively, as in effect
immediately prior to the Effective Time. With respect
to each Merger, such charter as so amended shall be
the charter of the Surviving Corporation, until duly
amended in accordance with the terms thereof and
applicable Law.
Section 3.2 The By-Laws. The By-Laws of
each of TCI PhillieCo Sub, TCI Partner, Comcast HoldCo
Sub1, Comcast HoldCo Sub2, Cox HoldCo Sub1 and Cox HoldCo
Sub2 shall be amended at the Effective Time to be
identical to the By-Laws of TCI Merger Sub1, TCI Merger
Sub2, Comcast Merger Sub1, Comcast Merger Sub2, Cox
Merger Sub1 and Cox Merger Sub2, respectively, as in
effect immediately prior to the Effective Time. With
respect to each Merger, such By-Laws as so amended shall
be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof, of the
charter of the Surviving Corporation and applicable Law.
Section 3.3 Directors. The directors of
each of TCI Merger Sub1, TCI Merger Sub2, Comcast Merger
Sub1, Comcast Merger Sub2, Cox Merger Sub1 and Cox
Merger Sub2 immediately prior to the Effective Time shall,
from and after the Effective Time, serve as the
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directors of TCI PhillieCo Sub, TCI Partner, Comcast
HoldCo Sub1, Comcast HoldCo Sub2, Cox HoldCo Sub1 and
Cox HoldCo Sub2, respectively, until their successors
have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in
accordance with each such entity's charter and By-Laws.
Section 3.4 Officers. The officers of each
of TCI Merger Sub1, TCI Merger Sub2, Comcast Merger Sub1,
Comcast Merger Sub2, Cox Merger Sub1 and Cox Merger Sub2
immediately prior to the Effective Time shall, from and after
the Effective Time, serve as the officers of TCI PhillieCo
Sub, TCI Partner, Comcast HoldCo Sub1, Comcast HoldCo Sub2,
Cox HoldCo Sub1 and Cox HoldCo Sub2, respectively, until their
successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in
accordance with each such entity's charter and By-Laws.
ARTICLE 4
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGERS
Section 4.1 Share Consideration; Conversion or
Cancellation of Shares in the Mergers.
(a) Subject to the provisions of this Article 4,
at the Effective Time, by virtue of the Mergers and without any
action on the part of the holders thereof, the shares of
TCI Partner, TCI PhillieCo Sub, Comcast HoldCo Sub1, Comcast
HoldCo Sub2, Cox HoldCo Sub1 and Cox HoldCo Sub2 shall be converted
into shares of Series 2 PCS Stock, the Warrants and (in certain
cases) shares of the PCS Preferred Stock in the following manner:
(i) Each share of common stock of TCI Partner
issued and outstanding immediately prior to the Effective
Time shall be converted into (A)a number of shares of
Series 2 PCS Stock equal to (x) such number of shares
of Series 2 PCS Stock as represents at the Effective
Time a 21.47655% Initial PCS Group Percentage Interest
divided by (y) the number of outstanding shares of
common stock of TCI Partner at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 1.37085%
Initial PCS Group Percentage Interest divided by (y)
the number of outstanding shares of common stock of TCI
Partner at the Effective Time and (C) a number of shares
of PCS Preferred Stock equal to (x) the aggregate number
of shares of PCS Preferred Stock (if any) to be issued
in the Mergers with respect to the common stock of TCI
Partner pursuant to Section 6.6 divided by (y) the number
of outstanding shares of common stock of TCI Partner at
the Effective Time.
(ii) Each share of common stock of TCI PhillieCo
Sub issued and outstanding immediately prior to the
Effective Time shall be converted into (A) a number
of shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 0.92434% Initial PCS Group
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Percentage Interest divided by (y) the number of
outstanding shares of common stock of TCI PhillieCo
Sub at the Effective Time and (B) a number of Warrants
equal to (x) such number of Warrants as represents at
the Effective Time a 0.05900% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares of
common stock of TCI PhillieCo Sub at the Effective Time.
(iii) Each share of common stock of Comcast
HoldCo Sub1 issued and outstanding immediately prior
to the Effective Time shall be converted into (A) a number
of shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 0.10738% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares of
common stock of Comcast HoldCo Sub1 at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 0.00685%
Initial PCS Group Percentage Interest divided by (y) the
number of outstanding shares of common stock of Comcast
HoldCo Sub1 at the Effective Time and (C) a number of
shares of PCS Preferred Stock equal to (x) the aggregate
number of shares of PCS Preferred Stock (if any) to be
issued in the Mergers with respect to the common stock
of Comcast HoldCo Sub1 pursuant to Section 6.6 divided
by (y) the number of outstanding shares of common stock
of Comcast HoldCo Sub1 at the Effective Time.
(iv) Each share of common stock of Comcast HoldCo
Sub2 issued and outstanding immediately prior to the
Effective Time shall be converted into (A) a number of
shares of Series 2 PCS Stock equal to (x) such number
of shares of Series 2 PCS Stock as represents at the
Effective Time a 10.63090% Initial PCS Group Percentage
Interest divided by (y) the number of outstanding shares
of common stock of Comcast HoldCo Sub2 at the Effective
Time, (B) a number of Warrants equal to (x) such number
of Warrants as represents at the Effective Time a
0.67857% Initial PCS Group Percentage Interest divided
by (y) the number of outstanding shares of common stock
of Comcast HoldCo Sub2 at the Effective Time and (C) a
number of shares of PCS Preferred Stock equal to (x) the
aggregate number of shares of PCS Preferred Stock (if
any) to be issued in the Mergers with respect to the
common stock of Comcast HoldCo Sub2 pursuant to Section
6.6 divided by (y) the number of outstanding shares of
common stock of Comcast HoldCo Sub2 at the Effective
Time.
(v) Each share of common stock of Cox HoldCo Sub1
issued and outstanding immediately prior to the Effective
Time shall be converted into (A) a number of shares of
Series 2 PCS Stock equal to (x) such number of shares of
Series 2 PCS Stock as represents at the Effective Time a
0.10738% Initial PCS Group Percentage Interest divided by
(y) the number of outstanding shares of common stock of
Cox HoldCo Sub1 at the Effective Time and (B) a number of
Warrants equal to (x) such number of Warrants as represents
at the Effective Time a 0.00685% Initial PCS Group
Percentage Interest divided by (y) the number of
outstanding shares of common stock of Cox HoldCo Sub1 at
the Effective Time.
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(vi) Each share of common stock of Cox HoldCo Sub2
issued and outstanding immediately prior to the Effective
Time shall be converted into (A) a number of shares of
Series 2 PCS Stock equal to (x) such number of shares of
Series 2 PCS Stock as represents at the Effective Time a
11.09307% Initial PCS Group Percentage Interest
divided by (y) the number of outstanding shares of
common stock of Cox HoldCo Sub2 at the Effective Time,
(B) a number of Warrants equal to (x) such number of
Warrants as represents at the Effective Time a 0.70807%
Initial PCS Group Percentage Interest divided by (y) the
number of outstanding shares of common stock of Cox HoldCo
Sub2 at the Effective Time and (C) a number of shares of PCS
Preferred Stock equal to (x) the aggregate number of shares
of PCS Preferred Stock (if any) to be issued in the Mergers
with respect to the Common Stock of Cox HoldCo Sub2
pursuant to Section 6.6 divided by (y) the number of
outstanding shares of common stock of Cox HoldCo Sub2
at the Effective Time.
(vii) Each share of capital stock other than
common stock of each of the HoldCo Entities and TCI
Partner shall be cancelled.
(b) All shares of the HoldCo Entities and TCI Partner
to be converted into Series 2 PCS Stock, Warrants and (if applicable)
PCS Preferred Stock pursuant to this Section 4.1 shall, at the
Effective Time, cease to be outstanding, shall be canceled and
retired and shall cease to exist, and shall thereafter represent
only the right to receive for each of such shares, upon the
surrender of such certificate in accordance with Section 4.2,
the amount of Series 2 PCS Stock, Warrants and (if applicable)
PCS Preferred Stock specified above (the "Share
Consideration"). No fractional shares of Series 2 PCS
Stock or PCS Preferred Stock or fractional Warrants shall be
issued as a result of the Mergers, and the number of shares of
Series 2 PCS Stock and PCS Preferred Stock and Warrants to be
received by any shareholder of the HoldCo Entities or TCI
Partner shall be rounded to the nearest whole number of shares
or Warrants.
(c) Each share of common stock of TCI Merger Sub1,
TCI Merger Sub2, Comcast Merger Sub1, Comcast Merger Sub2,
Cox Merger Sub1 and Cox Merger Sub2 issued and outstanding
immediately prior to the Effective Time shall at the Effective Time
be converted into one share of common stock of the applicable
Surviving Corporation.
Section 4.2 Payment for Shares in the Mergers. At the
Closing, Sprint will deliver to the holders of shares of the
HoldCo Entities and TCI Partner stock and warrant
certificates representing the Share Consideration (together
with the executed Warrant Agreements) in exchange for certificates
representing all of the outstanding shares of the HoldCo Entities
and TCI Partner. Such certificates representing the outstanding
shares of the HoldCo Entities and TCI Partner shall forthwith
be canceled.
Section 4.3 Warrant Intergroup Interest. Effective
at the Effective Time, the Sprint Board of Directors will create
an intergroup interest of the Sprint FON Group in the
PCS Group that will have terms equivalent to the Warrants
and will represent a 2.83019% Initial PCS Group Percentage Interest.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 5.1 Mutual Representations. Each Parent hereby
represents and warrants to each other Parent, as to itself and
each of its Controlled Affiliates that is a party to this Agreement,
as follows:
(a) Due Incorporation or Formation; Authorization
of Agreements. Such party is duly organized or formed and validly
existing under the laws of the jurisdiction of its organization or
formation and has the corporate or partnership power and authority
to own its property and carry on its business as owned and carried
on at the date hereof. Such party is duly qualified to do business
and in good standing (if applicable) in each jurisdiction in which
it conducts business or in which it is otherwise required to be
qualified, except for failures to be so qualified which, individually
or in the aggregate, would not have a Material Adverse Effect on
such party. Such party has the corporate or partnership power and
authority to execute and deliver this Agreement and the Other
Agreements to which it is or will be a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Other
Agreements to which it is or will be a party have been (or at
the Closing will be) duly executed and delivered by such party,
and the execution, delivery and performance of this Agreement
and such Other Agreements by such party have been duly authorized
by all necessary corporate or partnership action. This
Agreement and the Other Agreements to which it is or will be
a party constitute (or, as to Other Agreements not executed
on or prior to the date hereof and (in the case of Sprint) the
Warrants, will constitute) the legal, valid and binding
obligation of such party, enforceable in accordance with its
terms (except as such enforceability may be limited by bankruptcy,
insolvency (including all laws relating to fraudulent transfers),
reorganization, moratorium and similar laws affecting the rights
and remedies of creditors generally and the application of
general principles of equity).
(b) No Conflict; No Default. Except as to clauses
(i), (iii), (iv) and (v) below, as would not have a Material
Adverse Effect on such party, neither the execution or
delivery of this Agreement or the Other Agreements to which
it is a party or (in the case of Sprint) the Warrants by such
party nor (assuming the Required Approvals have been obtained)
the performance of this Agreement or the Other Agreements by
such party or the consummation by such party of the transactions
contemplated hereby or thereby in accordance with the terms and
conditions hereof and thereof (i) will conflict with, violate or
result in a breach of any of the terms, conditions or provisions
of any Law applicable to such party or any of its Controlled
Affiliates, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions or
provisions of the certificate or articles of incorporation,
bylaws or partnership agreement (or other governing documents)
of such party or any of its Controlled Affiliates, (iii) will
conflict with, violate, result in a breach of or constitute a
default under any of the terms, conditions or provisions of any
material agreement or instrument to which such party or any of its
Controlled Affiliates is a party or by which such party or any
of its Controlled Affiliates is or may be bound or to which any
of its material properties or assets is subject, (iv) will conflict
with, violate, result in a breach of, constitute a default under
(whether with notice or lapse of time or both), accelerate or permit
the acceleration of the performance required by, give to others any
interests or rights or require any consent, authorization
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or approval under any indenture, mortgage, lease agreement or
similar instrument to which such party or any of its Controlled
Affiliates is a party or by which such party or any of its
Controlled Affiliates is or may be bound, or (v) will result in
the creation or imposition of any Lien upon any of the other
material properties or assets of such party or any of its
Controlled Affiliates.
(c) Litigation. Except for the Petition of Sprint
Spectrum Partners and Sprint Spectrum, L.P. d/b/a Sprint PCS
for Declaratory Relief filed on March 13, 1997, with the FCC,
there are no actions, suits, proceedings or investigations pending
or, to the knowledge of such Parent, threatened against such party
or any of its properties, assets or businesses (other than any
actions, suits or proceedings pending or threatened against Sprint
PCS, PhillieCo, SprintCom or EquipmentCo or their respective properties,
assets or businesses) before or by any Governmental Authority which
would, individually or in the aggregate, if adversely determined
(or, in the case of an investigation, could lead to any action,
suit or proceeding, which if adversely determined would), have a
Material Adverse Effect on such party, and such party has not
received any currently effective notice of any default, and
such party is not in default, under any applicable order, writ,
injunction, decree, permit, determination or award of any
Governmental Authority, which default would have a Material
Adverse Effect on such party.
(d) Finders Fees. Other than Merrill Lynch & Co.
(whose fees other than in connection with its role as underwriter
(if any) in the IPO shall be paid by the Cable Parents)
and Salomon Smith Barney and SBC Warburg Dillon Read, Inc.
(whose fees shall be paid by Sprint and allocated to the Sprint
FON Group, except as provided in Section 12.4), there is no
investment banker, broker or finder that has been retained by
or is authorized to act on behalf of any Parent or its
Controlled Affiliates who would be entitled to any fee or
commission upon consummation of or otherwise in connection
with the transactions contemplated by this Agreement; provided
that the Parents acknowledge that they have previously jointly
retained Salomon Smith Barney with respect to services provided
prior to October 10, 1997, and each Parent will pay its pro rata
share (based on the PCS Percentage Interest of its respective
Partner) of the fees and expenses for such services (which, in
the case of Sprint, will be allocated to the Sprint FON Group).
Section 5.2 Representations and Warranties of the
Cable Parents. Each Cable Parent hereby represents and warrants
to each other Parent, as to itself and each of its Controlled
Affiliates that is a party to this Agreement, as follows:
(a) Interests in Sprint PCS Owned by the Cable Partners.
Such Cable Parent's respective Cable Partner has good legal title to,
and beneficial ownership of, the PCS Interest indicated as owned by
it on Schedule 5.2(a), free and clear of all Liens other than
Liens described in clause (iii) of the definition of Permitted Liens
("Contractual Liens"). Except as provided in the PCS Partnership
Agreement and the MinorCo Partnership Agreement, such Cable Partner
has the sole right to vote and dispose of the PCS Interest
indicated as owned by it on Schedule 5.2(a). Such Cable Partner
has no assets or liabilities or obligations (absolute, accrued,
contingent or otherwise, including any liability for Taxes of
itself or any other Person) except (i) its PCS Interest, (ii) as
contemplated by Section 6.4, (iii) obligations under the CP Contracts,
(iv) certain other intercompany indebtedness that will be extinguished
by means of capital contribution prior to the Effective Time and (v)
obligations imposed solely as a matter of Laws to which such Cable Partner
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is subject. Such Cable Partner has not engaged in any business
or activities of any type or kind whatsoever except as relates
to its ownership of the PCS Interest. Except as provided
in the CP Contracts and in Section 6.4, there are no subscriptions,
options, warrants, call rights or rights of conversion or other
rights, agreements, arrangements or commitments (collectively,
"Rights") obligating such Cable Partner to issue additional
capital stock or interests in such Cable Partner to any party
or to Transfer its PCS Interest or any equity or voting interest
therein in whole or in part, or any voting agreement, voting trust
agreement or similar agreement relating to the voting by such
Cable Partner of any of its PCS Interests.
(b) Partnership Interests in Cable Partners Owned by
HoldCo Entities. Each of such Cable Parent's respective HoldCo
Entities has good legal title to, and record and beneficial ownership
of, all capital stock and all general partnership, limited partnership
and any other equity interests indicated as owned by it on Schedule
5.2(b) (the "Owned Interests"), free and clear of all Liens (other
than Contractual Liens). Other than the Owned Interests and,
in the case of Cox HoldCo Sub 2, its PhillieCo Interest, such
HoldCo Entity has no assets or liabilities or obligations
(absolute, accrued, contingent or otherwise, including any
liability for Taxes of itself or any other Person) except for (i)
its rights and obligations under the CP Contracts and obligations
imposed solely as a matter of Laws to which such HoldCo Entity is
subject, (ii) as provided in Section 6.4 and (iii) certain other
intercompany indebtedness that will be extinguished by means of
capital contribution prior to the Effective Time. Such
HoldCo Entity has not engaged in any business or activities of
any type or kind whatsoever except as relates to its ownership
of its respective Owned Interests. The Owned Interests held
by such HoldCo Entity are duly authorized and validly issued and
were not issued in violation of any preemptive rights or any
applicable securities laws. Following the Mergers, such
HoldCo Entity will continue to have good legal title to, and
beneficial ownership of, its Owned Interests, free and clear
of any Lien arising as a result of the Mergers. Except as
provided in the CP Contracts and in Section 6.4, there are no
Rights obligating such HoldCo Entity to issue additional
capital stock or other securities of such HoldCo Entity, Transfer
any of its Owned Interests or any equity or voting interest
therein in whole or in part, or any voting agreement, voting
trust agreement or similar agreement relating to the voting by
such HoldCo Entity of any such Owned Interests. Solely for
the purposes of this Section 5.2(b), TCI PhillieCo Sub will be
excluded from the definition of HoldCo Entities, and TCI Parent shall
not make any representation with respect to this Section.
(c) Capital Stock of the HoldCo Entities and TCI Partner.
The number of authorized and outstanding shares of each series and
class of capital stock of such Cable Parent's HoldCo Entity and
TCI Partner, as to TCI, is set forth on Schedule 5.2(c). All issued
shares of such capital stock are duly authorized, validly issued,
fully paid and nonassessable, and were not issued in violation of
any preemptive rights or securities laws. Such Cable Parent
(as to Cox with respect to Cox HoldCo Sub2) or the Subsidiary of
such Cable Parent indicated on Schedule 5.2(c) has good legal title
to, and beneficial ownership of, the shares of capital
stock of its respective HoldCo Entity and TCI Partner, as to TCI,
indicated as owned by it on Schedule 5.2(c), free and clear of all
Liens (other than Contractual Liens). Except as provided
in the CP Contracts, such Cable Parent (as to Cox with respect to
Cox HoldCo Sub2) or such Subsidiary of the Cable Parent has the sole
right to vote and dispose of such capital stock. There are no Rights
obligating such Cable Parent (as to Cox with respect to Cox HoldCo
Sub2) or such Subsidiary of the Cable Parent to Transfer any such
21
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shares of capital stock or any equity or voting interest therein in
whole or in part, or any voting agreement, voting trust agreement
or similar agreement relating to the voting by such Subsidiary of
the Cable Parent of any of such shares of capital stock.
(d) Availability. Such Cable Parent has made
available to Sprint true and correct copies of the charter,
bylaws, stockholders agreements, partnership agreement and
other constituent documents, as applicable, of each HoldCo
Entity and Cable Partner.
(e) Consents, Approvals and Authorizations. The
execution, delivery and performance of this Agreement and the
Other Agreements by such Cable Parent and its respective
Controlled Affiliates do not and will not require any consent,
approval, authorization or other action by, or filing with or
notification to, any Governmental Authority or any other Person
on the part of such Cable Parent or its respective Controlled Affiliates,
except (i) for (to the extent applicable to such Person) the
Required Approvals or (ii) to the extent the failure to obtain
or make any of the foregoing, individually or in the aggregate,
would not have a Material Adverse Effect on such party.
(f) Contracts.
(i) Except as set forth on Schedule 5.2(f)(i) and
for promissory notes representing the loans referred to
in Section 6.4, none of such Cable Parent's respective
HoldCo Entities or Cable Partner is a party to, nor are its
properties or assets bound by, any contracts or agreements
except written contracts to which Sprint or its Controlled
Affiliates is a party (the "CP Contracts").
(ii) Neither the Cable Partner of such Cable Parent
nor any of its Controlled Affiliates is in material breach
of Section 6.6 of the PCS Partnership Agreement.
(g) Taxes. For the purposes of this Section, any tax item
shown on a return or report furnished by Sprint, Sprint PCS GP, Sprint
PCS LP, Sprint PCS, PhillieCo GP, PhillieCo LP or PhillieCo (or their
respective predecessors) to any Cable Parent or any member of its
Affiliated Group (as defined herein) shall be deemed correct.
(i) Since its formation, each of such Cable Parent's
HoldCo Entities (and TCI Partner, as to TCI) has been a
member of an affiliated group, as defined in Code section
1504, of which its respective Cable Parent (or an
Affiliate of its Cable Parent) is the common parent, which
has elected to file consolidated federal income tax returns
for all taxable periods ending after the formation of such
entity and on or prior to the last day of the first taxable
year of such affiliated group to close after the Closing
Date (each, an "Affiliated Group").
(ii) Except as set forth on Schedule 5.2(g)(ii),
since its formation, each of such Cable Parent's HoldCo
Entities (and TCI Partner, as to TCI) has derived no
material item of income, loss, deduction or credit during
its existence other than such items which were or are
included in its direct or indirect distributive share
of such
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items of Sprint PCS GP, Sprint PCS LP, PhillieCo GP and
PhillieCo LP. Each of such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) has no subsidiaries other
than direct interests or interests in partnerships which
hold direct interests (or indirect interests through other
partnerships) in Sprint PCS GP, Sprint PCS LP, PhillieCo GP
and PhillieCo LP.
(iii) Such Cable Parent's Affiliated Group has filed
all federal income tax returns that it was required to file
for each period during which its respective HoldCo Entities
(and TCI Partner, as to TCI) was a member of the Affiliated
Group. All such returns were correct and complete in all
material respects in so far as they relate to such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI). All
material federal income taxes owed by such Cable Parent's
Affiliated Group with respect to its HoldCo Entities (or
TCI Partner, as to TCI) (whether or not shown on a Tax
Return) have been paid for each taxable period during
which such Cable Parent's HoldCo Entities (and TCI Partner,
as to TCI) was a member of its respective Affiliated Group.
(iv) If the income of any of such Cable Parent's
HoldCo Entities (or TCI Partner, as to TCI) is required
under state, local, or foreign tax rules, to be included on
a consolidated, unitary, combined or other such tax returns
filed by an entity other than such HoldCo Entities or TCI
Partner, each such group has filed all income tax returns
that it was required to file with respect to such
HoldCo Entity (or TCI Partner, as to TCI) for each period
during which its respective HoldCo Entities or TCI Partner
was a member of such group. All such returns were correct
and complete in all material respects in so far as they
relate to such Cable Parent's HoldCo Entities (and TCI
Partner, as to TCI). All material income taxes owed by such
group with respect to such HoldCo Entities (or TCI Partner,
as to TCI) (whether or not shown on a Tax Return) have
been paid for each taxable period during which such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI) was a
member of its respective group.
(v) Except as set forth on Schedule 5.2(g)(v), each
of such Cable Parent's HoldCo Entities (and TCI Partner, as
to TCI) and each of its Subsidiaries (if any) have filed all
Tax Returns that it was required to file through the date
hereof. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by each of such Cable
Parent's HoldCo Entities (and TCI Partner, as to TCI) or
its Subsidiaries (if any) (whether or not shown on any Tax
Return) have been paid. Except as provided in Schedule
5.2(g)(v) and except for any extension relating to the
entire Affiliated Group or any consolidated, unitary,
combined or other such group of which such HoldCo Entity
or TCI Partner is a member, none of such Cable Parent's
HoldCo Entities (nor TCI Partner, as to TCI) nor its
respective Subsidiaries (if any) is currently the bene-
ficiary of any extension of time within which to file a
Tax Return. No claim has ever been made by an authority,
in a jurisdiction where such Cable Parent's HoldCo
Entities (or TCI Partner, as to TCI) or its respective
Subsidiaries (if any) do not file Tax Returns, that it
or they may be subject to taxation
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by that jurisdiction. There are no security interests on
any of the assets of such Cable Parent's HoldCo Entities
(or TCI Partner, as to TCI) or its respective Subsidiaries
(if any) that arose in connection with any failure (or
alleged failure) to pay any Tax.
(vi) Each of such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) and each of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(vii) There is no dispute or claim concerning any Tax
Liability of such Cable Parent's HoldCo Entities (or TCI
Partner, as to TCI) or its respective Subsidiaries (if any)
either claimed or raised by any authority in writing to such
HoldCo Entity (or TCI Partner, as to TCI) (or its respective
Cable Parent) or as to which any of such entities has
knowledge based upon direct personal contact with any agent
of such authority.
(viii) Schedule 5.2(g)(viii) lists all Tax
Returns filed by such Cable Parent's HoldCo Entities
(and TCI Partner, as to TCI) and each of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities for all taxable periods ending on or before the
date hereof and indicates those Tax Returns that have
been audited and those which are currently under audit,
except that such schedule does not include consolidated,
unitary, combined or other such Tax Returns filed by a
Cable Parent (or an Affiliate of a Cable Parent) which
includes such Cable Parent's HoldCo Entities (or TCI
Partner, as to TCI). Each Cable Parent has delivered
(or will deliver within 30 days following the date
hereof) to Sprint correct and complete copies of all
Tax Returns (except for those Tax Returns not required
to be included in Schedule 5.2(g)(viii)), examination
reports, and statements of deficiencies assessed against
or agreed to by its respective HoldCo Entities (or TCI
Partner, as to TCI) and its respective Subsidiaries
(if any).
(ix) Except for waivers and extensions that apply
to such Cable Parent's HoldCo Entities (or TCI Partner,
as to TCI) or its Subsidiaries (if any) with respect to
consolidated, unitary or combined Tax Returns that
include the income of any such entities and the income
of their respective Cable Parents (or Affiliates of the
Cable Parents), the normal period within which to examine
and/or assess Taxes on the income of any such entity has
not been extended with respect to any such entity by
waiver of, or agreement to extend, the applicable
statute of limitations or otherwise.
(x) None of such Cable Parent's HoldCo Entities
(nor TCI Partner, as to TCI) nor any of the respective
Subsidiaries (if any) of such Cable Parent's HoldCo
Entities has filed a consent under Code section 341(f)
concerning collapsible corporations, or has made or
is required to make any payments, or is a party to any
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agreement that under certain circumstances could obligate
it to make any payment that will not be deductible under
Code section 280G.
(h) Tax Opinions. On the date hereof, each of the Cable
Parents has received from its respective outside counsel an opinion to
the effect that, although not free from doubt, the Mergers involving
such Cable Parent's respective HoldCo Entities or Cable Partner
(as applicable) should constitute a "reorganization" under Section
368(a) of the Code. In rendering such opinions, outside counsel
for each of the Cable Parents has received and relied upon
representations contained in (A) certificates of such Cable
Parent in form and substance reasonably acceptable to such counsel
and (B) the certificate referred to in Section 6.12(c).
(i) Ownership of Sprint Securities. Except as
provided in this Agreement and the Other Agreements, neither
such Cable Parent nor any of its Subsidiaries owns or has a
contractual right or obligation to acquire any shares of Sprint
Common Stock or any other capital stock of Sprint or any security
convertible into or exercisable or exchangeable for
Sprint Common Stock or any other capital stock of Sprint.
Section 5.3 Representations and Warranties of Sprint.
Sprint hereby represents and warrants that:
(a) Merger Subs.
(i) The Merger Subs were formed by Sprint solely
for the purpose of engaging in the transactions
contemplated hereby.
(ii) All of the issued and outstanding capital stock
of each Merger Sub is directly owned beneficially and of
record by Sprint free and clear of any Liens (other than
Contractual Liens).
(iii) Except for obligations or liabilities arising
under this Agreement, each Merger Sub has not incurred any
obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into
any agreements or arrangements with any Person.
(b) Consents, Approvals and Notifications. The execution,
delivery and performance of this Agreement and the Other Agreements by
Sprint and its respective Controlled Affiliates do not and will not
require any consent, approval, authorization or other action by, or
filing with or notification to, any Governmental Authority or any
other Person on the part of Sprint on its Controlled Affiliates,
except (i) for the Required Approvals or (ii) to the extent the failure
to obtain or make any of the foregoing, individually or in the
aggregate, would not have a Material Adverse Effect on such party.
(c) Sprint Board Action. Prior to the date hereof, the
Board of Directors of Sprint has approved (i) an amendment to
Sprint's Bylaws, to be effective at the Closing, in the form of
Exhibit O (the "Bylaw Amendment"), (ii) the Management and Allocation
Policies, to be effective
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at the Closing, (iii) the Initial Charter Amendment and the Subsequent
Charter Amendment and (iv) this Agreement and the transactions
contemplated hereby. This Agreement and the transactions contemplated
hereby (including the future exercise by the Cable Holders of their
respective Equity Purchase Rights) have been approved by the Board of
Directors of Sprint (including by a majority of the "Continuing
Directors" of Sprint at a meeting at which at least seven of such
Continuing Directors were present, as contemplated by Article Seventh
of the Current Sprint Charter). With respect to those matters
described in clauses (i), (iii) and (iv) above, the Board of Directors
of Sprint has directed that such matters be submitted for the approval
of the stockholders of Sprint at the Stockholders Meeting and has
recommended to the stockholders of Sprint that such matters be
approved.
(d) FT/DT Agreements. Attached hereto as Exhibit P are
true and correct copies of the FT/DT Agreements. The execution and
delivery of this Agreement and the Other Agreements (including the
Registration Rights Agreement), and the consummation and
performance of the transactions contemplated hereby and thereby,
by Sprint and its Controlled Affiliates will not violate or conflict
with the FT/DT Agreements (including the Amended and Restated
Registration Rights Agreement included therein) or any other agreement
between Sprint or any of its Controlled Affiliates (on the one hand)
and FT or DT or any of their respective Controlled Affiliates (on the
other hand), or conflict with the consummation and performance by
Sprint and its Controlled Affiliates of the transactions contemplated
thereby.
(e) PCS Percentage Group Interests; Intergroup Interests.
At the Effective Time, the number of shares of Series 2 PCS Stock and
Warrants held by each of the Cable Parents and its Subsidiaries will
represent the following Initial PCS Group Percentage Interests: TCI
Parent - 23.83074%; Comcast Parent - 11.42370%; and Cox Parent -
11.91537%. Immediately following the Recapitalization, the Sprint
FON Group will not hold an intergroup interest in the PCS Group except
for (i) the Preferred Intergroup Interest, (ii) the Warrant Intergroup
Interest, and (iii) any intergroup interest retained by Sprint relating
to Pre-Closing Options (which, in the case of clause (iii), will
represent a PCS Group Percentage Interest of less than 5.0%). Sprint
covenants that all Pre-Closing Options shall be satisfied out of
the Sprint FON Group's intergroup interest in the PCS Group or
otherwise satisfied by Sprint without the allocation of any cost or
expense to the PCS Group and without otherwise economically diluting
the PCS Group Percentage Interest of any Cable Parent.
(f) PCS Group Constituents. Assuming the accuracy of the
representations and warranties of the Cable Parents contained in this
Agreement, immediately following the Closing, the PCS Group shall
consist of the entities and ownership interests therein shown on
Schedule 5.3(f) (other than Sprint, UCOM, Inc., US Telecom, Inc.,
UC PhoneCo, Inc. and UST PhoneCo, Inc.) and the corresponding interests
in their respective assets and liabilities and the businesses conducted
by such entities ("PCS Group Constituents").
(g) King & Spalding Opinion. On the date hereof, Sprint
has received from King & Spalding its opinion to the effect that (i)
the Recapitalization will constitute a recapitalization within the
meaning of Section 368(a)(1)(E) of the Code, (ii) any outstanding
stock which is designated as common stock of Sprint in
Sprint's Articles of Incorporation will constitute
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voting stock of Sprint for federal income tax purposes, and (iii)
except with respect to cash paid in lieu of fractional shares, if any,
the holders of such stock of Sprint will not recognize income,
gain or loss in and as a result of the Recapitalization. In rendering
such opinion, King & Spalding has received and relied upon
representations contained in certificates of Sprint in form and
substance reasonably acceptable to King & Spalding.
(h) Representations and Warranties Regarding Sprint
Partner. With respect to Sprint Partner, Sprint hereby represents
and warrants to each other Parent as follows:
(i) Sprint Partner has good legal title to, and
beneficial ownership of, a 40% PCS Interest (consisting of
a 40% interest in Sprint PCS GP and a 40% interest in Sprint
PCS LP), free and clear of all Liens (other than Contractual
Liens). Except as provided in the PCS Partnership Agreement
and the MinorCo Partnership Agreement, Sprint Partner has
the sole right to vote and dispose of such PCS Interest.
Other than such PCS Interest and its PhillieCo Interest,
Sprint Partner has no assets or liabilities or obligations
(absolute, accrued, contingent or otherwise, including any
liability for Taxes of itself or any other Person) except
for obligations under the Sprint Contracts, obligations
imposed solely as a matter of Laws to which Sprint Partner
is subject and liabilities and obligations attributable to
its PCS Interest and PhillieCo Interest. Sprint Partner
has not engaged in any business or activities of any type
or kind whatsoever except as relates to its ownership of
the PCS Interest and its PhillieCo Interest. There are
no Rights obligating Sprint Partner to issue additional
interests in Sprint Partner to any party or (except as
provided in the PCS Partnership Agreement and the MinorCo
Partnership Agreement) to Transfer its PCS Interest or any
equity or voting interest therein in whole or in part, or
(except for the Sprint Contracts) any voting agreement,
voting trust agreement or similar agreement relating to the
voting by Sprint Partner of any of its PCS Interests.
(ii) Interests in Sprint Partner. The subsidiaries
of Sprint holding direct interests in Sprint Partner have
good legal title to all of the general partnership and
limited partnership interests in Sprint Partner indicated
as owned by them on Schedule 5.3(h)(ii), free and clear of
all Liens (other than Contractual Liens). Such interests
are duly authorized and validly issued and were not issued
in violation of any preemptive rights or any applicable
securities laws. There are no Rights obligating such
subsidiaries to issue additional interests in, or capital
stock of, such subsidiaries, Transfer any of their
interests in Sprint Partner or any equity or voting
interest therein in whole or in part, or (except for the
Sprint Contracts) any voting agreement, voting trust
agreement or similar agreement relating to the voting by
such subsidiaries of any of the general or limited
partnership interests of Sprint Partner.
(iii) Availability. Sprint has made available to each
Cable Parent true and correct copies of the charter, bylaws,
stockholders agreements, partnership agreement and other
constituent documents, as applicable, of Sprint Partner.
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(iv) Consents, Approvals and Authorizations. The
execution, delivery and performance of this Agreement and
the Other Agreements by Sprint Partner do not and will
not require any consent, approval, authorization or other
action by, or filing with or notification to, any
Governmental Authority or any other Person on the part of
Sprint Partner, except (i) for the Required Approvals or
(ii) to the extent the failure to obtain or make any of
the foregoing, individually or in the aggregate, would
not have a Material Adverse Effect on Sprint Partner.
(v) Contracts.
(A) Sprint Partner is not a party to, nor are
its properties or assets
bound by, any contracts or agreements
except those to which one
or more of the Cable Partners or their
Affiliates are a party (the
"Sprint Contracts").
(B) Neither Sprint Partner nor any of its
Controlled Affiliates is in
material breach of Section 6.6 of
the PCS Partnership Agreement.
(vi) Taxes.
(A) Since its formation, SprintCom has been
a member of an Affiliated Group of
which Sprint is the common parent, which
has elected to file consolidated federal
income tax returns.
(B) Since its formation, Sprint Partner has
not derived any material
item of income, loss, deduction or credit
during its existence other than such
items which were or are included in
its direct or indirect distributive share
of such items of Sprint PCS GP, Sprint
PCS LP, PhillieCo GP and PhillieCo LP.
Neither SprintCom nor Sprint Partner has
Subsidiaries other than interests in
partnerships which hold direct interests
(or indirect interests through other
partnerships) in Sprint PCS GP, Sprint PCS
LP, PhillieCo GP and PhillieCo LP.
(C) Sprint's Affiliated Group has filed all
federal income tax returns that it was
required to file for each period during
which SprintCom was a member of the
Affiliated Group. All such returns were
correct and complete in all material
respects insofar as they relate to
SprintCom.
(D) If the income of SprintCom or Sprint
Partner is required under state, local,
or foreign tax rules, to be included on
a consolidated, unitary, combined or
other tax return filed by an
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entity other than itself, each such
group has filed all income tax
returns that it was required to file with
respect to SprintCom or Sprint Partner for
each period during which SprintCom or
Sprint Partner was a member of such group.
All such returns were correct and complete
in all material respects insofar as they
relate to SprintCom or Sprint Partner.
All material income taxes owed by such
group with respect to SprintCom or Sprint
Partner (whether or not shown on a Tax
Return) have been paid for each taxable
period during which SprintCom or Sprint
Partner was a member of its respective
group.
(E) Each of SprintCom and Sprint Partner
(and each of their Subsidiaries (if any))
has filed all Tax Returns that it was
required to file through the date hereof.
All such Tax Returns were correct and
complete in all material respects.
All Taxes owed by each of such entities
(or its Subsidiaries (if any))
(whether or not shown on any Tax Return)
have been paid. No claim has ever been
made by an authority, in a jurisdiction
where SprintCom or Sprint Partner (or
their respective Subsidiaries (if any))
do not file Tax Returns, that it or they
may be subject to taxation by that
jurisdiction. There are no security
interests on any of the assets of
SprintCom or Sprint Partner (or their
respective Subsidiaries (if any)) that
arose in connection with any failure
(or alleged failure) to pay any Tax.
(F) Each of Sprint Com and Sprint Partner
(and each of their respective Subsidiaries
(if any)) has withheld and paid all Taxes
required to have been withheld and paid in
connection with amounts paid or owing to
any employee, independent contractor,
creditor, stockholder, or other third
party.
(G) There is no dispute or claim concerning
any Tax Liability of SprintCom or Sprint
Partner (or their respective Subsidiaries
(if any)) either claimed or raised by any
authority in writing to such entity as to
which any of such entities has knowledge
based upon direct personal contact with
any agent of such authority.
(H) Neither SprintCom nor Sprint Partner
(nor any of their respective
Subsidiaries (if any)) has filed a consent
under Code section 341(f) concerning
collapsible corporations, or has made or
is required to make any payments, or
is a party to any agreement that under
certain circumstances could
29
<PAGE>
obligate it to make any payment,
that will not be deductible under
Code section 280G.
(i) Reports and Financial Statements. Sprint has
filed all reports (including proxy statements) and registration
statements required to be filed with the SEC since January
1, 1996 (collectively, the "Sprint SEC Reports"). None of
the Sprint SEC Reports (including the financial statements
contained therein), as of their respective dates, contained
any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading. All of the Sprint
SEC Reports, as of their respective dates, complied in
all material respects with the requirements of the Exchange
Act, the Securities Act and the applicable rules and regulations
thereunder. Except (i) as and to the extent disclosed or
reserved against on the balance sheet of Sprint as of December
31, 1997 included in the Sprint SEC Reports, (ii) as incurred
after the date thereof in the ordinary course of business consistent
with prior practice and not prohibited by this Agreement and
(iii) as may result from any Year 2000 Liability, Sprint does
not have any liabilities or obligations of any nature, absolute,
accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, have or would have a
Material Adverse Effect on Sprint. During the period since
December 31, 1997, except as disclosed in the Sprint SEC Reports
filed prior to the date hereof, there has not been, and nothing
has occurred that has had, a Material Adverse Effect on Sprint.
(j) Capitalization of Sprint. The certificate delivered
to the Cable Parents at the Closing as contemplated by Section 9.1(xvi)
will be true and correct. All such issued and outstanding shares of
Sprint capital stock immediately following the Effective Time will
have been duly authorized and validly issued, and will be fully paid
and nonassessable, and issued in compliance with all applicable state
and federal securities laws. All PCS Options outstanding immediately
following the Effective Time will have been duly authorized and
validly issued, and will be fully paid and nonassessable (except as
to the payment of any exercise price for the underlying securities)
and issued in compliance with all applicable state and federal securities
laws.
Section 5.4 Representations and Warranties Concerning
PhillieCo. Each PhillieCo Parent hereby represents and warrants to
each other Parent (in the case of Sections 5.4(a) and (b)) and to
Comcast only (in the case of Sections 5.4(c)-(l)), as to itself and
its respective PhillieCo Partner, as follows:
(a) Due Organization. Such PhillieCo Partner is duly
formed and validly existing under the laws of the State of Delaware
and has the corporate or partnership power (as applicable) and authority
to own its property and carry on its business as owned and carried on
at the date hereof. Such PhillieCo Partner is duly qualified to do
business in each jurisdiction in which it conducts business or in
which it is otherwise required to be qualified, except for
failures to be so qualified which, individually or in the aggregate,
would not have a Material Adverse Effect on such PhillieCo Partner.
(b) Interests in PhillieCo Owned by the PhillieCo
Partners. Such PhillieCo Partner has good legal title to, and
beneficial ownership of, the PhillieCo Interest indicated as owned
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<PAGE>
by it on Schedule 5.4(b), free and clear of all Liens (other than
Contractual Liens). Except as provided in the PhillieCo
Partnership Agreement and the PhillieCo LP Partnership Agreement,
such PhillieCo Partner has the sole right to vote and dispose
of the PhillieCo Interest indicated as owned by it
on Schedule 5.4(b). Other than (i) its PhillieCo Interest, (ii)
notes receivable from PhillieCo GP, (iii) in the case of Sprint
Partner, its PCS Interest, (iv) in the case of Cox HoldCo Sub2,
its interest in Cox Partner (and liabilities and obligations
attributable to Cox Partner's PCS Interest) and the note
receivable from Cox HoldCo Sub1 that will be contributed to Cox
HoldCo Sub2 prior to Closing pursuant to Section 6.6, and (v)
as contemplated by Section 6.4 and (in the case of Cox HoldCo Sub2)
as contemplated by Section 6.6(a)(i)(A), such PhillieCo Partner
has no assets or liabilities or obligations (absolute, accrued,
contingent or otherwise, including any liability for Taxes of
itself or any other Person) other than obligations imposed
solely as a matter of Laws to which such PhillieCo Partner
is subject. Such PhillieCo Partner has not engaged in any
business or activities of any type or kind whatsoever
except as relates to its ownership of the PhillieCo Interest
(and, in the case of Cox HoldCo Sub2 and Sprint Partner, its PCS
Interest). Except as set forth in the CP Contracts and Section
6.4, there are no Rights obligating such PhillieCo Partner to issue
additional capital stock or interests in such PhillieCo Partner
to any party or to Transfer its PhillieCo Interest or any equity
or voting interest therein in whole or in part, or any voting
agreement, voting trust agreement or similar agreement relating
to the voting by such PhillieCo Partner of any of its PhillieCo
Interests.
(c) Licenses. PhillieCo1 holds the licenses issued
by the FCC that are listed on Schedule 5.4(c) (the "PhillieCo
Licenses") and has satisfied all terms and conditions required to
be satisfied on or before the date hereof imposed by the FCC,
by any other Governmental Authority, or by federal law as a
condition of the award of the PhillieCo Licenses, the failure to
satisfy of which could reasonably be expected to cause PhillieCo1
to forfeit its right to hold or use the PhillieCo Licenses,
including: the payment of all lump sums due the FCC under 47 C.F.R.
Section 24.708 in payment for award of the PhillieCo Licenses;
the payment of all withdrawal, disqualification or default penalties
associated with participation in competitive bidding for the
PhillieCo Licenses; and the satisfaction of all FCC technical
requirements for construction and operation of the PhillieCo Licenses,
including frequency coordination, microwave relocation, antenna
height and power limitations.
(d) Compliance with Laws. PhillieCo GP and its Controlled
Affiliates have not made any untrue statement of fact, or omitted to
disclose any facts, to the FCC or any other Governmental Authority
or taken or failed to take any action, which misstatements, omissions,
actions or failures to act, individually or in the aggregate, could
reasonably be expected to cause PhillieCo1 to forfeit its right to
hold or use the PhillieCo Licenses or that, insofar as can
reasonably be foreseen, could have a material adverse effect on the
ability of Sprint to allocate the business of PhillieCo and the PhillieCo
Licenses to the PCS Group or otherwise have the PhillieCo Licenses
attributed to the PCS Group.
(e) Litigation. Except for the Petition of Sprint
Spectrum Partners and Sprint Spectrum, L.P. d/b/a Sprint PCS for
Declaratory Relief filed on March 13, 1997 with the FCC, there
are no actions, suits, proceedings or investigations pending or,
to the knowledge of the PhillieCo Parents, threatened against
PhillieCo in, before or by any Governmental Authority or any arbitrator
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<PAGE>
that could, if adversely determined (or, in the case of an
investigation could lead to any action, suit or proceeding,
that, if adversely determined, could), reasonably be
expected to have a material adverse effect on the right of PhillieCo1 to
hold or use the PhillieCo Licenses or for PhillieCo1 to allocate the
PhillieCo Licenses to the PCS Group, or impose any material adverse
restrictions or limitations on the operation of the business attributed
to the PCS Group; PhillieCo1 has not received any currently effective
notice of any default, and PhillieCo is not in default, under any
applicable order, writ, injunction, decree, permit, determination or
award of any Governmental Authority or any arbitrator that could
reasonably be expected to have a material adverse effect on the right of
PhillieCo1 to hold or use the PhillieCo Licenses or for PhillieCo1 to
allocate the PhillieCo Licenses to the PCS Group or a material adverse
effect on PhillieCo.
(f) Title to Licenses. On the Closing Date, the PhillieCo
Licenses will be owned by PhillieCo1 free and clear of all Liens, except
for any Permitted Liens and Liens that, individually or in the aggregate,
are not material to the PhillieCo Licenses (taken as a whole).
(g) No Breach. As of the date of this Agreement, (i) each
material permit, license, contract, agreement, lease and insurance policy
held by PhillieCo or to which PhillieCo is a party (whether evidenced
by a written document or otherwise), is in full force and effect in
accordance with its terms, and (ii) there does not exist under any such
permit, license, contract, agreement, lease or insurance policy any default,
or event which, with the giving of notice or the lapse of time or both,
would become a breach or default, the consequences of which (in the
case of either (i) or (ii) above) would result in a Material Adverse
Effect on PhillieCo.
(h) Environmental Protection. The PhillieCo Partners do
not have knowledge of, nor has PhillieCo received notice of, any events,
conditions, circumstances, activities, practices, incidents, actions or
plans that PhillieCo Partners reasonably expect would result in claims or
liabilities, (A) based on or related to alleged on-site or off-site
contamination with respect to or affecting the assets of PhillieCo or
(B) arising out of or related to the assets of PhillieCo under any law,
statute, rule, regulation, order, decree or judgment related to public
or occupational safety and health, pollution and/or protection of the
environment, including the Resource Conservation and Recovery Act of
1976 and the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (collectively, "Environmental Laws"),
in each case that, individually or in the aggregate, would have a
Material Adverse Effect on PhillieCo. As of the date of this Agreement,
PhillieCo has owned and operated its assets in compliance with all
Environmental Laws except where any such noncompliance, individually
or in the aggregate, would not have a Material Adverse Effect on
PhillieCo.
(i) Intellectual Property. To the knowledge of the
PhillieCo Partners, PhillieCo is not using any copyright, patent,
proprietary information, technical information or other similar
intangible property right that is owned by any Person in a manner
that is not in compliance in all material respects with the applicable
license of such intangible property right to PhillieCo, except where
such noncompliance would not result in a Material Adverse Effect
on PhillieCo.
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<PAGE>
(j) Financial Information. Incorporated by reference into
this Agreement are (i) the unaudited combined balance sheets of
PhillieCo GP and PhillieCo LP as of December 31, 1997, and the related
unaudited combined statements of operations and cash flows for the year
then ended, including the notes thereto and (ii) the unaudited combined
balance sheets of PhillieCo GP and PhillieCo LP as of March 31, 1998,
and the related unaudited combined statement of operations for the three
months then ended (the documents referred to in (i) and (ii) being
collectively, the "PhillieCo Financial Statements"). The
PhillieCo Financial Statements present fairly in all material respects
the financial position and results of operations of PhillieCo GP
and PhillieCo LP at the dates and for the periods to
which they relate and have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the
periods involved. Except (i) as and to the extent disclosed or
reserved against on the combined balance sheets of PhillieCo GP and
PhillieCo LP as of December 31, 1997, (ii) as incurred after the
date thereof in the ordinary course of business consistent with
prior practice and not prohibited by this Agreement and (iii)
as may result from any Year 2000 Liability, PhillieCo GP and
PhillieCo LP and their Subsidiaries (taken as a whole) do not
have any liabilities or obligations of any nature, absolute,
accrued, contingent or otherwise and whether due or to become due, that,
individually or in the aggregate, would have a Material Adverse
Effect on PhillieCo GP and PhillieCo LP and their Subsidiaries
(taken as a whole). During the period since December 31,
1997, there has not been, and nothing has occurred that has had,
a Material Adverse Effect on PhillieCo GP and PhillieCo LP and their
Subsidiaries (taken as a whole).
(k) Sole Line of Business. PhillieCo conducts no
material businesses or activities other than those relating to the
provision of wireless telephony services pursuant to the PhillieCo
Licenses.
(l) Liabilities. Except as shown on the PhillieCo
Financial Statements, to the knowledge of the PhillieCo Partners,
PhillieCo is not subject to any liabilities arising outside the
ordinary course of business that might reasonably be expected to
have a Material Adverse Effect on PhillieCo.
Section 5.5 Representations and Warranties Concerning
SprintCom and EquipmentCo. Sprint hereby represents and warrants
to the Cable Parents as follows:
(a) Due Organization; Title. Each of SprintCom and
EquipmentCo is a corporation and limited partnership, respectively,
duly organized and validly existing under the laws of the State of
Kansas, and Delaware, respectively, and has the corporate and
partnership, respectively, power and authority to own its property
and carry on its business as owned and carried on at the date hereof.
Each of SprintCom and EquipmentCo is duly qualified to do business
in each jurisdiction in which it conducts business or in which it is
otherwise required to be qualified, except for failures to be so
qualified which, individually or in the aggregate, would not have a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a
whole). Sprint (through its Wholly Owned Subsidiaries) has good legal
title to, and record and beneficial ownership of, all the outstanding
capital stock of SprintCom free and clear of all Liens. There are no
Rights obligating Sprint to issue additional capital stock or other
securities of SprintCom. Sprint has good legal title to, and beneficial
ownership of, the general partnership and limited partnership interests in
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EquipmentCo, free and clear of all Liens. There are no
Rights obligating Sprint or its Subsidiaries to Transfer any of its
interests in EquipmentCo.
(b) Licenses. SprintCom holds the licenses issued by the
FCC that are listed on Schedule 5.5(b) (the "SprintCom Licenses") and
has satisfied all terms and conditions required to be satisfied on or
before the date hereof imposed by the FCC, by any other Governmental
Authority, or by federal law as a condition of the award of the
SprintCom Licenses, the failure to satisfy of which could reasonably be
expected to cause SprintCom to forfeit its right to hold or use the
SprintCom Licenses, including: the payment of all lump sums due the FCC
under 47 C.F.R. Section 24.708 in payment for award of the SprintCom
Licenses; the payment of all withdrawal, disqualification or default
penalties associated with participation in competitive bidding for the
SprintCom Licenses; and the satisfaction of all FCC technical
requirements for construction and operation of the SprintCom Licenses,
including frequency coordination, microwave relocation, antenna height
and power limitations.
(c) Compliance with Laws. SprintCom and its Controlled
Affiliates have not made any untrue statement of fact, or omitted to
disclose any facts, to the FCC or any other Governmental Authority or
taken or failed to take any action, which misstatements, omissions,
actions or failures to act, individually or in the aggregate, could
reasonably be expected to cause SprintCom to forfeit its right to hold
or use the SprintCom Licenses or that, insofar as can reasonably be
foreseen, could have a material adverse effect on the ability of Sprint
to allocate the business of SprintCom and the SprintCom Licenses to the
PCS Group or otherwise have the SprintCom Licenses attributed to the
PCS Group.
(d) Litigation. Except as set forth on Schedule 5.5(d),
there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Sprint, threatened against SprintCom or EquipmentCo
in, before or by any Governmental Authority or any arbitrator that
could, if adversely determined (or, in the case of an investigation
could lead to any action, suit or proceeding, that, if adversely
determined, could), reasonably be expected to have a material
adverse effect on the right of SprintCom to hold or use the SprintCom
Licenses or for Sprint to allocate the SprintCom Licenses to the PCS
Group, or impose any material adverse restrictions or limitations on
the operation of the business attributed to the PCS Group; and none of
Sprint, SprintCom or EquipmentCo have received any currently effective
notice of any default, and SprintCom and EquipmentCo are not in default,
under any applicable order, writ, injunction, decree, permit,
determination or award of any Governmental Authority or any arbitrator
that could reasonably be expected to have a material adverse effect
on the right of SprintCom to hold or use the SprintCom Licenses or
for Sprint to allocate the SprintCom Licenses to the PCS Group or a
material adverse effect on SprintCom and Equipment Co (taken as a
whole).
(e) Title to Licenses. On the Closing Date, the SprintCom
Licenses will be owned by SprintCom free and clear of all Liens, except
for any Permitted Liens and Liens that, individually or in the
aggregate, are not material to the SprintCom Licenses (taken as a
whole).
(f) No Breach. As of the date of this Agreement, (i)
each material permit, license, contract, agreement, lease
and insurance policy held by SprintCom or EquipmentCo or to
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<PAGE>
which either of them is a party (whether evidenced by a written document
or otherwise), is in full force and effect in accordance with its terms,
and (ii) there does not exist under any such permit, license, contract,
agreement, lease or insurance policy any default, or event which, with
the giving of notice or the lapse of time or both, would become a
breach or default, the consequences of which (in the case of either
(i) or (ii) above) would result in a Material Adverse Effect on
SprintCom and EquipmentCo (taken as a whole).
(g) Environmental Protection. Sprint does not have
knowledge of, nor has Sprint or any of its Controlled Affiliates
received notice of, any events, conditions, circumstances, activities,
practices, incidents, actions or plans that Sprint reasonably expects
would result in claims or liabilities, (A) based on or related to
alleged on-site or off-site contamination with respect to or affecting
the assets of SprintCom or EquipmentCo or (B) arising out of or
related to the assets of SprintCom and EquipmentCo under any
Environmental Laws, in each case that, individually or in the
aggregate, would have a Material Adverse Effect on SprintCom and
EquipmentCo (taken as a whole). As of the date of this Agreement,
SprintCom and EquipmentCo have owned and operated their assets in
compliance with all Environmental Laws except where any such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a whole).
(h) Intellectual Property. To the knowledge of Sprint,
neither SprintCom nor EquipmentCo is using any copyright, patent,
proprietary information, technical information or other similar
intangible property right that is owned by any Person in a manner
that is not in compliance in all material respects with the applicable
license of such intangible property right to Sprint or its Controlled
Affiliate, except where such noncompliance would not result in a
Material Adverse Effect on SprintCom and EquipmentCo (taken as a whole).
(i) Financial Information. Sprint has delivered to the
Cable Parents copies of (i) the combined balance sheet of SprintCom
and EquipmentCo as of December 31, 1997, and the related combined
statements of operations, changes in equity (deficit) and cash flows
for the year then ended, certified by independent auditors, including
the notes thereto and (ii) the unaudited combined balance sheet of
SprintCom and EquipmentCo as of March 31, 1998, and the related
combined statement of operations for the three months then ended (the
documents referred to in (i) and (ii) being collectively, the "SprintCom
and EquipmentCo Financial Statements"). The SprintCom and EquipmentCo
Financial Statements present fairly in all material respects the
combined financial position and combined results of operations of
SprintCom and EquipmentCo at the dates and for the periods to which
they relate and have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods
involved. Except (i) as and to the extent disclosed or reserved against
on the combined balance sheet of SprintCom and EquipmentCo as of
December 31, 1997, (ii) as incurred after the date thereof in the
ordinary course of business consistent with prior practice (including
leveraged lease transactions that have heretofore been disclosed to the
Cable Partners) and not prohibited by this Agreement and (iii) as may
result from any Year 2000 Liability, SprintCom and EquipmentCo do not
have any liabilities or obligations of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due, that,
individually in the aggregate, would have a Material Adverse Effect on
SprintCom and EquipmentCo taken as a whole. During the period since
December 31, 1997, there has not been,
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and nothing has occurred that has had, a Material Adverse Effect on
SprintCom and EquipmentCo taken as a whole.
(j) Sole Line of Business. Neither SprintCom nor
EquipmentCo conducts any material businesses or activities other
than those relating to the provision of wireless telephony services
pursuant to the SprintCom Licenses (including any acquisitions of PCS
licenses and related assets and leveraged lease financing programs
that have heretofore been disclosed to the Cable Parents).
(k) Liabilities. Except as shown on the SprintCom and
EquipmentCo Financial Statements, to the knowledge of Sprint, neither
SprintCom nor EquipmentCo is subject to any liabilities arising outside
the ordinary course of business that might reasonably be expected to
have a Material Adverse Effect on SprintCom and EquipmentCo, taken as a
whole, other than any acquisitions of PCS licenses and related assets
and leveraged lease transactions that have heretofore been disclosed to
the Cable Parents.
ARTICLE 6
COVENANTS OF THE PARTIES
Section 6.1 Cooperation.
(a) Between the date hereof and the earlier of the Closing
or the termination of this Agreement, subject to the terms and
conditions of this Agreement, the parties shall cooperate with each
other and use all commercially reasonable efforts to obtain all
necessary consents and approvals for the consummation of the
transactions contemplated hereby and otherwise to satisfy the conditions
to closing set forth in Article 8. Without limiting the generality
of the foregoing, (A) each PCS Partner shall vote its PCS Interest
at any meeting of the PCS Partners and shall cause its representatives
to vote at any meeting of the Partnership Board of Sprint PCS GP, and
each PhillieCo Partner shall vote its PhillieCo Interest at any
meeting of the PhillieCo Partners and shall cause its representatives
to vote at any meeting of the Partnership Board of PhillieCo GP, so as
to facilitate the completion of the transactions contemplated by this
Agreement, (B) each party hereto shall use its commercially reasonable
efforts, and shall cause each of Sprint PCS and PhillieCo to use its
commercially reasonable efforts, to obtain all consents and
authorizations of third parties and Governmental Authorities and to make
all filings with and give all notices to third parties and Governmental
Authorities which may be necessary or reasonably required in order to
effect the transactions contemplated hereby, and (C) the Cable Parents
shall, and the PCS Partners shall cause Sprint PCS to, and the PhillieCo
Partners shall cause PhillieCo to, make qualified personnel available to
Sprint for (i) supplying all information reasonably requested by Sprint
for inclusion in the Proxy Statement and the other filings contemplated
by Section 6.2, (ii) meetings or correspondence with counsel for Sprint
and the underwriters for purposes of conducting customary due diligence
in connection with the IPO and (iii) with respect to Sprint PCS and
PhillieCo only, meetings with underwriters and potential investors. In
addition, subject to the other provisions of this Section 6.1, none of
the parties shall take any action that such party knows would cause any
of such party's representations and warranties in this Agreement to be
inaccurate or that such party
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knows would prevent or materially delay the satisfaction of the
conditions to closing set forth in Article 8 of this Agreement or the
receipt of any required approvals or consents; provided that no
party will be required to conduct itself in a manner that is not
commercially reasonable. "Commercially reasonable efforts" as
used in this Agreement shall not require any party to
undertake extraordinary or unreasonable measures
to obtain any consents or other authorizations, including requiring such
party to make any material expenditures (other than normal filing fees
or the like) or to accept any material changes in the terms of the
contract, license or other instrument for which a consent is sought.
(b) Notwithstanding the foregoing, in connection with any
filing or submission required or action to be taken by either Sprint or
a Cable Parent or its respective Controlled Affiliates to effect the
Mergers and to consummate the other transactions contemplated hereby no
Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take (or refrain from taking) or commit to take
(or refrain from taking) any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product
lines or assets of such Parent or any of its Affiliates (including, in
the case of Sprint, TCI Partner and the HoldCo Entities and their
respective Subsidiaries.)
Section 6.2 Certain Actions by Sprint.
(a) SEC Filings. As soon as is reasonably practicable
after the execution of this Agreement, Sprint shall prepare and file
with the SEC (i) a proxy statement (the "Proxy Statement") to be
mailed to Sprint stockholders in connection with a special meeting (the
"Stockholders Meeting") to be held for the purpose of approving this
Agreement and the transactions contemplated hereby, the Initial
Charter Amendment, the Subsequent Charter Amendment, the Bylaw
Amendment and amendments to certain of Sprint's equity-based
incentive plans in connection with the creation of the PCS Stock,
among other things, and (ii) a registration statement on Form S-3
(the "Registration Statement") containing a prospectus (the
"IPO Prospectus") covering the shares of Series 1 PCS Stock to be
sold in the IPO. Sprint shall use its commercially reasonable
efforts to cause the Proxy Statement to be approved for
mailing and the Registration Statement to become effective under
the Securities Act, each as promptly as practicable after such
filing, and shall take all commercially reasonable actions
required to be taken under any applicable state blue sky or
securities laws in connection with the IPO and the Recapitalization.
Sprint shall use its commercially reasonable efforts to cause
the Series 1 PCS Stock required to be issued in the IPO and the
Recapitalization to be approved for listing or quotation in
satisfaction of the condition to Closing set forth in Section
8.1(d).
Sprint will provide the Cable Parents with a reasonable
opportunity to review and comment upon drafts of the Proxy Statement
and the Registration Statement and any amendments thereto prior to
filing any such documents with the SEC. Sprint shall not make
any changes to the Proxy Statement from the draft dated May 18,
1998 (which has been reviewed by the Cable Parents) or include
any statements in the Registration Statement that are
inconsistent with the provisions of this Agreement, the Other
Agreements, the Management and Allocation Policies and the Bylaw
Amendment. Attached hereto as Exhibit Q are certain provisions
that Sprint will include in the Proxy Statement (in any form filed
with the SEC) relating to the Management and Allocation
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Policies, the Tax Sharing Agreement and related matters. Sprint
will not include in the Proxy Statement or the Registration
Statement any language reasonably objected to by any
Cable Parent that changes, limits or qualifies, or is otherwise
inconsistent with, such provisions on Exhibit Q or the "Risk Factors"
section of the May 18 draft of the Proxy Statement. Also included
as part of Exhibit Q is language that reflects Sprint's current
expectation for disclosure in the Proxy Statement regarding
SprintCom's rollout schedule.
Each of the Cable Parents covenants that none of the
information supplied or to be supplied by such Cable Parent or its
Subsidiaries in writing at the request of Sprint for inclusion or
incorporation by reference in the Registration Statement or the Proxy
Statement will, at the respective times such documents are filed
and (in the case of the Registration Statement) at the time such
document becomes effective or at the time any amendment or
supplement thereto becomes effective and (in the case of the Proxy
Statement) at the time it is mailed to the stockholders of Sprint,
contain any untrue statement of a material fact, or omit to
state any material fact required or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. However, a Cable Parent will not be
deemed in breach of this covenant due to any misstatement or omission
that is attributable to information supplied to such Cable Parent
or any of its Subsidiaries by Sprint PCS GP, PhillieCo GP or any
of their Subsidiaries.
Sprint covenants that (i) the Registration Statement,
when it becomes effective and at the time any amendment or
supplement thereto becomes effective, will not contain any
untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; (ii) the Proxy Statement, when first
mailed to the stockholders of Sprint, will not contain any untrue
statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and (iii) the Proxy Statement and the
Registration Statement will comply as to form in all material respects
with the provisions of applicable law and any applicable rules or
regulations thereunder, except that no representation is made by Sprint
with respect to statements made therein based on information supplied
by any Cable Parent or its Subsidiary in writing at the request of
Sprint for inclusion in the Registration Statement or the
Proxy Statement. Sprint acknowledges that the Cable Parents, in
entering into this Agreement and agreeing to consummate the
transactions contemplated hereby, are relying on the covenant
contained in this paragraph and the information to be contained
in the Proxy Statement and the Registration Statement as if the
forms of final Proxy Statement and Registration Statement
were delivered in connection herewith.
(b) Stockholders Meeting. Sprint shall cause the
Stockholders' Meeting to be held as soon as practicable after the
date hereof (without regard to the condition of the equity markets,
including the market for initial public offerings, wireless
communications companies or tracking stocks). The Board of
Directors of Sprint shall recommend that its stockholders
approve this Agreement, the Initial Charter Amendment, the Subsequent
Charter Amendment, and the other matters related thereto presented
for a vote in the Proxy Statement, and Sprint shall use commercially
reasonable efforts to obtain such stockholder approval. Sprint shall
not be deemed to have breached any obligation under this Agreement by
reason of the disclosure of information in the Proxy Statement or any
public announcement or other communication with Sprint's
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stockholders if such disclosure is required by Law, so long as
the Board of Directors of Sprint shall not have withdrawn,
limited, conditioned or qualified the recommendation referred
to above. Sprint's conclusion that any such disclosure is required
by Law will be final and binding on all the parties hereto if
Sprint has received a written opinion of counsel that such
disclosure or communication is required by Law. "Commercially
reasonable" efforts shall not be deemed to require any action that
would prevent Sprint's compliance with Section 3(a)(9) of the
Securities Act in connection with the Recapitalization.
(c) Concurrent IPO. Sprint intends to close the IPO
as soon as practicable following the date that the conditions to
Closing set forth in Sections 8.1(a), 8.1(b) and 8.1(d) have been
satisfied (subject to Section 6.2(e), the "Trigger Date"), assuming
that the other conditions to Closing have been satisfied or are
capable of being satisfied at or prior to the Closing; provided
that the determination to proceed with the IPO at any time shall
remain in Sprint's sole discretion. If the IPO occurs prior to
the Recapitalization, the Closing shall occur simultaneously with
the closing of the IPO. If Sprint causes the IPO to be completed
simultaneously with the Closing, (i) Sprint shall complete the
Recapitalization by filing the Subsequent Charter Amendment with
the Kansas Secretary of State within 120 days following the Closing,
and (ii) each Cable Parent will, and will cause its Controlled
Affiliates to, for a period of one hundred eighty (180) days
following the Closing Date, refrain from engaging in any public
sale or distribution of any PCS Stock or securities convertible
into, or exchangeable or exercisable for, or the value of which
relates to or is based upon, PCS Stock.
(d) Concurrent Recapitalization. Subject to Section
6.2(e), if the IPO is not completed on or prior to the 30th day
following the Trigger Date, then Sprint shall, on the earlier of
(i) the date which is 10 days following such date subsequent to the
Trigger Date that Sprint reasonably determines that the IPO is not
capable of being completed on or prior to the 30th day following
the Trigger Date or (ii) the 40th day following the Trigger Date,
effect the Recapitalization by filing the Initial Charter Amendment,
the Subsequent Charter Amendment and the Certificate of Designations
with the Kansas Secretary of State, assuming that the other conditions
to Closing have been satisfied or are capable of being satisfied at the
Closing. If Sprint causes the Recapitalization to be completed as
provided in this Section 6.2(d), the Closing shall occur simultaneously
with the completion of the Recapitalization. In such event, Sprint
currently intends to complete the IPO within 120 days after the Closing
Date. If Sprint completes the Recapitalization simultaneously with the
Closing and the IPO is completed within such 120-day period, each Cable
Parent will, and will cause its Controlled Affiliates to, for a period
commencing at the time of Closing and ending on the later of (i) 90 days
following the closing of the IPO and (ii) 180 days following the Closing
Date, refrain from engaging in any public sale or distribution of any
PCS Stock or securities convertible into, or exchangeable or exercisable
for, or the value of which relates to or is based upon, PCS Stock.
If the IPO is not completed within 120 days following the Closing,
Sprint will not engage in any public sale or distribution of any PCS
Stock or securities convertible into, or exchangeable or exercisable
for, or the value of which relates to or is based upon, PCS Stock
until after the Registration Rights Commencement Date, and then,
only after (i) providing notices to the Cable Parents (and any
required Affiliates) as required by Section 3(a) of the Registration
Rights Agreement, (ii) providing the Cable Parents with priority in
such sale or distribution in accordance with Section 3 thereof,
and (iii) amending the Registration Statement (and amending or
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supplementing the related preliminary prospectus if preliminary
prospectuses have been distributed) if necessary to register and
offer the shares that the Cable Parents have elected to sell in
such sale or distribution in accordance with the Registration
Rights Agreement.
(e) Extension of Trigger Date. If the Trigger Date would
occur (but for this Section 6.2(e)) after August 1, 1998, and before
September 1, 1998, the Trigger Date will be deemed to occur on the
earlier of (i) September 1, 1998 or (ii) such date after August 1,
1998, that Sprint reasonably determines that the IPO is not capable
of being completed on or prior to October 1, 1998.
Section 6.3 IPO Matters.
(a) All of the net proceeds of the shares of Series 1 PCS
Stock sold in the IPO will be allocated to the PCS Group. Sprint will
select the lead (book-running) managing underwriter(s) for the IPO,
and the Cable Partners shall select a co-lead managing underwriter
(who shall be reasonably acceptable to Sprint) (such underwriters as
selected by Sprint and the Cable Partners being the "Underwriters").
Except as provided in Section 6.2 and this Section 6.3, Sprint will have
sole discretion to determine the pricing and other terms of the IPO.
The total proceeds raised in the IPO (net of underwriting commissions
and discounts and excluding the proceeds from any exercise of the
Top-Up Rights) are referred to herein as the "Total Proceeds".
(b) Prior to the filing of the Registration Statement, the
Underwriters will advise the Parents as to the expected range of the
IPO Price. Sprint will be entitled to sell in the IPO without any
further approval of the Cable Parents a number of shares of Series 1
PCS Stock up to the greater of (i) $500 million divided by the
midpoint of the price range indicated on the cover of the "red herring"
prospectus used to market such shares, regardless of the Total
Proceeds that would result from the sale of such shares and (ii)
such number of shares as is required to be sold in the IPO to
achieve Total Proceeds of between $500 million and $525 million
(in Sprint's discretion).
(c) In addition, prior to filing of the Registration
Statement, the Underwriters will advise the Parents as to the aggregate
proceeds that, in the opinion of the Underwriters, could be raised in
the IPO without adversely affecting the IPO Price or the after-
market trading price of the Series 1 PCS Stock. If such recommendation
is for Total Proceeds of more than $525 million and any of the Parents
notifies the other Parents within ten days following the receipt of
such advice from the Underwriters that such Parent is unwilling to
proceed with an IPO of the size recommended by the Underwriters, then
the Total Proceeds of the IPO shall not exceed $525 million unless a
larger amount is permitted by clause (i) of Section 6.3(b) or a larger
amount of Total Proceeds is thereafter unanimously agreed to by the
Parents.
(d) The dollar amounts set forth above in this Section 6.3
do not include a 15% over-allotment option on the shares sold to the
public in the IPO or any amounts paid by FT, DT or the Cable Partners
on exercise of their Top-Up Rights in connection with the IPO, which
will be incremental to the amounts specified above and may be effected
by Sprint without the approval of any of the Cable Parents.
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Section 6.4 Capital Requirements of Sprint PCS Prior to
Closing.
(a) The capital requirements of Sprint PCS GP and its
Subsidiaries during the period from the date of this Agreement through
the Closing Date will be satisfied by capital contributions from the
PCS Partners to Sprint PCS GP to be made from time to time pursuant to
this Section 6.4(a) up to an aggregate amount of $400 million (the "PCS
Contributions"). The chief executive officer of Sprint PCS GP may call
all or a portion of the PCS Contributions at any time prior to the
Closing Date by giving written notice to each of the PCS Partners
specifying (i) the aggregate amount required to be contributed to Sprint
PCS GP and (ii) the date (the "Contribution Date") that such amount is
required to be contributed to Sprint PCS GP, which shall be at least 20
Business Days following the date of such notice. On each Contribution
Date, each PCS Partner will contribute (by wire transfer of immediately
available funds to an account designated by Sprint PCS GP) its pro rata
portion of any PCS Contribution based on its PCS Interest on the date of
such contribution.
(b) The PCS Contributions will be funded by loans from the
Parents as follows: (i) Sprint (directly or through its Subsidiaries)
will lend Sprint Partner's portion of any PCS Contribution to Sprint
Partner (the "Sprint PCS Loan"); (ii) TCI will lend TCI Partner's
portion of any PCS Contribution to TCI Partner; (iii) Comcast agrees
that Comcast Telephony Communications, Inc. will lend Comcast Partner's
portion of any PCS Contribution to either or both of its respective
HoldCo Entities; and (iv) Cox will lend Cox Partner's portion of any PCS
Contribution to Cox HoldCo Sub1 (each such loan described in clauses
(ii), (iii), and (iv) is referred to herein as a "Cable Parent PCS
Loan"). Notwithstanding the foregoing, in no event will the Cable Parent
PCS Loans be made to a direct Subsidiary of the lending entity. The
HoldCo Entity or Entities of Comcast that receive a Cable Parent PCS
Loan will in turn loan the proceeds of Comcast's Cable Parent PCS Loan
to Comcast Partner, and Cox HoldCo Sub1 will in turn loan the proceeds
of Cox's Cable Parent PCS Loan to Cox Partner. Each entity
receiving a Cable Parent PCS Loan will issue to the lender in
consideration for such loans promissory notes in the form of Exhibit R
(the "Cable Parent PCS Notes"). Sprint Partner will issue similar
promissory notes to Sprint for the Sprint PCS Loans (the "Sprint PCS
Notes").
(c) The PCS Partners hereby agree that, notwithstanding
any requirements of the PCS Partnership Agreement, except as provided
in this Section 6.4, or otherwise agreed in writing by all the PCS
Partners simultaneously with or subsequent to the execution of this
Agreement, no further Additional Capital Contributions under the PCS
Partnership Agreement shall be required prior to the Closing; provided
that if this Agreement is terminated prior to Closing, the provisions
of the PCS Partnership Agreement with respect to Additional Capital
Contributions will be fully restored. Any failure of a PCS Partner to
fund its pro rata share of the PCS Contributions (which obligation shall
be deemed a material covenant for all purposes hereunder) will give rise
to a remedy of the other parties for breach of this Agreement, but will
not trigger an "Adverse Act" or other remedies under the PCS Partnership
Agreement.
(d) If the PCS Contributions are not adequate to meet the
capital requirements of Sprint PCS GP and its Subsidiaries pending the
Closing, the PCS Partners will cause Sprint PCS GP to obtain a financing
proposal from a financial institution or an opinion from an investment
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banking firm as to the terms on which such additional required capital
would be available in a placement of debt securities by Sprint PCS GP.
Any such financing proposal must contemplate debt with a maturity of at
least three years, except that such debt must be payable in full at the
closing of the buy-sell arrangements set forth in Section 14.7 of
the PCS Partnership Agreement (but shall not otherwise mature or
accelerate as a result of a termination of this Agreement) (the
"Proposed Term"). Upon its receipt of written notice from the Sprint
PCS chief executive officer or the Sprint PCS Partnership Board
specifying the terms of third party financing proposed to be obtained
by Sprint PCS GP, Sprint Partner will have the right to provide debt
financing to Sprint PCS GP (directly or through an Affiliate) on
terms that result in substantially the same net economic cost to Sprint
PCS GP as the terms contemplated by such proposed financing (including
any expenses that would be incurred by Sprint PCS GP in effecting
financing through a third party). Sprint Partner or its Affiliate may
elect to provide such financing for a term equivalent to the Proposed
Term. At the Effective Time, any such debt financing provided by
Sprint Partner or its Affiliate would become debt of the PCS Group
owed to the Sprint FON Group.
Section 6.5 Capital Requirements of SprintCom Prior to
Closing. Subject to the next sentence, the capital requirements of
SprintCom and EquipmentCo during the period from the date of this
Agreement through the Closing Date will be provided by loans from
Sprint or its Affiliate or third party financing. The minimum
aggregate amount of loans from Sprint or its Affiliates will be (i)
$110.6 million times (ii) a fraction, the numerator of which equals
the total amount of PCS Contributions between the date of this Agreement
and the Closing Date and the denominator of which equals $400 million.
Such minimum aggregate amount (determined in accordance with the
formula set forth above) of the loans made by Sprint or its Affiliates
pursuant to this Section 6.5 is referred to herein as the "SprintCom
Loans." The SprintCom Loans shall be evidenced by promissory notes
(the "SprintCom Notes") in the form of Exhibit S hereto. Any
indebtedness of SprintCom or EquipmentCo to Sprint or its Affiliates
that was advanced or otherwise existed prior to January 1, 1998, shall
be contributed to the equity of SprintCom or EquipmentCo on the
Closing Date, and any such indebtedness advanced on or after January 1,
1998 and through the Closing Date (other than the SprintCom Loans),
shall on the Closing Date become intergroup debt of the PCS Group on
terms consistent with the Management and Allocation Policies.
Section 6.6 Capitalization or Purchase of PCS Notes and
SprintCom Loans.
(a) Each Cable Parent may elect to capitalize all or
any portion of its Cable Parent PCS Loans, subject to and in accordance
with the following terms and conditions:
(i) Such capitalization shall be effected no
later than immediately prior to Closing in the
following manner:
(A) to the extent Cox elects to
capitalize any portion of its Cable Parent PCS
Loans, Cox shall contribute such portion of its
Cable Parent PCS Loans to Cox HoldCo Sub2, and
(B) to the extent either Comcast or
TCI elects to capitalize any portion of its Cable
Parent PCS Loans, Comcast or TCI, as
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applicable, shall contribute such portion of its
Cable Parent PCS Loans as sequential capital
contributions through all intermediate corporations
from the creditor to the obligor of such Cable Parent
PCS Loans, including a capital contribution by the
owner of the stock of such obligor to such obligor.
(ii) In the Mergers, pursuant to Section 4.1, the
holder of the common stock of any entity to which any
Cable Parent PCS Loans have been contributed pursuant to
this Section 6.6(a) will receive, as consideration in the
Merger of such entity, for the equity representing the
Cable Parent PCS Loans contributed to such entity, a number
of shares of PCS Preferred Stock equal to the aggregate
principal amount of the Cable Parent PCS Loans and accrued
and unpaid interest thereon contributed to such entity,
divided by $1,000.
(iii) If the IPO is to be completed concurrently
with the Closing and a Cable Parent has elected pursuant to
Section 6.6(d)(ii) to receive any Available Cash Proceeds,
then such Cable Parent may not capitalize that portion of
its Cable Parent PCS Loans at the Closing.
(b) At the Closing, Sprint will purchase any Cable Parent
PCS Loans that (i) have not been capitalized pursuant to Section 6.6(a)
and (ii) are not required to be purchased by Sprint for cash at the
Closing pursuant to Section 6.6(d)(vi)(A). Sprint shall pay the purchase
price for any Cable Parent PCS Loans that it is required to purchase
pursuant to this Section 6.6(b) by delivering to the holder of such Cable
Parent PCS Loans a number of shares of PCS Preferred Stock equal to the
aggregate principal amount of such Cable Parent PCS Loans, plus all
accrued and unpaid interest thereon, divided by $1,000.
(c) At the Closing, any portion of the Sprint PCS Notes
and SprintCom Loans that is not required to be repaid at the Closing
pursuant to Section 6.6(d)(vii)(A), will be repaid by the creation of
the Preferred Intergroup Interest, which shall be the economic
equivalent of a number of shares of PCS Preferred Stock equal to the
outstanding principal amount of such Sprint PCS Notes and SprintCom
Loans, plus all accrued unpaid interest thereon, divided by $1,000.
(d) In connection with the consummation of the IPO
(which term, for purposes of this Section 6.6, includes any initial
primary offering of shares of Series 1 PCS Stock prior to the
Registration Rights Commencement Date), each Cable Parent may elect
to require that Sprint purchase for cash all or any portion of its
Cable Parent PCS Loans, or all or any portion of the shares of PCS
Preferred Stock issued to such Cable Parent or any Subsidiary of such
Cable Parent at the Closing pursuant to Section 6.6(b), but not any
shares of PCS Preferred Stock issued as consideration in any of the
Mergers in accordance with Section 6.6(a)(ii), subject to and in
accordance with the following terms and conditions:
(i) Not later than twelve Business Days prior
to the scheduled commencement of the road show for the
IPO, Sprint will notify each Cable Parent
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in writing (the "Sprint Notice") of Sprint's
good faith, reasonable estimate of the net proceeds
of the IPO (not including the proceeds of any
exercise by FT, DT or any Cable Parent of its Top-Up
Rights).
(ii) Each Cable Parent will, at least seven
Business Days prior to the scheduled commencement of
the road show for the IPO (but in any event within
two Business Days following the date that Sprint notifies
the Cable Parents that Sprint is prepared to print the
"red herring" prospectus to be used in connection
with the IPO roadshow (but for inclusion of the
information contained in the Parent Responses)),
deliver a binding written response (each, a "Parent
Response") to Sprint indicating the total cash that
such Cable Parent desires to have paid to it and its
Subsidiaries in consideration for the purchase of its Cable
Parent PCS Loans or PCS Preferred Stock issued at Closing
pursuant to Section 6.6(b), as applicable (such Cable
Parent's "Cash Request Amount"). If Sprint proposes to
consummate the IPO concurrently with the Closing and, after
receiving each Cable Parent's Parent Response, (A) Sprint
elects to postpone commencing the road show or printing
the "red herring" prospectus by more than 10 Business
Days from the schedule contemplated at the time of the
giving of the Sprint Notice or (B) delays in consummating
the IPO require that Sprint reprint the "red herring"
prospectus, then, in either such case, any Cable Parent
may amend its Parent Response by written notice to Sprint
given prior to the printing or reprinting, respectively,
of the "red herring" prospectus, as applicable, to reduce
its Cash Request Amount. If the IPO is proposed to be
consummated after the Closing, a Cable Parent's Cash
Request Amount may not exceed the product of $1,000
times the number of shares of PCS Preferred Stock
issued to such Cable Parent and its Subsidiaries at
Closing pursuant to Section 6.6(b).
(iii) Within five Business Days after giving the
Sprint Notice, Sprint will notify each of the Cable
Parents of the total cash that Sprint desires to
receive in repayment of its Sprint PCS Notes and
SprintCom Loans or for the reduction of the Preferred
Intergroup Interest created pursuant to Section 6.6(c),
as applicable (Sprint's "Cash Request Amount").
(iv) If the IPO is proposed to be consummated
simultaneously with the Closing, neither Sprint's nor
a Cable Parent's Cash Request Amount may exceed the
balance of principal and unpaid and accrued interest
on its Cable Parent PCS Loans (in the case of the Cable
Parents) or its Sprint PCS Loans and SprintCom Loans
(in the case of Sprint).
(v) The Available Cash Proceeds shall be
allocated among the Parents for purposes of this
Section 6.6(d) in accordance with the following:
(A) "Available Cash Proceeds" means
the amount by which the net proceeds
of the IPO (not including the
proceeds of any exercise by FT or DT
of its Top-Up Rights but including the
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proceeds of any exercise by any Cable
Parent of its Top-Up Rights )
exceed $500 million.
(B) The Available Cash Proceeds shall first
be allocated (1) to Sprint, to the extent
of the lesser of 53% of the Available
Cash Proceeds or Sprint's Cash Request
Amount, (2) to TCI, to the extent of the
lesser of 23.5% of the Available Cash
Proceeds or TCI's Cash Request
Amount, (3) to Comcast, to the extent
of the lesser of 11.75% of the Available
Cash Proceeds or Comcast's Cash Request
Amount, and (4) to Cox, to the extent of
the lesser of 11.75% of the Available Cash
Proceeds or Cox's Cash Request Amount.
(C) After the allocations pursuant to Section
6.6(d)(v)(B), if all of the Available Cash
Proceeds have not been allocated and any
Parent has not been allocated a portion
of the Available Cash Proceeds equal to
its Cash Request Amount, then the portion
of the Available Cash Proceeds
that was not allocated pursuant to the
preceding paragraph shall be allocated
among those Parents that have not been
allocated all of their respective Cash
Request Amounts, in proportion to their
Cash Request Amounts, until (1) each
Parent has been allocated its Cash Request
Amount or (2) all of the Available Cash
Proceeds have been allocated among the
Parents.
(D) The sum of the portion of the Available
Cash Amount allocated to a Parent
pursuant to 6.6(d)(v)(B) plus the
portion of the Available Cash Amount
allocated to a Parent pursuant to
6.6(d)(v)(C) is such Parent's
"Allocated Cash Proceeds."
(vi) Upon the consummation of the IPO, Sprint shall
pay to each Cable Parent in cash the amount of such Cable
Parent's Allocated Cash Proceeds as consideration for the
purchase from such Cable Parent or any Subsidiary of such
Cable Parent of:
(A) in the case of an IPO consummated
concurrently with the Closing, a portion
of such Cable Parent's Cable Parent
PCS Loans having a principal amount,
together with all accrued and unpaid
interest thereon, equal to such Cable
Parent's Allocated Cash Proceeds, and
(B) in the case of an IPO consummated after
the Closing, that number of shares of
the PCS Preferred Stock issued to such
Cable Parent or any Subsidiary of such
Cable Parent at the Closing pursuant
to Section 6.6(b) having a Liquidation
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Preference (as defined in the
Certificate of Designations), plus
accumulated unpaid dividends, equal
to such Cable Parent's Allocated Cash
Proceeds.
(vii) Upon the consummation of the IPO,
(A) in the case of an IPO consummated
concurrently with the Closing, an amount
equal to Sprint's Allocated Cash
Proceeds shall be used to repay any
outstanding Sprint PCS Loans and
SprintCom Loans and to pay accrued
interest thereon (which payment shall
be allocated to the Sprint FON Group),
and
(B) in the case of an IPO consummated after
the Closing, an amount equal to Sprint's
Allocated Cash Proceeds shall be used to
reduce the Preferred Intergroup Interest
created pursuant to Section 6.6(c), in a
manner comparable to a redemption of
PCS Preferred Stock pursuant to Section
6.6(d)(vi)(B).
(e) Notwithstanding any other provision of this Section
6.6, Sprint will in no event issue any fractional shares of PCS
Preferred Stock. Any fractional share of PCS Preferred Stock otherwise
required to be issued pursuant to this Section 6.6 shall be rounded to
the nearest whole share.
Section 6.7 Loans to PhillieCo. The Parents of the
PhillieCo Partners have loaned to PhillieCo GP in proportion to the
respective PhillieCo Interests of the PhillieCo Partners $50 million in
the aggregate pursuant to promissory notes dated as of April 13, 1998.
Sprint will arrange for or provide any additional financing required
by PhillieCo GP on the same basis as contemplated with respect to
Sprint PCS GP in Section 6.4(d). The parties hereto agree that Sprint
shall cause all loans advanced by the Parents of the PhillieCo Partners
or their respective Affiliates to PhillieCo GP prior to the Closing
(whether included in the $50 million or otherwise) to be repaid by
PhillieCo GP (together with accrued interest) on the 90th day
following the Closing Date, and the PhillieCo Parents will cause
PhillieCo GP and their respective Affiliates to enter into agreements
prior to May 31, 1998, extending the maturity of the notes representing
such loans to such date. Such agreements will provide that, if this
Agreement is terminated prior to Closing, such financing (and all
secured interest thereon) will be repayable to the applicable PhillieCo
Partner or its Affiliate at the closing of the buy/sell arrangements set
forth in Section 14.7 of the PhillieCo Partnership Agreement.
Section 6.8 Equity Purchase Rights.
(a) From and including the Closing Date, each Cable Parent
and any Subsidiary of a Cable Parent that holds shares of PCS Stock
(a "Cable Holder"), shall have the right (an "Equity Purchase Right")
to purchase from Sprint:
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(i) if on or after the Closing Date (including
in connection with the IPO), Sprint shall issue shares of
PCS Stock for cash, that number of additional shares of
Series 2 PCS Stock sufficient for such Cable Holder to
avoid any reduction in its PCS Group Percentage
Interest as in effect immediately prior to the issuance
of such shares (which, for the purposes of the IPO,
shall be determined as if the Mergers occurred immediately
prior to the consummation of the IPO) solely as a result
of such issuance; such shares of Series 2 PCS Stock to be
purchased from Sprint at a per share purchase price equal
to the purchase price paid for such shares of PCS Stock
whose issuance gave rise to such Equity Purchase Right,
which purchase price shall be net of any underwriting
discounts in connection with a public offering of shares
of PCS Stock;
(ii) if after the Closing, Sprint shall issue
for cash options, warrants or other securities of Sprint
or any of its Controlled Affiliates that are exercisable
or exchangeable for or convertible into shares of PCS Stock,
that number of such options, warrants or other securities
sufficient for such Cable Holder to avoid any reduction in
its PCS Group Percentage Interest as in effect immediately
prior to such issuance solely as a result of such issuance;
such options, warrants or other securities to be purchased
from Sprint at a price per unit equal to the per unit
purchase price paid for such options, warrants or other
securities whose issuance gave rise to such Equity
Purchase Right, which purchase price shall be net of any
underwriting discounts in connection with a public
offering of such options, warrants or other securities;
(iii) if after the Closing, the Sprint FON Group
contributes to the PCS Group cash or other assets in
exchange for an increase in the Sprint FON Group common
intergroup interest in the PCS Group, that number of
additional shares of Series 2 PCS Stock sufficient for
such Cable Holder to avoid any reduction in its PCS Group
Percentage Interest as in effect immediately prior to
such contribution solely as a result of such contribution,
such Series 2 PCS Stock to be purchased at a price per
share based on the corresponding per unit price used by
the Sprint Board of Directors or its Capital Stock
Committee in determining the appropriate adjustment to
the Sprint FON Group common intergroup interest as a
result of such contribution of cash or assets; and
(iv) if after the Closing, the Sprint FON Group
contributes to the PCS Group cash or other assets in
exchange for a preferred or other intergroup interest that
is convertible into or exchangeable for a common intergroup
interest in the PCS Group, that number of securities having
substantially the same terms as such preferred or other
intergroup interest sufficient for such Cable Holder to
avoid any reduction in its PCS Group Percentage Interest
as in effect immediately prior to such contribution solely
as a result of such contribution; such securities to be
purchased at a price per share based on the corresponding
per unit price used by the Sprint Board of Directors or
its Capital Stock Committee in determining the amount of the
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Sprint FON Group intergroup interest as a result of such
contribution of cash or assets.
The additional shares, options, warrants or other securities to be
purchased pursuant to paragraphs (i), (ii), (iii) and (iv) above
are referred to herein as the "Additional Securities."
(b) Sprint shall deliver to each Cable Parent written
notice of any proposed action that would give rise to Equity Purchase
Rights not less than fifteen days prior to such action, such notice
to describe in reasonable detail the price per share of PCS Stock
(or price per warrant, option or security exercisable or exchangeable
for or convertible into shares of PCS Stock) reflected in such
transaction and contain the calculation thereof (or, in the case of a
public offering, the anticipated price per share or other unit);
provided, that no such notices need be given (and the Cable Holders
shall not have any rights under this Section 6.8) with respect to
shares of PCS Stock issued pursuant to (i) the Recapitalization,
(ii) exercises of the Warrants, (iii) conversion of the PCS Preferred
Stock, (iv) qualified or non-qualified employee and director benefit
plans, arrangements or contracts (including stock purchase plans),
(v) dividend reinvestment plans, (vi) conversion rights under capital
stock of Sprint outstanding as of the date hereof or (vii) purchase
rights that are exercised by FT and/or DT as a result of the
issuance of PCS Stock in connection with any of the matters described
in clauses (ii)-(vi) above. In addition, a Cable Holder shall have no
rights under this Section 6.8 with respect to the exercise of purchase
rights by FT or DT that are triggered by sales of Series 2 PCS Stock
by such Cable Holder or any of its Affiliates.
(c) The Cable Holders may exercise their Equity Purchase
Rights pursuant to Section 6.8(a) by binding written notice (subject
to consummation of the underlying transaction) to Sprint delivered
prior to the fifteenth day after the date of the related notice
provided for in Section 6.8(b) specifying the number of Additional
Securities to be purchased.
(i) Notwithstanding the foregoing, in connection
with a public offering of PCS Stock by Sprint to which
this Section 6.8 is applicable, at least twelve (12)
Business Days prior to the printing of the "red herring"
prospectus for such offering, Sprint shall give written
notice to the Cable Parents setting forth Sprint's
then-current estimate of the number of shares of PCS
Stock Sprint intends to offer and the anticipated per
share range for the offering price (the "Price Range").
If the midpoint of the Price Range is $15 or less, the
Price Range shall extend not more than $1 above the
midpoint nor more than $1 below the midpoint. At least
seven (7) Business Days prior to the printing of
the "red herring" prospectus for such offering, each
Cable Parent shall be required to deliver a binding
notice to Sprint (the "EPR Notice") stating
whether and as to how many shares the Cable Parent
and its Subsidiaries will exercise their Equity
Purchase Rights as follows:
(A) for the IPO, whether Equity Purchase
Rights will be exercised if the actual
price per share at which shares are
sold in the IPO is in a range (the
"Decision Range") as follows: (x) if
the midpoint of the Price Range is $15 or
less, the Price Range; (y) if the midpoint
of the Price Range is $15 or more, then
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from a price per share 10% above
the midpoint of the Price Range
(but in no event more than $1 above the
high point) to a price per share
10% below the midpoint of the Price Range
(but in no event lower than $1 below the
low point);
(B) for other primary offerings, whether and
as to how many shares the Cable Parent
and its Subsidiaries will exercise
Equity Purchase Rights without regard to a
price range (subject to Section 6.8(c)(iii)).
(ii) In the case of (i)(A): (I) if the actual price
per share in the IPO is greater than the high point of the
Decision Range, (1) a decision to not exercise Equity
Purchase Rights shall nevertheless be binding and (2) any
Cable Holder that originally exercised its Equity Purchase
Rights with respect to the IPO, in whole or in part, shall
be entitled to rescind such exercise, in whole or in part,
at the time of pricing of the IPO; and (II) if the actual
price per share in the IPO is less than the low point of the
Decision Range, (1) an exercise of Equity Purchase Rights
shall nevertheless be binding and (2) any Cable Holder
that originally declined to exercise its Equity
Purchase Rights with respect to the IPO, or originally
exercised its Equity Purchase Rights with respect to the
IPO only in part, will be entitled to exercise its Equity
Purchase Rights with respect to the IPO, in whole or in part
(or in greater part, if its Equity Purchase Rights were
previously exercised), at the time of pricing of the IPO.
(iii) In the case of (i)(B): (I) if the actual price
per share in such offering is less than 95% of the closing
price of the Series 1 PCS Stock on the date of pricing of
such offering, (1) an exercise of Equity Purchase Rights
shall nevertheless be binding and (2) any Cable Holder that
originally declined to exercise its Equity Purchase Rights
with respect to such public offering, or originally
exercised its Equity Purchase Rights with respect to such
public offering only in part, will be entitled to exercise
its Equity Purchase Rights with respect to such public
offering, in whole or in part (or in greater part, if its
Equity Purchase Rights were previously exercised), at the
time of pricing of such public offering.
(iv) With respect to any decision to be made by a
Cable Holder at the time of pricing pursuant to paragraph
(ii) or (iii) above or with respect to any primary public
offerings by Sprint of securities that are exercisable or
exchangeable for or convertible into shares of PCS Stock,
Sprint and each affected Cable Holder will cooperate to
develop procedures that will permit such Cable Holder to
exercise its rights under paragraph (ii) or (iii) or with
respect to such offerings concurrently with the applicable
pricing decision without any disruption or delay to the
public offering.
(v) Payment for any Additional Securities purchased
by the Cable Holders that exercise their Equity Purchase
Rights shall be made as provided in Section 6.8(e) hereof.
The total number of Additional Securities specified by each
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exercising Cable Holder shall be issued and delivered
to such Cable Holder against delivery to Sprint of
the purchase price therefor as provided in Section 6.8(e)
hereof.
(d) If Sprint issues to the Cable Holders upon exercise of
their Equity Purchase Rights Additional Securities on a date after the
date the related PCS Stock is issued, then (i) the per share purchase
price paid by the Cable Holders shall be reduced to reflect the
fair market value (as determined by the Board of Directors of Sprint)
of any dividend or distribution made in respect of the PCS Stock after
the date the related PCS Stock is issued and prior to such issuance
and (ii) such purchase price and the number of shares of Additional
Securities purchased shall be appropriately adjusted to reflect any
stock split, stock dividend or other combination or reclassification
of the PCS Stock.
(e) The closing of purchases of Additional Securities
pursuant to the exercise of Equity Purchase Rights by the exercising
Cable Holders shall take place on a date specified by the exercising
Cable Holders, which date shall be within 30 days after the exercise
of such Equity Purchase Rights or (if later) within 10 days after
the receipt of all required regulatory approvals (in each case assuming
the action giving rise to such Equity Purchase Rights has occurred),
at the executive offices of Sprint, at 10:00 a.m., Kansas City time,
or at such other date, time or place as Sprint and such exercising
Cable Holder may otherwise agree. At such closing:
(i) Sprint shall deliver, or cause to be delivered,
to such exercising Cable Holder, certificates representing
the shares of Additional Securities to be purchased by
such exercising Cable Holder, in the name of such holder,
against payment of the purchase price therefor, as
provided below; and
(ii) such exercising Cable Holder shall deliver
to Sprint an amount in cash by wire transfer in immediately
available funds equal to the product of (i) the applicable
price per share determined pursuant to Section 6.8(a) (as
adjusted pursuant to Section 6.8(d)) and (ii) the number
of shares of Additional Securities to be acquired by
such exercising Cable Holder.
(f) In connection with the occurrence of any issuance or
contribution that gives rise to Equity Purchase Rights and to purchase
rights of FT and DT, Sprint shall use its reasonable efforts to
coordinate the exercise of purchase rights by the Cable Holders and FT
and DT to avoid a series of successive exercises of purchase rights
triggered by a single issuance or contribution.
(g) The Equity Purchase Rights of a Cable Parent and its
Subsidiaries shall terminate simultaneously with the termination of
the Standstill Agreement between Sprint and such Cable Parent.
(h) Notwithstanding the provisions of the Standstill
Agreement, with respect to each action giving rise to Equity Purchase
Rights, if a Cable Holder elects not to purchase all of the Additional
Securities that it is entitled to purchase after such action, such
Cable Holder will thereafter be entitled to purchase, in open market
purchases on the New York Stock Exchange or other applicable exchange
or otherwise from a third party:
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(i) as to Sections 6.8(a)(i) and (iii), a number of
shares of Series 1 PCS Stock equal to the number of shares
of Series 2 PCS Stock that such Cable Holder was entitled
to purchase from Sprint and elected not to so purchase; or
(ii) as to Sections 6.8(a)(ii) and (iv), either (A)
a number of shares of Series 1 PCS Stock equal to the number
of shares of PCS Stock into which the options, warrants or
other securities that such Cable Holder elected not to
purchase would have been convertible, exercisable or
exchangeable on the date of the action giving rise to such
Equity Purchase Rights (disregarding for such purpose any
time or other limitations on the holder's right to convert,
exercise, or exchange) or (B) that number of such securities
(other than PCS Stock) that such Cable Holder was entitled
to purchase and elected not to so purchase;
in each case as adjusted to reflect any stock split, stock dividend or
other combination or reclassification of the PCS Stock or other
security.
(i) Notwithstanding the provisions of the Standstill
Agreement, if after the Closing Date Sprint shall issue shares of
PCS Stock (or options, warrants or other securities of Sprint or
any of its Controlled Affiliates that are exercisable or exchangeable
for or convertible into shares of PCS Stock) other than for cash
(including pursuant to a merger, acquisition, share exchange or
similar transaction), each Cable Holder shall thereafter have the
right to acquire, in open market purchases on the New York Stock
Exchange or other applicable exchange or otherwise, that number of
additional shares of Series 1 PCS Stock sufficient for such Cable
Holder to avoid any reduction in its PCS Group Percentage Interest
as in effect immediately prior to the issuance of such shares solely
as a result of such issuance, assuming that any such options,
warrants or other securities were converted into shares of PCS Stock as
of the date of issuance of such options, warrants or other securities,
and appropriately adjusted to reflect any stock split, stock dividend
or other combination or reclassification of the PCS Stock.
(j) Any shares of Series 1 PCS Stock acquired by any Cable
Holder will be subject to the applicable Voting Agreement.
Section 6.9 Conduct of Business of the HoldCo Entities and
Cable Partners. From and including the date hereof to the Effective
Time (or the earlier termination of this Agreement), except as
expressly contemplated by this Agreement and the Other Agreements, none
of the HoldCo Entities or Cable Partners will, and none of the Cable
Parents will permit any of its respective HoldCo Entities or its
respective Cable Partner to:
(a) transfer, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the Transfer, issuance,
sale, disposition or pledge or other encumbrance of (i) any
additional shares of capital stock of any class, or any securities
or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of
any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or
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evidencing the right to subscribe for, any shares of capital stock
of such HoldCo Entity or Cable Partner (as the case may be), or
(ii) any other securities in respect of, in lieu of, or in
substitution for, shares of capital stock of such HoldCo Entity
or Cable Partner (as the case may be) outstanding on the date hereof;
(b) acquire or dispose of any property or assets of such
HoldCo Entity or Cable Partner (as the case may be) or enter into any
contracts, arrangements or understandings;
(c) adopt any amendments to the charter or By-Laws of
such HoldCo Entity or Cable Partner (as the case may be) or alter
through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of such HoldCo
Entity or Cable Partner;
(d) incur any indebtedness, liabilities or obligations
of any kind, except those imposed solely as a matter of Law without
any action of such HoldCo Entity or Cable Partner (as the case may be);
provided that the HoldCo Entities and the Cable Partners may
incur intercompany indebtedness that will be extinguished by means of
capital contribution prior to the Effective Time;
(e) engage in any conduct or business other than holding
the general and limited partnership interests in the respective Cable
Partner, Sprint PCS GP, Sprint PCS LP, PhillieCo GP or PhillieCo LP
(as applicable); or
(f) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 6.10 Conduct of Business of SprintCom and
EquipmentCo. From and including the date hereof to the earlier to
occur of the Closing Date or the termination of this Agreement
pursuant to Section 10.1, except as expressly contemplated by this
Agreement or the Other Agreements and excluding third party
affiliation arrangements that will be entered into by SprintCom,
Sprint shall cause SprintCom and EquipmentCo:
(a) to operate the business of SprintCom and EquipmentCo
in the ordinary course of business;
(b) not to transfer, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize the transfer, issuance, sale,
disposition or pledge or other encumbrance of (i) any additional shares
of capital stock of any class or other equity interests (including
limited or general partnership interests in the case of EquipmentCo),
or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital
stock or other equity interests (including limited or general
partnership interests in the case of EquipmentCo), or any rights,
warrants, options, calls, commitments or any other agreements
of any character to purchase or acquire any shares of capital
stock or other equity interests (including limited or general
partnership interests in the case of EquipmentCo) or any
securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock or
other equity interests (including limited or general partnership interests
in the case of EquipmentCo), or (ii) any other securities in respect of,
in lieu of, or in substitution for, shares of capital stock or other equity
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interests (including limited or general partnership interests in the
case of EquipmentCo) outstanding on the date hereof;
(c) not to acquire or dispose of any property or assets
or enter into any contracts, arrangements or understandings other
than in the ordinary course of business (which shall include any
acquisitions of PCS licenses and related assets and leveraged lease
transactions that have heretofore been disclosed to Cable Parents);
(d) not to adopt any amendments to the charter or By-Laws
or organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of SprintCom or EquipmentCo;
(e) not to incur any indebtedness other than in the
ordinary course of business (which shall include any acquisitions of
PCS licenses and related assets and leveraged lease transactions that
have heretofore been disclosed to the Cable Parents);
(f) not to enter in any contract, agreement, commitment
or arrangement to do any of the foregoing;
(g) not to take any other action that could be
reasonably expected to have a Material Adverse Effect on SprintCom
or EquipmentCo, whether individually or taken as a whole; and
(h) not to take any action or knowingly fail to take
any action (including actions relating to the buildout of PCS systems)
within its control that would result in the revocation of Sprint's
or SprintCom's right to hold or use the SprintCom licenses.
Section 6.11 Access to Information.
(a) Upon reasonable notice, each Cable Partner and HoldCo
Entity will afford to officers, employees, counsel, accountants and
other authorized representatives of Sprint ("Sprint Representatives")
reasonable access, during normal business hours throughout the period
prior to the Effective Time, to its properties, books and records
(including, subject to execution of appropriate access letters, the
work papers of independent accountants), and, during such period, shall
(and shall cause each of its Subsidiaries to) furnish promptly to such
Sprint Representatives all information concerning its business,
properties and personnel as may reasonably be requested, provided
that no investigation pursuant to this Section 6.11(a) shall affect
or be deemed to modify any of the respective representations or
warranties made herein by such Cable Parents, HoldCo Entities or
Cable Partners thereof. Sprint agrees that it will not, and will
cause the Sprint Representatives not to, use any information obtained
pursuant to this Section 6.11(a) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Sprint will keep confidential, and will cause the Sprint Representatives
to keep confidential, all information and documents obtained pursuant
to this Section 6.11(a) except as otherwise consented to by the
applicable Cable Parent; provided, however, that Sprint shall not
be precluded from making any disclosure which it deems required by
Law in connection with the Mergers, the IPO or the
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Recapitalization. In the event Sprint is required to disclose any
information or documents pursuant to the immediately preceding
sentence, Sprint shall promptly give prior written notice of such
disclosure that is proposed to be made to the applicable Cable
Parent so that Sprint and such Cable Parent can work together to
limit the disclosure to the greatest extent possible and, in the
event that Sprint is legally compelled to disclose any information,
to seek a protective order or other appropriate remedy or both.
Upon any termination of this Agreement, as and when requested by
the applicable Cable Parent, Sprint will collect and deliver to
such Cable Parent all documents obtained pursuant to this Section
6.11(a) by Sprint or the Sprint Representatives then in their
possession and any copies thereof.
(b) Upon reasonable notice, Sprint will afford to
officers, employees, counsel, accountants and other authorized
representatives of any of the Cable Parents ("CP Representatives")
reasonable access, during normal business hours throughout the
period prior to the Effective Time, to the properties, books and
records of SprintCom and EquipmentCo (including, subject to
execution of appropriate access letters, the work papers of
independent accountants), and, during such period, shall furnish
promptly to such CP Representatives all information concerning the
business, properties and personnel of SprintCom and EquipmentCo as
may reasonably be requested, provided that no investigation pursuant
to this Section 6.11(b) shall affect or be deemed to modify any of
the respective representations or warranties made herein by Sprint.
Each of the Cable Parents agrees that it will not, and will cause its
respective CP Representatives not to, use any information obtained
pursuant to this Section 6.11(b) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
The Cable Parents will keep confidential, and will cause its
respective CP Representatives to keep confidential, all information
and documents obtained pursuant to this Section 6.11(b) except as
otherwise consented to by Sprint; provided, however, that any Cable
Parent shall not be precluded from making any disclosure which it
deems required by Law in connection with the Mergers. In the event
a Cable Parent is required to disclose any information or documents
pursuant to the immediately preceding sentence, such Cable Parent
shall promptly give prior written notice of such disclosure that is
proposed to be made to Sprint so that Sprint and such Cable Parent can
work together to limit the disclosure to the greatest extent possible
and, in the event that such Cable Parent is legally compelled to
disclose any information, to seek a protective order or other
appropriate remedy or both. Upon any termination of this Agreement,
as and when requested by Sprint, each Cable Parent will collect and
deliver to Sprint all documents obtained pursuant to this Section
6.11(b) by any Cable Parent or its CP Representatives then in their
possession and any copies thereof.
Section 6.12 Tax Matters.
(a) Each of the parties shall use all reasonable efforts
to cause each of the Mergers to constitute a "reorganization" under
Section 368(a) of the Code. Each party agrees that it will not take
any action, and will not permit any of its Subsidiaries or Affiliates
to take any action, that such party knows would cause the Mergers to
fail to qualify as a reorganization under Section 368(a) of the Code.
Each party agrees to report the Mergers on all tax returns and other
filings as a reorganization under Section 368(a) of the Code.
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(b) Sprint shall use all reasonable efforts to cause the
Recapitalization to constitute a recapitalization as defined in Code
section 368(a)(1)(E). Sprint agrees that it will not take any action,
and will not permit any of its Subsidiaries or Affiliates to take any
action, that Sprint knows would cause the Recapitalization to fail to
qualify as a recapitalization under Code section 368(a)(1)(E).
(c) On the date hereof Sprint has, and on the Closing
Date Sprint will, execute and deliver to counsel to each Cable Parent
a certificate substantially in the form attached as Exhibit T, signed
by an officer of Sprint, setting forth factual representations and
covenants (stated in such Exhibit) that will serve as the basis of
the tax opinions required pursuant to Section 5.2(h).
Section 6.13 Chairman of Sprint PCS. Concurrently
with the execution of this Agreement, the PCS Partners will appoint
Ronald T. LeMay as Chairman of the Partnership Board of Sprint
PCS GP (the "Chairman").
Section 6.14 Agreement Not to Trigger Buy/Sell.
Until the termination of this Agreement, (i) each of the PCS Partners
agrees that the provisions of Section 5.8 of the PCS Partnership
Agreement shall be suspended and (ii) none of the PCS Partners will
take any action to implement the determination of Net Equity (as
defined in the Partnership Agreement) of each PCS Partner pursuant
to Section 14.7 of the Partnership Agreement, or take any other
action that would cause a Liquidating Event (as defined in the
Partnership Agreement).
Section 6.15 Management and Allocation Policies.
Sprint will not make any change in or amendment to the Management
and Allocation Policies or the Bylaw Amendment (or waive or otherwise
disregard any provision thereof) prior to the Recapitalization without
the consent of each of the Cable Parents.
Section 6.16 Informational Rights.
(a) Until the later to occur of (i) the termination of the
Standstill Agreement between Sprint and the applicable Cable Parent and
(ii) the earliest time that such Cable Parent and its Subsidiaries
beneficially own securities of Sprint representing a number of Votes (as
defined in the Standstill Agreement) that is less than 1.5% of the
number of Votes (as defined in the Standstill Agreement) represented by
all outstanding capital stock of Sprint (assuming for this purpose that
each share of Series 2 PCS Stock had the same voting right as a share of
Series 1 PCS Stock and that each share of Series 2 FON Stock had the same
voting rights as a share of Series 1 FON Stock), Sprint will provide such
Cable Parent with substantially the same informational rights that Sprint
provides to its major institutional stockholders. In addition, Sprint
will provide such Cable Parent with any information regarding the PCS Group
as may be reasonably requested by such Cable Parent to permit it to comply
with disclosure and financial reporting requirements under applicable
securities laws.
(b) If Sprint is required to include audited financial
statements of the HoldCo Entities and their Subsidiaries and TCI
Partner in the Proxy Statement or the Registration Statement,
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each Cable Parent shall provide such financial statements in the
necessary form at such Cable Parent's expense, promptly following the
request of Sprint.
Section 6.17 Transfer of Series 2 PCS Stock. Each of
the Cable Parents agrees that it will not (nor will it permit any of
its Subsidiaries to) Transfer any Series 2 PCS Stock, the Warrants or
any other securities of Sprint acquired by such Cable Parent and its
Subsidiaries pursuant to this Agreement unless such Transfer complies
with applicable federal and state securities laws.
Section 6.18 Spin-off. In the event of a Spin-off
(as defined in the Initial Charter Amendment) of all or substantially
all of the PCS Group or in case of a redemption of PCS Stock in exchange
for stock of the PCS Group Subsidiary of the type set forth in Section
7.2 of the Initial Charter Amendment, Sprint or its Subsidiary will
enter into a trademark license agreement with the PCS Group on
substantially the same terms as the Amended and Restated Sprint
Trademark License, dated as of January 31, 1996, between Sprint
Communications Company L.P. and Sprint PCS GP, except that,
notwithstanding the termination provisions of such agreement, such
trademark license (i) will be non-exclusive and (ii) will terminate
in its entirety on the date that is six months following the effective
date of the Spin-off.
Section 6.19 Parents Agreements: Non-Competition.
(a) The parties agree that for purposes of the Parents
Agreements, the terms "Subsidiary" and "Controlled Affiliate" and
(with respect to the Cable Parents) "Cable Subsidiary" shall not
include any Person in which a Cable Parent or Sprint, directly or
indirectly, holds an equity interest of not more than 50% so long
as such Cable Parent or Sprint, respectively, does not have direct
or indirect control over the management of the day-to-day operations
of such Person (each, a "Non-Controlled Affiliate"). In addition,
the parties agree that the release or waiver by a party of any
obligations of a Non-Controlled Affiliate of such party comparable
to the obligations of a Controlled Affiliate, Subsidiary or Cable
Subsidiary under the Parents Agreement (and the engaging in
activities by such Non-Controlled Affiliate that would otherwise
have been inconsistent with such obligations) shall not be deemed
to be inconsistent with the obligations of such party under the
applicable Parents Agreement. The parties further agree that
each of the Parents Agreements and the rights and obligations of the
parties thereunder shall terminate at the Effective Time pursuant
to clause (ii) of Section 13 of the Parents Agreements.
(b) The parties agree that, for the purposes of Section
6.3(c) of the PCS Partnership Agreement, no PCS Partner (nor any of
its Controlled Affiliates) is required in connection with the
acquisition of an equity interest in any Person that does not represent
a majority of the outstanding equity or voting interests in such
Person to require such Person not to engage in Competitive Activities
(as defined in the PCS Partnership Agreement) so long as (i) such
person is not engaged in any Competitive Activities as of the date
of the acquisition of such equity interest and (ii) neither such
PCS Partner nor any of its Controlled Affiliates allows its name to
be used in connection with any Competitive Activities engaged in by
such Person. The applicable parties agree that the prior sentences
shall also be applied with respect to the noncompetition restrictions
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contained in the PhillieCo Partnership Agreement and the
partnership agreement of Cox Communications PCS, L.P.
(c) The provisions of Sections 6.19(a) and 6.19(b)
shall survive any termination of this Agreement, but only with
respect to any equity interest acquired (or subject to a binding
agreement to be acquired) by a Cable Parent or its Subsidiaries
or Sprint or its Subsidiaries prior to such termination, whether
or not such equity interest was acquired prior to the date of
this Agreement.
Section 6.20 Confidentiality. Each Cable Parent
and its Subsidiaries shall be bound by the provisions of Sections
6.6(a), (b), (d) and (g) of the PCS Partnership Agreement,
as if references to the "Partners" therein referred to the Cable
Parents. The provisions of Section 6.6(c) and (e) of the PCS
Partnership Agreement shall not apply to any Cable Parent.
Section 6.6(f) of the PCS Partnership Agreement shall also
apply to each Cable Parent and its Subsidiaries, except that
the two (2) year period referred to therein shall be deemed to
commence on the Closing Date.
Section 6.21 Conduct of Business of PhillieCo.
From and including the date hereof to the earlier to occur of the
Closing Date or the termination of this Agreement pursuant
to Section 10.1, each PhillieCo Parent through its respective
PhillieCo Partner shall cause PhillieCo:
(a) to operate the business of PhillieCo in the ordinary
course of business;
(b) not to transfer, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize the transfer, issuance,
sale, disposition or pledge or other encumbrance of (i) any additional
limited or general partnership interests or other equity interests or any
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any limited or general partnership interests
or other equity interests or any commitments or other agreements of
any character to purchase or acquire any limited or general partnership
interests or other equity interests, or (ii) any other securities in
respect of, in lieu of, or in substitution for, limited or general
partnership interests or other equity interests outstanding on
the date hereof;
(c) not to acquire or dispose of any property or assets
or enter into any contracts, arrangements or understandings other than
in the ordinary course of business;
(d) not to adopt any amendments to the PhillieCo LP
Partnership Agreement or PhillieCo Partnership Agreement or
organizational documents or alter through merger, liquidation,
reorganization, restructuring or alter in any other fashion the
partnership structure or ownership of PhillieCo;
(e) not to incur any indebtedness other than in the
ordinary course of business;
(f) not to enter in any contract, agreement,
commitment or arrangement to do any of the foregoing;
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(g) not to engage in any other activities, except
the provisions of wireless telephone service pursuant to the PhillieCo
Licenses; and
(h) not to take any action or knowingly fail to take any
action (including actions relating to the buildout of PCS systems)
within its control that would result in the revocation of PhillieCo's
right to hold or use the PhillieCo Licenses.
Section 6.22 Intergroup Interests. Sprint agrees that
it will effect such changes from time-to-time to the Preferred Intergroup
Interest and the Warrant Intergroup Interest as may be necessary to
reflect any changes to the terms, rights, powers or privileges of
the PCS Preferred Stock and the Warrants, respectively, including
as a result of the redemption of the PCS Preferred Stock.
Section 6.23 Rights Plan. Sprint agrees that under
the applicable governing documents for any stockholder rights
plan in effect for stockholders of Sprint following the Closing:
(a) a holder of Series 2 PCS Stock (or Series 2 FON Stock)
shall not be deemed to "beneficially own" the shares of Series 1 PCS
Stock (or Series 1 FON Stock) issuable upon conversion thereof prior
to the time of such conversion (including for purposes
of calculating the voting power of the shares held by such holder);
(b) the beneficial ownership by a Cable Parent or its
Affiliates of the shares of common stock of Sprint acquired by such
Cable Parent or its Affiliates pursuant to this Restructuring Agreement
(including Article 4, Section 6.8 and Section 7.10 and including any
other shares of common stock of Sprint acquired upon conversion or
reclassification thereof, or upon payment of any dividend or other
distribution thereon), or acquired upon the conversion
of any such shares, shall not in and of itself constitute beneficial
ownership of shares sufficient so as to result in such Cable Parent
or its Affiliates being an "acquiring person" or the like
thereunder; and
(c) in the event any transferee of shares of common
stock of Sprint from a Cable Parent or any of its Affiliates
(whose beneficial ownership of common stock of Sprint
(and the voting power thereof) did not exceed the applicable
threshold as of the time of the acquisition of such shares
(including following any conversion of shares of Series 2 PCS Stock
or Series 2 FON Stock into Series 1 PCS Stock or Series 1 FON Stock
in connection therewith) so as to make such an "acquiring person"
or the like thereunder) subsequently exceeds such threshold as a
result of the operation of the provisions of Section 3.2 (or any
successor provisions) of the Amended and Restated Articles of
Incorporation of Sprint, Sprint shall provide such holder with a
period of 30 days in which to divest itself of a sufficient
number of shares (or to make other appropriate arrangements
reasonably acceptable to Sprint) to decrease its beneficial
ownership to below the applicable threshold prior to such holder's
becoming an "acquiring person" or the like thereunder.
ARTICLE 7
TAX MATTERS
Section 7.1 Tax Returns. Each Cable Parent has made
available (or, in the case of Tax Returns filed after the
Closing Date, will make available) to Sprint all Tax Returns, and any
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amendments thereto, filed by or on behalf of the HoldCo Entities, TCI
Partner and their Subsidiaries (if any) (or with respect to their assets
or businesses) for all taxable years or applicable periods ending on
or prior to the Closing Date, in each case, to the extent such Tax
Returns are relevant in the preparation by or on behalf of the HoldCo
Entities, TCI Partner and their Subsidiaries (if any) of Tax Returns
subsequent to the Closing Date.
Section 7.2 Termination of Prior Tax Settlement Agreements.
Except with respect to the Tax Sharing Agreement, all tax settlement
and tax-sharing agreements, arrangements, policies and guidelines,
formal or informal, express or implied, that may exist between the
HoldCo Entities, TCI Partner and their Subsidiaries (if any) and any
person or between any entity that will be part of the PCS Group and
any person ("Settlement Agreements") and all obligations thereunder
shall terminate prior to the Closing, and after the Closing Date,
none of the HoldCo Entities, TCI Partner and their Subsidiaries
(if any) on any such entities in the PCS Group shall be bound by
such Settlement Agreements or have any liability thereunder.
Section 7.3 Pre-Closing Taxes.
(a) Each of the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) shall continue to be included for all taxable
periods (or portions thereof) ending on or before the Closing Date
in the consolidated Federal income Tax Return and any required state or
local consolidated or combined income or franchise Tax Returns of
any affiliated group of which any of them is or was a member (each
of which is herein referred to as a "Selling Affiliated Group")
which Tax Returns include any of the HoldCo Entities, TCI Partner and
their Subsidiaries (if any) (all such Tax Returns including taxable
periods (or portions thereof) of the HoldCo Entities, TCI Partner
and their Subsidiaries (if any) ending on or before the
Closing Date are hereinafter referred to, collectively, as
"Pre-Closing Consolidated Returns"). Each Cable Parent or Cox
Partner shall cause its Selling Affiliated Group to timely prepare and
file (or cause to be prepared and filed) all Pre-Closing Consolidated
Returns and shall timely pay all Taxes shown as due and payable on
Pre-Closing Consolidated Returns (including any Taxes with respect to
any deferred income triggered into income by Treasury Regulations
Sections 1.1502-13, -14 and any excess loss accounts taken into income
under Treasury Regulation Section 1.1502-19). Without limiting the
generality of the foregoing, Sprint and the Cable Parents acknowledge
that, pursuant to Treasury Regulation Section 1.1502-76(b)(2)(v),
(i) Sprint shall include on its consolidated federal income tax
return for the first year ending after the Closing Date that portion
of the distributive share of each HoldCo Entity and TCI Partner for
the current taxable year of each partnership in which any HoldCo Entity
or TCI Partner is a partner that relates to the portion of such
taxable year beginning on the day after the Closing Date, and
(ii) each Cable Parent, with respect to any HoldCo Entity or TCI
Partner of which it is the former Parent following the Closing,
shall include on its consolidated federal income tax return for
the first year ending after the Closing Date that portion of the
distributive share of such HoldCo Entity or TCI Partner for the
current taxable year of each partnership in which such HoldCo
Entity or TCI Partner is a partner that relates to the portion
of such taxable year ending on the Closing Date. Sprint, the
Cable Parents, and Cox Partner agree that any such distributive
share shall be allocated between the portion of the applicable
taxable year ending on the Closing Date and the portion of the
applicable taxable year beginning on the day after the Closing
Date by hypothetically closing the books of all relevant
entities as of the Closing Date.
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(b) Each Cable Parent shall timely prepare (or cause
to be so prepared) all other Tax Returns of the HoldCo Entities,
TCI Partner and their Subsidiaries (if any) which such Cable
Parent formerly owned or controlled that are required by Law for
all taxable periods ending on or before the Closing Date ("Pre-
Closing Non-Consolidated Returns"). All Pre-Closing Non-Consolidated
Returns shall be prepared in a manner consistent with prior
practice and shall properly include and reflect the income, activities,
operations and transactions of the HoldCo Entities, TCI Partner and
their Subsidiaries (if any), as applicable. No Pre-Closing
Non-Consolidated return shall be amended in a manner inconsistent
with prior practice except as required by applicable Law. Each
Cable Parent shall timely file (or cause to be so filed) all
Pre-Closing Non-Consolidated Returns which are due on or before the
Closing Date and shall pay (or cause the HoldCo Entities, TCI
Partner and their Subsidiaries (if any) to pay as each may be
liable) all Taxes due thereon. Each Cable Parent shall also pay
(or cause the HoldCo Entities, TCI Partner and their Subsidiaries
(if any) to pay as each may be liable) the full amount of any
Tax which is payable by the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) without the filing of a Tax Return
("Non-Return Taxes"), payment of which is due on or before the Closing
Date.
(c) With respect to each Pre-Closing Non-Consolidated
Return due after the Closing Date, each Cable Parent shall deliver
(or cause to be so delivered) each such Pre-Closing Non-Consolidated
Return to Sprint at least 15 days prior to the due date of such Tax
Return, together with a payment in an amount equal to the amount of
Tax shown as due and payable on such Pre-Closing Non-Consolidated
Return (after giving effect to any credits for the amount of Tax,
if any, previously paid as shown on such Tax Return). Subject to the
foregoing, Sprint shall cause the HoldCo Entities, TCI Partner and
their Subsidiaries (if any) to file all such Pre-Closing
Non-Consolidated Returns that are due after the Closing Date and to
pay the amount of Tax shown as due and payable thereon to the extent
each is liable for such payment (after giving effect to any credits
for the amount of Tax, if any, previously paid as shown on such Tax
Return).
(d) In the event that after the Closing Date, any
HoldCo Entity, TCI Partner or their Subsidiaries (if any) is
required to pay any Taxes for any period ending on before the
Closing Date, the former Cable Parent of such entity shall promptly
pay to the applicable taxing authority the amount of such Taxes,
or indemnify any other person required to pay such
Taxes for the amount so paid pursuant to Section 7.11.
For purposes of the preceding sentence, the portion of the taxable
year of any partnership described in clause (ii) of the
penultimate sentence of Section 7.3(a) shall be treated as a
period ending on the Closing Date.
(e) Except as provided in Section 7.3(d), all
Taxes required to be paid by Sprint and its Subsidiaries with
respect to all periods ending on or before the Closing Date and
that portion of any period which includes but does not end on
such Closing Date shall be charged to the Sprint FON Group.
Section 7.4 Transfer Taxes. All sales, use,
transfer, stamp, value added, duty, excise, stock transfer,
real property transfer, recording and other similar taxes
and fees arising out of or in connection with the
transactions contemplated by this Agreement shall be paid by each
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Cable Parent to the extent such taxes or fees directly result
from the transfer of the stock of such Cable Parent's HoldCo
Entities or (in the case of TCI) TCI Partner.
Section 7.5 Post-Closing Taxes. Sprint shall timely
prepare and file (or cause to be so prepared and filed) all Tax
Returns required by Law for all Taxes, covering solely the HoldCo
Entities, TCI Partner and their Subsidiaries (if any), for taxable
periods ending after the Closing Date ("Post-Closing Returns").
Sprint shall timely pay or cause to be paid all Taxes relating
to Post-Closing Returns ("Post-Closing Taxes"). Each Cable Parent
shall reimburse Sprint for (i) the amount of Post-Closing Taxes
reported as payable on each Post-Closing Return that is attributable
to the portion of the period covered by such Tax Return ending on
the close of business on the Closing Date (the "Pre-Closing Tax Period"),
determined by treating the close of business on the Closing Date as
the last date of the taxable period and (ii) the amount of any
Non-Return Tax payable after the Closing Date that is
attributable to the portion of the period covered by such payment
which ends on or before the close of business on the Closing Date
(pro rata based upon the number of days covered by such
payment), in each case after giving effect to any credits for the
amount of such Post-Closing Tax or such Non-Return Tax, if any,
previously paid by such Cable Parent, the HoldCo Entities, TCI Partner
or their Subsidiaries (if any) or any of their predecessors or
affiliates. Such reimbursements shall be made on or before the later
of the date on which such return is filed or 15 days after receipt of a
copy of such return or evidence of such payment, and Sprint shall
provide Cable Parent with copies of workpapers which will permit Cable
Parent to review and substantiate the accuracy of such return or such
payment.
Section 7.6 Carrybacks. If any HoldCo Entity, or TCI Partner
or any of their Subsidiaries (if any) incurs a net operating loss, net
capital loss, or other tax benefit with respect to any taxable period
beginning on or after the Closing Date which tax benefit may be
carried back to a period ending on or before such date and a refund
of Taxes attributable to such benefit is required to be requested by
the former Cable Parent owning or controlling such HoldCo Entity or
TCI Partner or would be paid to such Cable Parent, then, upon request by
Sprint, such former Cable Parent will cooperate fully with Sprint to
file, process and pursue such refund and will immediately pay over to
such HoldCo Entity or TCI Partner any refund resulting therefrom.
Section 7.7 Tax Cooperation.
(a) Sprint, the HoldCo Entities, TCI Partner and their
Subsidiaries (if any) and the Cable Parents shall cooperate fully,
as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall
include providing information necessary or appropriate to the filing
of such Tax Returns, the retention and (upon the other party's request)
the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The HoldCo Entities, TCI Partner and their Subsidiaries
(if any) and Cable Partners agree (A) to retain all books and records
with respect to Tax matters pertinent to the HoldCo Entities, TCI
Partner and their respective Subsidiaries (if any) relating to any
taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent
notified by Sprint or the Cable Parents, any extensions thereof) of
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the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority,
and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such
books and records and, if the other party so requests,
the HoldCo Entities, TCI Partner and their Subsidiaries (if any)
or the Cable Partners, as the case may be, shall allow the other
party to take possession of such books and records.
(b) Sprint and the Cable Parents further agree,
upon request, to use their best efforts to obtain any certificate
or other document from any Governmental Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any
Tax that could be imposed.
(c) Sprint and the Cable Parents further agree,
upon request, to provide the other party with all information that
either party may be required to report pursuant to Section
6043 of the Code and all Treasury Department Regulations promulgated
thereunder.
Section 7.8 Notification of Proceedings. In the event
that Sprint or any of the HoldCo Entities, TCI Partner, or their
Subsidiaries (if any) receive notice, whether orally
or in writing, of any pending or threatened United States federal,
state, local, municipal or foreign tax examinations, claims settlements,
proposed adjustments, assessments or reassessments or related matters
with respect to Taxes that could affect any of the Cable Parents or
their Subsidiaries, or if any of the Cable Parents or any of their
Subsidiaries receive notice of any matter that could affect Sprint or
any of the HoldCo Entities, TCI Partner or their Subsidiaries (if any),
the party receiving notice shall notify in writing the potentially
affected party within 10 calendar days thereof. The failure of any
party to give the notice required by this Section 7.8 shall not impair
that party's rights under this Agreement except to the extent
that the other party demonstrates that it has been damaged thereby.
Section 7.9 Audits.
(a) Except as provided in Section 7.9(b), each of Cable
Parents and Sprint shall have the right to control any audit or
examination by any taxing authority, initiate any claim for refund,
file any amended return, contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed
adjustment relating or with respect to any Taxes, the ultimate
liability for which is the responsibility of that party or its
Affiliates under this Agreement, and each of Cable Parents and
Sprint shall be entitled to, and to the extent received by the
other shall be promptly paid by the other, all refunds with respect
to any such Taxes.
(b) With respect to any examination of Sprint PCS GP,
PhillieCo GP or their respective Subsidiaries for periods before
the Closing Date, Sprint shall act as the "tax matters partner."
Sprint shall take reasonable action to cause each other Parent to
be treated as a "notice partner" within the meaning of Section
6231(a)(9) of the Code. All reasonable expenses incurred by Sprint
while acting in its capacity as tax matters partner of Sprint PCS
GP and its Subsidiaries shall be paid or reimbursed by each Parent
pro rata based on the PCS Percentage Interest of its PCS Partner
immediately prior to Closing, and in its capacity as tax
matters partner of PhillieCo GP shall be paid or reimbursed by Sprint,
TCI and Cox based on the respective percentage interests of the
PhillieCo Partners in PhillieCo GP immediately prior
to Closing. Each Parent (except, with respect
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to PhillieCo GP, Comcast) shall be given at least five (5) Business
Days advance notice from Sprint of the time and place of, and shall
have the right to participate in (i) any material aspect of any
administrative proceeding relating to the determination of
partnership items at the Sprint PCS GP level or PhillieCo GP level
(or at the level of any Subsidiary thereof) and (ii) any material
discussions with the Internal Revenue Service relating to the
allocations pursuant to Section 3 of the PCS Partnership Agreement or
the PhillieCo Partnership Agreement or pursuant to the partnership
agreement of any Subsidiary. Sprint shall not, and neither Sprint
PCS GP nor PhillieCo GP shall permit the tax matters partner of
any Subsidiary to, initiate any action or proceeding in any court,
extend any statute of limitations, or take any other action
contemplated by Sections 6222 through 6232 of the Code that would
legally bind any other Parent, Sprint PCS GP, PhillieCo GP or any
Subsidiary without approval (in the case of Sprint PCS GP and its
Subsidiaries) of TCI and either of Cox or Comcast and (in the case
of PhillieCo GP and its Subsidiaries), TCI and Cox. Sprint shall
from time to time upon reasonable request of any other Parent confer,
and cause Sprint PCS GP's and PhillieCo GP's and any Subsidiary's
tax attorneys and accountants to confer, with such other Parent
and its attorneys and accountants on any matters relating to a
Sprint PCS GP or PhillieCo GP or Subsidiary tax return or any
tax election.
Section 7.10 SRLY Losses.
(a) As a result of the transactions contemplated hereby,
certain assets and businesses of Sprint and its Subsidiaries will
be allocated to the PCS Group (all of such assets and businesses
being referred to in this Section 7.10 collectively as the "Historic
Sprint PCS Business"). Further, TCI Partner and each of the HoldCo
Entities will become direct Wholly-Owned Subsidiaries of Sprint and
will be allocated to the PCS Group (each of such acquired corporations
being referred to in this Section 7.10 as an "Acquired PCS Sub").
The Historic Sprint PCS Business and the Acquired PCS Subs are each
referred to in this Section 7.10 as a "SRLY Entity."
(b) For purposes of this Section 7.10, a "SRLY Tax
Benefit" is any item of federal or state income Tax or state franchise
Tax benefit which (1) was realized by a SRLY Entity on or before the
Closing Date, but which Tax benefit was not utilized on or before the
Closing Date, (2) is available for use by Sprint or a Subsidiary of
Sprint after the Closing Date, and (3) if utilized on the day after
the Closing Date, would (but for this Section 7.10) be allocated to
the PCS Group. Without limitation, a Tax benefit includes any realized
but unused item of Tax loss, deduction or credit that may be applied
to offset income, gain or Tax (or any item thereof) under any applicable
federal or state Tax regime. Unrealized losses or deductions shall
not be treated as SRLY Tax Benefits. In the event that the Historic
Sprint PCS Business has previously realized Tax benefits that, for
Tax purposes, are attributable to Subsidiaries of Sprint that will
not be allocated to the PCS Group, Sprint agrees that any such
benefits that have not been utilized, but exist as carryovers, on
the day after the Closing Date shall be allocated to the PCS Group
to the same extent as if they were attributed for Tax purposes to
an entity that was allocated to the PCS Group as of such date, and
that such benefits shall be treated as SRLY Tax Benefits. For
purposes of the preceding sentence, whether a previously
realized Tax benefit of the Historic Sprint PCS Business
exists as a carryover on the day after the Closing Date
shall be determined as if the entity to which such benefit
is attributed for Tax purposes ceased on the Closing Date
to be a member of the affiliated group (as defined by Section 1504
of the Code) of which Sprint is the common parent. Accordingly, except
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as otherwise provided in this Section 7.10, any Tax savings
resulting from any SRLY Tax Benefit attributable to the
Historic Sprint PCS Business will be allocated to the PCS Group.
(c) For purposes of this Section 7.10, a "SRLY Tax
Savings" means, for any SRLY Measurement Period, the amount by which
(i) the aggregate amount of Taxes required to be paid by Sprint and
all Subsidiaries of Sprint that, during the SRLY Measurement Period,
are members of the affiliated group (as defined in Section 1504 of the
Code) (or any consolidated, unitary or combined group under
corresponding provisions of state tax laws) of which Sprint (or a
Subsidiary of Sprint) is the common parent, for such SRLY
Measurement Period, is less than (ii) the amount of Taxes that
would have been required to be paid by Sprint and all such
Subsidiaries for such SRLY Measurement Period if no SRLY Tax
Benefits existed.
(d) The parties hereto hereby agree that, if
SRLY Tax Savings exist for any SRLY Measurement Period, the
following shall occur:
(i) To the extent that the SRLY Tax Savings
result from a SRLY Tax Benefit attributable to an
Acquired PCS Sub, Sprint shall issue to the Cable
Parent or Subsidiary of a Cable Parent that owned
such Acquired PCS Sub before the Merger (or its
successor-in-interest) a number of fully paid and
nonassessable shares of Sprint common stock (or other
voting common stock permitted by Section 7.10(j)(i))
having a value equal to sixty percent (60%) of
such SRLY Tax Savings. The remaining forty percent
(40%) of such SRLY Tax Savings shall be retained by
Sprint and allocated to the PCS Group or such
other business group of Sprint to which the Acquired
PCS Sub from which such SRLY Tax Benefit was derived
or its successor was allocated on the last day of
the SRLY Measurement Period in which such SRLY Tax Savings
arose.
(ii) To the extent that the SRLY Tax Savings
results from a SRLY Tax Benefit attributable to the
Historic Sprint PCS Business, sixty percent (60%)
of such SRLY Tax Savings shall be allocated to the Sprint
FON Group (or any successor thereto). The remaining
forty percent (40%) of such SRLY Tax Savings shall be
allocated to the PCS Group or such other business group
of Sprint to which the Historic Sprint PCS Business or
relevant part thereof is allocated on the last day of the
SRLY Measurement Period in which such SRLY Tax Savings
arose.
(e) Whether a SRLY Tax Benefit has resulted in a SRLY
Tax Savings shall be determined by Sprint, taking into account all
of the relevant facts and circumstances, including (for example,
but without limitation), whether such SRLY Tax Benefit has been
utilized on a nominal or prima facie basis to reduce the amount
of Taxes that Sprint (or any of its Subsidiaries) is required to
pay; whether, but for such use, other Tax benefits realized
during or prior to such SRLY Measurement Period would be available
to offset the Taxes nominally offset by such SRLY Tax Benefit;
and whether the nominal savings from the utilization of a SRLY
Tax Benefit in computing Taxes due to one jurisdiction is offset
by a corresponding Tax detriment in the same or another
jurisdiction. Time value considerations and any Tax benefits
that have not been realized as of the end of the SRLY Measurement
Period (even if then projected to be realized in future periods from
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which such Tax benefits could be carried back to the SRLY
Measurement Period) shall not be taken into account in
making the determinations required by the preceding sentence.
(f) Sprint shall make the determination required by
Section 7.10(e) within ninety days after the filing of each
Sprint consolidated federal income Tax Return and each such
determination shall relate to the federal Tax period covered by
such Tax Return and to any state Tax periods ending simultaneously
with or before such federal Tax period that were not included
in a prior SRLY Measurement Period (such federal and state Tax
periods, collectively, the "SRLY Measurement Period"). A written
overview summary of each such determination (a "Determination
Summary") shall be provided within the ninety day period
described in the preceding sentence to each Cable Parent,
which summary shall be accompanied by a statement by the
incumbent senior financial officer of Sprint that he or she
has reviewed and is familiar such determination and the bases
therefor and believes that such determination applies the
requirements of this Section 7.10. If such determination
is that a SRLY Tax Savings has resulted from a SRLY Tax Benefit
attributable to an Acquired PCS Sub, the Determination Summary
shall also state the number of shares and class of voting
common stock in which payment will be made and shall set forth
the calculation of the value of such shares.
(g) The obligations imposed hereby apply only to Sprint
and shall not be binding on any other party, except that, if Sprint
distributes to some or all of its shareholders, with respect to or
in redemption of, some or all of the outstanding shares of capital
stock of Sprint, stock of a corporation that owns, directly or
indirectly, substantially all of the assets and businesses
constituting the Historic Sprint PCS Business and the outstanding
capital stock of the Acquired PCS Subs, then Sprint shall cause such
corporation to assume the obligations of Sprint hereunder and such
obligations shall be binding upon such corporation as if it were
"Sprint" hereunder.
(h) The parties hereto agree and acknowledge that Sprint
is not required or expected to take any action, or refrain from taking
any action, in order to preserve or accelerate or enhance the use of
any SRLY Tax Benefit, and that Sprint may take, or refrain from taking,
any action without considering any adverse effect thereof on its
ability to realize a SRLY Tax Savings from a SRLY Tax Benefit.
Sprint agrees to use its reasonable efforts to account for
both federal and non-federal SRLY Tax Benefits and SRLY Tax
Savings; provided that Sprint may, in its sole discretion, cease to
track and account for non-federal SRLY Tax Benefits and
non-federal SRLY Tax Savings at such time as the aggregate amount
of potential remaining non-federal SRLY Tax Savings is reasonably
estimated to be less than $1,000,000.
(i) Readjustments.
(i) If, as a result of any post-filing adjustment
to any Tax Return taken into account in computing the
SRLY Tax Savings for any SRLY Measurement Period, the
amount of such SRLY Tax Savings, as originally determined
for such SRLY Measurement Period, differs from the amount
of such SRLY Tax Savings that would have been determined
if the adjustments had been included on such original Tax
Return, then payments required by this Section 7.10
for such SRLY Measurement Period shall also be
adjusted as provided in this Section 7.10(i). If
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such adjustment results in or is associated with
adjustments to other Tax Returns taken into
account with respect to other SRLY Tax Measurement
Periods (or is made at the same time as adjustments
are made to returns taken into account with respect
to other SRLY Measurement Periods), the cumulative
differences in SRLY Tax Savings for all affected
SRLY Measurement Periods shall be recomputed for
each SRLY Entity; provided that, in making
such all such computations, tax benefits realized after
a SRLY Measurement Period, such as a later operating
loss that can be carried back to a prior period,
shall be ignored.
(ii) If for all the Acquired PCS Subs that were
previously Subsidiaries of a single Cable Parent (such
Acquired PCS Subs being referred to in this Section 7.10(i)
as such Cable Parent's Acquired PCS Subs), taken in the
aggregate, as a result of such recomputations, the SRLY Tax
Savings for such SRLY Measurement Period (or the cumulative
SRLY Tax Savings attributable to all SRLY Measurement
Periods involved in such related adjustments) exceeds
the SRLY Tax Savings for such SRLY Measurement
Period (or the cumulative SRLY Tax Savings for all such
periods) as originally computed for such SRLY Measurement
Period or SRLY Measurement Periods, as applicable, then
Sprint, within ninety days after such adjustment or
adjustments become final, shall make an incremental payment
to such Cable Parent (for itself or on behalf of any
Subsidiary of such Cable Parent that owned the relevant
Acquired PCS Sub before the Merger), in the form
described in Section 7.10(d)(i), in an amount equal to
60 percent of such increase (or cumulative increase).
(iii) If for the Historic Sprint PCS Business, as a
result of such recomputations, the SRLY Tax Savings for such
SRLY Measurement Period (or the cumulative SRLY Tax Savings
attributable to all SRLY Measurement Periods involved in
such related adjustments) exceeds the SRLY Tax Savings for
such SRLY Measurement Period (or the cumulative SRLY Tax
Savings for all such periods) as originally computed for
such SRLY Measurement Period or SRLY Measurement Periods,
as applicable, then sixty percent of such net increase
(or cumulative increase) shall be allocated to the Sprint
FON Group (or any successor thereto), effective no earlier
than the date that payments, if any, are made to the Cable
Parents with respect to any adjustments for such SRLY
Measurement Period or SRLY Measurement Periods pursuant to
Section 7.10(i)(ii).
(iv) If, for any Cable Parent's Acquired PCS Subs,
as a result of such recomputations, the SRLY Tax Savings
for such SRLY Measurement Period (or the cumulative SRLY
Tax Savings attributable to all SRLY Measurement
Periods involved in such related adjustments) is exceeded
by the SRLY Tax Savings for such SRLY Measurement Period
(or the cumulative SRLY Tax Savings for all such periods) as
originally computed for such periods, then such Cable Parent
(for itself or on behalf of any Subsidiary of such Cable
Parent that owned the relevant Acquired PCS Sub before the
Merger), shall promptly pay to Sprint for the benefit of
the PCS Group (or any successor) an amount in either cash or
shares of the voting common stock issued pursuant to Section
7.10(j) equal in value to 60 percent of the amount
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of such excess (without interest). For these
purposes, the voting common stock will be valued as
contemplated by the last sentence of Section 7.10(j)(ii),
with the "Determination Date" being five Business Days
prior to the delivery of such shares to Sprint.
(v) If, for the Historic PCS Business, as a result
of such recomputations, the SRLY Tax Savings for such SRLY
Measurement Period (or the cumulative SRLY Tax Savings
attributable to all SRLY Measurement Periods involved in
such related adjustments) is exceeded by the SRLY Tax
Savings for such SRLY Measurement Period (or the cumulative
SRLY Tax Savings for all such periods) as originally
computed for such periods, then an amount in cash equal to
60 percent of the amount of such excess (without interest)
shall be reallocated from the FON Group to the PCS Group.
(j) Any issuances of common stock required by Section
7.10(d) and Section 7.10(i) to be made to a Cable Parent or Subsidiary
of a Cable Parent shall be made as follows:
(i) If the SRLY Tax Savings with respect to which
such stock is being issued resulted from a SRLY Tax Benefit
that is attributable to a business as to which, at the time
such issuance is to be made, Sprint has outstanding a
class of publicly traded voting common stock that is
intended to track the performance of a business group to
which such business is attributed, then payment shall be
made in shares of such voting common stock, and such shares
shall be deemed to have been issued for the benefit of such
business group. If such SRLY Tax Benefit is attributable
to a business as to which, at the time such issuance is to
be made, Sprint does not have outstanding a class of
publicly traded voting common stock that is intended to
track the performance of a business group to which such
business is attributed, then payment shall be
made in shares of any class of outstanding publicly traded
Sprint voting common stock or, if Sprint does not have any
such outstanding class of common stock, in shares of the
publicly traded voting common stock of the
Parent Entity of Sprint or of any Subsidiary of such Parent
Entity.
(ii) The value of the shares of voting common
stock issued to a Cable Parent or Subsidiary of a Cable
Parent shall be established as of (A) the last Trading
Day (as defined in the Initial Charter Amendment) of the
SRLY Measurement Period with respect to the relevant
SRLY Tax Benefit or (B) in the case of shares of
voting common stock issued pursuant to Section 7.10(i),
the date on which the relevant adjustments described in
Section 7.10(i) become final (the "Determination Date").
Such value will equal the average of the Closing Prices
(as defined in the Initial Charter Amendment) for the
relevant stock for the period of 30 consecutive Trading
Days ending on the Determination Date.
(iii) Sprint shall issue any shares of voting common
stock required to be issued by it under this Section 7.10
within 60 days after the delivery of a Determination Sum-
mary which includes a determination that a Cable Parent or
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Subsidiary of a Cable Parent is entitled to receive
shares of voting common stock under this Section 7.10.
(iv) The shares of voting common stock issued
by Sprint under this Section 7.10 shall not reduce the
Number of Shares Issuable With Respect to the Intergroup
Interest as defined in the Initial Charter Amendment.
(v) Notwithstanding anything in this Section
7.10 to the contrary, no rights or obligations regarding the
issuance of voting common stock under this Section 7.10
shall accrue or become fixed with respect to any Cable
Parent, and the applicable Determination Date for
purposes of clause (ii) above which would otherwise
cause the same to occur shall automatically be delayed
with respect to such Cable Parent, for a period up to six
months from the otherwise applicable Determination Date
if the accrual or fixing of such rights would cause such
Cable Parent or Subsidiary of a Cable Parent to be subject
to liability under Section 16(b) of the Exchange Act;
provided that such period shall not exceed the minimum
period necessary for any such Cable Parent to be
exempt from such liability.
Section 7.11 Tax Indemnification
(a) After the Closing Date, each Cable Parent, with
respect only to its formerly owned or controlled HoldCo Entities and
their respective Subsidiaries and (in the case of TCI) TCI Partner,
shall indemnify and hold harmless Sprint, the HoldCo Entities, TCI
Partner, their Subsidiaries (if any) and each of their respective
affiliates, successors and assigns from and against any Tax liability
with respect to any Pre-Closing Non-Consolidated Return and with
respect to any Tax liability for the Pre-Closing Tax Period on a
Post-Closing Return (determined by treating the Closing Date as the
last date of the taxable period) and with respect to any Non-Return
Taxes attributable to the portion of the period covered by any payment
of such Taxes which ends on or before the Closing Date (determined on
a pro rata basis based upon the number of days covered by such payment
which are on or before the Closing Date and the total number of days
covered by such payment), in each case, to the extent such amount
exceeds any amount previously paid to Sprint, the HoldCo Entities,
TCI Partner, or their Subsidiaries (if any) with respect to such Tax
pursuant to Section 7.3 or 7.5, as applicable. Each Cable Parent
shall pay such amounts as it is obligated to pay to Sprint or the
HoldCo Entities, TCI Partner or their Subsidiaries (if any) within 10
calendar days after payment of any applicable Tax liability by Sprint
or the HoldCo Entities, TCI Partner, or their Subsidiaries (if any)
and to the extent not paid by each Cable Parent within such 10-day
period, the amount due shall thereafter include interest thereon at a
rate per annum equal to the "overpayment rate" under Section 6621(a)
of the Code (the "Overpayment Rate"), adjusted as and when changes to
such Overpayment Rate shall occur, compounded semi-annually. Each
Cable Parent shall indemnify and hold harmless Sprint and the HoldCo
Entities, TCI Partner and their Subsidiaries (if any) and each of their
respective affiliates, successors and assigns, from and against (i) any
Tax liability for periods prior to and including the Closing Date
resulting from the HoldCo Entities, TCI Partner, or their Subsidiaries
(if any) which such Cable Parent formerly owned or controlled being
severally liable for any Taxes of any consolidated group of which any
of the HoldCo Entities, TCI Partner, or their Subsidiaries (if
any) are or were members pursuant to Treasury Regulations
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Section 1.1502-6 or any analogous state or local tax provision
(including, without limitation, any Tax liability with respect to any
Pre-Closing Consolidated Return), and (ii) any Tax liability resulting
from the HoldCo Entities, TCI Partner, or their Subsidiaries (if any)
which such Cable Parent formerly owned or controlled ceasing to be a
member of any Selling Affiliated Group filing consolidated or
combined Tax Returns. Any indemnification payments made by a Cable
Parent under this Section 7.11(a) shall be allocated to the PCS Group.
(b) After the Closing Date, Sprint and each of the HoldCo
Entities and their Subsidiaries and TCI Partner, jointly and severally
shall indemnify and hold harmless each Cable Parent and its Affiliates,
successors and assigns from and against any Tax liability with
respect to Post-Closing Taxes, other than Post-Closing Taxes for
which a Cable Parent is responsible pursuant to Section 7.11(a).
Sprint shall cause the appropriate HoldCo Entity, TCI Partner, or
their Subsidiaries (if any) to pay such amounts within 10 calendar
days after payment of any such Tax liability by each Cable Parent and,
to the extent not paid by such HoldCo Entity, TCI Partner, or their
Subsidiaries (if any) within such 10-day period, the amount due
shall thereafter include interest thereon at the Overpayment Rate,
compounded semi-annually. Any indemnification payments made by
Sprint, any of the HoldCo Entities, TCI Partner or their Subsidiaries
under this Section 7.11(b) shall be charged to the PCS Group.
(c) All claims for indemnification under this Section
7.11 (i) will be asserted and resolved as provided in Section 11.4 and
(ii) shall be subject to the limitations set forth in Sections 11.2(b)
and 11.2(c). The right of the parties to commence a claim for
indemnification under this Section 7.11 shall survive until the 30th
day following the expiration of the applicable statute of limitations
period with respect to the subject matter of such claim.
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.1 Conditions of All Parties to Closing. The
respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of each of the following conditions, any
or all of which may be waived in whole or in part by the party being
benefitted thereby, to the extent permitted by applicable Law:
(a) Sprint Stockholder Approval. The following matters
presented for a vote of the stockholders of Sprint at the Stockholders
Meeting shall have been duly approved by the requisite holders of
capital stock in accordance with applicable Law and the Articles of
Incorporation and By-Laws of Sprint: (i) the Initial Charter Amendment;
(ii) the Subsequent Charter Amendment; (iii) this Agreement and the
transactions contemplated hereby and (iv) the Bylaw Amendment.
(b) HSR Act; FCC. Any waiting period applicable to the
transactions contemplated by this Agreement under the HSR Act shall
have expired or termination thereof shall have been granted, and all
consents required from the Federal Communications Commission shall
have been granted, in each case without any material limitation,
restriction, requirement or condition on Sprint PCS, any HoldCo
Entity, any PCS Partner or on any Parent or any of its Subsidiaries.
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(c) No Injunction. No preliminary or permanent
injunction or other order, decree or ruling issued by a Governmental
Authority, nor any statute, rule, regulation or executive order
promulgated or enacted by any Governmental Authority, shall be in
effect that enjoins the consummation of the transactions to be
effected at the Closing and which would result in material adverse
consequences to any Parent or any of its Subsidiaries if the Closing
occurred in violation thereof or imposes any material restrictions
or requirements thereon or on any of the parties in connection
therewith.
(d) Listing of Series 1 PCS Stock. The Series 1 PCS
Stock required to be issued in the IPO or in the Recapitalization
(whichever Sprint has elected to complete simultaneously with the
Closing) hereunder shall have been approved for listing on the New
York Stock Exchange, or if not so approved, shall have been approved
for listing on the American Stock Exchange or approved for quotation
on the National Market Tier of The Nasdaq Stock Market, subject
only to official notice of issuance.
(e) IPO or Recapitalization. The IPO or the
Recapitalization (whichever Sprint has elected to complete
simultaneously with the Closing) shall be consummated simultaneously
with the Closing.
(f) Initial Charter Amendment; Certificate of
Designations. The Initial Charter Amendment and the Certificate
of Designations (and, if the Recapitalization occurs on the Closing
Date, the Subsequent Charter Amendment) shall have been filed with
the Kansas Secretary of State.
(g) Certificates of Merger. Each of the Certificates
of Merger shall have been filed with the Delaware Secretary of State
or the Colorado Secretary of State, as applicable.
Section 8.2 Sprint's Conditions Precedent to Closing. The
obligations of Sprint and its Subsidiaries to effect the transactions
contemplated by this Agreement are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions,
compliance with which or the occurrence of which may be waived in
whole or in part by Sprint:
(a) Correctness of Representations and Warranties.
(i) The representations and warranties of each
Cable Parent contained in this Agreement shall be accurate
in all material respects on the Closing Date with the same
effect as if made on the Closing Date (except that
any such statements which are expressly made as of a
particular date shall have been accurate as of such
particular date); provided that with respect to the
representations and warranties contained in Section
5.2(g), any inaccuracies, individually or in the aggregate,
shall not be considered material unless such inaccuracies
have a material adverse effect on the ability of a Cable
Parent to perform its obligations under Section 7.3(d) or
7.11(a). For purposes of the last clause of the preceding
sentence, in determining whether an inaccuracy is material,
it is presumed that any tax item shown on a return
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or report furnished by Sprint, Sprint PCS GP,
Sprint PCS LP, PhillieCo GP or PhillieCo LP is
correct.
(ii) At the Closing, Sprint shall be provided
with a certificate to such effect from each of the Cable
Parents, signed by a duly authorized officer thereof.
(b) Performance of Agreements. All covenants and
agreements of each Cable Parent and its respective
Subsidiaries contained in this Agreement and required to be
performed on or before the Closing Date shall have been performed
in all material respects on or prior to the Closing Date. At
the Closing, Sprint shall be provided with a certificate to such
effect from each of the Cable Parents, signed by a duly
authorized officer thereof.
(c) Tax Opinion. There shall not have occurred any
change in applicable Law or any change in facts beyond Sprint's
reasonable control, in either case occurring after the date hereof,
that would prevent King & Spalding from reaffirming to Sprint at the
Closing its opinion described in Section 5.3(g). For purposes of this
Section 8.2(c), Law also includes any Revenue Ruling, proposed
regulations or official notice of intent to propose regulations
issued by the Internal Revenue Service, or a bill introduced in
the House of Representatives or Senate of the United States, or
legislation proposed by the United States Treasury Department.
Section 8.3 Cable Parents' Conditions Precedent to Closing.
The obligations of each Cable Parent and its Subsidiaries to effect
the transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following
conditions, compliance with which or the occurrence of which may be
waived in whole or in part by unanimous action of the Cable Parents.
(a) Correctness of Representations and Warranties. All
representations and warranties of Sprint and the other Cable Parents
shall be accurate in all material respects on the Closing Date with
the same effect as if made on the Closing Date (except that any such
statements which are expressly made as of a particular date shall have
been accurate as of such particular date). At the Closing, the Cable
Parents shall be provided with a certificate to such effect from Sprint
with respect to its representations and warranties, signed by a duly
authorized officer thereof.
(b) Performance of Agreements. All covenants and agreements
of Sprint and its Subsidiaries contained in this Agreement and required
to be performed on or before the Closing Date shall have been performed
in all material respects on or prior to the Closing Date. At the Closing,
the Cable Parents shall be provided with a certificate to such effect from
Sprint, signed by a duly authorized officer thereof.
(c) Tax Opinions. There shall not have occurred any
change in applicable Law or any change in facts beyond the
respective Cable Parent's reasonable control, in either
case occurring after the date hereof, that would prevent outside
counsel for such Cable Parent from reaffirming to such Cable
Parent at the Closing its opinion described in Section 5.2(h).
For purposes of this Section 8.3(c), Law also includes any Revenue
Ruling, proposed regulations or official notice of intent to propose
regulations issued by the Internal Revenue Service, or a bill
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introduced in the House of Representatives or Senate of the United
States, or legislation proposed by the United States Treasury
Department.
ARTICLE 9
CLOSING
Section 9.1 Closing. The Closing shall take place at
the offices of King & Spalding, 1185 Avenue of the Americas,
New York, New York, at 10:00 a.m. (local time at the
place of Closing) on the date determined by Sprint in
accordance with Sections 6.2(c), 6.2(d) and 6.2(e) or at
such other location or on such other date or time as the parties
hereto shall agree. At the Closing, the IPO or Recapitalization
shall be consummated, and the parties shall take such actions and
execute and deliver such documents and agreements as are contemplated
herein or as may be reasonably requested by any other party hereto,
including the following actions:
(i) The Initial Charter Amendment and the
Certificate of Designations and (if the Recapitalization
is to occur simultaneously with the Closing) the Subsequent
Charter Amendment shall be filed with the Kansas
Secretary of State.
(ii) (A) Sprint shall deliver to each of the
Cable Partners copies of the resolutions adopted by the
Sprint Board of Directors in connection with the
transactions contemplated by this Agreement, which
resolutions shall (among other things) (v) appoint the
Capital Stock Committee and delegate to it the
powers described on Exhibit Q, (w) adopt the Management
and Allocation Policies, (x) approve the Bylaw Amendment,
(y) approve the formation of the PCS Group and the Sprint
FON Group and (z) create the Preferred Intergroup
Interest and the Warrant Intergroup Interest, certified
by the Secretary or an Assistant Secretary of Sprint, and
(B) each of the Cable Parents shall deliver to
Sprint copies of the resolutions adopted by such Cable
Parent's Board of Directors in connection with the
transactions contemplated by this Agreement,
certified by the Secretary or Assistant Secretary of such
Cable Parent.
(iii) Each of the Parents shall deliver to each of
the other Parents a certification that such Parent's
representations and warranties set forth herein
are true and accurate as of the Closing Date, as though
such representations and warranties were made on and as
of the Closing Date.
(iv) Each of the Parents shall deliver to each
of the other Parents a certification that the covenants
contained herein that are required to be performed by
such Parent or its Subsidiaries prior to the Closing
have been performed in all material respects.
(v) (A) Certificates representing the shares
of Series 2 PCS Stock and the Warrants and (if
applicable) PCS Preferred Stock to be issued in the
Mergers (and, if applicable, pursuant to Equity
Purchase Rights exercised by the Cable
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Partners in connection with the IPO) shall be delivered
by Sprint to each of the Cable Partners, (B) the cash
and/or certificates representing PCS Preferred Stock
consisting of the purchase price for the Cable Parent
PCS Notes pursuant to Section 6.6 shall be paid or
delivered by Sprint to the Cable Parents or their
Subsidiaries and (C) the cash and/or Preferred Intergroup
Interest consisting of the purchase price for the Sprint
PCS Loans and the SprintCom Loans shall be paid to Sprint
or its Subsidiaries and/or created for the benefit of
the Sprint FON Group.
(vi) The Warrant Agreements shall be duly executed
and delivered by the parties thereto.
(vii) The Voting Agreements shall be duly executed
and delivered by the parties thereto.
(viii) The Cox L.A. Amendments shall be duly
executed and delivered by the parties thereto.
(ix) The Certificates of Merger shall be duly
executed and delivered by the parties thereto for
filing with the Delaware and Colorado Secretaries of
State.
(x) The Tax Sharing Agreement shall be duly
executed and delivered by Sprint.
(xi) The Registration Rights Agreement shall be
duly executed and delivered by the parties thereto.
(xii) The Mutual Release and Waiver shall be
duly executed and delivered by the parties thereto.
(xiii) The PCS Partners and the PhillieCo Partners
shall enter into amended restated partnership agreements
for Sprint PCS GP and PhillieCo GP in form reasonably
satisfactory to the Cable Parents.
(xiv) Sprint shall deliver to the Cable Parents a
certificate signed by an executive officer of Sprint
setting forth (i) the number of shares of each class
and series of capital stock of Sprint that will be
authorized and outstanding immediately following the
Effective Time, (ii) a list of all PCS Options that
will be outstanding immediately following the Effective
Time, (iii) a list of all shares of each class and
series of capital stock of Sprint that will be held in
treasury by Sprint immediately following the Effective
Time and (iv) the number of shares of each class and
series of PCS Stock that will have been reserved for
issuance by the Board of Directors of Sprint immediately
following the Effective Time. Such certificate shall
further certify that, other than (i) the PCS Options,
(ii) the rights of Cox Pioneer Partnership and its
Affiliates under the Agreement of Limited Partnership of
Cox Communications PCS, L.P., dated as of December 31,
1996, as amended, (iii) the
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rights of FT and DT under the FT/DT Agreements
and (iv) the rights of the Cable Parents and their
Affiliates under this Agreement and the Other Agreements,
there are no preemptive rights, rights of first refusal,
participation rights or other similar rights outstanding
at the Effective Time to purchase any of the authorized but
unissued PCS Stock or any PCS Stock held in treasury.
All of the actions contemplated to occur at the Closing (including
each of the Mergers) shall be deemed to have occurred simultaneously,
and none of such actions shall be effective unless all of such
actions have occurred or are waived by the necessary parties
(or, in the case of any of the Mergers, by unanimous written
consent of each party hereto).
ARTICLE 10
TERMINATION
Section 10.1 Events of Termination. This Agreement
may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(a) by mutual written consent of the Parents;
(b) by any Parent, by notice to the other Parents, if
the Closing shall be prohibited by any final, nonappealable order,
decree or injunction of a Governmental Authority, which would result
in material adverse consequences to any Parent or any of its
Subsidiaries if the Closing occurred in violation of such order,
decree or injunction;
(c) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to the
other Parents if the Closing has not occurred on or before December
31, 1998;
(d) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to the
other Parents following the time that any condition to closing set
forth in Article 8 has become incapable of being satisfied on or
prior to December 31, 1998; or
(e) by any Parent that is not in material breach of
any material covenant contained in this Agreement, by notice to
the other Parents following a material breach of any
material covenant contained in this Agreement by any other
Parent or its Subsidiary if such breach remains uncured in
any material respect for thirty (30) days following the giving of
notice of the breach of such material covenant from the Parent
seeking to terminate this Agreement to each other party; provided,
that the Parent seeking to terminate this Agreement gives written
notice of such termination to each other Parent within thirty (30)
days following the end of such thirty (30) day cure period.
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Section 10.2 Effect of Termination.
(a) If this Agreement is terminated in accordance with
Section 10.1, then this Agreement shall become null and void and
have no further effect, without any liability of any party to any
other party, except that the obligations of the parties pursuant
to Article 12 and under any provision of this Agreement that
expressly provides for certain actions to occur simultaneously
with or following the termination of this Agreement shall survive
the termination of this Agreement indefinitely; provided, that no
such termination shall release or relieve any party hereto from
liability for any willful material breach of any material provision
of this Agreement occurring prior to such termination.
(b) If this Agreement is terminated in accordance with
Section 10.1, the PCS Partnership Agreement, the PhillieCo
Partnership Agreement and the Parents Agreements shall continue in
full force and effect until terminated in accordance with their
respective terms, without any amendment to the rights and
obligations of the parties thereto, except (i) the PCS Partners
agree that an event described in Section 14.1(a)(iii) of the PCS
Partnership Agreement shall be deemed to have occurred simultaneously
with such termination such that the PCS Partners proceed immediately
to the determination of "Net Equity" under Section 14.7 of the PCS
Partnership Agreement, thus bypassing the escalation procedures of
Section 5.8 of the PCS Partnership Agreement and (ii) the PhillieCo
Partners agree that an event described in Section 14.1(a)(iii) of the
PhillieCo Partnership Agreement shall be deemed to have occurred
simultaneously with such termination such that the PhillieCo Partners
proceed immediately to the determination of "Net Equity" under
Section 14.7 of the PhillieCo Partnership Agreement,
thus bypassing the escalation procedures of Section 5.8 of the
PhillieCo Partnership Agreement.
ARTICLE 11
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 11.1 Scope of Representations of the Parties.
Except as and to the extent set forth in this Agreement, none of the
parties makes any representation, warranty, covenant or agreement
whatsoever, and each party disclaims all liability and responsibility
for any representation, warranty, covenant, agreement or statement
made or information communicated (orally or in writing) to any other
party (including any opinion, information or advice which may have
been provided to any other party or any Affiliate thereof by any
stockholder, partner, director, officer, employee, accounting firm,
legal counsel or any other agent, consultant or representative of
a party). Each of the parties expressly agrees and acknowledges
that, in consummating the transactions contemplated hereby, it is
only relying on the representations and warranties of the other
parties made in this Agreement, the Other Agreements and any other
agreements or certificates expressly contemplated by this Agreement,
and is not relying on any representation or warranty of any
present, former or future stockholder or partner, director,
officer, employee, accounting firm, legal counsel or any other agent,
consultant or representative of any of the parties or any of their
respective Affiliates. Each of the parties further acknowledges and
agrees that it has access to all available information about Sprint
PCS and its Subsidiaries and that such party is not relying on any
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representation or warranty whatsoever, except as expressly provided
in this Agreement, or any other party hereto or any of their
Affiliates with respect to Sprint PCS and its Subsidiaries.
Section 11.2 Indemnification of Parties.
(a) Following the Closing and subject to the other
terms and conditions of this Agreement, each party (as applicable
with respect to any specific party, the "Indemnitor") agrees to
indemnify, defend and hold harmless each other party hereto that
is not an Affiliate of the Indemnitor and their respective
successors and assigns (each an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against any
and all losses, claims, costs, fines, damages (excluding consequential
and special damages other than amounts paid as consequential or
special damages to a third party pursuant to a Third Party Claim),
Taxes (other than those for which indemnity is provided under
Section 7.11), liabilities and deficiencies, including (subject
to Section 11.4) reasonable legal and other fees and expenses
incurred in the investigation and defense of claims and actions,
and amounts paid as indemnification to directors, officers,
employees or agents, whether such claims and actions are brought
by third parties or parties hereto (each a "Loss" and collectively,
"Losses"), incurred by an Indemnified Party and arising out of or
resulting from (A) any inaccuracy in the representations and
warranties of the Indemnitor set forth in this Agreement or
in any Other Agreement or (B) any failure to perform by the
Indemnitor of any of its covenants or agreements contained in
this Agreement or any Other Agreement (any such Loss or Losses
being referred to herein as an "Indemnified Loss" or "Indemnified
Losses"). Notwithstanding the foregoing, no Indemnitor shall be
required to indemnify the Indemnified Parties with respect to
any Indemnified Loss arising under clause (A) above unless and
until the aggregate amount of the Indemnified Losses incurred
by all Indemnified Parties with respect to the representations
and warranties made by such Indemnitor and its Affiliates, if
any, as finally determined pursuant to Section 11.4 (other than
Losses with respect to Non-Basket Claims) exceeds $50 million;
provided, however, that at such time as the aggregate amount of
Indemnified Losses from such claims other than Non-Basket Claims
("Basket Claims") exceeds $50 million, the Indemnified Parties
shall be entitled to indemnification for the full amount of the
Indemnified Losses, if any, as finally determined pursuant to
Section 11.4 from Basket Claims in excess of $10 million (the
limitation contained in this sentence referred to herein as
the "Basket Limitation"). As used herein the term "Non-Basket
Claim" means any claim arising out of an inaccuracy of any of
the representations and warranties set forth in Sections 5.1(a),
5.1(b), 5.2(a), 5.2(b), 5.2(c), 5.3(a), the second sentence of
5.3(c), 5.3(d), 5.3(e), 5.3(f), 5.3(h)(i), 5.3(h)(ii), 5.4(b),
5.5(a) and 5.5(b). The Basket Limitation shall not apply to
any Indemnified Losses from claims that are Non-Basket Claims.
(b) The amount of any Indemnified Loss shall be reduced
by any insurance proceeds and any indemnity, contribution or other
similar payment recovered by the Indemnified Parties from any third
party with respect to the facts or circumstances which gave rise to
the Indemnified Loss (net of any Taxes thereon). If any
indemnification payment is payable by an Indemnitor pursuant to
Section 11.4 prior to the date of the receipt of any payment
referred to in this paragraph by an Indemnified Party, the
Indemnified Party will be required to reimburse an appropriate
portion thereof to the Indemnitor upon its receipt of such
payment.
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(c) If any Indemnitor's obligation under this Section
11.2 arises in respect to an adjustment that makes allowable to any
Indemnified Party, or any Affiliate of an Indemnified Party, any
present or future deduction, amortization, exclusion from income or
other allowance (a "Tax Benefit") that would not, but for such
adjustment, have been allowable, then any payment by the Indemnitor
to the relevant Indemnified Party or Indemnified Parties shall be
an amount equal to the Indemnified Loss minus the sum of the
present values (calculated using a 5.77% discount rate) of all
Tax Benefits that arise as a consequence of the relevant
adjustment multiplied, in each case, by (i) the maximum federal,
state, local or foreign, as the case may be, corporate tax rate
in effect at the time of the payment of such Indemnified Loss or
(ii) in the case of a credit, 100%.
Section 11.3 Survival. The representations and
warranties set forth in this Agreement will terminate and expire
on the first anniversary of the Closing Date, after which
time no party may institute any action or present any claim for
an inaccuracy of such statements; provided that the representations
and warranties set forth in Sections 5.1(a), 5.1(b), 5.2(a), 5.2(b),
5.2(c), 5.2(g), 5.3(a), the second sentence of 5.3(c), 5.3(d), 5.3(e),
5.3(f), 5.3(h)(i), 5.3(h)(ii), 5.4(b), 5.5(a) and 5.5(b) will survive
until the expiration of the applicable statute of limitations period
with respect to claims made thereunder for any inaccuracy thereof.
Any action or claim for the breach of any covenant or agreement
contained herein must be instituted or presented prior to the
expiration of the applicable statute of limitations period with
respect to such claim or action.
Section 11.4 Indemnification Procedures. Except
to the extent otherwise provided herein, all claims for indemnification
under this Agreement will be asserted and resolved as follows:
(a) An Indemnified Party claiming indemnification
under this Agreement will promptly (i) notify the Indemnitor from
whom indemnification is sought of any third party claim or claims
("Third Party Claim") asserted against the Indemnified Party which
could give rise to a right of indemnification under this Agreement
and (ii) transmit to the Indemnitor a written notice ("Claim Notice")
describing in reasonable detail the nature of the Third Party
Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the
Third Party Claim, if reasonably possible, and the basis
of the Indemnified Party's request for indemnification under this
Agreement. Within thirty (30) days after receipt of any Claim
Notice (the "Election Period"), the Indemnitor will notify
the Indemnified Party (i) whether the Indemnitor disputes its
potential liability to the Indemnified Party under this Agreement
with respect to such Third Party Claim and (ii) whether the
Indemnitor desires to defend the Indemnified Party against
such Third Party Claim.
(b) If the Indemnitor notifies the Indemnified Party
within the Election Period that the Indemnitor does not dispute its
potential liability to the Indemnified Party under this Agreement and
that the Indemnitor elects to assume the defense of the Third Party
Claim, then the Indemnitor will have the right to defend, at its
sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings will be prosecuted promptly and
diligently by the Indemnitor to a final conclusion or settled at
the discretion of the Indemnitor in accordance with this Section
11.4(b). Subject to the last sentence of this Section 11.4(b),
the Indemnitor will have full control of such defense and
proceedings, including any compromise or settlement thereof.
The Indemnified Party is hereby authorized, at the sole cost
and expense of the Indemnitor (but only if the Indemnified
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Party is ultimately determined to be actually entitled to
indemnification hereunder with respect to such Third Party Claim
or if the Indemnitor assumes the defense with respect to the
Third Party Claim), to file, during the Election Period, any motion,
answer or other pleadings which the Indemnified Party deems
necessary or appropriate to protect its interests or those of the
Indemnitor and which are not unnecessarily prejudicial to the
Indemnitor. If requested by the Indemnitor, the Indemnified
Party will, at the sole cost and expense of the Indemnitor,
cooperate with the Indemnitor and its counsel in contesting
any Third Party Claim which the Indemnitor elects to
contest, including the making of any bona fide directly related
counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any Person. The Indemnified Party
may participate in, but not control, any defense or settlement of
any Third Party Claim controlled by the Indemnitor pursuant to
this Section 11.4(b) and, except as permitted above or
pursuant to Section 11.4(c), will bear its own costs and expenses
with respect to such participation; provided, however, that if the
Indemnified Party asserts that there exists a conflict of interest
that would make it inappropriate for the same counsel to represent
the Indemnitor, then the Indemnitor shall reimburse the Indemnified
Party for the reasonable fees and expenses of separate counsel, to
the extent such fees and expenses are incurred solely in connection
with the matters with respect to which there is a conflict of
interest. Notwithstanding anything in this Section 11.4 to the
contrary, the Indemnitor will not, without the written consent of
the Indemnified Party, (i) settle or compromise any action, suit or
proceeding or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnified Party of a written
release from all liability in respect of such action, suit or
proceeding or (ii) settle or compromise any action, suit or
proceeding in any manner that (A) involves the sale, forfeiture
or loss of, or the creation of any Lien on, any property of such
Indemnified Party, (B) involves an award which together with
previous awards would exceed the available amount of the
indemnity hereunder, or (C) involves equitable remedies
against the Indemnified Party or any of its Affiliates.
(c) If the Indemnitor fails to notify the Indemnified
Party within the Election Period that the Indemnitor elects to
assume the defense of a Third Party Claim pursuant to Section 11.4(b),
or if the Indemnitor elects to assume such defense pursuant to
Section 11.4(b) but fails to diligently and promptly defend the
Third Party Claim, then the Indemnified Party will have the right
to defend, at the sole cost and expense of the Indemnitor,
the Third Party Claim by all appropriate proceedings, which
proceedings will be promptly and diligently prosecuted by the
Indemnified Party to a final conclusion or settled. The
Indemnified Party will have full control of such defense and
proceedings; provided, however, that the Indemnified Party will
not, without the Indemnitor's written consent, settle or
compromise any action, suit or proceeding in any manner that
(A) involves the sale, forfeiture or loss of, or the creation of
any Lien on, any property of such Indemnitor or (B) involves
equitable remedies against the Indemnitor or any of its Affiliates.
Notwithstanding the foregoing, if the Indemnitor has delivered a
written notice to the Indemnified Party to the effect that the
Indemnitor disputes its potential liability to the Indemnified
Party under this Agreement with respect to such Third Party Claim
and if such dispute is resolved in favor of the Indemnitor, the
Indemnitor will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section 11.4(c)
or of the Indemnitor's participation therein at the Indemnified
Party's request, and the Indemnified Party will reimburse the
Indemnitor in full for all costs and expenses of such litigation.
The Indemnitor may participate in, but not control, any defense
or settlement controlled
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by the Indemnified Party pursuant to this Section 11.4(c), and
the Indemnitor will bear its own costs and expenses with respect
to such participation.
(d) If an Indemnified Party has a claim against an
Indemnitor hereunder which does not involve a Third Party Claim,
the Indemnified Party will transmit to the Indemnitor a written
notice (the "Indemnity Notice") describing in reasonable detail
the nature of the claim, an estimate of the amount of damages
attributable to such claim, and the basis of the Indemnified
Party's request for indemnification under this Agreement. If
the Indemnitor does not notify the Indemnified Party within sixty
(60) days from its receipt of the Indemnity Notice that the
Indemnitor disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice will be deemed a liability
of the Indemnitor hereunder. If the Indemnitor has timely disputed
such claim, as provided above, such dispute will be resolved by
litigation in an appropriate court of competent jurisdiction.
(e) No Indemnitor will be obligated to make any
payment of indemnity under this Agreement except pursuant to the
procedures set forth in this Article 11. Payments of all amounts
owing by the Indemnitor pursuant to Sections 11.4(b) and (c) will
be made within ten (10) days after (A) if the Indemnitor gives the
notice contemplated by Section 11.4(a) stating that it does not
dispute its liability hereunder or fails to give the notice
contemplated by Section 11.4(a) within the Election Period, (i)
the effective date of a settlement of the Third Party Claim or
(ii) the date an adjudication of such Third Party Claim
becomes final and nonappealable, as the case may be, or (B) if
the Indemnitor does give the notice contemplated by Section 11.4(a)
that it disputes its liability hereunder, (i) the date an
adjudication of the Indemnitor's liability to the Indemnified
Party under this Agreement becomes final and nonappealable or
(ii) the effective date of a settlement between the Indemnitor
and the Indemnified Party as to such liability, as the case may
be. Payments of all amounts owing by the Indemnitor pursuant to
Section 11.4(d) will be made within ten (10) days after (X) if
the Indemnitor has disputed the relevant claim, (i) the date an
adjudication of the Indemnitor's liability to the Indemnified
Party under this Agreement becomes final and nonappealable or
(ii) the effective date of a settlement between the Indemnitor
and the Indemnified Party as to the Indemnitor's liability under
this Agreement, as the case may be, or (Y) if the relevant claim
has not been disputed by the Indemnitor, the expiration of the sixty
(60) day Indemnity Notice period.
(f) The failure by a party to give a notice required
pursuant to this Section 11.4 shall not relieve the other party or
parties of its obligations under this Section 11.4 or result in the
loss of any rights of such party under this Section 11.4, except to
the extent that such failure results in the failure of such other
party or parties to receive actual notice of the events or
circumstances giving rise to such notice requirement and such
other party or parties are damaged solely as a result of the
failure of such party to give such notice, and then only to
the extent of such damage.
Section 11.5 Acknowledgment of the Parties. Each
of the parties hereto expressly agrees and acknowledges that after
the Closing, such party's sole and exclusive remedies with respect
to any and all claims under this Agreement shall be pursuant to
Section 7.11 and this Article 11, except that specific performance
with respect to breaches of covenants may be sought as provided in
Section 12.13(d).
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Section 11.6 Limitation on Obligation to Indemnify.
Notwithstanding any other provision of this Agreement, none of the
PhillieCo Partners shall be liable or bear responsibility for any
portion of an Indemnified Loss attributable to any breach of the
representations and warranties set forth in Section 5.4 with respect
to PhillieCo (a "PhillieCo Loss") for more than a percentage of the
total amount of any such Indemnified Loss equal to such PhillieCo
Partner's PhillieCo Percentage Interest. In the event that any
PhillieCo Partner shall be required, other than by reason of such
PhillieCo Partner's gross negligence, fraud or willful misconduct,
to pay, discharge or otherwise bear responsibility for any amount
of any PhillieCo Loss pursuant to this Article 11 in excess of
such PhillieCo Partner's proportionate share thereof, the other
PhillieCo Partners hereby agree to indemnify, hold harmless and
reimburse such PhillieCo Partner against and for such other
PhillieCo Partners' share of such excess. It is the intention
of the PhillieCo Partners that, following the operation of this
Section, each PhillieCo Partner will have borne exactly its
proportionate share (determined as provided in the first
sentence of this Section) of the PhillieCo Loss at issue.
Section 11.7 Allocation of Losses. Any payment
made by Sprint or any of its Subsidiaries under this Article 11
shall be charged to the Sprint FON Group. Any payments
received by Sprint or any of its Subsidiaries under this Section
11 shall be allocated to the PCS Group. If any claim for Loss
by a Cable Parent or any of its Subsidiaries against Sprint under
this Article 11 derived in whole or in part from any Loss sustained
by the PCS Group the derivative portion of such claim will be
satisfied to the extent that Sprint allocates from the
Sprint FON Group to the PCS Group an amount of cash equal to
the Loss suffered by the PCS Group.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Notices. Except as expressly provided
herein, all notices, consents, waivers and other communications
required or permitted to be given by any provision of this Agreement
shall be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested) or sent by hand or
overnight courier, or by facsimile transmission (with acknowledgment
received and confirmation sent as provided below), charges
prepaid and addressed to the intended recipient as follows,
or to such other address or number as such Person may from
time to time specify by like notice to the parties:
(a) If to TCI or any of its Subsidiaries:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Telecopy: (303) 488-3200
Attention: President
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with copies to:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Telecopy: (303) 488-3245
Attention: General Counsel
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022-6030
Te1ecopy: (212) 705-5125
Attention: John L. Graham
(b) If to Cox or any of its Subsidiaries:
Cox Communications, Inc.
1400 Lake Hearn Drive
Atlanta, Georgia 30319-1464
Telecopy: (404) 847-6336
Attention: Dallas Clement
with a copy to:
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Telecopy: (202) 776-2222
Attention: David D. Wild
(c) If to Comcast or any of its Subsidiaries:
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
Telecopy: (215) 981-7794
Attention: General Counsel
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with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
Attention: Dennis S. Hersch
(d) If to Sprint or any of its Subsidiaries:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telecopy: (913) 624-8426
Attention: Chief Financial Officer
with copies to:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telecopy: (913) 624-2256
Attention: Corporate Secretary
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Telecopy: (404) 572-5146
Attention: Bruce N. Hawthorne
Any party may from time to time specify a different address for notices
by like notice to the other parties. All notices and other
communications given in accordance with the provisions
of this Agreement shall be deemed to have been given and
received (i) four (4) Business Days after the same are sent by
certified or registered mail, postage prepaid, return receipt
requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the
next Business Day by a reliable overnight courier service,
with acknowledgment of receipt) or (iii) one (1) Business
Day after the same are sent by a reliable overnight courier
service, with acknowledgment of receipt.
Section 12.2 Binding Effect. Except as otherwise
provided in this Agreement, this Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors, permitted transferees, and permitted assigns.
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Section 12.3 Construction. This Agreement shall
be construed simply according to its fair meaning and not strictly
for or against any party.
Section 12.4 Expenses. Whether or not the
transactions contemplated hereby are consummated, each of the
parties shall bear the fees and expenses relating to its
compliance with the various provisions of this Agreement,
and each of the parties agrees to pay all of its own expenses
(including all legal and accounting fees) incurred in connection
with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparation made for
carrying the same into effect. Notwithstanding the
foregoing and Section 5.1(d), if and only to the extent that
Sprint makes a cash capital contribution prior to Closing to
a Subsidiary of Sprint that will be a member of the PCS Group
after the Closing, the fees and expenses will be paid by such
Subsidiary of Sprint in connection with the transactions
contemplated by this Agreement and will be allocated to the
PCS Group. Neither this Section nor Section 5.1(d) limits in
any way the discretion of Sprint to allocate expenses relating
to the IPO to the PCS Group in accordance with the Management and
Allocation Policies.
Section 12.5 Table of Contents; Headings. The
table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope, extent or intent
of this Agreement.
Section 12.6 Governing Law. The validity of
this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties shall be
governed by the internal laws of the State of Delaware without
regard to principles of conflict of laws.
Section 12.7 Severability. Every provision of this
Agreement is intended to be severable. If any term or provision
hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the
maximum extent permissible so as to effect the intent of the
parties, and such illegality, invalidity or unenforceability
shall not affect the validity, legality or enforceability of
the remainder of this Agreement. If necessary to effect the
intent of the parties hereto, the parties hereto will negotiate
in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as
closely as possible reflects such intent.
Section 12.8 Amendments. This Agreement may be
modified or amended only by a written amendment signed by Persons
authorized to so bind each party hereto.
Section 12.9 Entire Agreement. The provisions
of this Agreement and any other agreements executed by the
parties concurrently herewith set forth the entire agreement
and understanding between the parties hereto as to the
subject matter hereof and supersede all prior agreements,
oral or written, and other communications between the parties
hereto relating to the subject matter hereof.
Section 12.10 Confidentiality. Each party hereto
agrees that, with respect to any non-public information obtained
in connection with this Agreement or the transactions
contemplated hereunder, the use or treatment of such information
shall be fully subject to the terms and provisions of Section
6.6 of the PCS Partnership Agreement.
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Section 12.11 Assignment. No party shall assign
any of its rights under this Agreement or delegate its duties
hereunder unless it obtains the prior written consent of the
other parties hereto, which consent may be withheld at such
party's absolute discretion. Notwithstanding the immediately
preceding sentence, any party may assign its rights (but not
its obligations) under this Agreement to any Controlled
Affiliate of such party.
Section 12.12 Waivers; Remedies. The observance
of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively
or prospectively) by the party or parties entitled to enforce
such term, but any such waiver shall be effective only if in a
writing signed by the party or parties against which such waiver
is to be asserted. Except as otherwise provided herein, no failure
or delay of any party hereto in exercising any power or right
under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such right
or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
Section 12.13 Consent to Jurisdiction; Specific
Performance.
(a) Each party hereto irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court sitting in the County
of New York or any Federal court of the United States of America
sitting in the Southern District of New York, and any appellate
court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and each party hereto irrevocably
and unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in such
New York State court or, to the extent permitted by law, in
such Federal court.
(b) Each party hereto irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection
which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement in any New York State court sitting in the County of
New York or any Federal court sitting in the Southern
District of New York. Each party hereto irrevocably waives,
to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party.
(c) Each party hereto irrevocably consents to
service of process in the manner provided for the giving of
notices pursuant to this Agreement; provided, that such
service shall be deemed to have been given only when actually
received by such party. Nothing in this Agreement shall affect
the right of a party to serve process in any other manner
permitted by law.
(d) Each party hereto agrees with the other parties
that the other parties would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with
their specific terms and that monetary damages would not provide
an adequate remedy in such event. Accordingly, in addition to any
other remedy to which the non-breaching parties may be entitled, at
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law or in equity, the non-breaching parties shall be entitled to
injunctive relief to prevent breaches of this Agreement and
specifically to enforce the terms and provisions hereof.
Section 12.14 WAIVER OF JURY TRIAL. EACH PARTY
HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Section 12.15 Further Assurances. Upon reasonable
request from time to time, each party hereto shall execute,
acknowledge and deliver any documents and perform all
further acts that may be reasonably necessary, appropriate
or desirable to carry out the intent and purposes of this Agreement.
Section 12.16 Counterparts. This Agreement may be
executed in any number of counterparts with the same effect as if
all parties hereto had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.
Section 12.17 Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall be
construed to give any Person other than the parties hereto
any legal or equitable right, remedy or claim under or in
respect of this Agreement.
Section 12.18 Restrictive Legends.
(a) Upon original issuance of any certificate issued
pursuant to this Agreement representing the Series 2 PCS Stock,
PCS Preferred Stock, the Warrants or any other securities of
Sprint issued in connection with this Agreement, such certificate
shall bear the following restrictive legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED OR SOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
(b) After such time as the above legend is no longer
required to appear on any certificate representing a security of
Sprint issued in connection with this Agreement, at the request of
the holder of such certificate, Sprint shall cause such
certificate to be exchanged for a certificate that does not
bear such legend.
(c) Sprint may make a notation on its records or give
instructions to any transfer agents or registrars for the securities
of Sprint issued in connection with this Agreement that bear the
above legend reflecting the restrictions set forth in such legend.
85
<PAGE>
(d) Sprint shall not incur any liability for any
delay in recognizing any transfer of any certificate bearing the
above legend and representing a security of Sprint issued
in connection with this Agreement if Sprint reasonably believes in
good faith that such transfer may have been or would be in violation
of the provisions of applicable securities law or this Agreement.
87
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Restructuring and Merger Agreement as of the day and year
first above written.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
Title: Executive Vice
President
COMCAST CORPORATION
By: /s/ Arthur R. Block
Title: Vice President
COX COMMUNICATIONS, INC.
By: /s/ James O. Robbins
Title: President and Chief
Executive Officer
SPRINT CORPORATION
By: /s/ Don A. Jensen
Title: Vice President
TCI SPECTRUM HOLDINGS, INC.
By: /s/ Stephen M. Brett
Title: Vice President
87
<PAGE>
COMCAST TELEPHONY SERVICES
By: Comcast Telephony
Services, Inc.,
Its General Partner
By: /s/ Arthur R. Block
Title: Vice President
COX TELEPHONY PARTNERSHIP
By: Cox Communications
Wireless, Inc.
Its Managing General Partner
By: /s/ James O. Robbins
Title: President
SPRINT ENTERPRISES, L.P.
By: US Telecom, Inc.,
Its Managing General Partner
By: /s/ Don A. Jensen
Title: Vice President
TCI PHILADELPHIA HOLDINGS, INC.
By: /s/ Stephen M. Brett
Title: Vice President
88
<PAGE>
COM TELEPHONY SERVICES, INC.
By: /s/ Arthur R. Block
Title: Vice President
COMCAST TELEPHONY SERVICES, INC.
By: /s/ Arthur R. Block
Title: Vice President
COX TELEPHONY PARTNERS, INC.
By: /s/ James O. Robbins
Title: President
COX COMMUNICATIONS WIRELESS, INC.
By: /s/ James O. Robbins
Title: President
SWV ONE, INC.
By: /s/ Don A. Jensen
Title: Vice President
89
<PAGE>
SWV TWO, INC.
By: /s/ Don A. Jensen
Title: Vice President
SWV THREE, INC.
By: /s/ Don A. Jensen
Title: Vice President
SWV FOUR, INC.
By: /s/ Don A. Jensen
Title: Vice President
SWV FIVE, INC.
By: /s/ Don A. Jensen
Title: Vice President
SWV SIX, INC.
By: /s/ Don A. Jensen
Title: Vice President
90
Exhibit 99(A)
Contacts: Bill White, Sprint 913-624-2226
Mark Bonavia, Sprint 913-624-3552
Tom Murphy, Sprint PCS 816-559-6703
For Immediate Release
SPRINT TO ASSUME OWNERSHIP, MANAGEMENT CONTROL OF SPRINT PCS
Sprint, cable partners reach restructuring agreement
Sprint to create new wireless stock
KANSAS CITY, Mo., May 26, 1998 - Sprint Corporation today
announced an agreement to assume ownership and management
control of Sprint PCS, its wireless joint venture with
Tele-Communications, Inc. (TCI), Comcast Corporation and
Cox Communications Inc. Sprint will issue shares of a new
common stock that tracks Sprint's wireless operations
("Sprint PCS Stock") to the cable partners in exchange for
their interests and to the public in an initial public
offering later this year.
"Sprint PCS has taken the lead as the only wireless
provider with the licenses to provide PCS service
throughout the entire United States. Sprint PCS has
achieved outstanding results, currently serving more than
1.2 million customers," said William T. Esrey, Sprint's
chairman and chief executive officer.
"The addition of Sprint PCS as a full part of Sprint
helps fulfill our strategic vision of being a full-service
communications provider and reflects our willingness to
lead and define the communications company of the future,"
he said. "This agreement positions Sprint to be the only
carrier with nationwide PCS and long distance wireline
services. The operating efficiencies resulting from Sprint's
ability to package wireless, long distance and Sprint's
local service will Sprint to Assume Ownership, Management
Control of Sprint PCS give Sprint a significant competitive
advantage and customers increased simplicity in selecting
services from one carrier.
"The creation of the Sprint PCS Stock provides a new
means for investors to participate in a rapidly growing
segment of the communications industry," Esrey said. "By
establishing this new equity, the marketplace will help
highlight the value we are creating with our investment
in PCS. At the same time, the strong growth in our wireline
operations, which will be separately tracked and continue to
be reported as Sprint FON Stock, will also become more visible
to the investment community."
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<PAGE>
Sprint To Assume Ownership, Management Control Of Sprint PCS
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Sprint's steps towards management control
Under a restructuring agreement reached by the four
partners, Sprint will assume full ownership and management
control of Sprint PCS in a series of steps over the next several
months.
First, Sprint will issue Sprint PCS Stock to track the
performance of the combined wireless operations. Initially, the
cable partners will receive a 47 percent economic interest in
Sprint PCS Stock in exchange for their interests in Sprint PCS
and PhillieCo. Sprint's initial share will be 53 percent. The
cable partners will not have special governance rights in Sprint
PCS or the Sprint Corporation and will be issued low vote
(1/10 vote) shares.
The next step will be to combine, under the Sprint PCS name,
Sprint PCS, PhillieCo (a partnership of Sprint, TCI and Cox
offering PCS service in the Philadelphia MTA) and the PCS licenses
wholly-owned by Sprint through its subsidiary SprintCom. The
combined operation will include PCS licenses serving the entire
continental United States, Alaska, Hawaii, Puerto Rico and the U.S.
Virgin Islands.
The agreement also contemplates an initial public offering of
the Sprint PCS Stock to occur concurrently with the above steps. The
IPO would be targeted to raise between $500 million and $1 billion
for Sprint PCS. The ownership split established after the initial
allocation of shares (i.e., the 53-47 split) would be
proportionately reduced by the amount of ownership interests issued
in connection with the IPO.
Approximately 90 days after the restructuring and the IPO,
Sprint will recapitalize itself with two new common stocks. Sprint
FON Stock will track the performance of Sprint's local and long
distance operations, as well as its directories and distribution
businesses, emerging businesses and Global One joint venture.
Sprint PCS Stock will track Sprint's wireless holdings.
It is expected that each share of existing Sprint common
stock will be converted into one share of Sprint FON Stock and a
fractional share of Sprint PCS Stock in a tax-free transaction.
Sprint shareholders will then own shares of both the Sprint FON Stock
and Sprint PCS Stock. The restructuring agreement provides Sprint
with the option to reverse the sequence of the public offering and
the recapitalization. The transaction is subject to approval by Sprint
shareholders.
New stock classifications and transaction phases
The Sprint PCS Stock will be divided into three categories
to reflect different voting rights and the special rights previously
granted to France Telecom and Deutsche Telekom. Public shareholders
of Sprint PCS Stock have full voting rights. The voting power of
Sprint FON shares and Sprint PCS shares is based on aggregate relative
market values of the two stocks.
*Series 1 PCS (full vote per share) to be held by Sprint
shareholders and the public
*Series 2 PCS (1/10 vote of Series 1; full voting in class
votes only) issued to TCI, Cox and Comcast in exchange for
their interests in Sprint PCS and PhillieCo.
*Series 3 PCS (full vote per share) to be held by France Telecom
and Deutsche Telekom
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Sprint to Assume Ownership, Management Control of Sprint PCS
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At the time of the restructuring and the IPO, France Telecom
and Deutsche Telekom will purchase a sufficient number of Series 3
PCS shares to maintain their overall 20 percent voting interest in
Sprint, consisting of 20 percent voting interests in shares of both
Sprint FON Stock and Sprint PCS Stock.
According to Sprint PCS chief executive officer Andrew
Sukawaty, the restructuring is a positive step for Sprint PCS and
its employees. "Sprint PCS will be able to fully leverage Sprint's
broad marketing reach, distribution channels, network assets and
communications expertise."
"Together, Sprint, TCI, Cox and Comcast have supported the
business and management of Sprint PCS allowing us to build and
launch one of the most successful wireless ventures in history,"
Sukawaty said. "I'm pleased that the partners have reached an
agreement that allows each of them to be rewarded for their
pioneering investment in PCS."
Sprint is a global communications company - at the forefront
in integrating long distance, local and wireless communications
services - and one of the world's largest carriers of Internet traffic.
Sprint built and operates the United States only nationwide
all-digital, fiber optic network and is the leader in advanced data
communications services. Sprint has $15 billion in annual revenues
and serves more than 16 million business and residential customers.
Transaction supplement
The Sprint PCS and Sprint FON stocks would be Sprint
Corporation common stocks. Each of these stocks would have its own
stock exchange listing and be traded separately. These stocks are
distinguished from other common stocks by the fact that they track
the financial performance of part of the overall business, but do
not represent direct interests in tracked assets and businesses. The
tracked units are part of the same company, and are overseen by the
same board of directors. The owners of these stocks do share a claim
on overall corporate assets with Sprint to Assume Ownership,
Management Control of Sprint PCS other stock classes. Except in
very limited circumstances where class votes are required, the
holders of Sprint FON Stock and Sprint PCS Stock will vote as a group.
Financial performance of Sprint PCS and Sprint FON would be
disclosed in separate financial statements. Sprint Corporation would
also continue to report consolidated financial results.
Under the proposed stock restructuring, it is expected that
Sprint would generally borrow on a consolidated basis at the parent
company level and then advance funds as required to Sprint PCS at
rates and on other terms substantially equivalent to the terms Sprint
PCS would be able to obtain from third parties as a wholly-owned
subsidiary of Sprint Corporation. As a result, Sprint PCS would
likely be able to finance its growth with lower financing costs than
if it were an independent company. Financing costs for Sprint FON are
not expected to be materially impacted by Sprint PCS debt.
At the end of April, Sprint PCS had pro forma debt outstanding
of approximately $5 billion.
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Sprint to Assume Ownership, Management Control of Sprint PCS
-4-
Cash dividends are expected to continue to be distributed
at current levels for Sprint FON Stock; cash dividends are not
expected to be declared on Sprint PCS Stock for the foreseeable
future.
Following the restructuring, Sprint will allocate income tax
benefits and expenses to Sprint FON and Sprint PCS operations based
upon their respective effect on consolidated income taxes of Sprint.
A spin off of the Sprint PCS operations within two years of
the restructuring would require a vote of the shareholders of
Sprint PCS stock. Sprint has committed to refrain from converting
Sprint PCS Stock into Sprint FON Stock for the first three years.
In year four, Sprint would be able to convert Sprint PCS Stock at
a 10 percent premium and, thereafter, based upon a determination
of fairness to each class.
The transaction provides the cable partners with registration
rights that, if used by the cable partners, will permit the
monetization of their Sprint PCS holdings through equity offerings
or through derivatives. The cable partners are committed to typical
lock-up periods for public sales. If Series 2 shares are
transferred by a cable partner, the transferred shares become full
vote Series 1 shares.
With the restructuring of Sprint's businesses, certain
policies have been adopted to achieve fair treatment of material
matters between the holders of Sprint FON and Sprint PCS stock.
A Capital Stock Committee of Sprint's Board of Directors will be
established to interpret, make decisions under and oversee
implementation of these policies.
France Telecom and Deutsche Telekom will retain their
existing Class A Common Stock. Following the recapitalization,
the Class A Common Stock will represent interests in both the
Sprint FON Stock and the Sprint PCS Stock. Dividends on the Class
A Common Stock will be based on the dividends paid on the
underlying stocks. Likewise, voting rights of the Class A Common
Stock will be based on the voting power of the underlying stocks.
France Telecom and Deutsche Telekom together have
anti-dilution rights allowing them to maintain a 20 percent
interest in Sprint Corporation. Stock purchases at or subsequent
to closing will be in voting Sprint FON Stock and Sprint PCS Stock.
Board representation for France Telecom and Deutsche Telekom would
be based on the aggregate voting power of the Class A Common Stock,
the Sprint FON Stock and the Sprint PCS Stock.
Sprint's financial advisors for this transaction were SBC
Warburg Dillon-Read Inc., and Salomon Smith Barney.
Sprint's legal advisor was King & Spalding.
Exhibit 99(B)
MASTER RESTRUCTURING AND INVESTMENT AGREEMENT
Among
SPRINT CORPORATION,
FRANCE TELECOM S.A.
and
DEUTSCHE TELEKOM AG
Dated as of May 26, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I CLOSINGS; PURCHASE AND
SALE OF SHARES 1
Section 1.1. The Primary Closing 1
Section 1.2. The Secondary Closing 3
Section 1.3. The Greenshoe Closing 4
Section 1.4. Purchase and Sale of
Shares at the Primary
Closing 5
Section 1.5. Purchase and Sale of
Shares at the Secondary
and Greenshoe Closings 6
Section 1.6. Antidilution 6
Section 1.7. Reduction of Purchased
Shares 7
Section 1.8. Effect of Conversion 7
Section 1.9. Relationship of Purchases
Under this Agreement
to CP Top Ups 7
Section 1.10. Effect on Stockholders'
Agreement 7
ARTICLE II CONDITIONS TO CLOSINGS 7
Section 2.1. Conditions of All Parties
to Primary Closing 8
Section 2.2. Sprint's Conditions
Precedent to the Primary
Closing 9
Section 2.3. Conditions Precedent to
the Primary Closing for
FT and DT 10
Section 2.4. Conditions Precedent to
Secondary and Greenshoe
Closings During the
Anticipated IPO Period 12
Section 2.5. Conditions Precedent to
Secondary and Greenshoe
Closings After the
Anticipated IPO Period 14
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SPRINT 16
Section 3.1. Organization, Qualification,
Etc. 16
Section 3.2. Capital Stock and Other
Matters 16
Section 3.3. Validity of Shares 16
Section 3.4. Corporate Authority; No
Violation 17
Section 3.5. No Conflict; No Default 18
Section 3.6. Sprint Reports and Financial
Statements 18
Section 3.7. Absence of Certain Changes
or Events 19
Section 3.8. Litigation 19
Section 3.9. Proxy Statement; Other
Information 20
Section 3.10. Certain Tax Matters 20
Section 3.11. Amendments to the Rights
Agreement 20
i
<PAGE>
Section 3.12. Other Registration Rights 21
Section 3.13. Takeover Statutes 21
Section 3.14. Vote Required; Board
Recommendation 22
Section 3.15. Sprint Board Action 22
Section 3.16. King & Spalding Opinion 22
Section 3.17. PCS Restructuring
Agreement 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE BUYERS 22
Section 4.1. Representations and
Warranties of FT 22
Section 4.2. Representations and
Warranties of DT 25
ARTICLE V COVENANTS 27
Section 5.1. Cooperation 27
Section 5.2. Certain Actions by Sprint 29
Section 5.3. IPO Matters 31
Section 5.4. Tax Matters 31
Section 5.5. Brokers or Finders 31
Section 5.6. No Action Relating to
Takeover Statutes;
Applicability of Future
Statutes and Regulations 32
Section 5.7. Management and Allocation
Policies 32
Section 5.8. Sprint Action 32
Section 5.9. Standstill Agreement 32
ARTICLE VI TERMINATION; ABANDONMENT 33
Section 6.1. Events of Termination 33
Section 6.2. Effect of Termination 34
Section 6.3. Reimbursement of Expenses 34
Section 6.4. Abandonment of Purchase
and Sale of Capital
Stock at Primary Closing 34
Section 6.5. Abandonment of Secondary
Closing and Greenshoe
Closing 35
ARTICLE VII MISCELLANEOUS 36
Section 7.1. Survival of Representations
and Warranties 36
Section 7.2. Assignment 37
Section 7.3. Entire Agreement 37
Section 7.4. Expenses 38
Section 7.5. Waiver, Amendment, Etc. 38
Section 7.6. Binding Agreement; No
Third Party Beneficiaries 38
ii
<PAGE>
Section 7.7. Notices 38
Section 7.8. Governing Law; Dispute
Resolution; Equitable
Relief 40
Section 7.9. Severability 41
Section 7.10. Translation 41
Section 7.11. Table of Contents;
Headings; Counterparts 42
Section 7.12. Waiver of Immunity 42
Section 7.13. Continuing Director
Approval 42
Section 7.15. Currency 43
ARTICLE VIII DEFINITIONS 43
Section 8.1. Certain Definitions 43
iii
<PAGE>
MASTER RESTRUCTURING AND INVESTMENT AGREEMENT
MASTER RESTRUCTURING AND INVESTMENT AGREEMENT, dated
as of May 26, 1998 (the "Agreement"), among Sprint
Corporation, a corporation organized under the laws of
Kansas ("Sprint"); France Telecom S.A., a societe anonyme
formed under the laws of France ("FT"); and Deutsche
Telekom AG, an Aktiengesellschaft formed under the laws
of Germany ("DT" and, with FT, the "Buyers").
RECITALS
WHEREAS, Sprint, FT and DT entered into an
Investment Agreement dated as of July 31, 1995, as
amended (the "Original Investment Agreement"), pursuant
to which the Buyers purchased shares of capital stock
of Sprint;
WHEREAS, concurrently with the execution and
delivery of this Agreement, Sprint is entering into the
PCS Restructuring Agreement, which provides for, among
other things, (i) the CP Exchange, (ii) the IPO and
(iii) the Recapitalization (capitalized terms used
herein but not previously defined have the meanings set
forth in Article VIII of this Agreement); and
WHEREAS, in connection with the transactions
contemplated herein and in the PCS Restructuring
Agreement, Sprint and the Buyers desire to make
certain changes to various existing agreements among
the Buyers and Sprint, and the Buyers desire to
purchase certain shares of capital stock from Sprint,
all in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and agreements set forth
herein, each of FT, DT and Sprint (each a "Party" and
collectively the "Parties") agrees as follows:
ARTICLE I
CLOSINGS; PURCHASE AND SALE OF SHARES
Section 1.1. The Primary Closing. The
Primary Closing shall take place at the offices of
King & Spalding, 1185 Avenue of the Americas, New
York, New York, at 10:00 a.m. (local time at the
place of the Primary Closing) on the date of the
consummation of the earlier to occur of the IPO or
the Recapitalization, as the case may be, or at
such other location or on such other date or time
as the Parties hereto shall agree. On the Primary
Closing Date, (i) the CP Closing will occur, (ii)
either the IPO or the Recapitalization will be
consummated, (iii) if the conditions to Primary
Closing specified in Sections 2.1(b) and 2.3(b)
are satisfied or waived prior to the Primary Closing,
the purchase and sale of shares of capital stock
of Sprint contemplated by Section 1.4 shall be
consummated, and (iv) the Parties will take the
following actions:
(a) The Initial Charter Amendment and
(if the Recapitalization is to occur on the
Primary Closing Date) the Subsequent Charter
Amendment shall be filed with the Kansas
Governmental Authorities.
<PAGE>
(b) Sprint shall deliver to each of
FT and DT a copy of the Bylaw Amendment and
the resolutions adopted by Sprint's Board
of Directors in connection with the
transactions contemplated by this Agreement,
certified by the Secretary or an Assistant
Secretary of Sprint.
(c) Sprint and the Buyers shall deliver
to each other a certificate to the effect that
the representations and warranties of such Party
are accurate in all material respects on the
Primary Closing Date with the same effect as if
made on the Primary Closing Date (except that
any such statements which are expressly made as
of a particular date shall have been accurate
as of such particular date and except to the
extent contemplated or permitted by this
Agreement or the PCS Restructuring Agreement).
(d) Sprint and the Buyers shall deliver
to each other a certificate that the covenants
and agreements contained herein that are required
to be performed by such Party on or prior to the
Primary Closing have been performed in all
material respects.
(e) if the conditions to the Primary
Closing specified in Sections 2.1(b) and 2.3(b)
are satisfied or waived prior to the Primary
Closing, certificates representing the shares of
Series 3 PCS Stock to be issued to FT at the
Primary Closing shall be delivered by Sprint to
FT.
(f) if the conditions to the Primary
Closing specified in Sections 2.1(b) and 2.3(b)
are satisfied or waived prior to the Primary
Closing, certificates representing the shares of
Series 3 PCS Stock to be issued to DT at the
Primary Closing shall be delivered by Sprint to DT.
(g) if the conditions to the Primary
Closing specified in Sections 2.1(b) and 2.3(b)
are satisfied or waived prior to the Primary
Closing, cash (or, if the IPO does not occur on
the Primary Closing Date, Top Up Notes or a
combination of cash and Top Up Notes) in the
amount of one-half of the purchase price for the
shares of Series 3 PCS Stock being purchased by
FT and DT on the Primary Closing Date shall be
delivered by each of FT and DT, such cash (if
applicable) to be delivered by wire transfer of
immediately available funds to an account
designated by Sprint to FT and DT at least five
Business Days prior to the Primary Closing Date.
(h) The Amended and Restated Stockholders'
Agreement, in form reasonably satisfactory to
each of the Parties shall be executed and
delivered by each Party in the English and
French languages.
(i) The Amended and Restated Registration
Rights Agreement, in form reasonably satisfactory
to each of the Parties, shall be executed and
delivered by each Party in the English and French
languages.
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<PAGE>
(j) The Amended and Restated Standstill
Agreement, in form reasonably satisfactory to
each of the Parties, shall be executed and
delivered by each Party in the English and
French languages.
(k) The Amended and Restated DT Investor
Confidentiality Agreement, in form reasonably
satisfactory to each of the Parties, shall be
executed and delivered by DT and Sprint in the
English language.
(l) The Amended and Restated FT Investor
Confidentiality Agreement, in form reasonably
satisfactory to each of the Parties, shall be
executed and delivered by FT and Sprint in the
English and French languages.
All of the actions contemplated to occur at the
Primary Closing shall be deemed to have occurred
simultaneously, and none of such actions shall be
effective unless all of such actions have occurred
or are waived by the necessary Parties.
Notwithstanding anything to the contrary in this
Agreement, (i) the failure of any of the conditions
set forth in Sections 2.1(b) or 2.3(b) to be
satisfied or waived prior to or at the Primary
Closing shall not affect the Buyers' obligations
under Article V to vote (or cause to be voted)
the shares of capital stock of Sprint they own
(directly or indirectly) in favor of the Initial
Charter Amendment, the Subsequent Charter Amendment,
this Agreement, the Amended Other Agreements, the
PCS Restructuring Agreement and the transactions
contemplated hereby and thereby and any other
matters related thereto presented for a vote at
the Stockholders Meeting (including any class vote
of the Class A Holders required thereat or in
connection therewith), and their agreement not to
exercise any disapproval rights which they may have
under the Articles or otherwise with respect to
any such matters, (ii) the failure of any of the
conditions set forth in Sections 2.1(b) or 2.3(b)
to be satisfied or waived prior to or at the Primary
Closing shall not affect the Parties' obligations to
proceed with all of the transactions and deliveries
contemplated to be undertaken at the Primary Closing
(other than the purchase and sale by the Buyers of
the capital stock of Sprint), and such transactions
and deliveries in fact shall proceed if all of the
other conditions to the Primary Closing have been
satisfied or waived, and (iii) if the conditions
to the purchase and sale of the capital stock of
Sprint at the Primary Closing are not satisfied or
waived prior to or at the Primary Closing, unless
this Agreement is otherwise terminated in
accordance with its terms, the purchase and sale
by the Buyers of the capital stock of Sprint
contemplated to be purchased at the Primary Closing
shall occur on the fifth Business Day (unless the
Parties otherwise agree) following the satisfaction
of all such conditions to the purchase and sale of
such capital stock.
Section 1.2. The Secondary Closing. If
Sprint determines to proceed with the IPO after the
Primary Closing Date, the Secondary Closing shall
take place at the offices of King & Spalding, 1185
Avenue of the Americas, New York, New York, at 10:00
a.m. (local time at the place of the Secondary
Closing) on the date determined by Sprint in
accordance with Section 5.2(d) or at such other
location or on such other date or time as Sprint
may determine. At the Secondary Closing, (i) the
IPO will be consummated, and (ii) if the
conditions to the Secondary Closing specified in
Section 2.4 or 2.5, as applicable, are satisfied
or waived prior to the Secondary Closing, the
purchase
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and sale of shares of capital stock of Sprint
contemplated by Section 1.5 to occur at the
Secondary Closing shall be consummated, and
the Parties will take the following actions:
(a) Sprint shall deliver to the
Buyers the certificate contemplated by
Section 2.4(b)(iv), and the Buyers shall
deliver to Sprint the certificates
contemplated by Section 2.4(c)(iii).
(b) Certificates representing the
shares of Series 3 PCS Stock to be issued
to FT at the Secondary Closing shall be
delivered by Sprint to FT.
(c) Certificates representing the
shares of Series 3 PCS Stock to be issued
to DT at the Secondary Closing shall be
delivered by Sprint to DT.
(d) Cash in the amount of one-half
of the purchase price for such shares of
Series 3 PCS Stock being purchased shall
be delivered by each of FT and DT, such
cash to be delivered by wire transfer of
immediately available funds to an account
designated by Sprint to FT and DT at least
five Business Days prior to the Secondary
Closing Date.
All of the actions contemplated to occur at
the Secondary Closing shall be deemed to have
occurred simultaneously, and none of such actions
shall be effective unless all of such actions
have occurred or are waived by the necessary
Parties. Notwithstanding anything to the contrary
in this Agreement, but subject to the provisions
of Section 6.5, if the conditions to the purchase
and sale of the capital stock of Sprint at the
Secondary Closing are not satisfied or waived
prior to or at the Secondary Closing the purchase
and sale by the Buyers of the capital stock of
Sprint contemplated to be purchased at the
Secondary Closing shall occur on the fifth Business
Day (unless the Parties otherwise agree) following
the satisfaction of all such conditions to the
purchase and sale of the capital stock.
Section 1.3. The Greenshoe Closing. If
the underwriters for the IPO exercise an
over-allotment option in connection with the IPO
(the "Greenshoe") after either the Primary Closing
Date or the Secondary Closing Date, the Greenshoe
Closing shall take place at the offices of King &
Spalding, 1185 Avenue of the Americas, New York,
New York, at 10:00 a.m. (local time at the place
of the Greenshoe Closing) on the date determined by
Sprint in accordance with the terms of any
underwriting agreement entered into by Sprint in
connection with the IPO or at such other location
or on such other date or time as Sprint may
determine. At the Greenshoe Closing, (i) the
over-allotment option granted to the underwriters
will be consummated, and (ii) if the conditions to
the Greenshoe Closing specified in Section 2.4 or
2.5, as applicable, are satisfied or waived prior
to the Greenshoe Closing, the purchase and sale of
shares of capital stock of Sprint contemplated by
Section 1.5 to occur at the Greenshoe Closing shall
be consummated, and the Parties will take the
following actions:
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<PAGE>
(a) Sprint shall deliver to the
Buyers the certificate contemplated by Section
2.4(b)(iii), and the Buyers shall deliver to
Sprint the certificates contemplated by
Section 2.4(c)(iii).
(b) Certificates representing the
shares of Series 3 PCS Stock to be issued to
FT at the Greenshoe Closing shall be delivered
by Sprint to FT.
(c) Certificates representing the
shares of Series 3 PCS Stock to be issued to
DT at the Greenshoe Closing shall be delivered
by Sprint to DT.
(d) Cash in the amount of one-half of
the purchase price for such shares of Series 3
PCS Stock being purchased shall be delivered by
each of FT and DT, such cash to be delivered by
wire transfer of immediately available funds to
an account designated by Sprint to FT and DT at
least five Business Days prior to the Greenshoe
Closing Date.
All of the actions contemplated to occur at
the Greenshoe Closing shall be deemed to have
occurred simultaneously, and none of such actions
shall be effective unless all of such actions
have occurred or are waived by the necessary
Parties. Notwithstanding anything to the contrary
in this Agreement, but subject to the provisions
of Section 6.5, if the conditions to the purchase
and sale of the capital stock of Sprint at the
Greenshoe Closing are not satisfied or waived
prior to or at the Greenshoe Closing the purchase
and sale by the Buyers of the capital stock of
Sprint contemplated to be purchased at the
Greenshoe Closing shall occur on the fifth
Business Day (unless the Parties otherwise agree)
following the satisfaction of all such conditions
to the purchase and sale of the capital stock.
Section 1.4. Purchase and Sale of
Shares at the Primary Closing. Upon the terms and
subject to the conditions of this Agreement,
Sprint shall issue, sell and deliver to each of FT
and DT, and each of FT and DT, severally and not
jointly, shall purchase and accept, shares of
Series 3 PCS Stock at the Primary Closing as set
forth below in this Section 1.4:
(a) Subject to Sections 1.6, 1.7, 1.8
and 1.9, FT and DT shall purchase that number
of whole shares (rounded up to the nearest
whole share) of Series 3 PCS Stock sufficient
for FT and DT to have acquired Beneficial
Ownership, in the aggregate, equal to 25% of
the aggregate Voting Power attributable to the
shares of Series 1 PCS Stock, Series 2 PCS
Stock and PCS Preferred Stock issued in the CP
Exchange, the IPO (if the IPO occurs on the
Primary Closing Date), the CP/IPO Top Up
Purchase (if the IPO occurs on the Primary
Closing Date), the PCS Preferred Issuance, and
the CP/FT-DT Top Up Purchase to be effected at
the Primary Closing. Such shares shall be
purchased at the applicable price specified
below in this Section 1.4(a) and
determined at the date of the Primary Closing
as follows:
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(i) if Sprint elects to complete
the IPO on the Primary Closing Date, the
purchase price per share of such shares of
Series 3 PCS Stock shall be the IPO Price
net of any underwriting discounts in
connection with the IPO, which purchase
price shall be paid in cash in immediately
available funds.
(ii) if Sprint elects to complete
the Recapitalization on the Primary Closing
Date and prior to the IPO, then the purchase
price per share of such shares of Series 3
PCS Stock shall be an amount equal to the
Volume Weighted Trading Average of the Series
1 PCS Stock for the period of 20 consecutive
Trading Days following the commencement of
regular way trading in connection with the
Recapitalization, which purchase price shall
be paid by the issuance to Sprint by FT and
DT of Top Up Notes or a combination of cash
and Top Up Notes.
(b) Each of FT and DT agrees to purchase
one-half of the shares of Series 3 PCS Stock to be
purchased pursuant to Section 1.4(a). The purchase
of shares of capital stock by FT and DT pursuant to
this Section 1.4 shall be consummated concurrently,
and no purchase of shares by FT or DT pursuant to
this Section 1.4 shall be made unless and until the
concurrent purchase by the other Party is so effected.
Section 1.5. Purchase and Sale of Shares at the
Secondary and Greenshoe Closings. Upon the terms and
subject to the conditions of this Agreement, if the
Secondary Closing or the Greenshoe Closing occurs, subject
to Sections 1.6, 1.7, 1.8 and 1.9, Sprint shall issue,
sell and deliver to each of FT and DT, and each of
FT and DT, severally and not jointly, shall purchase and
accept, at the Secondary Closing or the Greenshoe Closing,
as the case may be, that number of whole shares (rounded
up to the nearest whole share) of Series 3 PCS Stock
sufficient for FT and DT to have acquired Beneficial
Ownership, in the aggregate, equal to 25% of the aggregate
Voting Power attributable to the shares of Series 1 PCS
Stock and Series 2 PCS Stock issued (i) in the case of the
Secondary Closing, in the IPO (if the IPO occurs on the
Secondary Closing Date), the CP/IPO Top Up Purchase (if
the IPO occurs on the Secondary Closing Date), and the
CP/FT-DT Top Up Purchase to be effected at the Secondary
Closing, and (ii) in the case of the Greenshoe Closing,
in the Greenshoe, the CP/Greenshoe Top Up Purchase and
the CP/FT-DT Top Up Purchase to be effected at the
Greenshoe Closing. Such shares shall be purchased at
the IPO Price net of any underwriting discounts in
connection with the IPO. Each of FT and DT agrees to
purchase one-half of the shares of Series 3 PCS Stock to
be purchased pursuant to this Section 1.5. The purchase
of shares of capital stock by FT and DT pursuant to this
Section 1.5 shall be consummated concurrently, and no
purchase of shares by FT or DT pursuant to this Section
1.5 shall be made unless and until the concurrent
purchase by the other Party is so effected.
Section 1.6. Antidilution. The number of
shares of Series 3 PCS Stock to be purchased by the
Buyers hereunder and the purchase price therefor shall
be adjusted to reflect any stock split, subdivision,
stock dividend, or other reclassification, consolidation
or a combination of the Voting Securities of Sprint
or similar action or transaction after the date hereof,
provided that no adjustment shall be made under this
Section 1.6 in respect of the Recapitalization.
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Section 1.7. Reduction of Purchased Shares.
At any Applicable Closing, the number of shares of Series
3 PCS Stock to be purchased by FT and DT hereunder shall
be reduced by the minimum number of shares, if any,
necessary so that, following such Applicable Closing,
FT and DT and their respective Affiliates shall
Beneficially Own in the aggregate (rounded up to the
nearest whole share) 20% of the sum of (a) the aggregate
number of Votes of Sprint outstanding at that time
(giving effect to any other issuances of Voting
Securities of Sprint to take place concurrently with
such Applicable Closing) and (b) the aggregate number of
Votes represented by the Voting Securities of Sprint
which FT and DT and their respective Affiliates have
committed to purchase from Sprint (but not including
any Voting Securities of Sprint to be purchased by FT
and DT under this Agreement, other than Voting
Securities which have been purchased prior to the
Applicable Closing or which will be purchased at
such Applicable Closing). Any reduction in shares
pursuant to this Section 1.7 shall be borne one-half
by each of FT and DT.
Section 1.8. Effect of Conversion. If after
the date hereof all outstanding shares of Class A Stock
shall have been converted into Non-Class A Common Stock
pursuant to the Class A Provisions, each share of
Series 3 PCS Stock to have been issued by Sprint pursuant
to this Agreement shall instead be issued as one duly
issued, fully paid and nonassessable share of Series 1
PCS Stock.
Section 1.9. Relationship of Purchases Under
this Agreement to CP Top Ups. In connection with the
exercise by FT and DT of their rights under this Agreement
to purchase shares of capital stock of Sprint at each
Applicable Closing, Sprint shall use its reasonable
efforts to coordinate the exercise of purchase rights by
the Cable Partners and FT and DT to avoid a series of
successive exercises of purchase rights triggered by a
single issuance.
Section 1.10. Effect on Stockholders' Agreement.
To the extent FT and DT purchase shares of Sprint capital
stock pursuant to this Agreement in respect of the CP
Exchange, the IPO, the Greenshoe, the CP/FT-DT Top Up,
the CP/IPO Top Up, the CP/Greenshoe Top Up and/or the
issuance of the PCS Preferred Stock, such purchase
shall be in lieu of the Equity Purchase Rights which
FT and DT otherwise would have had under the Stockholders'
Agreement and the Amended and Restated Stockholders'
Agreement as a result of such events, and no such Equity
Purchase Rights as a result of such events may be exercised
under such documents with respect to the transactions
contemplated by this Agreement except to the extent that
FT and DT do not purchase shares of capital stock in respect
of such events because this Agreement is terminated or
the Secondary Closing or Greenshoe Closing is abandoned.
ARTICLE II
CONDITIONS TO CLOSINGS
Section 2.1. Conditions of All Parties to
Primary Closing.
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(a) The respective obligations of each
Party to consummate the transactions contemplated
by this Agreement to occur at the Primary Closing
(other than the purchase and sale of the capital
stock of Sprint to be acquired by FT and DT
hereunder) are subject to the fulfillment at or
prior to the Primary Closing Date of each of the
following conditions, any or all of which may be
waived in whole or in part by the Party being
benefitted thereby, to the extent permitted by
applicable Law:
(i) The matters presented for a
vote of the stockholders of Sprint at the
Stockholders Meeting as contemplated by Section
5.2(b) shall have been duly approved by the
requisite holders of capital stock of Sprint in
accordance with applicable Law and the Articles
and Bylaws of Sprint.
(ii) The CP Closing shall be
consummated simultaneously with the Primary
Closing.
(iii) No preliminary or permanent
injunction or other order, decree or ruling
issued by a Governmental Authority, nor any
statute, rule, regulation or executive order
promulgated or enacted by any Governmental
Authority, shall be in effect that enjoins the
actions to be effected at the Primary Closing
under clauses (a) and (b) and (h) through (m)
only of Section 1.1 of this Agreement or the
transactions contemplated by the PCS
Restructuring Agreement.
(iv) The IPO or the Recapitalization
(whichever Sprint has elected to complete
concurrently with the CP Exchange on the Primary
Closing Date) shall be consummated simultaneously
with the Primary Closing.
(v) The Initial Charter Amendment
and (if the Recapitalization is to occur
concurrently with the CP Exchange) the Subsequent
Charter Amendment shall have been filed with the
Kansas Secretary of State.
(b) The respective obligations of each
Party to consummate the purchase and sale of the
capital stock of Sprint to be purchased by FT and
DT hereunder at the Primary Closing are subject to
the fulfillment at or prior to the Primary Closing
Date of each of the conditions specified in Section
2.1(a) and each of the following additional
conditions, any or all of which may be waived in
whole or in part by the Party being benefitted thereby,
to the extent permitted by applicable Law:
(i) All consents, if any, required from
the Federal Communications Commission in order
to permit the purchase and sale of the shares of
capital stock of Sprint to be purchased by FT
and DT at the Primary Closing shall have been
granted, in each case without any material
limitation, restriction, requirement or condition
on Sprint, FT or DT.
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(ii) FT shall have received all approvals,
if any, of the French minister in charge of
economic affairs and finance (ministre charge
de l'economie et des finances) and all approvals,
if any, of the French minister in charge of posts
and telecommunications (ministre charge des postes
et des telecommunications) required in order to
permit the purchase and sale of the shares of
capital stock of Sprint to be purchased by FT and
DT at the Primary Closing.
(iii) DT shall have received all approvals,
if any, of the Bundeskartellamt required in order
to permit the purchase and sale of the shares of
capital stock of Sprint to be purchased by FT and
DT at the Primary Closing.
(iv) All other material Governmental
Approvals, if any, required in order to permit the
purchase and sale of the shares of capital stock of
Sprint to be purchased by FT and DT at the Primary
Closing shall have been received.
(v) No Change of Control shall have occurred.
Section 2.2. Sprint's Conditions Precedent to the
Primary Closing. The obligations of Sprint to effect the
transactions contemplated by this Agreement to occur at the
Primary Closing (including the purchase and sale of the capital
stock of Sprint to be acquired by FT and DT hereunder at the
Primary Closing) are subject to the satisfaction, on or prior
to the Primary Closing Date, of each of the following conditions,
compliance with which or the occurrence of which may be waived
in whole or in part by Sprint:
(a) The representations and warranties of each
of FT and DT contained in this Agreement shall be accurate
in all material respects on the Primary Closing Date with
the same effect as if made on the Primary Closing Date
(except that any such statements which are expressly made
as of a particular date shall have been accurate as of such
particular date and except to the extent contemplated or
permitted by this Agreement or the PCS Restructuring
Agreement). At the Primary Closing, Sprint shall be
provided with a certificate to such effect from each of FT
and DT, signed by a duly authorized officer thereof.
(b) All covenants and agreements of each of FT
and DT contained in this Agreement and required to be
performed on or prior to the Primary Closing Date shall
have been performed in all material respects on or prior
to the Primary Closing. At the Primary Closing, Sprint
shall be provided with a certificate to such effect from
each of FT and DT, signed by a duly authorized officer
thereof.
(c) There shall not have occurred any change in
applicable Law or any change in facts beyond Sprint's
reasonable control, in either case occurring after the
date hereof, that would prevent King & Spalding from
reaffirming to Sprint on the Primary Closing Date its
opinion described in Section 3.7. For purposes of this
Section 2.2(c), Law also includes any Revenue Ruling,
proposed regulations or official notice of intent to
propose regulations issued by the Internal Revenue
Service, or a bill introduced in the House of
Representatives
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or Senate of the United States or legislation proposed
by the United States Treasury Department.
(d) Each of the Amended Other Agreements shall
have been executed by the Buyers which are parties
thereto and delivered to Sprint.
Section 2.3. Conditions Precedent to the Primary
Closing for FT and DT.
(a) The obligations of each of FT and DT to
effect the transactions contemplated by this Agreement
to occur at the Primary Closing (other than the purchase
and sale of the capital stock of Sprint to be acquired
by FT and DT hereunder at the Primary Closing) are
subject to the satisfaction, on or prior to the Primary
Closing Date, of the following conditions, compliance
with which or the occurrence of which may be waived in
whole or in part by FT and DT:
(i) All representations and warranties of
Sprint (other than the representations and
warranties set forth in Sections 3.6, 3.7 and 3.8)
shall be accurate in all material respects on the
Primary Closing Date with the same effect as if
made on the Primary Closing Date (except that any
such statements which are expressly made as of a
particular date shall have been accurate as of
such particular date and except to the extent
contemplated or permitted by this Agreement or the
PCS Restructuring Agreement). At the Primary
Closing, FT and DT shall be provided with a
certificate to such effect from Sprint, signed by
a duly authorized officer thereof.
(ii) All covenants and agreements of Sprint
contained in this Agreement and required to be
performed on or prior to the Primary Closing Date
shall have been performed in all material respects
on or prior to the Primary Closing. At the Primary
Closing, FT and DT shall be provided with a
certificate to such effect from Sprint, signed by
a duly authorized officer thereof.
(iii) Sprint shall have amended its Articles
in accordance with the Initial Charter Amendment and
(if the Recapitalization is to occur on the Primary
Closing Date) the Subsequent Charter Amendment.
(iv) Sprint shall have duly adopted the
Bylaw Amendment and such amended terms shall be
in full force and effect.
(v) Each of the Amended Other Agreements
shall have been executed by Sprint and delivered to
the Buyers which are parties thereto.
(vi) The Board of Directors shall have taken
appropriate action so that the provisions of Kan.
Stat. Ann. Section 17-12,101 (the "Business
Combination Statute") restricting "business
combinations" with "interested stockholders"
(each as
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defined in Kan. Stat. Ann. Section 17-12,100)
will not apply to FT, DT or any Person who as of the
date hereof is an Affiliate of FT or DT with respect
to the purchase and sale of shares of capital stock
of Sprint pursuant to and permitted by this Agreement
and the Amended Other Agreements.
(vii) The Series 1 FON Stock and Series 1 PCS
Stock issuable upon conversion of the Class A Stock
to be issued pursuant to this Agreement shall have
been approved for listing on the New York Stock
Exchange, or if not so approved, shall have been
approved for listing on the American Stock Exchange
or approved for quotation on the National Association
of Securities Dealers Automated Quotations National
Market System subject to official notice of issuance.
(viii) Each of the Buyers shall have received
opinions dated as of the Primary Closing Date, from
counsel to the Company reasonably satisfactory to the
Buyers, in form reasonably satisfactory to the Parties.
(b) The obligations of each of FT and DT to effect
the purchase and sale of the capital stock of Sprint to be
acquired by FT and DT hereunder at the Primary Closing are
subject to the satisfaction, on or prior to the Primary
Closing Date, of each of the conditions specified in Section
2.3(a) and each of the following conditions, compliance with
which or the occurrence of which may be waived in whole or
in part by FT and DT:
(i) The representations and warranties of
Sprint set forth in Sections 3.6, 3.7 and 3.8 shall be
accurate in all material respects on the Primary
Closing Date with the same effect as if made on the
Primary Closing Date (except that any such statements
which are expressly made as of a particular date shall
have been accurate as of such particular date and
except to the extent contemplated or permitted by this
Agreement or the PCS Restructuring Agreement). At the
Primary Closing, FT and DT shall be provided with a
certificate to such effect from Sprint, signed by a
duly authorized officer thereof.
(ii) There shall not have occurred after the date
hereof any change in applicable Law that would cause the
Recapitalization to be deemed taxable to FT or DT under
French or German tax law.
(iii) Unless FT and DT have otherwise consented in
writing, the PCS Restructuring Agreement shall not have
been amended in a manner which fundamentally changes the
transactions contemplated by the PCS Restructuring
Agreement or which is materially adverse to FT and DT.
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Section 2.4. Conditions Precedent to Secondary and
Greenshoe Closings During the Anticipated IPO Period.
(a) If the IPO occurs within 180 days following the
CP Exchange, the respective obligations of each Party to
consummate the transactions contemplated by this Agreement
to occur at each of the Secondary Closing and the Greenshoe
Closing are subject to the fulfillment at or prior to each of
the Secondary Closing Date and Greenshoe Closing Date,
respectively, of the following conditions, which may be waived
in whole or in part by the Party being benefitted thereby, to
the extent permitted by applicable Law:
(i) No preliminary or permanent injunction or
other order, decree or ruling issued by a Governmental
Authority, nor any statute, rule, regulation or executive
order promulgated or enacted by any Governmental
Authority, shall be in effect that enjoins the
consummation of the transactions to be effected at the
Secondary Closing or the Greenshoe Closing, as the case
may be.
(ii) All material Governmental Approvals, if any,
required in order to permit the purchase and sale of the
shares of capital stock of Sprint to be purchased by FT
and DT at the Secondary Closing or the Greenshoe Closing,
as the case may be, shall have been received.
(b) If the IPO occurs within 180 days following the CP
Exchange, the obligation of each Buyer to consummate the
transactions contemplated hereby at a Secondary Closing or
Greenshoe Closing is subject to the fulfillment of each of
the following conditions on or prior to the date of such
Secondary Closing or Greenshoe Closing:
(i) The representations and warranties of
Sprint set forth in Sections 3.1, 3.2(a), 3.3, 3.4 and
3.5 shall be true and correct in all material respects
at and as of the date hereof and at and as of the date
of such Secondary Closing or Greenshoe Closing, as the
case may be, as if such representations and warranties
were made at and as of such date except (x) with respect
to representations and warranties that relate solely to
a date prior to such date, and were true and correct in
all material respects on such prior date, and (y) to
the extent contemplated or permitted by this Agreement,
the PCS Restructuring Agreement, the Amended Other
Agreements or the Articles.
(ii) The first two sentences of Section 3.6(a)
(as to SEC Documents filed prior to the Applicable
Closing) and Section 3.7 (but in the case of Section
3.7 only as to changes prior to the Applicable Closing,
but after the later of (x) the end of the quarter
covered by the last Quarterly Report on Form 10-Q of
Sprint filed prior to the Applicable Closing, and (y)
the end of the year covered by the last Annual Report
on Form 10-K of Sprint filed prior to the Applicable
Closing) shall be true and correct in all material
respects at and as of the date of the Secondary
Closing or the
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Greenshoe Closing, as the case may be, except
to the extent such failure to be true and correct
does not relate to, and is not reasonably likely
to relate to, a material adverse change in the
business, operations, results of operations,
financial condition, assets or liabilities of
Sprint compared to the last to be filed prior to
the Applicable Closing of the Annual Report on
Form 10-K of Sprint or the Quarterly Report on
Form 10-Q of Sprint.
(iii) Sprint shall have performed and complied
in all material respects with its obligations under
Section 5.6 of this Agreement; Article FIFTH of the
Articles (to the extent such Article relates to the
rights of the holders of Class A Stock); the Class A
Provisions; and Articles III, IV, V and VI, and
Sections 7.1, 7.4, 7.8, 7.10 and 7.11 of the
Stockholders' Agreement and the Amended and
Restated Stockholders' Agreement.
(iv) Sprint shall have delivered to the
Buyers a certificate, dated the date of such
Secondary Closing or Greenshoe Closing, as the case
may be, signed by a duly authorized senior officer
of Sprint, certifying that the conditions specified
in Sections 2.4(b)(i) and (ii) have been fulfilled.
(v) No Change of Control shall have occurred.
(vi) There shall not have occurred after the
date hereof any change in applicable Law that would
cause the Recapitalization to be deemed taxable to
FT or DT under French and German tax law.
(c) The obligation of Sprint to consummate the
transactions contemplated hereby at a Secondary Closing
or Greenshoe Closing is subject to the fulfillment of
each of the following conditions on or prior to the date
of such Secondary Closing or Greenshoe Closing:
(i) The representations and warranties of
the Buyers set forth in Sections 4.1(a), 4.1(b),
4.1(d), 4.1(g), 4.2(a), 4.2(b), 4.2(d) and 4.2(g)
shall be true and correct in all material respects
at and as of the date hereof and at and as of the
date of such Secondary Closing or Greenshoe
Closing, as the case may be, as if such
representations and warranties were made at and
as of such date except (x) with respect to
representations and warranties that relate solely
to a date prior to such date, and were true and
correct in all material respects on such prior
date, and (y) to the extent contemplated or
permitted by this Agreement, the PCS Restructuring
Agreement, the Amended Other Agreements or the
Articles.
(ii) Each of the Buyers shall have
performed and complied in all material respects
with its obligations under Article I of this
Agreement, Article II and Section 7.5 of the
Stockholders' Agreement and the Amended and
Restated Stockholders' Agreement, Sections 2.1,
3.1 and 3.2(b) of the Standstill Agreement and
the
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Amended and Restated Standstill Agreement,
the Investor Confidentiality Agreements and the
Amended and Restated Investor Confidentiality
Agreements.
(iii) Each of the Buyers shall have
delivered to Sprint a certificate, dated the
date of such Secondary Closing or Greenshoe
Closing, as the case may be, signed by a duly
authorized senior officer of such Buyer,
certifying that the conditions specified in
Sections 2.4(c)(i) and (ii) have been fulfilled.
(d) Except as set forth in this Section 2.4,
no breach of the representations, warranties, covenants
or agreements contained in this Agreement shall affect
the obligations of the Parties to consummate the purchase
and sale of capital stock of Sprint at any Secondary
Closing or Greenshoe Closing, provided that this
sentence shall not affect any other rights, liabilities,
duties or obligations of the Parties arising under this
Agreement as a result of such breach.
Section 2.5. Conditions Precedent to Secondary and
Greenshoe Closings After the Anticipated IPO Period.
(a) If the IPO occurs after 180 days following
the CP Exchange, the respective obligations of each
Party to consummate the transactions contemplated by
this Agreement to occur at each of the Secondary
Closing and the Greenshoe Closing are subject to the
fulfillment at or prior to each of the Secondary
Closing Date and Greenshoe Closing Date, respectively,
of the following conditions which may be waived in whole
or in part by the Party being benefitted thereby, to
the extent permitted by applicable Law:
(i) No preliminary or permanent injunction
or other order, decree or ruling issued by a
Governmental Authority, nor any statute, rule,
regulation or executive order promulgated or
enacted by any Governmental Authority, shall be in
effect that enjoins the consummation of the
transactions to be effected at the Secondary
Closing or the Greenshoe Closing, as the case
may be.
(ii) All other material Governmental
Approvals, if any, required in order to permit the
purchase and sale of the shares of capital stock
of Sprint to be purchased by FT and DT at the
Secondary Closing or the Greenshoe Closing, as the
case may be, shall have been received.
(b) If the IPO occurs after 180 days following
the CP Exchange, in addition to the conditions set forth
in Section 2.4(b), the obligations of the Buyers to
consummate the transactions contemplated by this
Agreement to occur at each of the Secondary Closing and
the Greenshoe Closing are subject to the fulfillment
at or prior to each of the Secondary Closing Date and
Greenshoe Closing Date, respectively, of the following
conditions, which may be waived in whole or in part by
the Buyers, to the extent permitted by applicable Law:
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(i) The representations and warranties of
Sprint contained in this Agreement shall be
accurate in all material respects on the date
of the Applicable Closing with the same effect
as if made on the date of the Applicable Closing
(except that any such statements which are
expressly made as of a particular date shall have
been accurate as of such particular date and
except to the extent contemplated or permitted by
this Agreement or the PCS Restructuring Agreement).
At the Applicable Closing, the Buyers shall be
provided with a certificate to such effect from
Sprint, signed by a duly authorized officer
thereof.
(ii) There shall not have occurred after
the date hereof any change in applicable Law that
would cause the Recapitalization to be deemed
taxable to FT or DT under French and German tax
law.
(c) If the IPO occurs after 180 days following
the CP Exchange, in addition to the conditions set forth
in Section 2.4(c), the obligations of Sprint to consummate
the transactions contemplated by this Agreement to occur
at each of the Secondary Closing and the Greenshoe
Closing are subject to the fulfillment at or prior to
each of the Secondary Closing Date and Greenshoe Closing
Date, respectively, of the following condition, which
may be waived in whole or in part by Sprint, to the
extent permitted by applicable Law:
The representations and warranties of each of FT and
DT contained in this Agreement shall be accurate in all
material respects on the date of the Applicable Closing with
the same effect as if made on the date of the Applicable
Closing (except that any such statements which are expressly
made as of a particular date shall have been accurate as of
such particular date and except to the extent contemplated
or permitted by this Agreement or the PCS Restructuring
Agreement). At the Applicable Closing, Sprint shall be
provided with a certificate to such effect from each of FT
and DT, signed by a duly authorized officer thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SPRINT
Sprint represents and warrants to each of FT and DT
as follows:
Section 3.1. Organization, Qualification, Etc.
Sprint is a corporation duly organized, validly existing and
in good standing under the laws of the State of Kansas.
Sprint has all requisite corporate power and authority to:
(a) enter into this Agreement, the Amended Other Agreements
and the letter agreement dated as of the date hereof among
the Parties hereto identifying certain documents as being
in form reasonably satisfactory to the Parties (the
"Letter Agreement"), (b) subject to approval by the
stockholders of Sprint and to the filing of the Proposed
Charter Amendments, issue and sell shares of Series 3 PCS
Stock to the Buyers pursuant to this Agreement and comply
with its obligations under this Agreement, each
Amended Other Agreement and the
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Letter Agreement, and (c) own, lease and operate its
properties and assets and to carry on in all material
respects its business as now being conducted and proposed
to be conducted as shall be described in the Proxy
Statement.
Section 3.2. Capital Stock and Other Matters.
(a) Schedule 3.2 sets forth the authorized
capital stock of Sprint and the number of each class
of shares issued and outstanding as of March 31, 1998.
No bonds, debentures, notes or other indebtedness of
Sprint or any of its Subsidiaries having the right to
vote (or convertible into securities having the right
to vote) on any matters on which holders of shares of
capital stock of Sprint may vote are issued and
outstanding on the date hereof. All of the issued
and outstanding shares of Sprint's capital stock are
validly issued, fully paid and nonassessable. No
holder of the outstanding shares of Sprint's capital
stock is entitled to preemptive rights with respect to
any issuance of shares of Class A Stock.
(b) Except as set forth in Schedule 3.2, no
class of capital stock of Sprint is entitled to
preemptive rights. Except as set forth in Schedule
3.2, there are no stockholder agreements, voting
trusts or other Contracts to which Sprint is a party
or by which it is bound relating to the voting or
transfer of any shares or units of any Voting
Securities of Sprint.
Section 3.3. Validity of Shares.
(a) Subject to obtaining the approval of the
stockholders of Sprint specified in Section 5.2(b)
hereof and to the filing of the Proposed Charter
Amendments with the appropriate Kansas Governmental
Authorities, (i) when the shares of Series 3 PCS
Stock are issued and delivered, in each case against
payment therefor at each Applicable Closing as
provided hereby (including cash in an amount at least
equal to the aggregate par value of the shares), each
such share shall be validly issued, free of any Lien
(other than any Lien arising due to the action or
inaction of any of the Buyers), fully paid and a
nonassessable share of capital stock of Sprint and
(ii) upon the filing of the Proposed Charter Amendments,
each share of Class A Common Stock into which the Class
A Common Stock held by FT is automatically reclassified
and changed, and each share of Class A Common
Stock--Series DT into which the Class A Common Stock
held by DT is automatically reclassified and changed,
will be validly issued, free of any Lien (other than
any Lien arising due to the action or inaction of any
of the Buyers), fully paid and a nonassessable share
of capital stock of Sprint.
(b) Subject to obtaining the approval of the
stockholders of Sprint specified in Section 5.2(b)
hereof and to the filing of the Proposed Charter
Amendments with the appropriate Kansas Governmental
Authorities, upon the filing of the Proposed Charter
Amendments:
(i) When shares of Series 3 FON Stock,
Series 3 PCS Stock, Series 1 FON Stock or Series
1 PCS Stock, as applicable, are delivered upon
sale or exchange
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of interests in the Class A Common Stock or
Class A Common Stock--Series DT, each such
share will be validly issued, free of any
Lien (other than any Lien arising due to the
action or inaction of any of the Buyers),
fully paid and a nonassessable share of capital
stock of Sprint;
(ii) The holders of Class A Common
Stock shall, at any time, be entitled to all
of the rights and privileges pertaining to the
ownership of Series 1 FON Stock and Series 1
PCS Stock to the extent such Class A Common
Stock represents, at such time, Shares Issuable
With Respect To The Class A Equity Interest
In the FON Group and Shares Issuable With Respect
To The Class A Equity Interest In The PCS Group
(as each such term is defined in the Proposed
Charter Amendments); and
(iii) Each share of Sprint capital stock
into which any share of Class A Stock is
reclassified upon a recapitalization in accordance
with ARTICLE SIXTH, Section 1.2(e) of the
Subsequent Charter Amendment will be validly
issued, free of any Lien (other than any Lien
arising due to the action or inaction of any
of the Buyers), fully paid and a nonassessable
share of capital stock of Sprint.
Section 3.4. Corporate Authority; No Violation.
The execution, delivery and performance of this Agreement,
each Amended Other Agreement and the Letter Agreement, and
the consummation of the transactions contemplated hereby
and thereby (including, without limitation, the issuance
and sale of Sprint's capital stock) have been duly
authorized by all requisite corporate action on the part
of Sprint, subject to obtaining the approval of the
stockholders of Sprint specified in Section 5.2 hereof
and to the filing of the Proposed Charter Amendments with
the appropriate Kansas Governmental Authorities and assuming
that, with respect solely to those provisions of the
Stockholders' Agreement, the Amended and Restated
Stockholders' Agreement, the Articles and the Proposed
Charter Amendments that require explicitly the receipt
of Continuing Director approval for the performance of
obligations or consummation of transactions on the part
of Sprint thereunder, Continuing Director approval is
obtained in the manner provided therein. Upon the
execution and delivery by Sprint of this Agreement,
each Amended Other Agreement and the Letter Agreement,
each such agreement will constitute a legal, valid and
binding agreement of Sprint, enforceable against Sprint
in accordance with its terms.
Section 3.5. No Conflict; No Default. Neither
the execution, delivery and performance by Sprint of this
Agreement, each Amended Other Agreement and the Letter
Agreement, the adoption of the Bylaws Amendment and the
adoption and filing of the Proposed Charter Amendments nor
the consummation by Sprint of the transactions contemplated
hereby or thereby will: (i) subject to the approval of the
stockholders of Sprint contemplated by Section 5.2 hereof
and the filing of the Proposed Charter Amendments with the
appropriate Kansas Governmental Authorities, violate or
conflict with any provision of the Articles or Bylaws,
assuming that, with respect solely to those provisions of
the Stockholders' Agreement, the Amended and Restated
Stockholders' Agreement and the Proposed Charter
Amendments that require explicitly the receipt of
Continuing Director approval for the performance of
obligations or consummation of transactions on the
part of Sprint hereunder or thereunder, Continuing
Director approval is obtained in the
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manner provided herein or therein; (ii) require any
Governmental Approvals or Third Party Approvals, except
(x) as set forth in Schedule 3.5 or (y) where the failure
to so obtain, make or file such Governmental Approvals
or Third Party Approvals, individually or in the aggregate,
is not reasonably likely to have a Material Adverse Effect
on Sprint and its Subsidiaries taken as a whole or
adversely affect in any material respect Sprint's
ability to perform its obligations hereunder or under
the Amended Other Agreements or the Letter Agreement;
(iii) except as set forth in Schedule 3.5, result in a
default (or an event that, with notice or lapse of time
or both, would become a default) or give rise to any
right of termination by any third party, cancellation,
amendment or acceleration of any obligation or the loss
of any benefit under, or result in the creation of any
Lien on any of the assets or properties of Sprint or
any of its Subsidiaries pursuant to, any Contract to
which Sprint or any of its Subsidiaries is a party
or by which Sprint or any of its Subsidiaries or any
of their respective assets or properties is bound,
except for any such defaults, terminations,
cancellations, amendments, accelerations, losses, or
Liens that, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect
on Sprint and its Subsidiaries taken as a whole or
adversely affect in any material respect Sprint's
ability to perform its obligations hereunder or under
the Amended Other Agreements or the Letter Agreement;
or (iv) except as set forth in Schedule 3.5, violate
or conflict with any Law applicable to Sprint or any
of its Subsidiaries, or any of the properties,
businesses, or assets of any of Sprint or any of its
Subsidiaries, except violations and conflicts that,
individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on Sprint
and its Subsidiaries taken as a whole or adversely
affect in any material respect Sprint's ability to
performs its obligations hereunder or under the
Amended Other Agreements or the Letter Agreement.
Section 3.6. Sprint Reports and Financial
Statements.
(a) Sprint has previously made available
to FT and DT complete and correct copies of each:
(i) annual report on Form 10-K for Sprint; (ii)
quarterly report on Form 10-Q for Sprint; (iii)
definitive proxy statement for Sprint; (iv) current
report on Form 8-K for Sprint; and (v) other form,
report, schedule and statement, in the case of each
of clauses (i), (ii), (iii), (iv) and (v) filed by
Sprint with the SEC under the Exchange Act since
January 1, 1997 (collectively, the "SEC
Documents"). As of their respective dates, each
of the SEC Documents complied (or will comply) in
all material respects with the requirements of the
Exchange Act to the extent applicable to such SEC
Document, and none of such SEC Documents (as of
their respective dates) contained (or will contain)
an untrue statement of a material fact or omitted
(or will omit) to state a material fact required
to be stated therein or necessary to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading, except as the same was corrected or
superseded in a subsequent document duly filed with
the SEC, that has been delivered to the Buyers.
Since January 1, 1997, Sprint has timely filed all
reports and registration statements and made all
filings required to be filed under the Exchange
Act with the SEC under the rules and regulations of
the SEC.
(b) The audited consolidated financial
statements and unaudited consolidated interim
financial statements included in the SEC Documents
(including any related notes)
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fairly present the financial position of Sprint
and its consolidated Subsidiaries as of the
dates thereof and the results of operations and
changes in cash flows for the periods specified,
subject, where appropriate, to normal year-end
audit adjustments, in each case in accordance
with past practice and GAAP applied on a
consistent basis during the periods involved
(except as otherwise stated therein). Since
March 31, 1998, Sprint and its Subsidiaries
have incurred no liability or obligation of any
nature (whether accrued, absolute, contingent
or otherwise) other than liabilities and
obligations that, individually and in the
aggregate, are not reasonably likely to have
a Material Adverse Effect on Sprint and its
Subsidiaries taken as a whole or materially
and adversely affect Sprint's ability to
perform its obligations hereunder or under
the Amended Other Agreements or the Letter
Agreement.
Section 3.7. Absence of Certain Changes
or Events. Since March 31, 1998 there has not been,
occurred or arisen any change in the business,
financial condition or results of operations of
Sprint and its Subsidiaries taken as a whole, other
than as a result of changes in general business
conditions or legal or regulatory changes affecting
the U.S. telecommunications industry generally
(including the effect on competition resulting
therefrom) or actions by competitors, having a
Material Adverse Effect on Sprint and its
Subsidiaries taken as a whole or any change that
adversely affects in any material respect Sprint's
ability to perform its obligations hereunder or
under the Amended Other Agreements or the Letter
Agreement.
Section 3.8. Litigation. There is no
Proceeding pending or, to the best of Sprint's
Knowledge, threatened against or relating to Sprint
or any of its Subsidiaries at law or in equity that,
individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Sprint
and its Subsidiaries taken as a whole or affect
adversely in any material respect Sprint's ability
to perform its obligations hereunder or under the
Amended Other Agreements or the Letter Agreement.
There is no judgment, decree, injunction, rule or
order of any Governmental Authority outstanding
against Sprint or any of its Subsidiaries that,
individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Sprint
and its Subsidiaries taken as a whole or adversely
affect in any material respect Sprint's ability to
perform its obligations hereunder or under the
Amended Other Agreements or the Letter Agreement.
Section 3.9. Proxy Statement; Other
Information.
(a) None of the information included,
or incorporated by reference, in the Proxy
Statement or any amendment or supplement
thereto, will at the time of the mailing of
the definitive Proxy Statement, and at the
time of the Stockholders Meeting, contain
any untrue statement of a material fact or
omit to state any material fact required to
be stated therein or necessary in order to
make the statements therein, in the light
of the circumstances under which they are
made, not misleading, provided that the
foregoing shall not apply to any investment
bank's fairness opinion included therein
and that no representation is made by Sprint
with respect to (i) information provided by
FT, DT or any of their Affiliates in
writing specifically for inclusion, or
incorporation by reference, in the Proxy
Statement, or (ii) any representations or
warranties made by FT or DT in any agreement
that is included as a schedule or exhibit
to the Proxy Statement. The Proxy Statement,
at the time of the mailing
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and at the time of the Stockholders Meeting,
will comply in all material respects with
the provisions of the Exchange Act.
(b) All documents that Sprint is
responsible for filing with any Governmental
Authority in connection with the transactions
contemplated hereby other than those described
in Section 3.9(a) have complied and will comply
in all material respects with applicable Law.
All information supplied or to be supplied by
Sprint in any document filed with any
Governmental Authority in connection with the
transactions contemplated hereby or by the
Amended Other Agreements will be, at the time
of filing, true and correct in all material
respects, except where the failure to be true
and correct, individually or in the aggregate,
would not be reasonably likely to have a
Material Adverse Effect on Sprint and its
Subsidiaries taken as a whole and would not
adversely affect in any material respect the
consummation of the transactions contemplated
by this Agreement or any Amended Other
Agreement or the Letter Agreement.
Section 3.10. Certain Tax Matters. To the
best of Sprint's Knowledge and belief, it is
reasonable to assert that Sprint is not a United
States Real Property Holding Corporation, as that
term is defined under Section 897 of the Code and the
regulations promulgated thereunder.
Section 3.11. Amendments to the Rights
Agreement. The Board of Directors has taken, or
prior to the Primary Closing will take, all necessary
action to amend the Rights Agreement to provide that
the ownership by FT, DT and their respective Affiliates
and Associates of all of the Voting Securities
permitted to be owned by them under Sections 2.1(a)(i)
and 2.3 of the Amended and Restated Standstill
Agreement (but not Sections 2.1(a)(ii) or 2.2
thereof or Section 2.3 thereof to the extent based
upon an applicable Percentage Limitation (as defined
in the Amended and Restated Standstill Agreement) as
determined by Section 2.1(a)(ii) or 2.2 thereof)
will not result in FT, DT or any of their respective
Affiliates or Associates (as such terms are defined
in the Rights Agreement) being deemed an Acquiring
Person (as such term is defined in the Rights
Agreement) or result in the occurrence of a Stock
Acquisition Date, Distribution Date, Section
11(a)(ii) Event or Section 13 Event (as such terms
are defined in the Rights Agreement).
Section 3.12. Other Registration Rights.
Sprint has not granted, and has not agreed to grant,
any demand or incidental registration rights to any
Person other than (a) rights granted pursuant to
the Registration Rights Agreement and to be granted
pursuant to the Amended and Restated Registration
Rights Agreement, (b) rights to be granted to the
Cable Partners pursuant to the Cable Partners
Registration Rights Agreement, and (c) rights
issued after the date hereof that will not
adversely affect the registration rights to be
granted to the Buyers in the Amended and Restated
Registration Rights Agreement.
Section 3.13. Takeover Statutes. The
Board of Directors has taken appropriate action
so that the provisions of the Business Combination
Statute will not, prior to the termination of this
Agreement, apply to FT, DT or any Person who as of
the date hereof is an Affiliate of FT or DT. The
ownership by FT and DT and any subsidiary of FT
and/or DT identified in the Acquiring Person
Statement of shares of Sprint's capital stock
representing in the aggregate less than one-third
of the
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voting power of Sprint (assuming for purposes
of the Kansas Control Share Acquisitions Statute
that none of FT, DT, any subsidiary of FT and/or
DT identified in the Acquiring Person Statement,
or their respective affiliates and associates (as
each such term is defined in the Kansas Control
Share Acquisitions Statute), acquires any Voting
Securities other than as contemplated or permitted
by the Original Investment Agreement, any Initial
Other Agreement, this Agreement, any Amended Other
Agreement or the Articles, or owned, directly or
indirectly, or had or exercised the power to vote
or direct the vote of, in each case alone or as
part of a group, any Voting Securities as of the
date of this Agreement or at the time of the vote
contemplated by Section 5.2 other than as set
forth in Sections 4.1(f) and 4.2(f)) will not
result in a loss of voting rights with respect
to such shares due to the Kansas Control Share
Acquisitions Statute. No other "fair price,"
"moratorium," "control share acquisition,"
"business combination," "shareholder protection"
or similar anti-takeover statute or regulation
enacted under the applicable Laws of any state of
the United States of America will apply to this
Agreement or any Amended Other Agreement, or the
transactions contemplated hereby or thereby
(assuming that none of FT, DT and their respective
Affiliates Beneficially Own any Voting Securities
as of the date hereof other than as set forth in
Sections 4.1(f) and 4.2(f) and that none of such
Persons acquires any Voting Securities other than
as contemplated or permitted by this Agreement,
any Initial Other Agreement, any Amended Other
Agreement or the Articles) except for statutes or
regulations the failure of Sprint with which to
comply would not have a material adverse effect on
(a) the transactions contemplated in this Agreement
or any Amended Other Agreement, (b) the ability of
the Buyers to exercise fully their rights under
this Agreement or any Amended Other Agreement or
the Articles, or (c) the intrinsic value of an
investment in Sprint's equity securities (provided
that a change in the market price of Sprint's
equity securities shall not, in and of itself,
be deemed to have a material adverse effect on
the intrinsic value of an investment in Sprint's
equity securities).
Section 3.14. Vote Required; Board
Recommendation. The only votes of the stockholders
of Sprint required under Kansas law and the Articles
and Bylaws to approve (a) the Proposed Charter
Amendments and (b) such other matters, if any,
related thereto or to this Agreement as Sprint may
determine to submit to the stockholders of Sprint,
are (i) the affirmative vote of the holders of a
majority of the outstanding shares of the Common
Stock, the Class A Common Stock, the Preferred
Stock-First Series, the Preferred Stock-Second
Series and the Preferred Stock-Fifth Series of
Sprint, voting together as a single class, (ii)
the affirmative vote of the holders of a
majority of the outstanding shares of the Common
Stock and Class A Common Stock, voting as a single
class, and (iii) the approval (or the failure to
disapprove) of the Class A Common Stock, voting
or taking action as a class. The Board of
Directors has determined that the proposals
contemplated by Section 5.2(b) are advisable
and in the best interests of the stockholders
of Sprint.
Section 3.15. Sprint Board Action.
Prior to the date hereof, the Board of Directors
of Sprint has approved (i) the Bylaw Amendment
and (ii) the Management and Allocation Policies,
each to be effective at the Primary Closing.
Section 3.16. King & Spalding Opinion.
On the date hereof, Sprint has received from
King & Spalding its opinion to the effect that
(i) the Recapitalization will constitute a
recapitalization within the meaning of Section
368(a)(1)(E) of the Code, (ii) any outstanding
stock
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which is designated as common stock of
Sprint in Sprint's Articles of Incorporation
will constitute voting stock of Sprint for
federal income tax purposes, and (iii) except
with respect to cash paid in lieu of fractional
shares, if any, the holders of such stock of
Sprint will not recognize income, gain or loss
in and as a result of the Recapitalization.
In rendering such opinion, King & Spalding
may receive and rely upon representations
contained in certificates of Sprint in form
and substance reasonably acceptable to
King & Spalding.
Section 3.17. PCS Restructuring
Agreement. A complete and correct copy of the
PCS Restructuring Agreement has been provided
to the Buyers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
Section 4.1. Representations and
Warranties of FT. FT represents and warrants
to Sprint as follows:
(a) FT is a societe anonyme validly
existing under the laws of the Republic of
France, and has all requisite power and
authority to: (i) enter into this Agreement,
each of the Amended Other Agreements and the
Letter Agreement, (ii) purchase the shares
of Sprint's capital stock as provided herein,
and in the Amended and Restated Stockholders'
Agreement and the Articles as amended by the
Proposed Charter Amendments, and (iii) comply
with its obligations under this Agreement,
each Amended Other Agreement and the Letter
Agreement.
(b) (i) The execution, delivery and
performance of this Agreement, each Amended
Other Agreement and the Letter Agreement, and
the consummation of the transactions
contemplated hereby and thereby, have been
duly authorized by all requisite action on
the part of FT. Upon the execution and
delivery by FT of this Agreement, each
Amended Other Agreement and the Letter
Agreement, each such agreement will
constitute a legal, valid and binding
agreement of FT, enforceable against FT
in accordance with its terms.
(ii) Neither the execution, delivery
and performance by FT of this Agreement,
each Amended Other Agreement or the Letter
Agreement, nor the consummation by FT of
the transactions contemplated hereby or
thereby, will: (w) violate or conflict
with any provision of the FT Law and
Decrees; (x) require any Governmental
Approvals or Third Party Approvals,
except where the failure to so obtain,
make or file such Governmental Approvals
or Third Party Approvals is not reasonably
likely to affect adversely in any material
respect FT's ability to perform its
obligations hereunder or under the Amended
Other Agreements or the Letter Agreement;
(y) result in a default (or an event that,
with notice or lapse of time or both,
would become a default) under any Contract
to which FT or any of its Subsidiaries is a
party, or by which FT or any of its
Subsidiaries or any of their
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respective assets or properties is bound,
except for any such defaults that,
individually or in the aggregate, are not
reasonably likely to affect adversely in
any material respect FT's ability to
perform its obligations hereunder or
under the Amended Other Agreements or the
Letter Agreement; or (z) violate or conflict
with Law applicable to FT or any of its
Subsidiaries, or any of the properties,
businesses, or assets of FT or any of its
Subsidiaries, except violations and conflicts
that, individually or in the aggregate, are
not reasonably likely to affect adversely in
any material respect FT's ability to perform
its obligations hereunder or under the
Amended Other Agreements or the Letter
Agreement.
(c) There is no Proceeding pending
or, to the best of FT's Knowledge, threatened
against or relating to FT or any of its
Subsidiaries at law or in equity that,
individually or in the aggregate, is
reasonably likely to affect adversely in any
material respect FT's ability to perform its
obligations hereunder or under the Amended
Other Agreements or the Letter Agreement.
There is no judgment, decree, injunction,
rule or order of any Governmental Authority
outstanding against FT or any of its
Subsidiaries that, individually or in the
aggregate, is reasonably likely to adversely
affect in any material respect FT's ability to
perform its obligations hereunder or under the
Amended Other Agreements or the Letter
Agreement.
(d) FT is purchasing the shares of
Sprint's capital stock to be purchased by it
pursuant to this Agreement and the Amended and
Restated Stockholders' Agreement for its own
account for investment, and not with a view
to the distribution of such shares or any part
thereof. FT is a party to no Contract with any
Person for resale of such shares in connection
with such a distribution. FT acknowledges that
the offering of the shares pursuant to this
Agreement and the Amended and Restated
Stockholders' Agreement will not be registered
under the Securities Act or under any state
securities or blue sky law or the securities
laws of any other country, on the grounds
(with respect to the Securities Act and such
state securities or blue sky laws) that the
offering and sale of shares of capital stock
contemplated by this Agreement and the Amended
and Restated Stockholders' Agreement are exempt
from registration pursuant to exceptions
available under such laws, and that Sprint's
reliance upon such exemptions is predicated upon
FT's representations set forth in this Agreement
and the Amended and Restated Stockholders'
Agreement. FT understands that the shares of
Sprint's capital stock purchased by it pursuant
to this Agreement and the Amended and Restated
Stockholders' Agreement may not be sold or
transferred unless such shares are subsequently
registered under the Securities Act and/or
applicable state securities or blue sky laws or
any applicable securities law of any other country
or an exemption from such registration is available.
(e) All documents that FT is responsible
for filing with any Governmental Authority in
connection with the transactions contemplated hereby
or by the Amended Other Agreements have complied
and will comply in all material respects with
applicable Law. All information supplied or to
be supplied by FT in any document filed with any
Governmental Authority in connection with the
transactions contemplated hereby or by the
Amended Other Agreements will be, at the time of
filing, true and correct in all material
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respects, except where the failure to be true
and correct, individually or in the aggregate,
would not adversely affect in any material respect
the consummation of the transactions contemplated
by this Agreement or any Amended Other Agreement
or the Letter Agreement.
(f) FT is in compliance in all material
respects with Article 2 of the Standstill Agreement.
(g) Neither FT nor any Subsidiary of FT
is entitled to any immunity on the grounds of
sovereignty or otherwise (including, without
limitation, pursuant to the Foreign Sovereign
Immunities Act, 28 U.S.C. Section 1602 et seq.),
based upon its status as an agency or
instrumentality of government, from any legal
action, suit or proceeding or from set off or
counterclaim, from the jurisdiction of any
competent court described in Section 7.8 hereof,
from service of process, from attachment prior
to judgment, from attachment in aid of execution
of a judgment, from execution pursuant to a
judgment or arbitral award, or from any other
legal process in any jurisdiction, in each case
relating to this Agreement or any Amended Other
Agreement or the Letter Agreement.
Section 4.2. Representations and Warranties
of DT. DT represents and warrants to Sprint as follows:
(a) DT is an Aktiengesellschaft duly
formed and validly existing under the laws of
Germany, and has all requisite corporate power
and authority to: (i) enter into this Agreement,
each of the Amended Other Agreements and the
Letter Agreement, (ii) purchase the shares of
Sprint's capital stock as provided herein, and
in the Amended and Restated Stockholders'
Agreement and the Articles as amended by the
Proposed Charter Amendments and (iii) comply with
its obligations under this Agreement, each Amended
Other Agreement and the Letter Agreement.
(b) (i) The execution, delivery and
performance of this Agreement, each Amended Other
Agreement and the Letter Agreement, and the
consummation of the transactions contemplated
hereby and thereby, have been duly authorized by
all requisite corporate action on the part of DT.
Upon the execution and delivery by DT of this
Agreement, each Amended Other Agreement and the
Letter Agreement, each such agreement will
constitute a legal, valid and binding agreement
of DT, enforceable against DT in accordance with
its terms.
(ii) Neither the execution, delivery
and performance by DT of this Agreement, each
of the Amended Other Agreements or the Letter
Agreement, nor the consummation by DT of the
transactions contemplated hereby or thereby,
will (w) violate or conflict with any
provision of the Satzung or other governing
documents of DT or any of its Subsidiaries;
(x) require any Governmental Approvals or
Third Party Approvals, except where the
failure to so obtain, make or file such
Governmental Approvals or Third Party
Approvals, individually or in the aggregate,
is not reasonably likely to affect adversely
in any material respect DT's ability to
perform its obligations hereunder or under
the Amended Other Agreements or the
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Letter Agreement; (y) result in a default
(or an event that, with notice or lapse of
time or both, would become a default) under
any Contract to which DT or any of its
Subsidiaries is a party, or by which DT or
any of its Subsidiaries or any of their
respective assets or properties is bound,
except for any such defaults that,
individually or in the aggregate, are not
reasonably likely to affect adversely in
any material respect DT's ability to perform
its obligations hereunder or under the
Amended Other Agreements or the Letter
Agreement.
(c) There is no Proceeding pending or, to
the best of DT's Knowledge, threatened against or
relating to DT or any of its Subsidiaries at law
or in equity that, individually or in the aggregate,
is reasonably likely to affect adversely in any
material respect DT's ability to perform its
obligations hereunder or under the Amended Other
Agreements or the Letter Agreement. There is no
judgment, decree, injunction, rule or order of
any Governmental Authority outstanding against DT
or any of its Subsidiaries that, individually or
in the aggregate, is reasonably likely to adversely
affect in any material respect DT's ability to
performs its obligations hereunder or under the
Amended Other Agreements or the Letter Agreement.
(d) DT is purchasing the shares of Sprint's
capital stock to be purchased by it pursuant to
this Agreement and the Amended and Restated
Stockholders' Agreement for its own account for
investment, and not with a view to the distribution
of such shares or any part thereof. DT is a
party to no Contract with any person for resale of
such shares in connection with such a distribution.
DT acknowledges that the offering of the shares
pursuant to this Agreement and the Amended and
Restated Stockholders' Agreement will not be
registered under the Securities Act or under any
state securities or blue sky law or the securities
laws of any other country, on the grounds (with
respect to the Securities Act and such state
securities or blue sky laws) that the offering and
sale of shares of capital stock contemplated by
this Agreement and the Amended and Restated
Stockholders' Agreement are exempt from
registration pursuant to exceptions available under
such laws, and that Sprint's reliance upon such
exemptions is predicated upon DT's representations
set forth in this Agreement and the Amended and
Restated Stockholders' Agreement. DT understands
that the shares of Sprint's capital stock purchased
by it pursuant to this Agreement and the Amended
and Restated Stockholders' Agreement may not be
sold or transferred unless such shares are
subsequently registered under the Securities Act
and/or applicable state securities or blue sky
laws or any applicable securities laws of any other
country or an exemption from such registration is
available.
(e) All documents that DT is responsible
for filing with any Governmental Authority in
connection with the transactions contemplated
hereby or by each Amended Other Agreement have
complied and will comply in all material respects
with applicable Law. All information supplied or
to be supplied by DT in any document filed with
any Governmental Authority in connection with the
transactions contemplated hereby or by the Amended
Other Agreements will be, at the time of filing,
true and correct in all material respects, except
where the failure to be true and correct,
individually or in the aggregate,
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would not adversely affect in any material respect
the consummation of the transactions contemplated
by this Agreement or any Amended Other Agreement
or the Letter Agreement.
(f) DT is in compliance in all material
respects with Article 2 of the Standstill Agreement.
(g) Neither DT nor any Subsidiary of DT
is entitled to any immunity on the grounds of
sovereignty or otherwise (including, without
limitation, pursuant to the Foreign Sovereign
Immunities Act, 28 U.S.C. Section 1602 et seq.),
based upon its status as an agency or
instrumentality of government, from any legal
action, suit or proceeding or from set off or
counterclaim, from the jurisdiction of any
competent court described in Section 7.8 hereof,
from service of process, from attachment prior
to judgment, from attachment in aid of execution
of a judgment, from execution pursuant to a judgment
or arbitral award, or from any other legal process
in any jurisdiction, in each case relating to this
Agreement or any Amended Other Agreement or the
Letter Agreement.
ARTICLE V
COVENANTS
Section 5.1. Cooperation.
(a) Between the date hereof and the
earlier of (i) the last Applicable Closing to
occur or (ii) the termination of this Agreement,
subject to the terms and conditions of this
Agreement, the Parties shall cooperate with each
other and use all commercially reasonable efforts
to obtain all necessary consents and approvals
for the consummation of the transactions
contemplated hereby and otherwise to satisfy the
conditions to closing set forth in Article II
hereof. Without limiting the generality of the
foregoing, (A) each of FT and DT agrees to vote
(or cause to be voted) the shares of capital
stock of Sprint it owns (directly or indirectly)
in favor of the Initial Charter Amendment, the
Subsequent Charter Amendment, this Agreement,
the Amended Other Agreements, the PCS
Restructuring Agreement and the transactions
contemplated hereby and thereby and the other
matters related thereto presented for a vote at
the Stockholders Meeting (including any class
vote of the Class A Holders required thereat or
in connection therewith), and agrees not to
exercise any disapproval rights which it may have
under the Articles or otherwise with respect to
any such matters, and (B) each Party shall use its
commercially reasonable efforts to obtain all
consents and authorizations of third parties and
Governmental Authorities and to make all filings
with and give all notices to third parties and
Governmental Authorities which may be necessary
or required in order to effect the transactions
contemplated hereby.
(b) Each of the Parties shall use its
reasonable efforts to resolve such objections,
if any, as any Governmental Authority may assert
with respect to this Agreement and the Amended
Other Agreements and the transactions contemplated
hereby and thereby under
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applicable Laws, including requesting
reconsideration (which may be initiated by the
party affected thereby or requested by any
other Party) of any adverse ruling of any
Governmental Authority and taking administrative
appeals, if available and reasonably likely to
result in a reversal of such adverse ruling.
If any Proceeding is instituted by any Person
challenging this Agreement, the Amended Other
Agreements or the transactions contemplated
hereby or thereby, the Parties shall promptly
consult with each other to determine the
most appropriate response to such Proceeding
and shall cooperate in all reasonable respects
with any Party subject to any such Proceeding,
provided that the decision whether to initiate,
and the control of, any Proceeding involving
any Party shall remain within the sole
discretion of such Party.
(c) Notwithstanding the foregoing, in
connection with any filing or submission
required or action to be taken by Sprint,
FT or DT to consummate the transactions
contemplated hereby, (i) neither Sprint nor
any Affiliates of Sprint shall be required
to become subject to any requirement or
condition that it divest or "hold separate"
any assets or businesses or any similar
transaction or restriction, and (ii)
neither Sprint nor any Affiliates of Sprint
shall be required to divest or hold separate
or otherwise take (or refrain from taking)
or commit to take (or refrain from taking)
any action that limits its freedom of action
with respect to, or its ability to retain,
any of the businesses, product lines or assets
of Sprint or any of its Subsidiaries.
(d) Each Party shall (i) execute and
deliver such additional instruments and other
documents as may be reasonably requested by
the other Parties hereto in connection with
the consummation of the transactions
contemplated hereby, and (ii) use its
reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be
done, all things necessary under applicable
Law to consummate the transactions contemplated
hereby and by the Amended Other Agreements and
to satisfy the applicable conditions to
closing hereunder.
(e) FT shall comply, to the extent
permitted by applicable Law of France, with
final and nonappealable discovery orders
rendered by a court of competent jurisdiction
as provided in Section 7.8 hereof or in any
corresponding section of any Amended Other
Agreement, and shall take such reasonable
action as appropriate in order to permit FT
to so comply with such orders.
(f) DT shall comply, to the extent
permitted by applicable Law of Germany, with
final and nonappealable discovery orders
rendered by a court of competent jurisdiction
as provided in Section 7.8 hereof or in any
corresponding section of any Amended Other
Agreement, and shall take such reasonable
action as appropriate in order to permit DT
to so comply with such orders.
(g) Sprint shall, at the request of
FT and DT, use its commercially reasonable
efforts to obtain, as soon as is practicable,
any United States regulatory approvals or
other regulatory relief as FT and DT
reasonably deem appropriate in order for FT
and DT to exercise and benefit from their
rights under this Agreement, the Amended
Other Agreements and the Articles.
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(h) In addition to any obligations
under the Standstill Agreement or the Amended
and Restated Standstill Agreement, the Parties
shall use reasonable efforts to consult in
good faith with each other with a view to
agreeing upon any press release or public
announcement relating to the transactions
contemplated hereby or by the Amended Other
Agreements prior to the consummation thereof.
Section 5. Certain Actions by Sprint.
(a) As soon as is reasonably practicable
after the execution of this Agreement, Sprint
shall prepare and file with the SEC (i) the
Proxy Statement to be mailed to Sprint
stockholders in connection with the Stockholders
Meeting to be held for the purpose of approving
the Initial Charter Amendment, the Subsequent
Charter Amendment and amendments to certain of
Sprint's equity-based incentive plans in
connection with the creation of the PCS Stock,
among other things, and (ii) the Registration
Statement containing the IPO Prospectus covering
the shares of Series 1 PCS Stock to be sold in
the IPO. Sprint shall use its commercially
reasonable efforts to cause the Proxy Statement
to be approved for mailing and the Registration
Statement to become effective under the
Securities Act, each as promptly as practicable
after such filing, and shall take all commercially
reasonable actions required to be taken under any
applicable state blue sky or securities laws in
connection with the IPO and the Recapitalization.
(b) Sprint shall cause the Stockholders
Meeting to be held as soon as practicable after
the date hereof. Sprint's Board of Directors
shall recommend that its stockholders approve
the Initial Charter Amendment, the Subsequent
Charter Amendment and the other matters related
thereto presented for a vote in the Proxy Statement
(including matters, if any, referred to in clause
(b) of Section 3.14), and Sprint shall use
commercially reasonable efforts to obtain such
stockholder approval. Sprint shall not be deemed
to have breached any obligation under this Agreement
by reason of the disclosure of information in the
Proxy Statement or any public announcement or other
communication with Sprint's stockholders if such
disclosure is required by Law, so long as the
Board of Directors of Sprint shall not have
withdrawn, limited, qualified or conditioned the
recommendation referred to above. Sprint's
conclusion that any such disclosure is required
by Law will be final and binding on all the
parties hereto if Sprint has received a written
opinion of counsel that such disclosure or
communication is required by Law. "Commercially
reasonable" efforts shall not be deemed to
require any action that would prevent Sprint's
compliance with Section 3(a)(9) of the
Securities Act in connection with the
Recapitalization. Each of FT and DT shall
provide such information regarding itself and
its Affiliates as may reasonably be requested by
Sprint for inclusion in the Proxy Statement. The
information provided by FT and DT in writing for
inclusion in the Proxy Statement will not contain
any material misstatement of fact or omit to
state any material fact necessary to make the
statements, in the light of the circumstances
under which they are made, not misleading. All
statements included in the Proxy Statement
relating to FT or DT shall be subject to the
approval of FT and DT, such approval not to be
unreasonably withheld. If, at any time after
the mailing of the definitive Proxy Statement
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and prior to the Stockholders Meeting, any event
should occur that results in the information
supplied by FT, DT or their respective Affiliates
in writing for inclusion in the Proxy Statement
containing an untrue statement of a material fact
or omitting to state any material fact required
to be stated therein or necessary to make the
statements therein, in the light of the
circumstances under which they are made, not
misleading, FT and DT shall promptly notify
Sprint of the occurrence of such event.
(c) Sprint currently intends to close
the IPO as soon as practicable following the
Trigger Date, assuming that the other conditions
to the closing (other than conditions relating
solely to the obligations of FT and DT to purchase
capital stock hereunder) have been satisfied or
are capable of being satisfied on or prior to the
Primary Closing Date; provided that the
determination to proceed with the IPO at any time
shall remain in Sprint's sole discretion. If the
IPO occurs prior to the Recapitalization, the
Primary Closing shall occur simultaneously with
the closing of the IPO. If Sprint causes the
IPO to be completed simultaneously with the
Primary Closing, Sprint shall complete the
Recapitalization by filing the Subsequent
Charter Amendment with the Kansas Secretary of
State within 120 days following the Primary
Closing and, unless the Transfer Restrictions
(as defined in the Amended and Restated
Stockholders Agreement) have been terminated
pursuant to Section 2.6(a) of the Amended and
Restated Stockholders Agreement, each of FT
and DT will, and will cause its controlled
Affiliates to, for a period of one hundred
eighty (180) days following the Primary
Closing Date, refrain from engaging in any
public sale or distribution of any PCS Stock
or securities convertible into, or
exchangeable or exercisable for, or the value
of which relates to or is based upon, PCS
Stock.
(d) Subject to Section 5.2(e), if the
IPO is not completed on or prior to the 30th
day following the Trigger Date, then Sprint
shall on the earlier of (i) the date which is
10 days following such date subsequent to the
Trigger Date that Sprint reasonably determines
that the IPO is not capable of being completed
on or prior to the 30th day following the
Trigger Date or (ii) the 40th day following
the Trigger Date, effect the Recapitalization
by filing the Initial Charter Amendment and
the Subsequent Charter Amendment with the
Kansas Secretary of State, assuming that the
other conditions to closing have been satisfied
or are capable of being satisfied at the
Primary Closing. If Sprint causes the
Recapitalization to be completed as provided
in this Section 5.2(d), the Primary Closing
hereunder shall occur simultaneously with the
completion of the Recapitalization. In such
event, Sprint currently intends to complete
the IPO within 120 days after the Primary
Closing Date. If Sprint completes the
Recapitalization simultaneously with the
Primary Closing and the IPO is completed within
such 120-day period, unless the Transfer
Restrictions (as defined in the Amended and
Restated Stockholders Agreement) have been
terminated pursuant to Section 2.6(a) of the
Amended and Restated Stockholders Agreement,
each of FT and DT will, and will cause its
controlled Affiliates to, for a period
commencing at the time of the Primary Closing
and ending 90 days following the closing of
the IPO, refrain from engaging in any public
sale or distribution of any PCS Stock or
securities convertible into, or exchangeable
or exercisable for, or the value of which
relates to or is based upon, PCS Stock.
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(e) If the Trigger Date occurs after
August 1, 1998, and before September 1, 1998,
the Trigger Date will be deemed to occur on
the earlier of (i) September 1, 1998 or (ii)
such date after August 1, 1998, that Sprint
reasonably determines that the IPO is not
capable of being completed on or prior to
October 1, 1998.
Section 5.3. IPO Matters. The IPO will be
conducted substantially in accordance with the terms
of the PCS Restructuring Agreement.
Section 5.4. Tax Matters. Each Party shall
use all reasonable efforts to cause the
Recapitalization to constitute a tax-free
"reorganization" under Section 368(a) of the
Code. Each Party agrees that it will not take
any action, and will not permit any of its
Subsidiaries or Affiliates to take any action,
that such party knows would cause the
Recapitalization to fail to qualify as a
tax-free reorganization under Section 368(a) of
the Code. Each Party agrees to report the
Recapitalization on all tax returns and other
filings as a reorganization under Section 368(a)
of the Code. Absent a change in applicable Law,
or a change in facts beyond Sprint's reasonable
control, Sprint agrees that (i) it will not
treat the closing of the transactions contemplated
by this Agreement and the Amended Other
Agreements, including with respect to the
equity purchase rights of FT and DT described
herein and therein, as giving rise to any
withholding tax obligation (except in respect of
any cash payments) and (ii) it will not change
the withholding rate otherwise applicable to
distributions as the result of the class votes
provided to the holders of the PCS Stock. For
purposes of the preceding sentence, change
in applicable Law also includes any Revenue
Ruling, and (as of the proposed effective date
thereof) any proposed regulations or official
notice of intent to propose regulations issued
by the Internal Revenue Service.
Section 5.5. Brokers or Finders.
(a) Other than Salomon Smith Barney
and SBC Warburg Dillon Read, no Person is or
will be entitled to any broker's or finder's
fee or any other commission or similar fee
as a result of any action by Sprint or any
of its Affiliates in connection with the
transactions contemplated by this Agreement
and the Amended Other Agreements. Sprint
agrees to indemnify and hold harmless each
of FT and DT from and against any and all
claims, liabilities and obligations
(including attorneys' fees (but not
including the portion of any such fees
determined pursuant to the German Fee
Regulations) and disbursements of counsel)
with respect to any such fees asserted by
any Person as a result of any action by
Sprint or any of its Affiliates in
connection with the transactions contemplated
by this Agreement and the Amended Other
Agreements.
(b) Other than Credit Suisse First
Boston, no Person is or will be entitled to
any broker's or finder's fee or any other
commission or similar fee as a result of any
action by FT or any of its Affiliates in
connection with the transactions contemplated
by this Agreement and the Amended Other
Agreements. FT agrees to indemnify and hold
Sprint harmless from and against any and all
claims, liabilities and obligations
(including attorneys' fees and disbursements
of counsel) with respect to any such fees
asserted by any Person as a result
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of any actions by FT or its Affiliates in
connection with the transactions contemplated
by this Agreement and the Amended Other
Agreements.
(c) Other than Credit Suisse First
Boston, no Person is or will be entitled to
any broker's or finder's fee or any other
commission or similar fee as a result of
any action by DT or any of its Affiliates
in connection with the transactions
contemplated by this Agreement and the
Amended Other Agreements. DT agrees to
indemnify and hold Sprint harmless from
and against any and all claims, liabilities
and obligations (including attorneys' fees
and disbursements of counsel) with respect
to any such fees asserted by any Person as
a result of any actions by DT or its
Affiliates in connection with the
transactions contemplated by this
Agreement and the Amended Other Agreements.
Section 5.6. No Action Relating to Takeover
Statutes; Applicability of Future Statutes and
Regulations. Sprint shall (a) take no action,
by resolution of its Board of Directors or
otherwise, to cause the Business Combination
Statute or the provisions of the Kansas Control
Share Acquisitions Statute to apply to FT, DT
or their respective Affiliates by virtue of the
transactions contemplated by this Agreement,
any Amended Other Agreement or the Articles,
and (b) use reasonable efforts to avoid (to the
extent possible) the application of any
"fair price," "moratorium," "control
share acquisition," "business combination,"
"shareholder protection" or similar
anti-takeover statute or regulation
promulgated under Kansas law after the date
hereof to FT, DT or their respective
Affiliates by virtue of the transactions
contemplated by this Agreement, any
Amended Other Agreement or the Articles.
Section 5.7. Management and Allocation
Policies. Sprint will not make any change
in or amendment to the Management and
Allocation Policies or the Bylaw Amendment
(or waive or otherwise disregard any
provision thereof) prior to the
Recapitalization without the consent of
each of FT and DT.
Section 5.8. Sprint Action. Except
to the extent that each of the Buyers
otherwise consents in writing, or as
otherwise contemplated by the PCS
Restructuring Agreement, this Agreement
or the Amended Other Agreements, until
the Primary Closing, Sprint shall not
amend or propose to amend the Articles
or Bylaws in any manner that would
adversely affect the consummation of
the transactions contemplated by, or
otherwise adversely affect the rights
of the Buyers under, this Agreement, each
Amended Other Agreement, the Articles as
proposed to be amended by the Proposed
Charter Amendments, and the Bylaws as
proposed to be amended by the Bylaws
Amendment.
Section 5.9. Standstill Agreement.
The discussions solely among FT, DT and
Sprint (and their respective legal counsel
and investment bankers) in connection with
the negotiation, execution and delivery of
this Agreement and the Amended Other
Agreements and the discussions solely
among FT, DT and Sprint (and their respective
legal counsel and investment bankers) in
connection with the consummation of the
transactions contemplated thereby shall
not constitute a violation of the Standstill
Agreement or the Amended and Restated
Standstill Agreement. In addition, the
discussions solely among FT, DT, Sprint
and the Cable Partners (and their respective
legal counsel
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and investment bankers) prior to the date
hereof in connection with the negotiation,
execution and delivery of the Purchase
Rights Agreement shall not constitute a
violation of the Standstill Agreement or
the Amended and Restated Standstill Agreement.
ARTICLE VI
TERMINATION; ABANDONMENT
Section 6.1. Events of Termination.
This Agreement may be terminated and the
transactions contemplated hereby abandoned
at any time prior to the Primary Closing:
(a) by mutual written consent
of the Parties;
(b) by any Party, by notice to
the other Parties, if the actions to be
taken by the Parties at the Primary
Closing under clauses (a), (b) and (h)
through (m) only of Section 1.1 hereof
shall be prohibited by any final,
nonappealable order, decree or
injunction of a Governmental Authority;
(c) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice
to the other Parties if the Primary Closing
has not occurred on or before December 31,
1998;
(d) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice to
the other Parties following the time that
any condition to the Primary Closing set
forth in Article II (other than any
conditions set forth in Sections 2.1(b)
and 2.3(b)) has become incapable of being
satisfied on or prior to December 31, 1998;
(e) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice to
the other Parties following a material
breach of any material covenant contained
in this Agreement by any other Party if
such breach remains uncured in any
material respect for 30 days following the
giving of notice of the breach of such
material covenant from the Party seeking
to terminate this Agreement to each other
Party; provided, that the Party seeking to
terminate this Agreement gives written
notice of such termination to each other
Party within 30 days following the end of
such 30-day cure period; or
(f) by FT or DT, if the Board of
Directors shall have withdrawn its
recommendation of the proposals
contemplated by Section 5.2(b) hereof or
shall have qualified its recommendation
in a manner materially adverse to FT and DT,
provided that for purposes of this clause
(f) if the Board of Directors continues its
recommendation and approval of such
proposals, but reflects in its recommendation
additional information, the inclusion of
such additional information, in and of
itself, shall not be deemed to be a
qualification that is materially adverse
to FT and DT or otherwise provide FT and
DT with a termination right under this
clause (f).
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Section 6.2. Effect of Termination.
(a) If this Agreement is terminated
in accordance with Section 6.1, then this
Agreement shall become null and void and have
no further effect, without any liability of
any Party to any other Party, except that the
obligations of the Parties pursuant to
Section 6.3 and Article VII and under any
provision of this Agreement that expressly
provides for certain actions to occur
simultaneously with or following the
termination of this Agreement shall survive
the termination of this Agreement
indefinitely; provided, that no such
termination shall release or relieve any
Party hereto from liability for any willful
material breach of any material provision
of this Agreement occurring prior to such
termination.
(b) If this Agreement is terminated
in accordance with Section 6.1, then the
Initial Other Agreements shall continue
in full force and effect until terminated
in accordance with their respective terms,
without any amendment to the rights and
obligations of the parties thereto.
Section 6.3. Reimbursement of Expenses. If
this Agreement is terminated pursuant to Section
6.1(f), in addition to any other remedies the Buyers
may have hereunder, at law, in equity or otherwise,
Sprint shall promptly reimburse each of FT and DT
for their actual reasonable out-of-pocket expenses
(including attorneys' fees, but notwithstanding the
foregoing, not including the portion of any fees
determined pursuant to the German Fee Regulations)
incurred by it relating to the transactions
contemplated by this Agreement and the Amended Other
Agreements (as set forth on a certificate or
certificates executed by an officer of each of FT
and DT describing such expenses in reasonable
detail) up to a maximum aggregate amount of $5
million for FT and DT collectively, to be
allocated between FT and DT as FT and DT shall
so determine.
Section 6.4. Abandonment of Purchase
and Sale of Capital Stock at Primary Closing.
The obligations of the parties to consummate
the purchase by FT and DT of the capital stock
of Sprint contemplated hereby to occur at the
Primary Closing may be abandoned at any time
prior to the Primary Closing:
(a) by any Party, by notice to the
other Parties, if the purchase and sale of
the capital stock of Sprint contemplated to
occur at the Primary Closing shall be
prohibited by any final, nonappealable
order, decree or injunction of a Governmental
Authority; or
(b) if a Change of Control shall
have occurred.
Notwithstanding any abandonment pursuant to this
Section 6.4 of the purchase and sale of the
capital stock of Sprint to be effected at the
Primary Closing, this Agreement shall not be
terminated and such abandonment shall have no
effect whatsoever on (i) the Buyers' obligations
under Article V to vote (or cause to be voted)
the shares of capital stock of Sprint they own
(directly or indirectly) in favor of the Initial
Charter Amendment, the Subsequent Charter
Amendment, this Agreement, the Amended Other
Agreements, the PCS Restructuring Agreement
and the transactions contemplated
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hereby and thereby and any other matters
related thereto presented for a vote at the
Stockholders Meeting (including any class vote
of the Class A Holders required thereat or in
connection therewith), and their agreement not
to exercise any disapproval rights which they
may have under the Articles or otherwise with
respect to any such matters, or (ii) any other
actions to be taken by the Parties at the
Primary Closing, including the Parties'
obligations to proceed with all of the
transactions and deliveries contemplated
to be undertaken at the Primary Closing
(other than the purchase and sale by the
Buyers of the capital stock of Sprint), and
such transactions and deliveries in fact
shall proceed if all of the other
conditions to the Primary Closing have been
satisfied or waived.
Section 6.5. Abandonment of Secondary
Closing and Greenshoe Closing. The
obligations of the parties to consummate
the purchase by FT and DT of the capital
stock of Sprint contemplated hereby to
occur at the Secondary Closing and/or the
Greenshoe Closing may be abandoned at any
time after the Primary Closing and prior
to such Secondary Closing or Greenshoe
Closing, as the case may be:
(a) by mutual written consent
of the Parties;
(b) by any Party, by notice to
the other Parties, if the Secondary
Closing or Greenshoe Closing, as the case
may be, shall be prohibited by any final,
nonappealable order, decree or injunction
of a Governmental Authority;
(c) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice to
the other Parties if the Secondary
Closing has not occurred on or before
June 30, 1999;
(d) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice to
the other Parties following the time that
any condition to closing set forth in
Article II and applicable to the purchase
by FT and DT of capital stock pursuant to
this Agreement at the Secondary Closing
or the Greenshoe Closing has become
incapable of being satisfied on or prior
to June 30, 1999;
(e) by any Party that is not in
material breach of any material covenant
contained in this Agreement, by notice to
the other Parties following a material
breach of any material covenant contained
in this Agreement by any other Party if
such breach remains uncured in any material
respect for 30 days following the giving
of notice of the breach of such material
covenant from the Party seeking to
terminate this Agreement to each other
Party; provided, that the Party seeking to
abandon the Secondary Closing or the
Greenshoe Closing gives written notice of
such termination to each other Party
within 30 days following the end of such
30-day cure period; or
(f) if a Change of Control shall
have occurred.
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Notwithstanding any abandonment of the Secondary
Closing or the Greenshoe Closing pursuant to this
Section 6.5, this Agreement shall not be
terminated and such abandonment shall have no
effect whatsoever on the actions taken or to be
taken by the Parties at the Primary Closing,
including the execution and delivery by the
Parties of the Amended Other Agreements.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Survival of Representations
and Warranties.
(a) The representations and warranties
made by (i) Sprint in Sections 3.1 through 3.5,
the first two sentences of Section 3.6(a) and
Section 3.7 (but, in the case of Section 3.7,
only to the extent that a change described in
such Section relates to a Material Adverse
Effect on Sprint and its Subsidiaries taken as
a whole that existed on the Primary Closing
Date, but arose after the later of (x) the date
of the end of the quarter covered by the last
Quarterly Report on Form 10-Q of Sprint filed
prior to the Primary Closing Date and (y) the
date of the end of the year covered by the
last Annual Report on Form 10-K of Sprint filed
prior to the Primary Closing Date) of this
Agreement, and (ii) the Buyers in Sections 4.1
and 4.2 of this Agreement (the "Surviving
Representations") will survive, solely with
respect to any damages relating to each
particular investment to be made at an
Applicable Closing, until the earlier to occur
of (x) 15 months after the date of the
Applicable Closing and (y) 90 days after the
publication of the results of the first
full audit of the consolidated financial
statements of Sprint and its Subsidiaries by
Sprint's independent auditors following the
Applicable Closing, such financial statements
to include a balance sheet and statements of
income and cash flows as of a date following
the Applicable Closing and to be prepared in
accordance with GAAP applied on a consistent
basis with the financial statements included
in the SEC Documents. Sprint shall have the
right to cause its independent auditors to
conduct such an audit at any time after the
Applicable Closing. No action may be brought
with respect to a breach of any Surviving
Representation after such time unless, prior
to such time, the Party seeking to bring such
an action has notified the other Parties of
such claim, specifying in reasonable detail
the nature of the loss suffered. The
representations and warranties provided in
Sections 3.10, 4.1(g) and 4.2(g) shall survive
without limitation as to time. None of the
other representations and warranties made by
any party in this Agreement or any Amended
Other Agreement or in any certificate or
document delivered pursuant hereto or
thereto prior to or on the Applicable Closing
shall survive the Applicable Closing. None
of the representations and warranties made
by any Party in this Agreement or any Amended
Other Agreement or in any certificate or
document delivered pursuant hereto or thereto
at the Secondary Closing or Greenshoe Closing
shall survive such Secondary Closing or
Greenshoe Closing, as the case may be, provided
that if any certificate or document delivered
pursuant hereto, or any portion thereof,
pertains to a Surviving Representation, such
certificate or document, or such portion
thereof, shall survive until the Surviving
Representation to which it pertains shall no
longer survive as provided herein.
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(b) The Buyers shall be entitled to
recovery with respect to breaches of the
Surviving Representations and to the
representation and warranty provided in Section
3.10 made by Sprint pursuant to this Agreement
(and in any certificate pertaining to any such
representation) only if the aggregate amount of
loss, liability or damage (including
reasonable attorneys' fees (but not including
the portion of any fees determined pursuant to
the German Fee Regulations) and other costs
and expenses) (collectively, "Damages")
incurred or sustained by the Buyers arising
from or relating to such breaches, in the
aggregate, exceeds $30 million. Sprint shall
be entitled to recovery with respect to breach
of the Surviving Representations made by the
Buyers pursuant to this Agreement (and in any
certificate pertaining to any such
representation) only if the aggregate amount
of Damages sustained by Sprint arising from
or relating to such breaches exceeds $30
million. Sprint shall not incur any liability
under the representation and warranty provided
in Section 3.10 or under any certificate
pertaining to such representation (even if
Sprint turns out in fact to be a U.S. real
property holding corporation), provided that
such representation and warranty is made to
the best of Sprint's Knowledge and belief.
(c) Notwithstanding anything in this
Section 7.1 to the contrary, except solely with
respect to the representations and warranties
in Section 3.3 relating to the effect of the
filing of the Proposed Charter Amendments with
respect to the Class A Common Stock, the
Buyers shall be entitled to Damages under this
Section 7.1 only to the extent such Damages
directly relate to the investment in Sprint
being made by the Buyers pursuant to this
Agreement, and without limiting the
generality of the foregoing, the Buyers shall
have no claim for Damages under this Agreement
with respect to any actual or alleged
diminution in value of, or other loss,
liability or damage associated with, the
Buyers' existing investment in Sprint or any
additional purchases of capital stock of
Sprint made by the Buyers other than pursuant
to this Agreement.
Section 7.2. Assignment. No Party will assign
this Agreement or any rights, interests or
obligations hereunder, or delegate performance of
any of its obligations hereunder, without the prior
written consent of each other Party.
Section 7.3. Entire Agreement. This Agreement,
including the Disclosure Schedules, the Exhibits
attached hereto, and the Amended Other Agreements
embody the entire agreement and understanding of
the Parties in respect of the subject matter
contained herein, provided that this provision
shall not abrogate (a) any other written agreement
between the Parties executed simultaneously with
this Agreement, (b) the Original Investment
Agreement, or (c) the understanding set forth in
Item 1 of Schedule 2 to that certain memorandum
dated June 22, 1995 among Sprint, FT and DT. This
Agreement supersedes all prior agreements and
understandings between the Parties with respect
to such subject matter, except as so provided in
the preceding sentence.
Section 7.4. Expenses. Except as set forth
in the next sentence, each Party and each of its
Affiliates will bear its own expenses (including
the fees and expenses of any attorneys,
accountants,
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investment bankers, brokers, or other Persons
engaged by it) incurred in connection with the
preparation, negotiation, authorization,
execution and delivery hereof and each of the
Amended Other Agreements to which it or any of
its Affiliates is a party, and the transactions
contemplated hereby and thereby. Each of the
Parties agrees that a Party making a request for
this Agreement, the Letter Agreement, an
Amended Other Agreement or any other document
related to this Agreement and the Amended Other
Agreements to be translated in the French language
shall be responsible for the expenses associated
with the preparation of such translations and
that the non-requesting Parties shall be
responsible for the expenses associated with the
review of such translations by the non-requesting
Parties and their advisors.
Section 7.5. Waiver, Amendment, Etc. This
Agreement may not be amended or supplemented, and
no waivers of or consents to departures from the
provisions hereof shall be effective, unless set
forth in a writing signed by, and delivered to,
all the Parties. No failure or delay of any
Party in exercising any power or right under
this Agreement will operate as a waiver thereof,
nor will any single or partial exercise of any
right or power, or any abandonment or
discontinuance of steps to enforce such right
or power, preclude any other or further exercise
thereof or the exercise of any other right or
power.
Section 7.6. Binding Agreement; No Third
Party Beneficiaries. This Agreement will be
binding upon and inure to the benefit of the
Parties and their successors and permitted
assigns. Nothing expressed or implied herein
is intended or will be construed to confer
upon or to give to any third party any rights
or remedies by virtue hereof.
Section 7.7. Notices. All notices and
other communications required or permitted by
this Agreement shall be made in writing in
the English language and any such notice or
communication shall be deemed delivered when
delivered in person, transmitted by telex or
telecopier, or seven days after it has been
sent by air mail, as follows:
FT: 6 place d'Alleray
75505 Paris Cedex 15
France
Attn: Group Executive
Vice President
Tel: (33-1) 44-44-84-72
Fax: (33-1) 44-44-01-51
with a copy to: 6 place d'Alleray
75505 Paris Cedex 15
France
Attn: General Counsel
Tel: (33-1) 44-44-84-76
Fax: (33-1) 44-12-40-35
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with a copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
U.S.A.
Attn: Alfred J. Ross, Jr., Esq.
Tel: (212) 848-4000
Fax: (212) 848-8434
DT: Friedrich-Ebert-Allee 140
D-53113 Bonn
Germany
Tel: 49-228-181-9000
Fax: 49-228-181-8970
Attn: Chief Executive Officer
with a copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
U.S.A.
Attn: Robert P. Davis, Esq.
Tel: (212) 225-2000
Fax: (212) 225-3999
Sprint: 2330 Shawnee Mission
Parkway, East Wing
Westwood, Kansas 66205
U.S.A.
Attn: General Counsel
Tel: (913) 624-8440
Fax: (913) 624-8426
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
U.S.A.
Attn: Bruce N. Hawthorne, Esq.
Tel: (404) 572-4903
Fax: (404) 572-5146
The Parties shall promptly notify each other
in the manner provided in this Section 7.7 of
any change in their respective addresses. A
notice of change of address shall not be deemed
to have been given until received by the addressee.
Communications by telex or telecopier also shall
be sent concurrently by mail, but shall in any
event be effective as stated above.
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Section 7.8. Governing Law; Dispute
Resolution; Equitable Relief.
(a) THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW).
(b) EACH PARTY IRREVOCABLY CONSENTS AND
AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING
AGAINST IT WITH RESPECT TO ITS OBLIGATIONS OR
LIABILITIES UNDER OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT
BY SUCH PARTY ONLY IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR,
IN THE EVENT (BUT ONLY IN THE EVENT) SUCH COURT
DOES NOT HAVE SUBJECT MATTER JURISDICTION OVER
SUCH ACTION, SUIT OR PROCEEDING, IN THE COURTS
OF THE STATE OF NEW YORK SITTING IN THE CITY OF
NEW YORK, AND EACH PARTY HEREBY IRREVOCABLY
ACCEPTS AND SUBMITS TO THE JURISDICTION OF EACH
OF THE AFORESAID COURTS IN PERSONAM, WITH RESPECT
TO ANY SUCH ACTION, SUIT OR PROCEEDING
(INCLUDING, WITHOUT LIMITATION, CLAIMS FOR
INTERIM RELIEF, COUNTER-CLAIMS, ACTIONS WITH
MULTIPLE DEFENDANTS AND ACTIONS IN WHICH SUCH
PARTY IS IMPLED). EACH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE
TO A JURY TRIAL IN ANY LEGAL ACTION, SUIT OR
PROCEEDING WITH RESPECT TO, OR ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.
(c) EACH OF FT AND DT HEREBY IRREVOCABLY
DESIGNATES CT CORPORATION SYSTEM (IN SUCH CAPACITY,
THE "PROCESS AGENT"), WITH AN OFFICE AT 1633
BROADWAY, NEW YORK, NEW YORK, 10019 AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS
BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION
IN ANY LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO
THIS AGREEMENT AND THE AMENDED OTHER AGREEMENTS,
AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON
DELIVERY THEREOF TO THE PROCESS AGENT, PROVIDED
THAT IN THE CASE OF ANY SUCH SERVICE UPON THE
PROCESS AGENT, THE PARTY EFFECTING SUCH
SERVICE SHALL ALSO DELIVER A COPY THEREOF TO FT
AND DT IN THE MANNER PROVIDED IN SECTION 7.7.
FT AND DT SHALL TAKE ALL SUCH ACTION AS MAY BE
NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL
FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO
THAT FT AND DT WILL AT ALL TIMES HAVE AN AGENT
FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES
IN NEW YORK, NEW YORK. IN THE EVENT OF THE
TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS AND BUSINESS OF THE PROCESS AGENT TO ANY
OTHER CORPORATION BY CONSOLIDATION, MERGER, SALE
OF ASSETS OR OTHERWISE, SUCH OTHER CORPORATION
SHALL BE SUBSTITUTED HEREUNDER FOR THE PROCESS
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AGENT WITH THE SAME EFFECT AS IF NAMED HEREIN
IN PLACE OF CT CORPORATION SYSTEM. EACH OF FT
AND DT FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED AIRMAIL, POSTAGE PREPAID, TO SUCH
PARTY AT ITS ADDRESS SET FORTH IN THIS
AGREEMENT. SUCH SERVICE OF PROCESS TO BE
EFFECTIVE UPON ACKNOWLEDGMENT OF RECEIPT OF
SUCH REGISTERED MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW. EACH OF FT AND DT EXPRESSLY ACKNOWLEDGES
THAT THE FOREGOING WAIVER IS INTENDED TO BE
IRREVOCABLE UNDER THE LAWS OF THE STATE OF NEW
YORK AND OF THE UNITED STATES OF AMERICA.
(d) EACH PARTY AGREES THAT MONEY DAMAGES
WOULD NOT BE A SUFFICIENT REMEDY FOR THE OTHER
PARTIES FOR ANY BREACH OF THIS AGREEMENT BY IT,
AND THAT IN ADDITION TO ALL OTHER REMEDIES THE
OTHER PARTES MAY HAVE, THEY SHALL BE ENTITLED
TO SPECIFIC PERFORMANCE AND TO INJUNCTIVE OR
OTHER EQUITABLE RELIEF AS A REMEDY FOR ANY SUCH
BREACH TO THE EXTENT PERMITTED BY APPLICABLE
LAW. EACH PARTY AGREES NOT TO OPPOSE THE
GRANTING OF SUCH RELIEF IN THE EVENT A COURT
DETERMINES THAT SUCH A BREACH HAS OCCURRED,
AND TO WAIVE ANY REQUIREMENT FOR THE SECURING
OR POSTING OF ANY BOND IN CONNECTION WITH SUCH
REMEDY.
Section 7.9. Severability. The invalidity or
unenforceability of any provision hereof in any
jurisdiction will not affect the validity or
enforceability of the remainder hereof in that
jurisdiction or the validity or enforceability of
this Agreement, including that provision, in any
other jurisdiction. To the extent permitted by
applicable Law, each Party waives any provision of
law that renders any provision hereof prohibited
or unenforceable in any respect. If any provision
of this Agreement is held to be unenforceable for
any reason, to the extent permitted by applicable
Law it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the
Parties to the extent possible.
Section 7.10. Translation.
(a) The Parties have negotiated this
Agreement in the English language and have
prepared successive drafts and the definitive
text of this Agreement in the English
language. For purposes of complying with
the French Translation Law, Sprint has
prepared and the other Parties have reviewed
a French version of this Agreement, which
French version was executed and delivered
simultaneously with the execution and delivery
of the English version hereof, such English
version having likewise been executed and
delivered. The Parties deem the French and
English versions of this Agreement to be
equally authoritative.
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(b) The Parties acknowledge that
the PCS Restructuring Agreement, Initial
Charter Amendment, the Subsequent Charter
Amendment, the Qualified Stock Purchaser
Standstill Agreement (as such term is defined
in the Amended and Restated Stockholders'
Agreement), Sprint Stock Payment Notes (as
such term is defined in the Amended and
Restated Stockholders' Agreement) and Sprint
Eligible Notes (as such term is defined in
the Amended and Restated Stockholders'
Agreement), and any draft forms thereof,
are not required to be translated into the
French language to comply with the French
Translation Law and that the Exhibits to the
Letter Agreement are either not required to be
translated into the French language prior to
the Primary Closing to comply with the French
Translation Law or are not required to be
translated into the French language either
before or after the Primary Closing to comply
with the French Translation Law.
Section 7.11. Table of Contents; Headings;
Counterparts. The table of contents and the headings
in this Agreement are for convenience of reference
only and will not affect the construction of any
provisions hereof. This Agreement may be executed in
one or more counterparts, each of which when so
executed and delivered will be deemed an original but
all of which will constitute one and the same
Agreement.
Section 7.12. Waiver of Immunity. Each of FT
and DT agrees that, to the extent that it or any of
its property is or becomes entitled at any time to
any immunity on the grounds of sovereignty or
otherwise based upon its status as an agency or
instrumentality of government from any legal
action, suit or proceeding or from set off or
counterclaim relating to this Agreement from the
jurisdiction of any competent court described in
Section 7.8, from service of process, from
attachment prior to judgment, from attachment
in aid of execution of a judgment, from execution
pursuant to a judgment or arbitral award, or from
any other legal process in any jurisdiction, it,
for itself and its property expressly, irrevocably
and unconditionally waives, and agrees not to
plead or claim, any such immunity with respect to
such matters arising with respect to this Agreement
or the subject matter hereof (including any
obligation for the payment of money). Each of FT
and DT agrees that the waiver in this provision is
irrevocable and is not subject to withdrawal in any
jurisdiction or under any statute, including the
Foreign Sovereign Immunities Act, 28 U.S.C. 1602
et seq. The foregoing waiver shall constitute a
present waiver of immunity at any time any action
is initiated against FT or DT with respect to this
Agreement.
Section 7.13. Continuing Director Approval.
Where Continuing Director approval is otherwise
explicitly required under this Agreement with
respect to a transaction or determination on the
part of Sprint, such approval shall not be
required if (a) the Fair Price Provisions have
been deleted in their entirety, (b) the Fair Price
Provisions have been modified so as explicitly not
to apply to any holder of Class A Common Stock, or
they have been modified in a manner reasonably
satisfactory to FT and DT so as explicitly not to
apply to any transactions with any holder of Class
A Common Stock contemplated by the Amended Other
Agreements or the Articles as amended by the
Proposed Charter Amendments, (c) the transaction
in question is not a "Business Combination"
within the meaning of the Fair Price Provisions,
or (d) the holder of Class A Common Stock that
is a party to the transaction, along with its
Affiliates (as such term is defined in Rule
12b-2 under the Exchange Act, as in effect on
October 1, 1982) and Associates (as such term
is defined in Rule 12b-2
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under the Exchange Act, as in effect on October
1, 1982), is not an "Interested Stockholder"
or an "Affiliate" of an "Interested
Stockholder" within the meaning of the Fair
Price Provisions. Where this Agreement
provides that Continuing Director approval
is explicitly required to undertake a
transaction or make a determination on the
part of Sprint, Sprint shall not undertake
such transaction or make such determination
unless it first delivers a certificate,
signed by a duly authorized officer of Sprint,
to each of FT and DT certifying that such
approval either has been obtained or is not
required as set forth in the preceding sentence,
and FT and DT shall be entitled to rely on such
certificate.
Section 7.14. Changes in Law. The
inclusion by the Parties in the Amended Other
Agreements and by Sprint in the Proposed
Charter Amendments of provisions contained in
the Initial Other Agreements and in the
existing Articles which provided for the
termination, modification or vesting of
certain rights and obligations of the parties
upon a change in the Law relating to the
United States Communications Act of 1934 is
not intended to create an inference that the
Parties believe that no such changes in the
Law have occurred since the date of the Initial
Other Agreements and such provisions shall be
interpreted with reference to the respective
dates of the Initial Other Agreements and the
date of filing of the Articles in connection
with the closing of the transactions
contemplated by the Original Investment Agreement.
Section 7.15. Currency. All amounts
payable under this Agreement and the Amended
Other Agreements shall be payable in U.S. dollars.
ARTICLE VIII
DEFINITIONS
Section 8.1. Certain Definitions. As used
in this Agreement, the following terms shall
have the meanings specified below:
"Acquiring Person Statement" means the
acquiring person statement dated November 17,
1995, delivered by FT, DT and certain of their
Affiliates pursuant to Section 17-1291 of the
Kansas Control Share Acquisitions Statute.
"Affiliates" means, with respect to any
Person, any other Person that directly or
indirectly through one or more intermediaries
controls, is controlled by, or is under common
control with such Person. For purposes of
this definition, the term "controls" (including
its correlative meanings "controlled by" and
"under common control with") shall mean the
possession, direct or indirect, of the power
to direct or cause the direction of the
management and policies of a Person, whether
through the ownership of voting securities,
by contract or otherwise.
"Agreement" means this Master
Restructuring and Investment Agreement,
including the Schedules attached hereto.
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"Amended and Restated Confidentiality
Agreements" means the Amended and Restated
DT Investor Confidentiality Agreement and
the Amended and Restated FT Investor
Confidentiality Agreement.
"Amended and Restated DT Investor
Confidentiality Agreement" means the
confidentiality agreement between Sprint
and DT, in form reasonably satisfactory to
each of the Parties.
"Amended and Restated FT Investor
Confidentiality Agreement" means the
confidentiality agreement between Sprint
and FT, in form reasonably satisfactory to
each of the Parties.
"Amended and Restated Registration
Rights Agreement" means the Amended and
Restated Registration Rights Agreement
among the Parties, in form reasonably
satisfactory to each of the Parties.
"Amended and Restated Standstill
Agreement" means the Amended and Restated
Standstill Agreement among the Parties, in
form reasonably satisfactory to each of the
Parties.
"Amended and Restated Stockholders'
Agreement" means the Amended and Restated
Stockholders' Agreement among the Parties,
in form reasonably satisfactory to each of
the Parties.
"Amended Other Agreements" means the
Amended and Restated Registration Rights
Agreement, the Amended and Restated Standstill
Agreement, the Amended and Restated
Stockholders' Agreement, the Amended and
Restated DT Investor Confidentiality Agreement
and the Amended and Restated FT Investor
Confidentiality Agreement.
"Applicable Closing" means the Primary
Closing, the Secondary Closing or the Greenshoe
Closing, as provided by the context of the
sentence.
"Articles" means the Articles of
Incorporation of Sprint, as amended from time
to time, including pursuant to the Proposed
Charter Amendments.
"Associate" has the meaning ascribed
to such term in Rule 12b-2 under the Exchange
Act, provided that when used to indicate a
relationship with FT or DT or their respective
Subsidiaries or Affiliates, the term
"Associate" shall mean (a) in the case of
FT, any Person occupying any of the positions
listed on Schedule 8.1(a) hereto, and (b) in
the case of DT, any Person occupying any of
the positions listed on Schedule 8.1(b)
hereto, provided, further, that, in each
case, no Person occupying any such position
described in clause (a) or clause (b) hereof
shall be deemed an "Associate" of FT or DT,
as the case may be, unless the Persons
occupying all such positions described in
clauses (a) and (b) hereof Beneficially Own,
in the aggregate, more than 0.2% of the
Voting Power of Sprint.
"Beneficial Owner" (including, with its
correlative meanings, "Beneficially Own" and
"Beneficial Ownership"), with respect to any
securities, shall mean any Person which:
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(a) has, or any of whose
Affiliates or Associates has, directly or
indirectly, the right to acquire (whether
such right is exercisable immediately or
only after the passage of time) such
securities pursuant to any agreement,
arrangement or understanding (whether or
not in writing), including pursuant to
the Original Investment Agreement, this
Agreement and the Amended and Restated
Stockholders' Agreement, or upon the
exercise of conversion rights, exchange
rights, warrants or options, or otherwise;
(b) has, or any of whose Affiliates
or Associates has, directly or indirectly,
the right to vote or dispose of (whether
such right is exercisable immediately or
only after the passage of time) or
"beneficial ownership" of (as determined
pursuant to Rule 13d-3 under the Exchange
Act as in effect on the date hereof but
including all such securities which a Person
has the right to acquire beneficial ownership
of, whether or not such right is exercisable
within the 60-day period specified therein)
such securities, including pursuant to any
agreement, arrangement or understanding
(whether or not in writing); or
(c) has, or any of whose Affiliates
or Associates has, any agreement, arrangement
or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting
or disposing of any securities which are
Beneficially Owned, directly or indirectly,
by any other Person (or any Affiliate thereof),
provided that (i) Class A Common Stock, FON Stock
and PCS Stock held by one of FT or DT or its
Affiliates or Associates shall not also be deemed
to be Beneficially Owned by the other of FT or DT
or its Affiliates or Associates; (ii) FON Stock
and PCS Stock shall not be deemed to be
Beneficially Owned by FT, DT or their Affiliates
or Associates by virtue of the top up rights and
standby commitments granted under the Purchase
Rights Agreement except to the extent that FT,
DT or their Affiliates or Associates have (A)
acquired shares of FON Stock or PCS Stock
pursuant to the Purchase Rights Agreement, or
(B) become irrevocably committed to acquire,
and the Cable Partners have become irrevocably
committed to sell, shares of Sprint FON Stock
or Sprint PCS Stock pursuant to the Purchase
Rights Agreement (with such Beneficial Ownership
to be determined on a full-voting basis),
subject only to customary closing conditions,
if any; and (iii) FT, DT and their Affiliates
and Associates shall not be deemed to Beneficially
Own any incremental Voting Power resulting solely
from the increase in Voting Power provided for by
the application of Section 7.5(d) of the Articles.
"Board of Directors" means the board of
directors of Sprint.
"Business Day" means any day other than a
day on which commercial banks in the City of
New York, Paris, France or Frankfurt am Main,
Germany, are required or authorized by law to
be closed.
"Buyers" means DT and FT.
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"Bylaw Amendment" means the amendment to
the Bylaws in form reasonably satisfactory to
each Party to be effected by the Board of Directors
of Sprint in connection with this Agreement and
the PCS Restructuring Agreement.
"Cable Partner Registration Rights Agreement"
means the registration rights agreement among
Sprint and the Cable Partners to be entered into
pursuant to the PCS Restructuring Agreement.
"Cable Partners" means TCI, Comcast and Cox.
"Change of Control" means a:
(a) decision by the Board of Directors
to sell Control of Sprint or not to oppose a
third party tender offer for Voting Securities
of Sprint representing more than 35% of the
Voting Power of Sprint; or
(b) change in the identity of a
majority of the Directors due to (i) a proxy
contest (or the threat to engage in a proxy
contest) or the election of Directors by the
holders of any series of Preferred Stock of
Sprint; or (ii) any unsolicited tender,
exchange or other purchase offer which has
not be approved by a majority of the
Independent Directors,
provided that a Strategic Merger shall not be
deemed to be a Change of Control and, provided,
further, that any transaction between Sprint
and FT and DT or otherwise involving FT and DT
and any of their direct or indirect Subsidiaries
which are party to a contract therefor shall not
be deemed to be a Change of Control.
"Class A Common Stock" means the Class A
Common Stock of Sprint, as provided for in the
Articles, including the Old Class A Common Stock
and the Class A Common Stock -- Series DT (each
as referred to in the Proposed Charter Amendments).
"Class A Holders" means the holders of the
Class A Stock.
"Class A Provisions" has the meaning set
forth in the Articles, as amended from time to
time, including by the Proposed Charter Amendments.
"Class A Stock" means (i) prior to the
Primary Closing, the Class A Common Stock, (ii)
following the Primary Closing, but prior to the
Recapitalization, the Class A Common Stock and
the Series 3 PCS Stock, and (iii) following the
Recapitalization, the Class A Common Stock, the
Series 3 FON Stock and the Series 3 PCS Stock.
"Closing Price" means, with respect to a
security on any day, the last sale price, regular
way, or in case no such sale takes place on such
day, the average of the closing bid and asked
prices, regular way, in either case as reported
in the principal consolidated transaction
reporting system with respect to securities
listed or admitted to trading on The New York
Stock Exchange, Inc. or, if such
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security is not listed or admitted to trading on
such exchange, as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the
security is listed or admitted to trading or,
if the security is not listed or admitted to
trading on any national securities exchange,
the last quoted sale price or, if not so quoted,
the average of the high bid and low asked
prices in the over-the-counter market, as
reported by NASDAQ or such other system then
in use, or, if on any such date such security
is not quoted by any such organization, the
average of the closing bid and asked prices
as furnished by a professional market maker
making a market in the security selected in
good faith by the Board of Directors. If
the security is not publicly held or so listed
or publicly traded, "Closing Price" means the
Fair Market Value of such security.
"Code" means the Internal Revenue Code
of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Comcast" means Comcast Corporation, a
Pennsylvania corporation.
"Common Stock" means the Common Stock,
par value U.S. $2.50 per share, of Sprint.
"Continuing Director" means any Director
who is unaffiliated with the Buyers and their
"affiliates" and "associates" (as each such
term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as in effect
on October 1, 1982) and was a Director prior
to the time that any Buyer or such affiliate
or associate became an Interested Stockholder
(as such term is defined in the Fair Price
Provisions), and any successor of a Continuing
Director if such successor is not affiliated
with any such Interested Stockholder and is
recommended or elected to succeed a
Continuing Director by a majority of
Continuing Directors, provided that such
recommendation or election shall only be
effective if made at a meeting of Directors
at which at least seven Continuing Directors
are present.
"Contract" means any loan or credit
agreement, note, bond, indenture, mortgage,
deed of trust, lease, franchise, contract,
or other agreement, obligation, instrument or
binding commitment of any nature.
"Control" means, with respect to a Person
or Group, any of the following:
(a) ownership by such Person or
Group of Votes entitling it to exercise
in the aggregate more than 35 percent of
the Voting Power of the entity in question;
or
(b) possession by such Person or
Group of the power, directly or indirectly,
(i) to elect a majority of the board of
directors (or equivalent governing body)
of the entity in question; or (ii) to
direct or cause the direction of the
management and policies of or with respect
to the entity in question, whether through
ownership of securities, by contract or
otherwise.
"Cox" means Cox Communications, Inc.,
a Delaware corporation.
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"CP Closing" means the consummation of
the Mergers (as defined in the PCS Restructuring
Agreement) and the other transactions
contemplated by the PCS Restructuring Agreement.
"CP Exchange" means the issuance of
shares of Series 2 PCS Stock by Sprint at the
CP Closing in exchange for certain interests
owned by the Cable Partners pursuant to the
PCS Restructuring Agreement.
"CP/FT-DT Top Up Purchase" means the
purchase by the Cable Partners under the PCS
Restructuring Agreement of shares of Series 2
PCS Stock in connection with the purchase by
FT and DT of shares of Sprint capital stock
pursuant to this Agreement.
"CP/Greenshoe Top Up Purchase" means
the purchase by the Cable Partners under the
PCS Restructuring Agreement of shares of
Series 2 PCS Stock in connection with the
Greenshoe.
"CP/IPO Top Up Purchase" means the
purchase by the Cable Partners under the
PCS Restructuring Agreement of shares of
Series 2 PCS Stock in connection with the
IPO.
"Director" means a member of the
Board of Directors.
"DT" has the meaning set forth in
the preamble.
"Exchange Act" means the Securities
Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
"Fair Market Value" means, with
respect to any asset, shares or other
property, the cash price at which a
willing seller would sell and a willing
buyer would buy such asset, shares or
other property in an arm's-length
negotiated transaction without undue time
restraints, as determined in good faith by
a majority of the Independent Directors as
certified in a resolution delivered to all
of the holders of Class A Stock.
"Fair Price Provisions" means
ARTICLE SEVENTH of the Articles, and any
successor provision thereto.
"FON Stock" means the Series 1 FON
Stock, the Series 2 FON Stock and the
Series 3 FON Stock.
"French Translation Law" means the
loi n(degree) 94-665 du 4 aout 1994 relative
a l'emploi de la langue francaise.
"FT" has the meaning set forth in the
preamble.
"FT Law and Decrees" means (a) Act
N(degree) 83-675 of July 23, 1983
concerning the democratization of the public
sector, (b) Act. N(degree) 90-568 of July 2,
1990 concerning the organization of the
Post Office and Telecommunications public
service as amended by Act N(degree) 96-660
of July 26,
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1996 concerning the national undertaking
France Telecom and (c) Decree N(degree)
96-1174 of December 27, 1996 approving
the constitution of France Telecom,
including miscellaneous provisions
concerning the operation of France Telecom.
"GAAP" means United States generally
accepted accounting principles as in effect
from time to time.
"German Fee Regulations" means
Bundesgebuhrenordnung fur Rechtsanwalte
vom 26. Juli 1957 (BGBI) I S. 907 (as it
or any successor provision is from time to
time in effect).
"Governmental Approval" means any
consent, waiver, grant, concession or
License of, registration or filing with,
or declaration, report or notice to, any
Governmental Authority.
"Governmental Authority" means any
federation, nation, state, sovereign, or
government, any federal, supranational,
regional, state, local or political
subdivision, any governmental or
administrative body, instrumentality,
department or agency or any court,
administrative hearing body, arbitration
tribunal, commission or other similar dispute
resolving panel or body, and any other
entity exercising executive, legislative,
judicial, regulatory or administrative
functions of a government, provided that
the term "Governmental Authority" shall
not include FT, DT, Atlas S.A. or any of
their respective Subsidiaries.
"Greenshoe" has the meaning set
forth in Section 1.3 of this Agreement.
"Greenshoe Closing" means the
consummation of the purchase by FT and DT
of shares of Sprint capital stock pursuant
to Section 1.3 of this Agreement.
"Greenshoe Closing Date" means the
date of the Greenshoe Closing.
"Greenshoe Top Up Purchase" means
the purchase by FT and DT of a number of
shares of Series 3 PCS Stock sufficient for
FT and DT, in the aggregate, to Beneficially
Own 25% of the aggregate Voting Power
attributable to the shares of Series 1 PCS
Stock and Series 2 PCS Stock issued in the
Greenshoe and the CP/Greenshoe Top Up Purchase,
respectively.
"Group" means any group within the
meaning of Section 13(d)(3) of the Exchange
Act.
"Independent Director" has the meaning
set forth in the Articles.
"Initial Charter Amendment" means the
Amended and Restated Articles of Incorporation
of Sprint in form reasonably satisfactory to
each Party effecting the creation of the PCS
Stock and the creation of the PCS Group and
the Sprint FON Group, which Sprint shall file
with the Kansas Governmental Authorities on
or before the Primary Closing Date.
"Initial Other Agreements" means the
Registration Rights Agreement, the Standstill
Agreement, the Stockholders' Agreement, and
the Investor Confidentiality Agreements.
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"Investor Confidentiality Agreements"
means the Confidentiality Agreement between
Sprint and DT dated January 31, 1996 and the
Confidentiality Agreement between Sprint and
FT dated January 31, 1996.
"IPO" means the initial primary
underwritten public offering of Series 1 PCS
Stock pursuant to an effective registration
statement under the Securities Act, proposed
to be conducted by Sprint in accordance with
Sections 5.2 and 5.3, that Sprint currently
expects to generate net proceeds of between
$500 million and $1.1 billion.
"IPO Price" means the initial price per
share at which shares of Series 1 PCS
Stock are purchased by the public in the IPO.
"IPO Prospectus" means a prospectus
located within the Registration Statement
covering the shares of Series 1 PCS Stock
to be sold in the IPO.
"Kansas Control Share Acquisitions
Statute" means Kan. Stat. Ann. Section 17-
1286 et seq. (1988).
"Knowledge", or any phrase or term
of similar meaning, when used with respect
to any of the Parties, means the actual
knowledge of the executive officers of such
Party, without having made any special
investigation or inquiry regarding the
applicable subject matter.
"Law" means any foreign or domestic
law, statute, code, ordinance, rule or
regulation promulgated, or any order,
judgment, writ, stipulation, award,
injunction or decree entered, by a
Governmental Authority.
"License" means any license,
ordinance, authorization, permit, certificate,
variance, exemption, order, franchise or
approval, domestic or foreign.
"Lien" means any lien, pledge, claim,
encumbrance, mortgage or security interest
in real or personal property.
"Management and Allocation Policies"
means the policies to be adopted by the Board
of Directors, effective as of the Primary Closing
Date, governing the relationship between the PCS
Group (on the one hand) and the Sprint FON Group
(on the other hand).
"Material Adverse Effect" on any party
hereto means, with respect to any Party, the
effect of any event, occurrence, fact, condition
or change that is materially adverse to the
business, operations, results of operations,
financial condition, assets or liabilities of
such Person.
"Original Investment Agreement" has the
meaning set forth in the Recitals to this
Agreement.
"Party" and "Parties" have the meaning set
forth in the Recitals to this Agreement.
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"PCS Group" has the meaning set forth
in the Initial Charter Amendment.
"PCS Preferred Issuance" means the issuance
of the PCS Preferred Stock pursuant to the PCS
Restructuring Agreement.
"PCS Preferred Stock" means the Preferred
Stock -- Series 7 of Sprint, no par value per
share, which shall be created and issued pursuant
to the terms of the PCS Restructuring Agreement.
"PCS Restructuring Agreement" means the
Restructuring and Merger Agreement, dated as of
the date hereof, between Sprint and the other
parties listed therein.
"PCS Stock" means the Series 1 PCS Stock,
the Series 2 PCS Stock, the Series 3 PCS Stock
and the PCS Preferred Stock.
"Person" means any individual, corporation,
partnership, limited liability company, trust,
unincorporated association or other entity.
"Primary Closing" means the closing of the
actions contemplated by this Agreement to take
place concurrently with the CP Exchange (which
may include the CP Exchange Top Up Purchase if
the conditions to the CP Exchange Top Up Purchase
have been satisfied or waived by the appropriate
parties), as contemplated by this Agreement,
held on the date and at the place fixed in
accordance with Article I.
"Primary Closing Date" means the date of
the Primary Closing.
"Proceeding" means any action, litigation,
suit, proceeding or formal investigation or
review of any nature, civil, criminal, regulatory
or otherwise, before any Governmental Authority.
"Proposed Charter Amendments" means the
Initial Charter Amendment and the Subsequent
Charter Amendment.
"Proxy Statement" means a proxy statement
to be mailed to Sprint stockholders in connection
with the Stockholders Meeting.
"Purchase Rights Agreement" means the Top
Up Right Agreement dated May 26, 1998 among FT,
DT and the Cable Partners as in effect on the
date hereof.
"Recapitalization" means the
reclassification of Sprint Common Stock into
Series 1 FON Stock and Series 1 PCS Stock to
be effected by the filing of the Subsequent
Charter Amendment.
"Registration Rights Agreement" means
the Registration Rights Agreement dated as of
January 31, 1996, between Sprint, FT and DT.
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"Registration Statement" means a
registration statement on Form S-3 containing
the IPO Prospectus covering the shares of Series
1 PCS Stock to be sold in the IPO.
"SEC" means the Securities and Exchange
Commission.
"Secondary Closing" means the
consummation of the purchase by FT and DT
of shares of Sprint capital stock pursuant to
Section 1.2 of this Agreement.
"Secondary Closing Date" means the date
of the Secondary Closing.
"Securities Act" means the Securities
Act of 1933, as amended.
"Series 1 FON Stock" means the FON Common
Stock -- Series 1, par value to be determined,
of Sprint, which will be created by the filing
of the Subsequent Charter Amendment.
"Series 1 PCS Stock" means the PCS Common
Stock -- Series 1, par value to be determined,
of Sprint, which will be created on or about
the Primary Closing Date by the filing of the
Initial Charter Amendment.
"Series 2 FON Stock" means the FON Common
Stock -- Series 2, par value to be determined,
of Sprint, which will be created by the filing
of the Subsequent Charter Amendment.
"Series 2 PCS Stock" means the PCS Common
Stock -- Series 2, par value to be determined,
of Sprint, which will be created on or about the
Primary Closing Date by the filing of the
Initial Charter Amendment.
"Series 3 FON Stock" means the FON Common
Stock -- Series 3, par value to be determined,
of Sprint, which will be created by the filing
of the Subsequent Charter Amendment.
"Series 3 PCS Stock" means the PCS Common
Stock -- Series 3, par value to be determined,
of Sprint, which will be created on or about
the Primary Closing Date by the filing of the
Initial Charter Amendment.
"Sprint" means Sprint Corporation, a
Kansas corporation.
"Sprint FON Group" has the meaning set
forth in the Initial Charter Amendment.
"Sprint PCS" means Sprint Spectrum L.P.,
a Delaware limited partnership.
"SprintSub" means Sprint Global Venture,
Inc., a wholly-owned subsidiary of Sprint.
"Standstill Agreement" means the
Standstill Agreement, dated as of July 31, 1995,
among Sprint, FT and DT, as amended on June 24,
1997.
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"Stockholders' Agreement" means the
Stockholders' Agreement, dated as of January
31, 1996, among Sprint, FT and DT, as amended
on June 24, 1997.
"Stockholders Meeting" means a special
meeting to be held for the purpose of approving
the Initial Charter Amendment, the Subsequent
Charter Amendment and amendments to certain of
Sprint's equity-based incentive plans in
connection with the creation of the PCS Stock,
among other things.
"Strategic Merger" means a merger or
other business combination involving Sprint
(a) in which the Class A Holders are entitled
to retain or receive, as the case may be, voting
equity securities of the surviving parent entity
in exchange for or in respect of (by conversion or
otherwise) such Class A Stock, with an aggregate
Fair Market Value equal to at least 75% of the sum
of (i) the Fair Market Value of all consideration
which such Class A Holders have a right to receive
with respect to such merger or other business
combination, and (ii) if Sprint is the surviving
parent entity, the Fair Market Value of the equity
securities of the surviving parent entity which
the Class A Holders are entitled to retain, (b)
immediately after which the surviving parent
entity is an entity whose voting equity securities
are registered pursuant to Section 12(b) or
Section 12(g) of the Exchange Act or which
otherwise has any class or series of its voting
equity securities held by at least 500 holders
and (c) immediately after which no Person or
Group (other than the Class A Holders) owns
Voting Securities of such surviving parent
entity with Votes equal to more than 35 percent
of the Voting Power of such surviving parent
entity.
"Subsequent Charter Amendment" means the
Amendment to the Restated Articles of
Incorporation of Sprint in form reasonably
satisfactory to each Party effecting the
Recapitalization, which Sprint shall file
with the Kansas Governmental Authorities either
(i) on or before the Primary Closing Date or
(ii) within 120 days following the Primary
Closing.
"Subsidiary" of any Person as of any
relevant date means a corporation, company or
other entity (i) more than 50% of whose
outstanding shares or equity securities are, as
of such date, owned or controlled, directly or
indirectly through one or more Subsidiaries,
by such Person, and the shares or securities so
owned entitle such Person and/or its Subsidiaries
to elect at least a majority of the members of
the board of directors or other managing
authority of such corporation, company or other
entity notwithstanding the vote of the holders of
the remaining shares or equity securities so
entitled to vote or (ii) which does not have
outstanding shares or securities, as may be the
case in a partnership, joint venture or
unincorporated association, but more than 50%
of whose ownership interest is, as of such
date, owned or controlled, directly or
indirectly through one or more Subsidiaries,
by such Person, and in which the ownership
interest so owned entitles such Person
and/or Subsidiaries to make the decisions for
such corporation, company or other entity.
"TCI" means Tele-Communications, Inc.,
a Delaware corporation.
"Third Party Approval" means any
consent, waiver, grant, concession, license,
authorization, permit, franchise or approval
of, or notice to, any Person other than a
Governmental Authority.
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"Top Up Note" means notes of FT or DT,
as applicable, in form reasonably satisfactory
to each of the Parties, made payable to Sprint.
"Trading Days" means with respect to any
security, any day on which the principal national
securities exchange on which such security is
listed or admitted to trading or NASDAQ, if such
security is listed or admitted to trading
thereon, is open for the transaction of business
(unless such trading shall have been suspended
for the entire day) or, if such security is not
listed or admitted to trading on any national
securities exchange or NASDAQ, any day other than
a Saturday, Sunday, or a day on which banking
institutions in the State of New York are
authorized or obligated by law or executive
order to close.
"Transfer" means any act pursuant to
which, directly or indirectly, the ownership
of assets or securities in question is sold,
exchanged, assigned, transferred, conveyed,
delivered or otherwise disposed of.
"Trigger Date" means the date that the
conditions to closing set forth in Sections
8.1(a), 8.1(b) and 8.1(d) of the PCS
Restructuring Agreement have been satisfied
or waived.
"Volume Weighted Trading Average" means,
with respect to any share of capital stock as
of a specific date, the volume-weighted average
Closing Price for the 20 consecutive Trading
Days ending on the last Trading Day prior to
such date.
"Vote" means, with respect to any entity,
the ability to cast a vote at a stockholders',
members' or comparable meeting of such entity
with respect to the election of directors,
managers or other members of such entity's
governing body, or the ability to cast a
general partnership or comparable vote,
provided that with respect to Sprint only,
the term "Vote" means the ability to exercise
general voting power (as opposed to the exercise
of special voting or disapproval rights such as
those set forth in ARTICLE SIXTH of the Articles)
with respect to matters other than the election
of directors at a meeting of the stockholders of
Sprint.
"Voting Power" means, with respect to any
entity as at any date, the aggregate number of
Votes outstanding as at such date in respect of
such entity.
"Voting Securities" means, with respect
to an entity, any capital stock or debt securities
of such entity if the holders thereof are
ordinarily, in the absence of contingencies,
entitled to a Vote, even though the right to such
Vote has been suspended by the happening of such
a contingency, and in the case of Sprint, shall
include, without limitation, the Common Stock and
the Class A Stock, but shall not include any
shares issued pursuant to the Rights Agreement to
the extent such issuance is caused by action
of a holder of the Class A Stock.
"Wholly-Owned Subsidiary" means, as to any
Person, a Subsidiary of such Person in which 100%
of the equity and voting interest is owned,
directly or indirectly, by such Person.
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IN WITNESS WHEREOF, the Parties have caused
this Agreement to be duly executed as of the date
first above written.
SPRINT CORPORATION
By: /s/ W. T. Esrey
Name: William T. Esrey
Title: Chairman and Chief
Executive Officer
FRANCE TELECOM S.A.
By: /s/ Thierry Girard
Name: Thierry Girard
Title: Senior Vice President
DEUTSCHE TELEKOM AG
By: /s/ H. Reuschenbach
Name: Helmut Reuschenbach
Title: Senior Executive
Director
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Schedules to Master Restructuring and
Investment Agreement
Schedule 3.2 Authorized Capital Stock;
Shares Issued and Outstanding;
Agreements relating to voting
or transfer of Voting
Securities.
Schedule 3.5 Governmental and Third Party
Approvals.
Schedule 8.1 (a) Associates of FT.
(b) Associates of DT.
