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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-----------------------
People's Choice TV Corp.
(Name of Issuer)
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Common Stock, $0.01 par value per share
(Title of Class of Securities)
-----------------------
710847 10 4
(CUSIP Number)
-----------------------
Don A. Jensen
Vice President and Secretary
Sprint Corporation
P.O. Box 11315
Kansas City, Missouri 64112
(913) 624-3326
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copy to:
Bruce N. Hawthorne, Esq.
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telephone: (404) 572-4600
April 6, 1999
(Date of Event which Requires Filing of Statement on Schedule 13D)
-----------------------
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box: [ ]
*The remainder of this cover page shall be filled out for a reporting
person's initial filing of this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that
section of the Exchange Act, but shall be subject to all other provisions of the
Exchange Act (however, see the Notes).
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CUSIP No. 710847 10 4
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Sprint Corporation
48-0457967
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS
WC
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Kansas
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NUMBER OF 7. SOLE VOTING POWER
SHARES 2,210,688 *
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 3,681,751 **
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 2,210,688 *
PERSON WITH 10. SHARED DISPOSITIVE POWER
3,681,751 **
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,892,439 ***
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ X ]
The foregoing amounts exclude any shares of Common Stock held by executive
officers and directors of the Reporting Person, if any. The Reporting
Person disclaims beneficial ownership of any shares held by such officers
and directors.
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
36.3%
The foregoing reflects the Owned Preferred, the Preferred Options and the
Common Options (each defined in the Note following Line 14) and is
calculated in accordance with Rule 13d-3, which requires that the Reporting
Person assume that the total number of outstanding shares of Common Stock
are equal to the number actually outstanding plus the number that would be
issued upon conversion of the Owned Preferred and exercise and conversion of
the Preferred Options held by the Reporting Person. See the Note following
Line 14.
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
* Reflects the voting power of the 497,405 shares (the "Owned Preferred") of
Convertible Cumulative Pay-in-Kind Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), held by the Reporting Person. The Preferred
Stock possesses approximately 4.444 votes per share and is convertible at
any time, at the option of the holder, into shares of Common Stock at a
conversion price of $22.50 (or approximately 4.444 shares of Common Stock
for each share of Preferred Stock), subject to certain adjustments.
** Reflects the irrevocable proxies (the "Proxies") granted to the Reportable
Person with respect to 1,694,823 and 881,600 shares of Common Stock,
respectively, which entitle the Reporting Person to vote on all matters
presented for a vote of stockholders (other than election of directors, as
to which the grantors of such proxies retain voting power), as
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described in Item 4 below. Also reflects the Preferred Options, over which
Sprint may be deemed to have beneficial ownership.
*** Reflects the Owned Preferred and, in addition, shares covered by options
held by the Reporting Person to purchase 123,699 shares and 125,000 shares
of Preferred Stock, respectively (together, the "Preferred Options"). The
shares of Preferred Stock underlying the Preferred Options are convertible
at any time at the option of the holder into an aggregate of 1,105,328
shares of Common Stock, over which the Reporting Person may be deemed to
possess beneficial ownership. The foregoing also reflects options to
purchase an aggregate of 2,576,423 shares of Common Stock (together, the
"Common Options") and proxies to vote such shares on certain matters. See
Items 4 and 5.
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement" or the "Schedule 13D")
relates to the Common Stock, par value $.01 per share (the "Common Stock"), of
People's Choice TV Corp., a Delaware corporation (the "Company"), that are
issuable upon conversion of the shares of Convertible Cumulative Pay-in-Kind
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), and certain
options to purchase Preferred Stock and Common Stock (each described in Item 4)
held by Sprint Corporation, a Kansas corporation ("Sprint," or the "Reporting
Person").
The address of the Company's principal executive offices is 2 Corporate
Drive, Suite 249, Shelton, Connecticut 06484.
Item 2. Identity and Background.
(a)--(c), (f) This Statement is being filed by Sprint. Sprint's principal
business address is 2330 Shawnee Mission Parkway, Westwood, Kansas 66205.
Sprint is a diversified telecommunications service provider. Its principal
activities include long distance service, local service, wireless personal
communications services, product distribution and directory publishing
activities, and other telecommunications activities, investments and alliances.
The name, business address, present principal occupation or employment, the
material occupations, positions, offices or employments for the past five years
and citizenship of each director and executive officer of Sprint and the name,
principal business and address of any corporation or other organization in which
such occupations, positions, offices and employments are or were carried on are
set forth in SCHEDULE I hereto and are incorporated herein by reference. Each
----------
of such directors and executive officers is a citizen of the United States,
except: Michel Bon is a citizen of France; and Ron Sommer is a citizen of
Germany.
(d)--(e) During the past five years, neither Sprint nor, to the best
knowledge of Sprint, any of the persons listed in Schedule I have been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Terms used and not defined in this Item have the respective meanings
assigned to such terms in Item 4.
All amounts paid, or to be paid, by Sprint for the securities described in
this Schedule 13D have been, or will be, as applicable, funded from amounts
available in its cash accounts.
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Preferred Stock.
- ---------------
Sprint paid $15 million to acquire the Owned Preferred.
If Sprint acquires the First Preferred Option Shares, Sprint will pay for
such shares: (i) $4,480,109.00, plus (ii) an amount equal to interest accrued on
such $4,480,109.00 at the rate of six percent (6%) per annum, compounded
quarterly, calculated from April 6, 1999 to the date of closing of such
purchase.
If Sprint acquires the Second Preferred Option Shares, Sprint will pay for
such shares: (i) $3,853,420.00, plus (ii) an amount equal to interest accrued on
such $3,853,420.00 at the rate of six percent (6%) per annum, compounded
quarterly, calculated from April 6, 1999 to the date of closing of such
purchase.
Common Stock.
- ------------
If Sprint acquires all of the Oristano Option Shares, Sprint will pay
$13,558,584 for such shares, subject to the adjustments described in Item 4.
If Sprint acquires all of the Baywater Option Shares, Sprint will pay
$7,052,800 for such shares.
If Sprint acquires all of the outstanding shares of Common Stock pursuant to
the Merger, Sprint will pay $103,390,536 for such shares, based on the number of
shares of Common Stock outstanding as of March 25, 1999 as reported in the
Annual Report on Form 10-K of the Company for the fiscal year ended December 31,
1998. Sprint disclaims beneficial ownership of such shares. The Merger
Agreement provides that shares of Common Stock that are owned by Sprint (and
shares of Common Stock and Preferred Stock that are owned by the Company as
treasury stock) will be cancelled in the Merger.
Item 4. Purpose of the Transaction.
MERGER AGREEMENT. Sprint, MM Acquisition Corp., a wholly owned subsidiary of
----------------
Sprint incorporated under the laws of the State of Delaware ("the Subsidiary"),
and the Company have entered into an Agreement and Plan of Merger, dated as of
April 12, 1999 (the "Merger Agreement"), pursuant to which the parties have
agreed that the Subsidiary will complete a merger with and into the Company (the
"Merger"). Upon completion of the Merger, Sprint will own all of the outstanding
shares of Common Stock of the Company. The Company shall be the "Surviving
Corporation" in the Merger.
Sprint entered into the Merger Agreement with the intent of acquiring
control of, and the entire common equity interest in, the Company. Pursuant to
the Merger Agreement, (A) each outstanding share of Common Stock will be
cancelled and converted into the right to receive $8.00 in cash, without
interest (the "Merger Consideration"),
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and (B) each share of Preferred Stock shall continue to be an issued and
outstanding share of Preferred Stock of the Surviving Corporation.
Pursuant to the Merger Agreement, the Company has established a rights plan
("Rights Plan") pursuant to which a right (each, a "Right") to purchase a new
class of preferred stock of the Company will be distributed as a dividend on
each share of Common Sock. Pursuant to the Rights Plan, if any person becomes
the beneficial owner of 15% or more of the Common Stock (other than pursuant to
an offer for all shares which is fair to and otherwise in the best interests of
the Company) then each Right not owned by such 15% or more shareholder or
certain related parties will entitle its holder to purchase, at the Right's
then-current price, shares of Common Stock having a value of twice the Right's
exercise price. The Company has agreed pursuant to the Merger Agreement that the
Merger and the other transactions contemplated by the Merger Agreement will not
be subject to such Rights Plan and all rights to purchase the preferred stock
established pursuant to such plan shall expire at the effective time of the
Merger. The Merger Agreement also contains provisions regarding board
recommendations, alternative acquisition proposals and termination fees.
The Company has agreed pursuant to the Merger Agreement that it shall in no
way prohibit Sprint or any of its affiliates from purchasing shares of capital
stock of the Company or entering into option, lock-up, voting or proxy
agreements or any other similar agreements with respect to such stock
(including, but not limited to, amending the Rights Plan to cause such
acquisition or agreement to trigger a "Stock Acquisition Date" or "Distribution
Date" or cause Sprint or any of its affiliates to become an "Acquiring Person",
as such terms are defined in the Rights Plan) at any time prior to the
consummation of the Merger.
COMMON OPTION AGREEMENTS. Sprint has entered into (i) a Stockholder and
------------------------
Option Agreement with Matthew Oristano, on his own behalf and as attorney-in-
fact for certain family members and related entities on Schedule I thereto (the
"Oristano Holders"), dated April 12, 1999 (the "Oristano Agreement"), and (ii) a
Stockholder and Option Agreement with Bay Harbour Management, LC ("Bay"), dated
April 12, 1999 (the "Bay Agreement", and together with the Oristano Agreement,
the "Option Agreements"). Sprint entered into the Option Agreement with the
purpose of facilitating its efforts to consummate the Merger.
Pursuant to the Option Agreements, the Oristano Holders and Bay granted to
Sprint: (i) irrevocable options (the "Common Options") to purchase 1,694,823 and
881,600 shares of Common Stock, respectively (the "Option Shares"), at a
purchase price equal to $8.00 in cash per Option Share (the "Option Price"), and
(ii) an irrevocable proxy to vote (or refrain from voting) the Option Shares
with respect to any issue brought before the stockholders of the Company, other
than with respect to the election of directors of the Company.
If prior to the closing of the purchase of Common Stock pursuant to the
exercise of the Common Stock Options (a "Purchase"), Sprint purchases any shares
of the Common Stock for an amount per share in excess of the Option Price (the
"Excess Amount"), then the amount per Option Share to be paid by Sprint upon
exercise of any of the Common Options shall equal the sum of the Option Price
plus the Excess Amount. If following the date of any purchase, Sprint
purchases any shares of the Company Common Stock for an amount per share in
excess of the sum of the Option Price plus, if applicable, the Excess Amount
plus any other amount previously remitted pursuant to the Option Agreements (the
"Subsequent Excess Amount"), then Sprint will remit to Stockholder an amount
equal to the Subsequent Excess Amount for each Option Share purchased at the
closing of the Option Agreement. Each of the Common Options expires 10 days
after the transactions contemplated by such Option Agreement receives approval
required by the HSR Act, if the Option has not been exercised by Sprint or its
designee on or before such date (the "Expiration Date"). If the Common Options
have not been exercised by Sprint on or before the Expiration Date, each of the
Oristano Holders and Bay shall have the right at such time, and for a period of
30 days thereafter, to require Sprint or its designee to purchase the Option
Shares at the Option Price, as adjusted (if necessary) in accordance with the
Option Agreements.
Sprint may in the future enter into additional option agreements or
agreements by which Sprint receives a proxy to vote shares of Common Stock of
the Company, but in no case prior to the receipt of necessary approvals from the
FCC shall Sprint acquire 50% or more of the voting power of the Company's
capital stock.
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PREFERRED PURCHASE AGREEMENT. On April 6, 1999, Sprint acquired 497,405
----------------------------
shares of Preferred Stock (the "Owned Preferred") pursuant to the Securities
Purchase and Option Agreement (the "Preferred Purchase Agreement"), dated as of
April 2, 1999, between Sprint and Wireless Holding LLC, a Delaware limited
liability company ("Wireless Holding"). Sprint entered into the Preferred
Purchase Agreement with the purpose of facilitating its efforts to consummate
the Merger.
The shares of Preferred Stock are convertible at any time into shares of
Common Stock at a conversion price of $22.50 (approximately 4.444 shares of
Common Stock for each share of Preferred Stock), subject to certain adjustments.
The Preferred Stock is entitled to vote as a single class with the Common Stock
on all matters submitted to a vote of the stockholders. Each share of Preferred
Stock is entitled to approximately 4.444 votes per share. Each share of Common
Stock is entitled to one vote per share.
Pursuant to the Preferred Purchase Agreement, Sprint also acquired (i) an
option (the "First Preferred Option") to purchase from Wireless Holding 123,699
shares of Preferred Stock (the "First Preferred Option Shares") and (ii) an
option (the "Second Preferred Option") to acquire 125,000 shares of Preferred
Stock (the "Second Preferred Option Shares"). The First Preferred Option and
the Second Preferred Option are referred to collectively as the "Preferred
Options."
The shares of Preferred Stock underlying the Preferred Options are
convertible at any time at the option of the holder into an aggregate of
1,105,328 shares of Common Stock, over which the Reporting Person may be deemed
to possess beneficial ownership.
The First Preferred Option must be exercised by Sprint promptly, but in no
event later than 30 days, after the expiration or termination of all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and
regulations thereunder ("HSR Act") with respect to such purchase. The Second
Preferred Option may be exercised by Sprint at any time prior to the Expiration
Date described below.
The Preferred Options each expire on the 18th-month anniversary of the
Preferred Purchase Agreement (the "Expiration Date"), subject to early
termination by Wireless Holding if early termination or expiration of the HSR
Act waiting period has not occurred within 150 days of the date of the Preferred
Purchase Agreement. If an option has not been exercised prior to the Expiration
Date, Wireless Holding has the right to require Sprint to purchase the shares of
Preferred Stock at the applicable option price (together with accrued interest).
THE MERGER. The Company Board has approved and adopted the Merger and the
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Merger Agreement. Pursuant to the Merger Agreement, the Company will be
required to submit the Merger Agreement to the Company's stockholders for
approval at a stockholders' meeting convened for that purpose. The Merger
Agreement must be approved by the vote of the holders
4
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of a majority of the outstanding stock of the Company entitled to vote, and must
in addition be approved by the vote of the holders of two-thirds of the votes
attributable to the Preferred Stock. The Preferred Stock is entitled to vote as
a single class with the Common Stock on all matters submitted to a vote of the
stockholders. Each share of Preferred Stock is entitled to approximately 4.444
votes per share. Each share of Common Stock is entitled to one vote per share.
Sprint currently owns two-thirds of the outstanding shares of Preferred Stock
and has the Preferred Options, entitling it to purchase, subject to the
conditions thereof, the remaining shares of Preferred Stock that are
outstanding.
If the Merger is consummated, stockholders of the Company at the time of the
Merger who do not vote in favor of the Merger will have the right under the
Delaware General Corporation Law (the "DGCL") to dissent and demand appraisal
of, and receive payment in cash of the fair value of, their shares of Common
Stock outstanding immediately prior to the effective date of the Merger in
accordance with Section 262 of the DGCL.
Under the DGCL, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their shares of Common Stock (exclusive of any element of value
arising from the accomplishment or expectation of the Merger or similar business
combination) and to receive payment of such fair value in cash. Any such
judicial determination of the fair value of such shares of Common Stock could be
based upon considerations other than or in addition to the price paid in the
Merger and the market value of the Common Stock. In Weinberger v. UOP, Inc.,
-----------------------
the Delaware Supreme Court stated, among other things, that "proof of value by
any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered in
an appraisal proceeding. Stockholders should recognize that the value so
determined could be higher or lower than the amount to be paid per share of
Common Stock in the Merger.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise any available appraisal rights. The
preservation and exercise of appraisal rights requires strict adherence to the
applicable provisions of the DGCL.
The foregoing description of the DGCL is not necessarily complete and is
qualified in its entirety by reference to the DGCL.
DIRECTORS. The terms of the Preferred Stock entitle the holders thereof,
---------
voting as a separate class, to elect two (2) directors to the board of directors
of the Company (the "Company Board") (or, if the size of the Company Board is
increased, a proportionately greater number) for so long as certain permitted
transferees own shares of Preferred Stock in certain minimum amounts. Sprint
holds two-thirds of the outstanding shares of Preferred Stock. Currently, there
are no directors on the Company Board elected by holders of Preferred Stock.
Pursuant to the Merger Agreement, Sprint has agreed with the Company that it
will not appoint any directors to the Board of Directors of the Company pursuant
to such rights unless or until permitted by rules and regulations of the Federal
Communications Commission.
5
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PLANS FOR THE COMPANY. It is currently expected that initially following the
---------------------
consummation of the Merger, the business and operations of the Company will
continue as they currently are conducted without substantial change. Parent
will continue to evaluate all aspects of the business, operations and management
of the Company after the Merger and will take such further actions as it deems
appropriate under the circumstances then existing.
Except as described above, none of Sprint, the Subsidiary nor, to the best
knowledge of Sprint and the Subsidiary, any of the persons listed on Schedule I
have any present plans or proposals that would relate to or result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries or a sale or other
transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the capitalization or dividend policy of
the Company or any other material change in the Company's corporate structure or
business or the composition of its Board or management.
The above descriptions of the Merger Agreement, the Preferred Purchase
Agreement and the Option Agreements and the related matters set forth in this
Item are summaries, and are qualified in their entirety by reference to the
complete text of such Agreements, which are filed as exhibits to this Schedule
13D and incorporated by reference into this Item 4.
Item 5. Interest in Securities of the Issuer.
The information set forth in Item 4 is hereby incorporated herein by
reference. Sprint owns the Owned Preferred, the Preferred Options and the
Common Options. Sprint has beneficial ownership of the shares of Common Stock
underlying the Owned Preferred and the Common Options, and may be deemed to have
beneficial ownership of the shares of Common Stock underlying the Preferred
Options.
The Owned Preferred and the Common Options are convertible into an aggregate
of 4,787,111 shares of Common Stock. Such number of shares of Common Stock
represents approximately 31.6% of the outstanding shares of Common Stock of the
Company on an as-converted basis.
If the shares of Common Stock underlying the Preferred Options are deemed
beneficially owned by Sprint, then Sprint beneficially owns securities
convertible and exercisable into an aggregate of 5,892,439 shares of Common
Stock, or approximately 36.3% of the outstanding Common Stock on an as-converted
basis.
Such percentages are calculated in accordance with Rule 13d-3, pursuant to
which total number of outstanding shares of Common Stock is assumed to be equal
to the number actually outstanding plus the number that would be issued upon
conversion of the Owned Preferred and the shares underlying the Preferred
Options.
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(b) The number of shares of Common Stock beneficially owned: (i) with
respect to which there is sole voting power is 2,210,688, (ii) with respect to
which there is shared voting power is 3,681,751, (iii) with respect to which
there is sole dispositive power is 2,210,688, and (iv) with respect to which
there is shared dispositive power is 3,681,751.
(c) Except as set forth in Item 4, Sprint has not effected any transactions
in the Common Stock during the past 60 days.
(d)--(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The information set forth in Items 2, 4 and 5 is hereby incorporated herein
by reference.
Item 7. Material to Be Filed as Exhibits.
The following documents are filed herewith:
Ex. No.
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1. Securities Purchase and Option Agreement, dated as of April 2, 1999,
between Sprint and Wireless Holding LLC
2. Agreement and Plan of Merger among Sprint, MM Acquisition Corp. and
the Company, dated as of April 12, 1999
3. Stockholder and Option Agreement between Sprint and Matthew
Oristano, dated April 12, 1999
4. Stockholder and Option Agreement between Sprint and Bay Harbour
Management, LC, dated April 12, 1999
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 12, 1999 SPRINT CORPORATION
By: /s/ Don A. Jensen
----------------------
Title: Vice President
<PAGE>
SCHEDULE 1
Directors, Executive Officers and Controlling Persons
of Sprint Corporation
<TABLE>
<CAPTION>
Principal Business or
Organization in Which
Name Principal Occupation And Business Such Business is Conducted
- ------------------------- ------------------------------------------ --------------------------------
<S> <C> <C>
DuBose Ausley Director of Sprint Corporation. Chairman Law
of a law firm, Ausley & McMullen, P.O.
Box 391, Tallahassee, FL 32302
Warren L. Batts Director of Sprint Corporation. Retired Retired; manufacturing
Chairman and Chief Executive Officer of
Tupperware Corporation and retired
Chairman of Premark International, Inc.,
Suite 214, One Northfield Plaza,
Northfield, IL 60093
John E. Berndt President of Sprint International, 2330 Telecommunications
Shawnee Mission Parkway, Westwood,
KS 66205
Gene M. Betts Senior Vice President and Treasurer of Telecommunications
Sprint Corporation, 2330 Shawnee
Mission Parkway, Westwood, KS 66205
Michel Bon Director of Sprint Corporation. Chairman Telecommunications
of France Telecom, 6 Place d'Alleray,
75505 Paris Cedex 15, France
Kevin E. Brauer President National Integrated Services of Telecommunications
Sprint Corporation, 7301 College
Boulevard, Overland Park, KS 66210
J. Richard Devlin Executive Vice President and General Telecommunications
Counsel of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood,
KS 66205
William T. Esrey Chairman and Chief Executive Officer and Telecommunications
Director of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood,
KS 66205
Michael B. Fuller President Local Telecommunications Telecommunications
Division of Sprint Corporation, 5454 West
110/th/ Street, Overland Park, KS 66211
</TABLE>
1
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<TABLE>
<S> <C> <C>
Irvine O. Hockaday, Jr. Director of Sprint Corporation. President Manufacturing
and Chief Executive Officer of Hallmark
Cards, Inc., 2501 McGee Trafficway,
Kansas City, MO 64108
Harold S. Hook Director of Sprint Corporation. Retired Retired; Financial Services
Chairman and Chief Executive Officer of
American General Corporation, Suite
W16-01, 2727 Allen Parkway, Houston,
TX 77019
Arthur B. Krause Executive Vice President and Chief Telecommunications
Financial Officer of Sprint Corporation,
2330 Shawnee Mission Parkway,
Westwood, KS 66205
Arthur A. Kurtze Senior Vice President One Sprint Strategic Telecommunications
Development of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood,
KS 66205
Ronald T. LeMay President and Chief Operating Officer and Telecommunications
Director of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood,
KS 66205
Linda Koch Lorimer Director of Sprint Corporation. Vice Education
President and Secretary of Yale
University, P.O. Box 208230, New Haven,
CT 06520
John P. Meyer Senior Vice President and Controller of Telecommunications
Sprint Corporation, 2330 Shawnee
Mission Parkway, Westwood, KS 66205
Charles E. Rice Director of Sprint Corporation. Vice Banking
Chairman-Corporate Development of
Bank of America, P.O. Box 40789,
Jacksonville, FL 32203
Theodore H. Schell Senior Vice President Strategic Planning Telecommunications
and Corporate Development of Sprint
Corporation, 2330 Shawnee Mission
Parkway, Westwood, KS 66205
Ron Sommer Director of Sprint Corporation. Vice Telecommunications
Chairman of the Board of Management of
Deutsche Telekom A.G., Friedrich-Ebert-
Allee 140, 53113 Bonn, Germany
</TABLE>
2
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<TABLE>
<S> <C> <C>
Arthur B. Krause Executive Vice President and Chief Telecommunications
Financial Officer of Sprint Corporation
2330 Shawnee Mission Parkway,
Westwood, KS 66205
Andrew J. Sukawaty President of Sprint PCS, 4900/4800 Main, Telecommunications
Kansas City, MO 64112
Stewart Turley Director of Sprint Corporation. Retired Retired; national chain of pharmacies
Chairman of Eckerd Corporation, Suite
201, 1465 South Fort Harrison Avenue,
Clearwater, FL 33756
I. Benjamin Watson Senior Vice President Human Resources Telecommunications
of Sprint Corporation, 2330 Shawnee
Mission Parkway, Westwood, KS 66205
Thomas E. Weigman Senior Vice President Consumer Market Telecommunications
Strategy and Communications of Sprint
Corporation, 2330 Shawnee Mission
Parkway, Westwood, KS 66205
</TABLE>
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SECURITIES PURCHASE AND OPTION AGREEMENT
----------------------------------------
THIS SECURITIES PURCHASE AND OPTION AGREEMENT (this "Agreement"), dated as
of April 2, 1999, is entered into between Sprint Corporation, a Kansas
corporation ("Sprint"), and Wireless Holding LLC, a Delaware limited liability
company ("Securityholder"), with respect to all of the shares of preferred stock
owned by Securityholder of People's Choice TV Corp., a Delaware corporation
("PCTV").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Securityholder owns 746,104 shares of the Convertible Cumulative
Pay-in-Kind Preferred Stock, par value $0.01 per share and liquidation
preference of $100 per share, of PCTV (the "Preferred Stock");
WHEREAS, Sprint desires to enter into this Agreement in connection with
Sprint's efforts to consummate an acquisition of PCTV;
WHEREAS, pursuant to the terms and conditions of this Agreement,
Securityholder desires to sell, and Sprint desires to purchase, 497,405 shares
of the Preferred Stock owned by Securityholder;
WHEREAS, the parties desire to enter into certain option arrangements with
respect to the remaining shares of Preferred Stock held by Securityholder, as
well as any additional shares of Preferred Stock acquired as dividends with
respect to such remaining shares;
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Agreement to Purchase.
---------------------
1.1 Sale and Purchase. Upon the terms and subject to the conditions
-----------------
of this Agreement, on the First Closing Date (as hereinafter defined),
Securityholder shall irrevocably sell, transfer, convey, assign and deliver to
Sprint, and Sprint shall purchase and accept delivery from Securityholder, (a)
497,405 shares of the Preferred Stock (the "Purchased Stock"), and (b) any and
all cash, securities, interest and other property and proceeds which may be
exchanged for, or distributed or collected in respect of, the Purchased Stock
(whether as dividends payable with respect to the Preferred Stock or otherwise).
The assets being sold to Sprint pursuant to this Section 1.1 (subject to
adjustment, exchange or conversion as contemplated by Section 9.1 hereof) are
referred to collectively hereinafter as the "Purchased Assets." Sprint does not
assume any liabilities or obligations (if any) of Securityholder related to or
in connection with the Purchased Assets and arising prior to the First Closing
Date.
<PAGE>
1.2 Purchase Price. The aggregate purchase price (the "Purchase
--------------
Price") to be paid by Sprint to Securityholder for the Purchased Assets shall be
an amount equal to fifteen million dollars ($15,000,000.00).
1.3 Payment of Purchase Price. Subject to the terms and conditions
-------------------------
of this Agreement, on the First Closing Date, Sprint shall make payment of the
Purchase Price to Securityholder by wire transfer of immediately available funds
to an account designated in writing by Securityholder prior to the First Closing
Date.
1.4 Transfer of Purchased Assets. Upon payment of the Purchase Price
----------------------------
as provided in Section 1.3 hereof, Securityholder shall deliver to Sprint, or an
affiliate of Sprint designated in writing to Securityholder, at the First
Closing (as hereinafter defined), (a) the certificates representing the
Purchased Stock (subject to adjustment, exchange or conversion as contemplated
by Section 9.1 hereof), duly endorsed in blank for transfer, or accompanied by
duly executed stock powers in blank, in each case with signatures guaranteed by
a national bank or trust company or a member firm of the New York Stock
Exchange, Inc., (b) all other cash, securities and other property which
constitute the Purchased Assets, (c) all such other agreements, endorsements,
assignments and other instruments as are necessary or desirable, in Sprint's
sole and absolute discretion, to vest in Sprint or its designee good and
marketable title to the Purchased Assets or to evidence of record the sale and
assignment of the Purchased Assets to Sprint or its designee, and (d) an
irrevocable proxy appointing Sprint or its designee as Securityholder's proxy to
vote the Purchased Stock, which irrevocable proxy shall be substantially
identical to the form attached hereto as Exhibit A.
1.5 First Closing. Subject to the fulfillment or waiver of the
-------------
conditions precedent set forth in Article 6 hereof, the closing of the purchase
and sale of the Purchased Assets (the "First Closing") shall take place at the
offices of King & Spalding, 1185 Avenue of the Americas, New York, New York
10036 at 2:00 p.m. (local time) on April 5, 1999 (the "First Closing Date").
Except as otherwise provided herein, all actions to be taken and all documents
to be executed at the First Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no action shall be deemed taken nor
documents deemed executed or delivered until all have been taken, delivered and
executed.
2. Grant of Options.
----------------
2.1 Options. Upon the terms and subject to the conditions of this
-------
Agreement, Securityholder hereby grants to Sprint or Sprint's designee (a) an
irrevocable option (the "First Option") to purchase (i) 123,699 shares of the
Preferred Stock, and (ii) any and all cash, securities, interest and other
property and proceeds which may be exchanged for, or distributed or collected in
respect of, any shares of the Preferred Stock referenced in Section 2.1(a)(i)
hereof, and (b) an irrevocable option (the "Second Option;" the First Option and
the Second Option are referred to collectively hereinafter as the "Options") to
purchase (i) 125,000 shares of the Preferred Stock, and (ii) any and all cash,
securities, interest and other property and proceeds which may be exchanged for,
or distributed or collected in respect of, any shares of the Preferred
-2-
<PAGE>
Stock referenced in Section 2.1(b)(i) hereof. The assets subject to the First
Option (subject to adjustment, exchange or conversion as contemplated by Section
9.1) are referred to collectively hereinafter as the "First Option Securities,"
the assets subject to the Second Option (subject to adjustment, exchange or
conversion as contemplated by Section 9.1) are referred to collectively
hereinafter as the "Second Option Securities," and the First Option Securities
and Second Option Securities are referred to collectively hereinafter as the
"Option Securities." Upon exercise of the First or Second Option and purchase of
the related Option Securities, Sprint shall not assume any liabilities or
obligations (if any) of Securityholder related to or in connection with such
Option Securities and arising prior to the relevant Option Closing Date (as
defined hereinafter).
2.2 [INTENTIONALLY OMITTED].
2.3 Option Prices. The purchase price payable by Sprint or its
-------------
designee at (a) the Option Closing (as hereinafter defined) for the First Option
Securities shall be an amount equal to the sum of (the "First Option Price") (i)
four million four hundred eighty thousand one hundred nine dollars
($4,480,109.00), plus (ii) an amount equal to interest accrued on such
$4,480,109.00 amount at the rate of six percent (6%) per annum, compounded
quarterly, calculated from the First Closing Date to the First Option Closing
Date (as hereinafter defined), and (b) the Option Closing for the Second Option
Securities shall be an amount equal to the sum of (the "Second Option Price;"
the First Option Price and the Second Option Price are referred to collectively
hereinafter as the "Option Prices") (i) three million eight hundred fifty-three
thousand four hundred twenty dollars ($3,853,420.00), plus (ii) an amount equal
to interest accrued on such $3,853,420.00 amount at the rate of six percent (6%)
per annum, compounded quarterly, calculated from the First Closing Date to the
Second Option Closing Date (as hereinafter defined).
2.4 Exercise.
--------
(a) Sprint or its designee shall exercise an Option as to the
related Option Securities by giving written notice to Securityholder.
Such notice shall specify a date (not earlier than one business day
nor later than three business days from the date such notice is
delivered to Securityholder) and place for closing of the exercise of
such Option (the "Option Closing"). Upon delivery of notice
exercising an Option, such Option shall be deemed to have been
exercised by Sprint or its designee irrespective of the actual date of
the Option Closing. The actual date of the Option Closing relating to
the First Option is referred to hereinafter as the "First Option
Closing Date," the actual date of the Option Closing relating to the
Second Option is referred to hereinafter as the "Second Option Closing
Date," and the First Option Closing Date and Second Option Closing
Date are referred to collectively hereinafter as the "Option Closing
Dates." At each Option Closing, Sprint or its designee will deliver
to Securityholder the Option Price with respect to the Option
Securities that are the subject of the Option being exercised, by
wire transfer of immediately available
-3-
<PAGE>
funds to an account designated in writing by Securityholder prior to
the applicable Option Closing Date.
(b) Upon payment of the Option Price as provided in Section
2.4(a) hereof, the Securityholder shall deliver to Sprint or its
designee at the Option Closing, (i) the certificates representing the
Option Securities (subject to adjustment, exchange or conversion as
contemplated by Section 9.1 hereof) that are the subject of the Option
being exercised, duly endorsed in blank for transfer, or accompanied
by duly executed stock powers in blank, in each case with signatures
guaranteed by a national bank or trust company or a member firm of the
New York Stock Exchange, Inc., (ii) all other cash, securities and
other property which constitute such Option Securities, and (iii) all
such other agreements, endorsements, assignments and other instruments
as are necessary or desirable, in Sprint's sole and absolute
discretion, to vest in Sprint or its designee good and marketable
title to such Option Securities or to evidence of record the sale and
assignment of such Option Securities to Sprint or its designee.
Notwithstanding any other provision of this Agreement, the parties
acknowledge and agree that Securityholder shall be the sole owner of
the Option Securities until the purchase and sale of the Option
Securities on an Option Closing Date.
2.5 Option Expiration/Put Right. Except as provided below, each
---------------------------
Option shall terminate and expire on the earlier of: (a) the date that is the
eighteen month anniversary of the date of this Agreement (the "Expiration Date")
if such Option has not been exercised by Sprint or its designee on or before
such date, and (b) the date Securityholder gives notice pursuant to Section
8.1.5 hereof. If either Option has not been exercised on or before the
Expiration Date, Securityholder shall have the right to deliver, at any time
commencing upon the Expiration Date and for a period of 30 days thereafter, a
written notice to Sprint (the "Securityholder Notice") requiring that Sprint or
its designee purchase the Option Securities subject to any unexercised Option at
the applicable Option Price (the "Put Right"); provided, however, that in the
event Sprint or an affiliate has elected or designated, or has the power to
elect or designate pursuant to a power that may be then exercised and that would
have immediate effect, a majority of the board of directors of PCTV, or in the
event Sprint has consummated one or more transactions that have resulted in
Sprint becoming the owner, directly or indirectly, of all of the issued and
outstanding common stock of PCTV, then Securityholder shall have the right to
deliver the Securityholder Notice and exercise the Put Right at any time during
the 30-day period following such election or designation of directors, the
acquisition of such power to elect or designate directors or the consummation of
such transactions. Notwithstanding any other provision of this Section 2.5, if
an Option Closing has not occurred prior to the Expiration Date solely as a
result of the existence of any order or decree that has the effect of
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions at such Option Closing, then the Expiration
Date shall be deemed extended for the time period that the Option Closing has
not occurred as a result of the existence of such order or decree plus an
additional 30 days, subject to a maximum extension of three months (i.e., the
---
twenty-one
-4-
<PAGE>
month anniversary of the date of this Agreement); provided, however, the Put
Right shall continue for an additional period of two years (i.e., the forty-five
---
month anniversary of the date of this Agreement) notwithstanding the termination
and expiration of any unexercised Option on the extended Expiration Date. Upon
the exercise by Securityholder of the Put Right, the parties shall consummate
the purchase and sale of the Option Securities subject to any unexercised Option
in accordance with Section 2.4 hereof.
2.6 Receipt of Distributions. After the execution of this Agreement
------------------------
and prior to the Option Closing relating to the Second Option, if Securityholder
receives any cash, securities, interest or other property or proceeds with
respect to the Option Securities (whether as dividends payable with respect to
the Preferred Stock or otherwise), such cash, securities, interest, property and
proceeds shall become a part of the assets included in the Option Securities.
2.7 No Solicitation. Other than as provided in this Article 2, from
---------------
and after the date of this Agreement and through the Expiration Date, neither
Securityholder nor any person acting as an agent of Securityholder or otherwise
on Securityholder's behalf shall, directly or indirectly, solicit, encourage or
initiate negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Sprint or an affiliate
or an associate of Sprint) concerning any sale, transfer, pledge or other
disposition or conversion of the Option Securities or a sale of, merger with, or
similar transaction involving PCTV or of any assets of PCTV. Securityholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Securityholder will notify Sprint immediately if any
party contacts Securityholder following the date hereof (other than Sprint or an
affiliate or associate of Sprint) concerning any sale, transfer, pledge or other
disposition or conversion of the Option Securities or a sale of, or merger with,
PCTV or of any sale of assets of PCTV.
3. Representations and Warranties of Sprint. In order to induce
----------------------------------------
Securityholder to enter into this Agreement and to consummate the transactions
contemplated hereby, Sprint hereby represents and warrants to Securityholder, as
of the date hereof, as of the First Closing Date and as of each Option Closing
Date, as follows:
3.1 Authorization. Sprint is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of Kansas. Sprint has
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. Sprint has duly authorized,
executed and delivered this Agreement and this Agreement is a legal, valid and
binding agreement of Sprint, enforceable against Sprint in accordance with its
terms.
3.2 Investment. Sprint acknowledges that the Purchased Stock and the
----------
Option Securities have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under the securities laws of any state or
other jurisdiction. Sprint is acquiring the
-5-
<PAGE>
Purchased Stock and the Option Securities solely for its own account and not
with a view to, or for resale in connection with, any distribution prohibited by
the Securities Act or the securities laws of any applicable state or other
jurisdiction. Sprint agrees not to resell or offer to resell the Purchased Stock
or the Option Securities except in compliance with the registration requirements
of the Securities Act and other applicable securities laws, or an applicable
exemption therefrom.
3.3 Sprint Has Adequate Information. Sprint is a sophisticated
-------------------------------
purchaser with respect to the Purchased Assets and Option Securities and has
adequate information concerning the business and financial condition of PCTV to
make an informed decision regarding the purchase of the Purchased Assets and
Option Securities and has independently and without reliance upon Securityholder
and based on such information as Sprint has deemed appropriate, made its own
analysis and decision to enter into this Agreement. Sprint acknowledges that
Securityholder has not made and does not make any representation or warranty,
whether express or implied, of any kind or character except as expressly set
forth in this Agreement. Sprint acknowledges that the purchase of the Purchased
Assets and Option Securities (upon exercise of the Options) by Sprint is
irrevocable, and that Sprint shall have no recourse to Securityholder, except
with respect to breaches of representations, warranties, covenants and
agreements expressly set forth in this Agreement, and pursuant to indemnities
contained herein. Sprint acknowledges that it has reviewed the Stock Purchase
Agreement, dated as of October 27, 1994 (the "Preferred Stock Agreement"), by
and among Blackstone Capital Partners II Merchant Banking Fund, L.P., Blackstone
Offshore Capital Partners II L.P. (collectively, "Blackstone") and PCTV, and the
Certificate of Designations relating to the Preferred Stock and filed by PCTV
with the Delaware Secretary of State on or about November 9, 1994 (the
"Certificate").
3.4 No Violation. Neither the execution and delivery of this
------------
Agreement nor the consummation of the transactions contemplated hereby will (a)
require Sprint to file or register with, or obtain any material permit,
authorization, consent or approval of, any governmental agency, authority,
administrative or regulatory body, court or other tribunal, foreign or domestic,
or any other entity, except for filings required to be made by Sprint pursuant
to federal securities laws and the regulations promulgated thereunder and except
any filings with and notices to governmental or regulatory authorities or any
other person required of Sprint to consummate the transactions contemplated
hereby under Section 7A of the Clayton Act (Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended) and the rules and regulations
promulgated thereunder (the "HSR Act"), or (b) violate, or cause a breach of or
default under, any contract, agreement or understanding, any statute or law, or
any judgment, decree, order, regulation or rule of any governmental agency,
authority, administrative or regulatory body, court or other tribunal, foreign
or domestic, or any other entity or any arbitration award binding upon Sprint,
except for any such violations, breaches or defaults that would not
(individually or in the aggregate) have a material adverse effect on the
Purchased Assets, the Option Securities, the rights of Securityholder pursuant
to this Agreement or the ability of Sprint to consummate the transactions
contemplated by this Agreement.
3.5 Securityholder's Excluded Information. Sprint acknowledges and
-------------------------------------
-6-
<PAGE>
confirms that (a) Securityholder may possess or hereafter come into possession
of certain non-public information concerning the Purchased Assets, the Option
Securities and PCTV which is not known to Sprint and which may be material to
Sprint's decision to purchase the Purchased Assets and Option Securities
("Securityholder's Excluded Information"), (b) Sprint has requested not to
receive Securityholder's Excluded Information and has determined to purchase the
Purchased Assets and Option Securities notwithstanding its lack of knowledge of
Securityholder's Excluded Information, and (c) Securityholder shall have no
liability or obligation to Sprint, in connection with, and Sprint hereby waives
and releases Securityholder from, and covenants not to sue Securityholder in
respect of, any claims which Sprint or its successors and assigns may have
against Securityholder (whether pursuant to applicable securities laws or
otherwise) with respect to, the non-disclosure of Securityholder's Excluded
Information; provided, however, nothing contained in this Section 3.5 shall
limit Sprint's right to rely upon the express representations and warranties
made by Securityholder in this Agreement, or Sprint's remedies in respect of
breaches of any such representations and warranties.
4. Representations and Warranties of Securityholder. In order to induce
------------------------------------------------
Sprint to enter into this Agreement and to consummate the transactions
contemplated hereby, Securityholder represents and warrants to Sprint, as of the
date hereof, as of the First Closing Date and, solely with respect to the
representations and warranties set forth in Section 4.5 below, as of each Option
Closing Date, as follows:
4.1 Existence. Securityholder is a limited liability company duly
---------
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Ownership. Securityholder has good and marketable title to the
---------
Purchased Assets and the Option Securities, free and clear of all liabilities,
claims, liens, options, proxies, charges, participations and encumbrances of any
kind or character whatsoever.
4.3 Authorization. Securityholder has all requisite power and
-------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has sole voting power and sole power of
disposition with respect to all of the Purchased Stock and the Option Securities
with no restrictions on its voting rights or rights of disposition pertaining
thereto. Securityholder has duly authorized, executed and delivered this
Agreement and this Agreement is a legal, valid and binding agreement of
Securityholder, enforceable against Securityholder in accordance with its terms.
Upon the closing of the transactions contemplated hereby on the First Closing
Date, the First Option Closing Date and the Second Option Closing Date,
Securityholder will transfer to Sprint or Sprint's designee, the sole power of
voting and disposition of the Purchased Stock, the First Option Securities and
the Second Option Securities (as applicable).
4.4 No Violation. Neither the execution and delivery of this
------------
Agreement nor the consummation of the transactions contemplated hereby will (a)
require Securityholder to file or register with, or obtain any material permit,
authorization, consent or approval of, any
-7-
<PAGE>
governmental agency, authority, administrative or regulatory body, court or
other tribunal, foreign or domestic, or any other entity, except for (i) filings
required to be made by Securityholder pursuant to federal securities laws and
the regulations promulgated thereunder, (ii) notice to PCTV given pursuant to
Section 4.08(b) of the Preferred Stock Agreement (which notice does not disclose
Sprint's identity), and (iii) consents that have been previously obtained, or
(b) violate, or cause a breach of or default under, any contract, agreement or
understanding, any statute or law, or any judgment, decree, order, regulation or
rule of any governmental agency, authority, administrative or regulatory body,
court or other tribunal, foreign or domestic, or any other entity or any
arbitration award binding upon Securityholder, except for any such violations,
breaches or defaults that would not (individually or in the aggregate) have a
material adverse effect on the Purchased Assets, the Option Securities, the
rights of Sprint pursuant to this Agreement or the ability of Securityholder to
consummate the transactions contemplated by this Agreement. As of the First
Closing Date, no proceedings are pending which, if adversely determined, will
have a material adverse effect on any of the Purchased Assets or the Option
Securities. Securityholder has not previously assigned or sold any of the
Purchased Assets or the Option Securities to any third party.
4.5 Transfer of Purchased Assets. Securityholder is the sole legal
----------------------------
and beneficial owner of the Purchased Assets and the Option Securities. At the
First Closing and at each Option Closing, Securityholder will transfer and
convey to Sprint or its designee (a) good and marketable title to the Purchased
Assets and the Option Securities (as applicable), free and clear of any liens,
claims, liabilities, options, proxies, charges, participations and encumbrances
of any kind or character whatsoever created by or arising through
Securityholder, any of its affiliates or Blackstone, and (b) all (i) equity
securities of PCTV or its affiliates that were held by Securityholder or its
affiliates as of the date of this Agreement (except, in the case of the First
Closing, the Option Securities and, in the case of the Option Closing relating
to the First Option, the Second Option Securities), (ii) "claims" against PCTV
or any of its affiliates that were held by Securityholder or its affiliates as
of the date of this Agreement and that relate to the Preferred Stock (except, in
the case of the First Closing, any such claims relating to the Option Securities
and, in the case of the Option Closing relating to the First Option, any such
claims relating to the Second Option Securities), and (iii) to Securityholder's
knowledge, other claims against PCTV or any of its affiliates that were held by
Securityholder or its affiliates as of the date of this Agreement. For purposes
of this Agreement, the terms "claim" and "claims" shall have the meaning set
forth in 11 U.S.C. (S) 101(5).
4.6 No Modifications to Documents Governing the Preferred Stock. The
-----------------------------------------------------------
Preferred Stock Agreement has not been modified, amended or supplemented in any
material respects since the execution and delivery thereof. Securityholder has
not consented to any waiver of any material breach of or material default under
the Preferred Stock Agreement or to any material noncompliance by PCTV with any
of the provisions of the Preferred Stock Agreement. A true, correct and
complete copy of the Preferred Stock Agreement has been provided previously by
Securityholder to Sprint or made available for Sprint's review. Neither
Securityholder nor any of its affiliates has voted to approve, or has consented
to, any material
-8-
<PAGE>
modification, amendment or supplement to the Certificate since the filing
thereof with the Delaware Secretary of State. Immediately prior to the First
Closing, Securityholder is a "Designated Transferee" (as such term is defined in
the Certificate) with respect to the Preferred Stock.
4.7 Securityholder Has Adequate Information. Securityholder is a
---------------------------------------
sophisticated seller with respect to the Purchased Assets and Option Securities
and has adequate information concerning the business and financial condition of
PCTV to make an informed decision regarding the sale of the Purchased Assets and
Option Securities and has independently and without reliance upon Sprint and
based on such information as Securityholder has deemed appropriate, made its own
analysis and decision to enter into this Agreement. Securityholder acknowledges
that Sprint has not made and does not make any representation or warranty,
whether express or implied, of any kind or character except as expressly set
forth in this Agreement. Securityholder acknowledges that the sale of the
Purchased Assets and Option Securities by Securityholder to Sprint is
irrevocable, and that Securityholder shall have no recourse to the Purchased
Assets, the Option Securities or Sprint, except with respect to breaches of
representations, warranties, covenants and agreements expressly set forth in
this Agreement, and pursuant to indemnities contained herein.
4.8 Sprint's Excluded Information. Securityholder acknowledges and
-----------------------------
confirms that (a) Sprint may possess or hereafter come into possession of
certain non-public information concerning the Purchased Assets, the Option
Securities and PCTV which is not known to Securityholder and which may be
material to Securityholder's decision to sell the Purchased Assets and Option
Securities ("Sprint's Excluded Information"), (b) Securityholder has requested
not to receive Sprint's Excluded Information and has determined to sell the
Purchased Assets and Option Securities notwithstanding its lack of knowledge of
Sprint's Excluded Information, and (c) Sprint shall have no liability or
obligation to Securityholder, in connection with, and Securityholder hereby
waives and releases Sprint from, and covenants not to sue Sprint in respect of,
any claims which Securityholder or its successors and assigns may have against
Sprint (whether pursuant to applicable securities laws or otherwise) with
respect to, the non-disclosure of Sprint's Excluded Information; provided,
however, nothing contained in this Section 4.8 shall limit Securityholder's
right to rely upon the express representations and warranties made by Sprint in
this Agreement, or Securityholder's remedies in respect of breaches of any such
representations and warranties.
4.9 No Defenses. Neither Securityholder nor any of its affiliates
-----------
has received any payments (other than dividends) under or in respect of the
Purchased Stock or the Option Securities (other than pursuant to this
Agreement). Securityholder has no liability or obligation related to or in
connection with the Purchased Assets or the Option Securities other than the
obligations to Sprint as set forth in this Agreement. As of the First Closing
Date, there are no legal or equitable defenses or counterclaims that have been
or, to Securityholder's knowledge without independent inquiry, are threatened by
or on behalf of PCTV that will affect the validity or enforceability of the
Purchased Stock or the Option Securities. Neither Securityholder nor any
-9-
<PAGE>
of its affiliates has caused to be converted any shares of Preferred Stock held
by such party into shares of PCTV common stock.
5. Certain Covenants.
-----------------
5.1 Lock-Up. Securityholder hereby covenants and agrees that, from
-------
and after the date hereof through the Second Option Closing Date, (a) except as
expressly provided in this Agreement or as consented to in writing by Sprint in
its sole and absolute discretion, Securityholder will not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of or limit its right to vote
in any manner any of the Option Securities or Purchased Assets, or agree to do
any of the foregoing, and (b) Securityholder will not take any action which
would have the effect of preventing or disabling Securityholder from performing
any of its obligations under this Agreement.
5.2 Receipt of Distributions. After the First Closing Date (in the
------------------------
case of the Purchased Assets), the First Option Closing Date (in the case of the
First Option Securities) and the Second Option Closing Date (in the case of the
Second Option Securities), if Securityholder receives any cash, securities,
interest or other property or proceeds with respect to the Purchased Assets,
the First Option Securities or the Second Option Securities (as applicable),
Securityholder shall hold such cash, securities, interest, property and proceeds
for the sole and exclusive benefit of Sprint or its designee free of any
interest of Securityholder therein, and Securityholder shall promptly pay and/or
deliver any such cash, securities, interest, property and proceeds, in full, to
Sprint or Sprint's designee in the same or equivalent form received (with the
endorsement of Securityholder when necessary or appropriate).
5.3 Public Announcement. Securityholder shall consult with Sprint
-------------------
before issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Sprint,
except as may be required by law.
5.4 Designated Transferee. From and after the date of this Agreement
---------------------
and through the Second Option Closing Date, Securityholder shall take all
commercially reasonable actions that are necessary or appropriate in order to
ensure that it remains at all times a "Designated Transferee" (as such term is
defined in the Certificate) with respect to the Preferred Stock and
Securityholder shall not take any action that would cause Securityholder to
cease being a Designated Transferee with respect to the Preferred Stock. To the
extent Securityholder is required to take any actions to ensure that it remains
a Designated Transferee, (a) Sprint shall bear all costs and expenses related to
the taking of such actions, and (b) Sprint shall have the right (but not the
obligation) to direct and control the taking of such actions.
5.5 Stop Transfer Instructions. Promptly following the First Closing
--------------------------
Date, Securityholder and Sprint shall deliver joint written instructions to PCTV
(in its capacity as the transfer agent or registrar for the Preferred Stock)
stating that the Option Securities may not be
-10-
<PAGE>
sold, transferred, pledged, assigned, hypothecated or otherwise disposed of in
any manner without the prior written consent of Sprint or except in accordance
with the terms and conditions of this Agreement.
5.6 HSR Filing. Promptly following the First Closing Date, Sprint
----------
will make all filings with and give all notices to governmental or regulatory
authorities required of Sprint pursuant to the HSR Act in connection with
consummating the transactions contemplated by this Agreement. Sprint will use
all commercially reasonable efforts to obtain early termination of all
applicable waiting periods under the HSR Act.
5.7 Exercise of First Option. Sprint agrees that it will exercise
------------------------
the First Option promptly following the satisfaction of the condition precedent
set forth in Section 6.1.5 hereof, but in no event later than 30 days after the
satisfaction of such condition precedent (it being understood that,
notwithstanding Sprint's exercise of the First Option, the consummation of the
transactions at the Option Closing relating to the First Option shall be subject
to the provisions of Section 6.1).
5.8 No Modifications. Securityholder agrees that, from and after the
----------------
date of this Agreement and through the Second Option Closing Date,
Securityholder shall not (without the written consent of Sprint) (a) agree to
any amendment, modification or supplement to the Preferred Stock Agreement, (b)
consent to any waiver of any breach or default under the Preferred Stock
Agreement, or (c) vote to approve, or consent to, any modification, amendment or
supplement to the Certificate.
6. Conditions to Closing.
---------------------
6.1 Conditions to Sprint's Obligations. The obligations of Sprint to
----------------------------------
consummate the transactions contemplated by this Agreement at the First Closing
are subject to the satisfaction at or prior to the First Closing of the
conditions precedent set forth in Sections 6.1.1, 6.1.3 and 6.1.4, and the
obligations of Sprint to consummate the transactions contemplated by this
Agreement at each Option Closing are subject to the satisfaction at or prior to
such Option Closing of each of the conditions precedent set forth in Sections
6.1.2, 6.1.3, 6.1.4 and 6.1.5, any one or more of which may be waived by Sprint:
6.1.1 Each of the representations and warranties of
Securityholder set forth Article 4 hereof shall be true and correct in all
material respects on and as of the date of this Agreement and as of the First
Closing Date with the same force and effect as though made on and as of the
First Closing Date.
6.1.2 Each of the representations and warranties of
Securityholder set forth in Section 4.5 hereof shall be true and correct in all
material respects on and as of the date of this Agreement and as of each Option
Closing Date with the same force and effect as though made on and as of such
Option Closing Date.
-11-
<PAGE>
6.1.3 There shall not be any order or decree by any federal,
state or local governmental regulatory agency, commission, bureau, authority,
court or arbitration tribunal of competent jurisdiction (an "Authority")
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions contemplated hereby.
6.1.4 Securityholder shall have complied with the covenants
contained in Section 5.8 hereof.
6.1.5. All waiting periods applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall have terminated or
expired.
6.2 Conditions to Securityholder's Obligations. The obligations of
------------------------------------------
Securityholder to consummate the transactions contemplated by this Agreement at
the First Closing are subject to the satisfaction at or prior to the First
Closing of the conditions precedent set forth in Sections 6.2.1 and 6.2.3, and
the obligations of Securityholder to consummate the transactions contemplated by
this Agreement at each Option Closing are subject to the satisfaction at or
prior to such Option Closing of the conditions precedent set forth in Sections
6.2.2 and 6.2.3, any one or more of which may be waived by Securityholder:
6.2.1 Each of the representations and warranties of Sprint
set forth in Article 3 of this Agreement shall be true and correct in all
material respects on and as of the date of this Agreement and as of the First
Closing Date with the same force and effect as though made on and as of the
First Closing Date.
6.2.2 Each of the representations and warranties of Sprint
set forth in Article 3 of this Agreement shall be true and correct in all
material respects on and as of the date of this Agreement and as of each Option
Closing Date with the same force and effect as though made on and as of such
Option Closing Date.
6.2.3 There shall not be any order or decree by any Authority
restraining, enjoining, prohibiting, invalidating or otherwise preventing the
consummation of the transactions contemplated hereby.
7. Indemnification and Survival.
----------------------------
7.1 Indemnification by Securityholder.
---------------------------------
7.1.1 Indemnity. Securityholder shall defend and indemnify
---------
Sprint and its agents, affiliates, subsidiaries, controlling persons, officers,
directors, and employees (collectively, the "Sprint Indemnitees"), and hold the
Sprint Indemnitees wholly harmless from and against, any and all losses,
liabilities, damages, costs (including, without limitation, court costs) and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, "Losses") which any Sprint Indemnitee incurs as a result of, or
with respect to, any inaccuracy in
-12-
<PAGE>
or breach of any representation, warranty, covenant or agreement by or on behalf
of Securityholder contained in this Agreement or contained in any certificate,
instrument, agreement or document of Securityholder delivered to Sprint in
connection with the consummation of the transactions contemplated hereby.
7.1.2 Claims. In the event that any Sprint Indemnitee shall
------
receive written notice of any claim or proceeding against such Sprint Indemnitee
that, if successful, might result in a claim under this Section 7.1, such Sprint
Indemnitee shall give Securityholder prompt written notice of such claim or
proceeding and shall permit Securityholder to participate in the defense of such
claim or proceeding by counsel of Securityholder's own choosing and at the
expense of Securityholder. In addition, upon written request of such Sprint
Indemnitee, Securityholder shall assume the carriage of the defense of any such
claim or proceeding.
7.2 Indemnification by Sprint.
-------------------------
7.2.1 Indemnity. Sprint shall defend and indemnify
---------
Securityholder and its members, agents, affiliates, subsidiaries, controlling
persons, officers, directors, and employees (collectively, the "Securityholder
Indemnitees"), and hold the Securityholder Indemnitees wholly harmless from and
against, any and all Losses which any Securityholder Indemnitee incurs as a
result of, or with respect to, any inaccuracy in or breach of any
representation, warranty, covenant or agreement by or on behalf of Sprint
contained in this Agreement or contained in any certificate, instrument,
agreement or document of Sprint delivered to Securityholder in connection with
the consummation of the transactions contemplated hereby.
7.2.2 Claims. In the event that any Securityholder
------
Indemnitee shall receive written notice of any claim or proceeding against such
Securityholder Indemnitee that, if successful, might result in a claim under
this Section 7.2, such Securityholder Indemnitee shall give Sprint prompt
written notice of such claim or proceeding and shall permit Sprint to
participate in the defense of such claim or proceeding by counsel of Sprint's
own choosing and at the expense of Sprint. In addition, upon written request of
such Securityholder Indemnitee, Sprint shall assume the carriage of the defense
of any such claim or proceeding.
7.3. Specific Performance. Securityholder acknowledges that Sprint
--------------------
will be irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of Securityholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Sprint upon the breach by
Securityholder of such covenants and agreements, Sprint shall have the right to
obtain injunctive relief to restrain any breach or threatened breach of such
covenants or agreements or otherwise to obtain specific performance of any of
such covenants or agreements.
7.4 Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of Securityholder and Sprint contained herein or
in any
-13-
<PAGE>
certificates or other documents delivered at or prior to the First Closing or
any Option Closing shall not be deemed waived or otherwise affected by any
investigation made by the other party hereto, and each representation and
warranty contained herein shall survive the closing of the transactions
contemplated hereby until (a) in the case of the representations and warranties
set forth in Sections 4.2, 4.3, 4.5, 4.7 and 4.8, the expiration of the
applicable statute of limitations, including extensions thereof, and (b) in the
case of all representations and warranties made as of the date hereof and as of
the First Closing Date (except those set forth in Sections 4.2, 4.3, 4.5, 4.7
and 4.8 hereof), the Second Option Closing Date.
7.5 Limitation on Indemnity. Notwithstanding any other provision of
-----------------------
this Article 7, the Sprint Indemnitees shall not be entitled to indemnification
under this Article 7 unless the aggregate amount of all Losses incurred by the
Sprint Indemnitees exceeds an amount equal to $2,000,000; provided, however,
that in the event the Losses incurred by the Sprint Indemnitees exceed the
$2,000,000 amount, then the indemnification obligations of Securityholder shall
apply only to the amount by which such Losses exceed $1,000,000.
8. Termination.
-----------
8.1 Termination. This Agreement may be terminated, and the
-----------
transactions contemplated hereby abandoned, prior to the applicable closing as
follows:
8.1.1 by Sprint and Securityholder by mutual written consent at
any time;
8.1.2 by Sprint by giving written notice to Securityholder at
any time (a) in the event Securityholder has breached any of its
representations, warranties, covenants or agreements contained in this Agreement
in any material respect, Sprint has notified Securityholder of the breach and
the breach has continued without cure for a period of 5 days after the notice of
breach, or (b) if the First Closing shall not have occurred on or before the 5th
day after the execution of this Agreement (unless the failure results primarily
from Sprint breaching any representation, warranty, covenant or agreement of
Sprint contained in this Agreement);
8.1.3 by Securityholder by giving written notice to Sprint at
any time (a) in the event Sprint has breached any representation, warranty,
covenant or agreement of Sprint contained in this Agreement in any material
respect, Securityholder has notified Sprint of the breach, and the breach has
continued without cure for a period of 5 days after the notice of breach, or (b)
if the First Closing shall not have occurred on or before the 5th day after the
execution of this Agreement (unless the failure results primarily from
Securityholder breaching any representation, warranty, covenant or agreement of
Securityholder contained in this Agreement);
8.1.4 by Securityholder or by Sprint at any time prior to the
First Closing Date if the First Closing shall violate any order, decree or
judgment of any court or any Authority
-14-
<PAGE>
having competent jurisdiction; or
8.1.5 by Securityholder by giving written notice to Sprint at
any time after the 150th day after the date of this Agreement if all applicable
waiting periods under the HSR Act shall not have terminated or expired.
8.2 Effect of Termination. In the event this Agreement is terminated
---------------------
pursuant to Section 8.1, all rights and obligations of the parties hereunder
shall terminate without liability of any party to any other party (except for
any liability of any party then in breach).
9. Miscellaneous.
-------------
9.1 Reorganization Securities. In the event that PCTV institutes any
-------------------------
change in the Preferred Stock by reason of stock dividends, stock splits,
mergers, recapitalizations, reorganizations, combinations, conversions,
exchanges of shares or the like (whether or not through a plan of reorganization
confirmed by a bankruptcy court) (in any case, a "Reorganization"), the right to
acquire any such Preferred Stock pursuant to this Agreement shall include the
right to purchase any and all cash, debt, securities or other consideration to
be received by Securityholder in exchange for such Preferred Stock on the same
terms and conditions as with respect to the original Preferred Stock,
appropriately adjusted to reflect changes made to the Preferred Stock, and at
the same aggregate Purchase Price or Option Price (as the case may be)
irrespective of such Reorganization.
9.2 Expenses. Each of the parties hereto shall pay its own expenses
--------
incurred in connection with this Agreement. Each of the parties hereto warrants
and covenants to the other that it will bear all claims for brokerage fees
attributable to action taken by it.
9.3 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
9.4 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
9.5 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to all
provisions of this Agreement.
9.6 Assignment. This Agreement may not be transferred or assigned by
----------
Securityholder but may be assigned by Sprint to any of its wholly-owned
subsidiaries or to any successor to its business and will be binding upon and
inure to the benefit of any such subsidiary
-15-
<PAGE>
or successor.
9.7 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be an original, but both of which together
shall constitute one and the same Agreement.
9.8 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram, or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) If to Sprint: Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Mr. Theodore H. Schell
Telecopy: (913) 624-8426
with copies to: Sheldon A. Fisher, Esq.
Senior Attorney
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telecopy: (913) 624-8361
and
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Bruce N. Hawthorne, Esq.
Telecopy: (404) 572-5146
(b) If to
Securityholder: Murray Capital Management Inc.
110 East 59th Street
New York, New York 10022
Attention: James B. Hoffman, Esq.
Telecopy: (212) 588-9874
-16-
<PAGE>
with a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004-1206
Attention: Richard E. Baltz, Esq.
Telecopy: (202) 942-5999
9.9 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
9.10 Enforceability. The invalidity or unenforceability of any
--------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
9.11 Further Assurances. From time to time at or after the First
------------------
Closing (in the case of the Purchased Assets) or any Option Closing (in the case
of the Option Securities), at Sprint's request and without further
consideration, Securityholder shall execute and deliver to Sprint or its
designee such documents and shall take such action as Sprint or its designee may
reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Sprint or its designee good, valid and
marketable title to the Purchased Assets and the Option Securities, including,
but not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Purchased Assets and the Option
Securities.
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
SPRINT CORPORATION
By: /s/ Ronald T. Le May
---------------------------
Name: Ronald T. Le May
-------------------------
Title: Chief Operating Officer
------------------------
WIRELESS HOLDING LLC
By: Murray Capital Management, Inc.,
Managing Member
By: /s/ Marti P. Murray
---------------------------
Name: Marti P. Murray
-------------------------
Title: President
------------------------
-18-
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
Wireless Holding LLC, a Delaware limited liability company
("Securityholder"), (a) has revoked or terminated (and hereby revokes and
terminates) any proxies, voting agreements or similar arrangements previously
given or entered into with respect to the shares of Convertible Cumulative Pay-
in-Kind Preferred Stock, par value $0.01 per share and liquidation preference of
$100 per share (the "Preferred Stock"), of People's Choice TV Corp., a Delaware
corporation ("PCTV"), held by Securityholder, and (b) hereby irrevocably
appoints Sprint Corporation, a Kansas corporation ("Sprint"), as proxy for
Securityholder, with full power of substitution and resubstitution, to vote (or
refrain from voting) in any manner as Sprint, in its sole discretion, may see
fit, 497,405 shares of the Preferred Stock (the "Proxy Shares") for
Securityholder and in Securityholder's name, place and stead, at any annual,
special or other meeting or action of the shareholders of PCTV or at any
adjournment thereof or pursuant to any consent of shareholders of PCTV in lieu
of a meeting or otherwise, with respect to any issue brought before the
shareholders of PCTV. Without limiting the generality of the foregoing, this
irrevocable proxy shall be valid and effective during any bankruptcy case
involving PCTV and shall include (without limitation) the right to vote the
Proxy Shares with respect to any plan of reorganization proposed in any such
bankruptcy case. Securityholder acknowledges and agrees that neither Sprint nor
Sprint's successors, assigns, subsidiaries, divisions, employees, officers,
directors, shareholders, agents or affiliates shall owe any duty to
Securityholder, whether in law or otherwise, or incur any liability of any kind
whatsoever, including (without limitation) with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including reasonable
attorney's fees) and compensation of any kind or nature whatsoever, to
Securityholder, in connection with, as a result of or otherwise relating to any
vote (or refrain from voting) by Sprint of the Proxy Shares at any annual,
special or other meeting or action or the execution of any consent of the
shareholders of PCTV.
This Irrevocable Proxy is executed and delivered by Securityholder this
______ day of April, 1999.
WIRELESS HOLDING LLC
By:________________________
Name:______________________
Title:_____________________
<PAGE>
IRREVOCABLE PROXY
-----------------
Wireless Holding LLC, a Delaware limited liability company
("Securityholder"), (a) has revoked or terminated (and hereby revokes and
terminates) any proxies, voting agreements or similar arrangements previously
given or entered into with respect to the shares of Convertible Cumulative Pay-
in-Kind Preferred Stock, par value $0.01 per share and liquidation preference of
$100 per share (the "Preferred Stock"), of People's Choice TV Corp., a Delaware
corporation ("PCTV"), held by Securityholder, and (b) hereby irrevocably
appoints Sprint Corporation, a Kansas corporation ("Sprint"), as proxy for
Securityholder, with full power of substitution and resubstitution, to vote (or
refrain from voting) in any manner as Sprint, in its sole discretion, may see
fit, 497,405 shares of the Preferred Stock (the "Proxy Shares") for
Securityholder and in Securityholder's name, place and stead, at any annual,
special or other meeting or action of the shareholders of PCTV or at any
adjournment thereof or pursuant to any consent of shareholders of PCTV in lieu
of a meeting or otherwise, with respect to any issue brought before the
shareholders of PCTV. Without limiting the generality of the foregoing, this
irrevocable proxy shall be valid and effective during any bankruptcy case
involving PCTV and shall include (without limitation) the right to vote the
Proxy Shares with respect to any plan of reorganization proposed in any such
bankruptcy case. Securityholder acknowledges and agrees that neither Sprint nor
Sprint's successors, assigns, subsidiaries, divisions, employees, officers,
directors, shareholders, agents or affiliates shall owe any duty to
Securityholder, whether in law or otherwise, or incur any liability of any kind
whatsoever, including (without limitation) with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including reasonable
attorney's fees) and compensation of any kind or nature whatsoever, to
Securityholder, in connection with, as a result of or otherwise relating to any
vote (or refrain from voting) by Sprint of the Proxy Shares at any annual,
special or other meeting or action or the execution of any consent of the
shareholders of PCTV.
This Irrevocable Proxy is executed and delivered by Securityholder this 5th
day of April, 1999.
WIRELESS HOLDING LLC
By:________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT 2.1
EXECUTION COPY
______________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
AMONG
SPRINT CORPORATION,
MM ACQUISITION CORP.
AND
PEOPLE'S CHOICE TV CORP.
DATED AS OF APRIL 12, 1999
______________________________________________________________________________
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 12,
---------
1999, by and among Sprint Corporation, a Kansas corporation ("Parent"), MM
------
Acquisition Corp., a Delaware corporation ("Buyer") and wholly owned subsidiary
-----
of Parent, and People's Choice TV Corp., a Delaware corporation (the "Company").
-------
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Buyer;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law of the State of Delaware (the "DGCL"), Buyer will merge with and
----
into the Company (the "Merger") in accordance with the provisions of the DGCL,
------
with the Company as the surviving corporation;
WHEREAS, as of the date hereof, Matthew Oristano, members of his family and
family trusts and foundations (collectively, the "Oristano Stockholders")
---------------------
beneficially own or have the power to vote shares of the common stock, par value
$.01 per share, of the Company (including any and all rights to be attached
thereto to acquire shares of preferred stock of the Company pursuant to the
Rights Plan (as hereinafter defined), and any other rights associated therewith,
to be adopted by the Company pursuant to Section 5.21, the "Company Common
--------------
Stock"), representing approximately 10.5% of the outstanding Company Common
Stock;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Parent entering into this Agreement, the
Oristano Stockholders have entered into a stockholder's agreement, dated as of
the date hereof (the "Stockholder's Agreement"), pursuant to which, among other
-----------------------
things, the Oristano Stockholders have granted an option in favor of Parent with
respect to the shares of Company Common Stock held by the Oristano Stockholders,
subject to the terms and conditions contained therein;
WHEREAS, the Board of Directors of the Company has unanimously determined
that the Merger and this Agreement are fair to, and in the best interests of,
the Company and the holders of Company Common Stock;
WHEREAS, the Board of Directors of Parent and Buyer have each approved this
Agreement and the Merger, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement and the Merger, and the transactions contemplated hereby, which
approval was based in part on the opinions of Chase Securities, Inc. and
Houlihan Lokey Howard & Zukin Capital (the "Independent Advisors"), independent
--------------------
financial advisors to the Board of Directors of the Company, that, as of the
date of such opinions and based on the assumptions, qualifications and
limitations contained therein, the consideration to be received by the Company's
stockholders for their shares
<PAGE>
of Company Common Stock in the Merger is fair, from a financial point of view,
to these stockholders;
WHEREAS, the Board of Directors of the Company has unanimously resolved to
recommend acceptance of the Merger to the holders of the Company Common Stock
and has determined that the consideration to be paid for each share of Company
Common Stock in the Merger is fair to the holders of the Company Common Stock
and to recommend that the holders of the Company Common Stock approve the
Merger, this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions of
----------
this Agreement, and in accordance with the DGCL, at the Effective Time (as
hereinafter defined), Buyer shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Buyer shall cease and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). The corporate existence of the Company, with all
---------------------
its purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Delaware.
Section 1.2. Effective Time; Closing. As promptly as practicable (and in
-----------------------
any event within five (5) business days) after the satisfaction or waiver of the
conditions set forth in Article VI hereof, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger or certificate of
ownership and merger, if applicable (the "Certificate of Merger"), with the
---------------------
Secretary of State of the State of Delaware and by making all other filings or
recordings required under the DGCL in connection with the Merger, in such form
as is required by, and executed in accordance with the relevant provisions of,
the DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware, or at
such other time as the parties hereto agree shall be specified in the
Certificate of Merger (the date and time the Merger becomes effective, the
"Effective Time"). On the date of such filing, a closing (the "Closing") shall
- --------------- -------
be held at 10:00 a.m., Eastern Standard Time, at the offices of the King &
Spalding, 1185 Avenue of the Americas, New York, New York 10036, or at such
other time and location as the parties hereto shall otherwise agree.
Section 1.3. Effect of the Merger. At the Effective Time, the effect of
--------------------
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the
-2-
<PAGE>
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Buyer shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of the Company and Buyer shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
Section 1.4. Conversion of Company Common Stock. At the Effective Time,
----------------------------------
by virtue of the Merger and without any action on the part of Buyer, the Company
or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
Section 1.4(c) and Dissenting Shares (as defined in Section 1.5), if any) shall
be canceled and, subject to Section 1.5, shall by virtue of the Merger and
without any action on the part of the holder thereof be converted automatically
into the right to receive an amount in cash equal to $8.00 payable, without
interest, to the holder of such share of Company Common Stock, upon surrender of
the certificate that formerly evidenced such share of Company Common Stock in
the manner provided in Section 1.7 (the "Merger Consideration"); provided, if
-------------------- --------
prior to the consummation of the Merger, Parent or any of its affiliates
purchases, or enters into an option to purchase, shares of Company Common Stock
at a price per share in excess of the Merger Consideration, the Merger
Consideration shall be increased to the highest such price per share;
(b) Each share of Preferred Stock (as hereinafter defined) issued and
outstanding immediately prior to the Effective Time (other than shares canceled
pursuant to Section 1.4(c)) shall continue to be an issued and outstanding share
of Preferred Stock of the Surviving Corporation following the Effective Time;
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Buyer and
each share of Company Common Stock and Preferred Stock (collectively, "Company
-------
Stock") that is owned by the Company as treasury stock shall be canceled and
- -----
retired and cease to exist and no payment or distribution shall be made with
respect thereto;
(d) At the Effective Time, all shares of the Company Common Stock
converted pursuant to Section 1.4(a) shall no longer be outstanding and shall
automatically be canceled and retired and cease to exist, and each holder of a
certificate ("Certificate") representing any such shares of Company Common Stock
-----------
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration in accordance with Section 1.4(a).
(e) Each share of common stock, par value $1.00 per share, of Buyer
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $1.00 per share, of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the Surviving
Corporation.
-3-
<PAGE>
Section 1.5. Dissenting Shares.
-----------------
(a) Notwithstanding anything in this Agreement to the contrary, shares
of Company Stock that are issued and outstanding immediately prior to the
Effective Time and which are held by holders of Company Stock (the "Company
-------
Stockholders") who have demanded and perfected their demands for appraisal of
- ------------
such shares of Company Stock in the time and manner provided in Section 262 of
the DGCL and, as of the Effective Time, have neither effectively withdrawn nor
lost their rights to such appraisal and payment under the DGCL (the "Dissenting
----------
Shares") shall not be converted as described in Section 1.4(a), but shall, by
- ------
virtue of the Merger, be entitled to only such rights as are granted by Section
262 of the DGCL; provided, however, that if such holder shall have failed to
-------- -------
perfect or shall have effectively withdrawn or lost his, her or its right to
appraisal and payment under the DGCL, such holder's shares of Company Stock
shall thereupon be deemed to have been converted, at the Effective Time, as
described in Section 1.4(a), into the right to receive the Merger Consideration
set forth in such provisions, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 of the DGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent or
as otherwise required by applicable law, make any payment with respect to any
such demands for appraisal or offer to settle or settle any such demands.
Section 1.6. Stock Option Plans. The Company shall take all commercially
------------------
reasonable efforts necessary to ensure that, pursuant to the Company's 1993 Key
Employee Non-qualified Stock Option Plan, 1993 Founders Non-qualified Option
Plan and 1993 Stock Option Plan (collectively, the "Company Stock Option
--------------------
Plans"), all outstanding options to acquire Company Common Stock (the "Company
-------
Options") granted under the Company Stock Option Plans shall be exercisable in
- -------
full immediately prior to the consummation of the Merger and all Company Options
that are not exercised prior to the consummation of the Merger will terminate
and expire as of the consummation date of the Merger. In addition, the Company
shall, by written notice to each holder of Company Options, offer to pay such
holder upon the consummation of the Merger, in exchange for the cancellation of
such holder's Company Options (regardless of exercise price) upon the
consummation of the Merger, an amount in cash determined by multiplying (A) the
-----------
excess, if any, of the Merger Consideration over the applicable exercise price
per share of the Company Option by (B) the number of shares of Company Common
--
Stock such holder could have purchased had such holder exercised such Company
Option in full immediately prior to the consummation of the Merger (such amount,
the "Option Consideration"), and each such Company Option shall thereafter be
--------------------
canceled.
-4-
<PAGE>
Section 1.7. Surrender of Shares of Company Common Stock; Stock Transfer
-----------------------------------------------------------
Books.
- -----
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent (the "Paying Agent") for the holders of shares of
------------
Company Common Stock reasonably acceptable to the Company to receive the funds
necessary to make the payments to such holders pursuant to Section 1.4 upon
surrender of their Certificates. Parent will, on or prior to the Effective
Time, deposit with the Paying Agent the Merger Consideration to be paid in
respect of the shares of Company Common Stock (the "Fund"). The Fund shall be
----
invested by the Paying Agent as directed by Parent. Any net profit resulting
from, or interest or income produced by, such investments, shall be payable to
the Surviving Corporation. Parent shall replace any monies lost through any
investment made pursuant to this Section 1.7(a). The Paying Agent shall make
the payments provided in Section 1.4.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to Section 1.4 a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal. Upon surrender to the
Paying Agent of a Certificate, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each share of Company Common Stock formerly evidenced
by such Certificate, and such Certificate shall then be canceled. Until so
surrendered, each such Certificate shall, at and after the Effective Time,
represent for all purposes, only the right to receive such Merger Consideration.
No interest shall accrue or be paid to any beneficial owner of shares of Company
Common Stock or any holder of any Certificate with respect to the Merger
Consideration payable upon the surrender of any Certificate. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered on the stock transfer books of
the Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed in blank or to the Paying Agent or otherwise be in
proper form for transfer and that the person requesting such payment shall have
paid all transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such taxes either have been paid or are not
applicable. If any Certificate shall have been lost, stolen or destroyed, upon
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Surviving Corporation or
Parent, the posting by such person of a bond, in such reasonable amount as the
Surviving Corporation or Parent may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the applicable
Merger Consideration such holder is entitled to receive pursuant to Section 1.4.
-5-
<PAGE>
(c) At any time following the sixth (6th) month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any portion of the Fund which had been made available to the
Paying Agent and not disbursed to holders of shares of Company Common Stock
(including, without limitation, all interest and other income received by the
Paying Agent in respect of all amounts held in the Fund or other funds made
available to it), and thereafter each such holder shall be entitled to look only
to the Surviving Corporation (subject to abandoned property, escheat and other
similar laws), and only as general creditors thereof, with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
such holder. If any Certificates representing shares of Company Common Stock
shall not have been surrendered immediately prior to such date on which the
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as hereinafter defined), any
such cash, shares, dividends or distributions payable in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto. Notwithstanding the foregoing, none
of the Surviving Corporation, Parent, Buyer or the Paying Agent shall be liable
to any holder of a share of Company Common Stock for any Merger Consideration
delivered in respect of such share of Company Common Stock to a public official
pursuant to any abandoned property, escheat or other similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, except for Parent and Buyer, the holders of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock except as otherwise provided herein or by applicable law, and all cash
paid pursuant to this Article I upon the surrender or exchange of Certificates
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock theretofore represented by such
Certificate.
(e) Parent, Buyer, the Surviving Corporation and the Paying Agent, as
the case may be, shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and Company Options such amounts that Parent,
Buyer, the Surviving Corporation or the Paying Agent is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), the rules and regulations promulgated
----
thereunder or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Parent, Buyer, the Surviving Corporation or the
Paying Agent, such amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock and
Company Options in respect of which such deduction and withholding was made by
Parent, Buyer, the Surviving Corporation or the Paying Agent.
-6-
<PAGE>
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation. The Certificate of
----------------------------
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Certificate of Incorporation.
Section 2.2. Bylaws. The Bylaws of the Company as in effect immediately
------
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation or such Bylaws.
Section 2.3. Directors and Officers. From and after the Effective Time,
----------------------
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Buyer at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of the Company at
the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other parties hereto as
follows:
Section 3.1. Organization and Standing. Each of the Company and each
-------------------------
subsidiary of the Company (a "Subsidiary") (i) is a corporation duly organized,
----------
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing necessary
except where failure to be so qualified or licensed would not, individually or
in the aggregate, have a Company Material Adverse Effect (as hereinafter
defined). The Company has furnished or made available to Parent true and
complete copies of its certificate of incorporation (including any certificates
of designations attached thereto, the "Company Certificate of Incorporation")
------------------------------------
and bylaws (the "Company Bylaws") and the certificate of incorporation and
--------------
bylaws (or equivalent organizational documents) of each Subsidiary, each as
amended to date. Such certificate of incorporation, bylaws or equivalent
organizational documents are in full force and effect, and neither the Company
nor any Subsidiary is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents.
-7-
<PAGE>
Section 3.2. Capitalization. The authorized capital stock of the Company
--------------
consists of 75,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, $.0l par value per share (the "Preferred Stock"). As of the
---------------
date hereof, (i) 12,923,817 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock are held in
the treasury of the Company, (iii) 2,392,975 Company Options are outstanding
pursuant to the Company Stock Option Plans (including certain additional non-
plan options), each such option entitling the holder thereof to purchase one
share of Company Common Stock, and 2,392,975 shares of Company Common Stock are
authorized and reserved for future issuance pursuant to the exercise of such
Company Options, (iv) 746,104 shares of Preferred Stock are issued and
outstanding designated as Convertible Cumulative Pay-in-Kind Preferred Stock
(the "Convertible Preferred Stock"), liquidation preference of $100 per share,
---------------------------
and (v) 629,321 shares of Company Common Stock are reserved for future issuance
pursuant to the exercise of outstanding Company Warrants. The Company will
authorize and reserve 75,000 shares of Series A Junior Participating Preferred
Stock for future issuance pursuant to the Rights Plan. The Company Disclosure
Letter delivered by the Company to the other parties hereto concurrently with
the execution of this Agreement (the "Company Disclosure Letter") sets forth a
-------------------------
true and complete list of the outstanding Company Options with the exercise
price. Except as set forth above or in the Company Disclosure Letter, there are
no options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued or
authorized by the Company relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company or any
Subsidiary. All shares of Company Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in the Company Disclosure Letter, there are
no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Stock or any
capital stock of any Subsidiary or to pay any dividend or make any other
distribution in respect thereof or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any person.
Except as set forth in the Company Disclosure Letter, the Company owns
beneficially and of record all of the issued and outstanding capital stock of
each Subsidiary and does not own an equity interest in any other corporation,
partnership or entity, other than in the Subsidiaries. Each outstanding share
of capital stock of each Subsidiary is duly authorized, validly issued, fully
paid and nonassessable and each such share owned by the Company or another
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
Section 3.3. Authority for Agreement.
-----------------------
(a) The Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject to
obtaining necessary stockholder
-8-
<PAGE>
approval, to consummate the Merger and the other transactions contemplated by
this Agreement. The execution, delivery and performance by the Company of this
Agreement, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action (including, without limitation, the unanimous
approval of the Board of Directors of the Company) and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the Merger or the other transactions contemplated by this
Agreement (other than, with respect to the Merger, the approval and adoption of
this Agreement by the affirmative vote of a majority of the voting power of the
then outstanding shares of Company Common Stock and Convertible Preferred Stock
voting as a single class and the approval by two-thirds of the holders of the
outstanding shares of Convertible Preferred Stock voting as a separate class and
the filing and recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Buyer,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The affirmative vote of
holders of the outstanding shares of Company Stock and Convertible Preferred
Stock voting as a single class entitled to vote at a duly called and held
meeting of stockholders and the affirmative vote of two-thirds of the holders of
the outstanding shares of the Convertible Preferred Stock are the only votes of
the Company Stockholders necessary to approve this Agreement, the Merger and the
other transactions contemplated by this Agreement.
(b) At a meeting duly called and held on April 11, 1999, the Board
of Directors of the Company unanimously (i) determined that this Agreement and
the other transactions contemplated hereby, including the Merger, are fair to
and in the best interests of the Company and the holders of the Company Common
Stock, (ii) approved, authorized and adopted this Agreement, the Merger and the
other transactions contemplated hereby, and (iii) resolved to recommend approval
and adoption of this Agreement and the Merger by the holders of the Company
Common Stock.
(c) The Independent Advisors have delivered to the Board of Directors
of the Company their written opinions, dated as of the date of this Agreement,
that, as of such date and based on the assumptions, qualifications and
limitations contained therein, the consideration to be received by the holders
of Company Common Stock in the Merger is fair, from a financial point of view,
to such holders. Copies of such opinions are included in the Company Disclosure
Letter.
Section 3.4. No Conflict. The execution and delivery of this Agreement by
-----------
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Merger and the other transactions contemplated by this
Agreement will not, (i) conflict with or violate the Company Certificate of
Incorporation or Company Bylaws or equivalent organizational documents of any of
its Subsidiaries, (ii) subject to Section 3.5, conflict with or violate any
United States federal, state or local or any foreign statute, law, rule,
regulation, ordinance, code, order, judgment, decree or any other requirement or
rule of law (a "Law") applicable to the Company or any of its Subsidiaries or by
---
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, or (iii) except as set forth in the Company Disclosure Letter,
result in a breach of or constitute a default (or an event which with notice or
lapse of time or both would become a
-9-
<PAGE>
default) under, give to others any right of termination, amendment, acceleration
or cancellation of, result in triggering any payment or other obligations, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any property or
asset of any of them is bound or affected, except in the case of clauses (ii)
and (iii) above for any such conflicts, violations, breaches, defaults or other
occurrences which could not, individually or in the aggregate, have a Company
Material Adverse Effect. "Company Material Adverse Effect" shall mean, with
respect to the Company, any--------------------------------change, event or
effect shall have occurred or been threatened that, when taken together with all
other adverse changes, events or effects that have occurred or been threatened,
is or is reasonably likely to (i) be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets, liabilities
(including, without limitation, contingent liabilities) of the Company and its
Subsidiaries taken as a whole or (ii) prevent or materially delay the
performance by the Company of any of its obligations under this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement.
Section 3.5. Required Filings and Consents. The execution and delivery of
-----------------------------
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any United States federal, state or local or
any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
- --------------------
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), state
------------
securities or "blue sky" laws ("Blue Sky Laws") and filing and recordation of
-------------
appropriate merger documents as required by the DGCL, (ii) for those required by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), (iii) for those required by the Federal Communications Commission or any
- ---
successor entity (the "FCC") under the Communications Act of 1934, as amended,
---
and the rules, regulations and policies of the FCC promulgated thereunder
(collectively, the "Communications Act"), including those required in connection
------------------
with the transfer of control of the Company and the assignment of the FCC
Licenses held by the Alda Companies (as hereinafter defined) (the "FCC
---
Filings"), (iv) for filings contemplated by Section 3.15 hereof, and (v) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, could not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 3.6. Compliance. Subject to Section 3.7 and except as disclosed
----------
in the Company Disclosure Letter, each of the Company and its Subsidiaries (i)
has been operated at all times in compliance with all Laws applicable to the
Company or any of its Subsidiaries or by which any property, business or asset
of the Company or any of its Subsidiaries is bound or affected and (ii) is not
in default or violation of any notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises, or other instruments or
obligations to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in either case
for any
-10-
<PAGE>
such failures to comply, conflicts, defaults or violations that could
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.7. Licenses and Permits.
--------------------
(a) The Company Disclosure Letter sets forth all of the FCC licenses,
permits, applications, and authorizations for MDS (as hereinafter defined), ITFS
(as hereinafter defined), I Channels and other FCC licensed facilities
(collectively, the "FCC Licenses") either held by the Company, or a Subsidiary
------------
or affiliate thereof, or that are subject to an agreement pursuant to which the
use of the transmission capacity associated therewith is leased by the Company,
a Subsidiary or an affiliate thereof (the "Channel Leases"). The Company
--------------
Disclosure Letter correctly sets forth the identity of the holder and lessor and
lessee (if applicable) of the transmission capacity of such FCC Licenses and the
termination date of such FCC Licenses. Each FCC License was duly and validly
issued and assigned to the holder thereof by the FCC pursuant to procedures
which comply with all requirements of applicable Law, including the requirements
of any international agreements implemented by the FCC related to channel use or
frequency coordination, and there has been no occurrence of any event or the
existence of any circumstances which may lead to the forfeiture, revocation,
suspension, impairment, adverse modification or non-renewal of any FCC License.
Each FCC License has been duly authorized and is in full force and effect and
the holders of the FCC Licenses and the Company (and its Subsidiaries and
affiliates, as applicable) are in substantial and material compliance therewith
and with the FCC rules and policies and there is no known conflict with the
valid rights of others which could have a material adverse effect on the value
and use of the FCC Licenses or the transmission capacity associated therewith.
No event has occurred which permits, or after notice or lapse of time or both
would permit, the forfeiture, revocation, impairment, adverse modification or
non-renewal of any FCC License, or the imposition of a monetary fine or
forfeiture. Except as set forth in the Company Disclosure Letter, there are no
agreements, arrangements or understandings relating to the assignment, transfer,
conveyance or pledge of any FCC License, in whole or in part, or any interest
therein for the markets of Chicago, Detroit, Houston, Indianapolis, Milwaukee,
Phoenix, Saint Louis, Salt Lake City and Tucson (the "Major Markets").
-------------
(b) The Company and each of the holders of the FCC Licenses has duly
filed in a timely manner all filings and reports relating to the FCC Licenses
and the Channel Leases required to be filed by the holders of the FCC Licenses,
or the Company, as the case may be, under the Communications Act, other
applicable Laws and FCC rules and are in compliance with other applicable Laws
and the Communications Act, including, without limitation, the rules and
regulations of the FCC relating to the operation and use of the FCC Licenses,
and, to the knowledge of the Company, each filing and report filed with respect
to the FCC Licenses is true, correct and complete in all respects and there have
been no changes in the ownership of the FCC Licenses since the filing of the
most recent ownership report.
(c) The Company Disclosure Letter correctly sets forth all of the
Channel Leases pursuant to which the Company may use the transmission capacity
of the FCC Licenses
-11-
<PAGE>
corresponding thereto. Each of the Channel Leases was duly and validly entered
into by the parties thereto pursuant to procedures which comply with all
requirements of applicable Law, including the requirements of the FCC, and no
event has occurred or circumstances exist which may lead to the revocation,
suspension, termination, breach, default, adverse modification or non-renewal of
any Channel Lease or material provision thereof, or cause any Channel Lease, or
any material provision thereof, not to comply with the requirements of the FCC.
The Company Disclosure Letter sets forth, on a market by market basis, for the
Major Markets, (i) the aggregate amount of transmission capacity (including the
number of 6 MHZ channels) available to the Company in each of the Major Markets
pursuant to the FCC Licenses and the Channel Leases (the "Aggregate Capacity")
------------------
and (ii) the amount of Aggregate Capacity, in analogue mode, that is reserved
for the holder of the FCC Licenses pursuant to the Channel Leases for uses other
the commercial uses associated with the Company's business, without regard to
the recapture requirements under the Channel Leases. Buyer upon the closing of
the transactions contemplated by this Agreement, will have the sole right to use
the transmission capacity of the FCC License under each of the Channel Leases
(other than the transmission capacity expressly reserved by such Channel Lease
for the holder of an FCC License). Each Channel Lease is in full force and
effect and the parties thereto are in compliance with the terms thereof with no
known conflicts with the valid rights of others. No third party has any rights
to assert any interests in any of the Channel Leases or the rights and benefits
granted to the Company pursuant thereto (other than the rights of the federal
government and the rights of the holder of an FCC License which is the subject
of a Channel Lease). No event has occurred which permits, or after notice or
lapse of time or both would permit the revocation, suspension, termination,
breach, default, adverse modification or non-renewal of any Channel Lease by the
lessor. There are no existing or alleged material defaults by the lessors or the
Company under any of the Channel Leases, including any defaults relating to the
payment obligations thereunder. The consummation of the transactions
contemplated by this Agreement will not result in the breach or violation of any
of the terms, conditions, or provisions of any of the Channel Leases.
(d) Except as set forth in the company Disclosure Letter, neither the
Company, any Subsidiary or affiliate of the Company, nor any lessor under any
Channel Lease has agreed to accept any interference from any third party or to
take any action to protect any third party's reception from interference that
would have a Company Material Adverse effect on the current operations of the
Company. The Company Disclosure Letter sets forth all interference agreements
with respect to the FCC Licenses to which the Company or any of its Subsidiaries
or affiliates is a party or any of the parties to the Channel Leases.
(e) Except as set forth in the Company Disclosure Letter, (i) each
Colocation Application (as hereinafter defined) and Other Application (as
hereinafter defined) complies with the FCC rules (including the interference
protection requirements), has been accepted for filing by the FCC, and cut-off
from competing and conflicting applications; (ii) the deadline for filing timely
petitions to deny each Colocation Application and each Other Application has
lapsed; (iii) there are no threatened or pending petitions to deny, informal
objections, competing or conflicting applications, outstanding no-objection
letters, comments, petitions for reconsideration, petitions for review or waiver
requests relating to such Colocation Applications and Other Applications; and
(iv)
-12-
<PAGE>
a protected service area for the FCC License has been granted or requested. For
purposes hereof, (i) a "Colocation Application" shall mean any Major Market
----------------------
application filed with, or granted by, the FCC to authorize the operation of the
facilities associated with each FCC License at a common transmitter site with
other ITFS and Multichannel Multipoint Distribution Service and Multipoint
Distribution Service stations (collectively, "MDS") pursuant to common technical
---
parameters of the FCC License and (ii) "Other Application" shall mean any other
-----------------
Major Market applications, in addition to Colocation Applications, filed with or
granted by the FCC to authorize the provision of digital services and/or two-way
services on the facilities associated with each FCC License.
(f) There is no outstanding adverse judgment, injunction, decree or
order that has been issued by the FCC against the Company, or a Subsidiary or
affiliate thereof or the holder of an FCC License, or any action, proceeding or
investigation pending before or threatened by the FCC or a third party
specifically, including, but not limited to, any pending or threatened
proceeding that would have the effect of revoking or restricting or impairing
one or more of the FCC Licenses or the operations of the Company or a Subsidiary
or affiliate thereof.
(g) Except as set forth in the Company Disclosure Letter, all
regulatory fees and expenses due and payable associated with the FCC Licenses
have been paid to the FCC, including all fees and costs associated with the FCC
Licenses held by the Company to provide LMDS or MDS service in basic trading
areas, as defined by Rand McNally (the "BTA Authorizations"). The Company
------------------
Disclosure Letter discloses any discounts or bidding credits that the Company
received from the FCC in conjunction with the licensing of the BTA
Authorizations.
Section 3.8. SEC Filings, Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports, statements and
documents required to be filed with the Securities and Exchange Commission (the
"SEC") since January 1, 1997 (collectively, the "SEC Reports"), each of which
--- -----------
has complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
--------------
regulations promulgated thereunder, or the Exchange Act, and the rules and
regulations promulgated thereunder, each as in effect on the date so filed.
None of the SEC Reports (including, but not limited to, any financial statements
or schedules included or incorporated by reference therein) contained when filed
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the audited consolidated balance sheets of the Company as
of December 31, 1998 and December 31, 1997 and the related consolidated
statements of operations, shareholders' equity/(deficit) and cash flows for the
three fiscal years in the period ended December 31, 1998 included in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, in each case,
including any related notes thereto, as filed with the SEC (collectively, the
"Company Financial Statements"), has been prepared in accordance with generally
- -----------------------------
accepted accounting principles ("GAAP") applied on a consistent basis throughout
----
the periods involved (except as may
-13-
<PAGE>
be indicated in the notes thereto) and fairly presents in all material respects
the consolidated financial position of the Company and its Subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated.
(c) Except as disclosed in the Company Disclosure Letter, there are no
liabilities of the Company or any of its Subsidiaries of any kind whatsoever,
whether or not accrued and whether or not contingent or absolute, that are
material to the Company and its Subsidiaries, taken as a whole, other than (i)
liabilities disclosed or provided for in the consolidated balance sheet of the
Company and its Subsidiaries at December 31, 1998, including the notes thereto,
(ii) liabilities disclosed in the SEC Reports, (iii) liabilities incurred on
behalf of the Company in connection with this Agreement and the contemplated
Merger, and (iv) liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1998, none of which are,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC as exhibits to the SEC
Reports pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
Section 3.9. Absence of Certain Changes or Events. Except as contemplated
------------------------------------
by this Agreement or as disclosed in the Company Disclosure Letter or the SEC
Reports filed prior to the date hereof, since December 31, 1998, the Company and
its Subsidiaries have conducted their respective businesses only in the ordinary
course and consistent with prior practice and there has not been (i) any event
or occurrence of any condition that has had or would reasonably be expected to
have a Company Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend or any other distribution with respect to any of the
capital stock of the Company or any Subsidiary, (iii) any material change in
accounting methods, principles or practices employed by the Company, or (iv) any
action of the type described in Sections 5.1(b) (other than Section 5.1(b)(v)
and (vi)) or 5.1(c) which had such action been taken after the date of this
Agreement would be in violation of any such Section.
Section 3.10. Taxes. Except as set forth in the Company Disclosure
-----
Letter, the Company and each of its Subsidiaries have timely filed all material
Tax Returns required to be filed by any of them. All such Tax Returns are true,
correct and complete in all material respects. All Taxes of the Company and its
Subsidiaries which are (i) shown as due on such Tax Returns, (ii) otherwise due
and payable or (iii) claimed or asserted by any taxing authority to be due, have
been paid, except for those Taxes being contested in good faith and for which
adequate reserves have been established in the financial statements included in
the SEC Reports in accordance with GAAP. There are no liens for any Taxes upon
the assets of the Company or any of its Subsidiaries, other than statutory liens
for Taxes not yet due and payable and liens for real estate Taxes contested in
good faith. The Company does not know of any proposed or threatened Tax claims
or assessments which, if upheld,
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<PAGE>
could individually or in the aggregate have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has made an election under
Section 341(f) of the Code. Neither the Company nor any of its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency. Except as set forth in
the Company Disclosure Letter, the Company and each Subsidiary has withheld and
paid over to the relevant taxing authority all Taxes required to have been
withheld and paid in connection with payments to employees, independent
contractors, creditors, shareholders or other third parties, except for such
Taxes which individually or in the aggregate could not have a Company Material
Adverse Effect. The unpaid Taxes of the Company and its Subsidiaries for the
current taxable period (A) did not, as of the most recent Company Financial
Statement, exceed the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the balance sheet in the most recent Company
Financial Statement (rather than in any notes thereto) and (B) do not exceed
that reserve as adjusted for the passage of time through the Closing in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax Returns. For purposes of this Agreement, (a) "Tax" (and,
---
with correlative meaning, "Taxes") means any federal, state, local or foreign
-----
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
----------
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.11. Title to Assets.
---------------
(a) Except as set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (the "10-K") or in the Company
----
Disclosure Letter, the Company and each of its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real and
personal properties and assets reflected in the 10-K or acquired after December
31, 1998 (other than assets disposed of since December 31, 1998 in the ordinary
course of business consistent with past practice), in each case free and clear
of all title defects, liens, encumbrances and restrictions, except for (i)
liens, encumbrances or restrictions which secure indebtedness which are properly
reflected in the 10-K; (ii) liens for Taxes accrued but not yet payable; (iii)
liens arising as a matter of law in the ordinary course of business with respect
to obligations incurred after December 31, 1998, provided that the obligations
secured by such liens are not delinquent; and (iv) such title defects, liens,
encumbrances and restrictions, if any, as individually or in the aggregate are
not reasonably likely to have a Company Material Adverse Effect. The Company
Disclosure Letter sets forth a true, correct and complete list of all real
property (i) owned or leased by the Company or a Subsidiary, (ii) as to which
the Company or a Subsidiary has a license, easement or right of way to use,
(iii) as to which the Company or a Subsidiary has the option to purchase, lease,
license or acquire an easement or right of way or (iv) in which the Company or a
Subsidiary has any other interest. Except as set forth in the Company
Disclosure
-15-
<PAGE>
Letter, the Company and each of its Subsidiaries either own, or have
valid leasehold interests in, all properties and assets used by them in the
conduct of their business, except where the absence of such ownership or
leasehold interest could not individually or in the aggregate have a Company
Material Adverse Effect.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any of its
assets with an individual value of $25,000 or an aggregate value in excess of
$100,000.
Section 3.12. Change of Control Agreements. Except as set forth in
----------------------------
Section 1.6 or the Company Disclosure Letter, neither the execution and delivery
of this Agreement nor the consummation of the Merger or the other transactions
contemplated by this Agreement, will (either alone or in conjunction with any
other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any director, officer
or employee of the Company. Except as set forth in the Company Disclosure
Letter, without limiting the generality of the foregoing, no amount paid or
payable by the Company in connection with the Merger or the other transactions
contemplated by this Agreement, including accelerated vesting of options,
(either solely as a result thereof or as a result of such transactions in
conjunction with any other event) will be an "excess parachute payment" within
the meaning of Section 280G of the Code.
Section 3.13. Litigation. Except for such matters disclosed in the
----------
Company Disclosure Letter which, if adversely determined, have not had, and
would not reasonably be expected to have, a Company Material Adverse Effect,
there are no claims, suits, actions, investigations, indictments or information,
or administrative, arbitration or other proceedings ("Litigation") pending or,
----------
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries. Except for such matters which have not had, and could not
reasonably be expected to have, a Company Material Adverse Effect, there are no
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court, administrative agency, or by arbitration, pursuant to a
grievance or other procedure) against or relating to the Company or any of its
Subsidiaries.
Section 3.14. Contracts and Commitments. The Company Disclosure Letter
-------------------------
sets forth a true, correct and complete list of the following contracts to which
the Company or a Subsidiary is a party (including every amendment, modification
or supplement to the foregoing): (i) any contracts of employment, (ii)
agreements or arrangements for the purchase or sale of any assets (otherwise
than in the ordinary course of business), (iii) agreements, contracts or
indentures relating to the borrowing of money, (iv) agreements with unions,
material independent contractor agreements and material leased or temporary
employee agreements, (v) leases of any real property involving annual rent of
$5,000 or more, and (vi) other than respect to contracts identified in the
Company Disclosure Letter pursuant to Section 3.7, all other contracts,
agreements or commitments involving payments made by or to the Company or a
Subsidiary of $100,000. Except for agreements, arrangements or commitments
disclosed in the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any agreement, arrangement or commitment which is
material to the
-16-
<PAGE>
business of the Company taken as a whole. The Company has delivered or made
available true, correct and complete copies of all such agreements, arrangements
and commitments to Parent. Neither the Company nor any of its Subsidiaries is in
default under any such agreement, arrangement or commitment which has had, or
could reasonably be expected to have, a Company Material Adverse Effect.
Section 3.15. Information Supplied. The proxy statement to be mailed to
--------------------
the Company Stockholders in connection with the meeting (the "Stockholder's
-------------
Meeting") to be called to consider the Merger (the "Proxy Statement") at the
- ------- ---------------
date such document is first published, sent or delivered to Company Stockholders
or, unless promptly corrected, at any time during the pendency of the
Stockholder's Meeting, 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 made therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement will comply as to
form and substance in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Buyer for inclusion or incorporation
by reference in the foregoing document.
Section 3.16. Employee Benefit Plans. All employee benefit plans,
----------------------
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company Benefit Plans") and all
---------------------
employee agreements providing for compensation, severance or other benefits to
any employee or former employee of the Company or any of its Subsidiaries are
set forth in the Company Disclosure Letter. True and complete copies of the
Company Benefit Plans have been made available to Parent. To the extent
applicable, the Company Benefit Plans comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
-----
Code, and any Company Benefit Plan intended to be qualified under Section 401(a)
of the Code has received a determination letter or is a model prototype plan and
continues to satisfy the requirements for such qualification. Neither the
Company nor any of its Subsidiaries nor any ERISA Affiliate of the Company
maintains, contributes to or has maintained or contributed in the past six (6)
years to any benefit plan which is covered by Title IV of ERISA or Section 412
of the Code. Neither any Company Benefit Plan, nor the Company nor any
Subsidiary has incurred any material liability or penalty under Section 4975 of
the Code or Section 502(i) of ERISA or engaged in any transaction that is
reasonably likely to result in any such liability or penalty. Except as set
forth in the Company Disclosure Letter, each Company Benefit Plan has been
maintained and administered in compliance with its terms and with ERISA and the
Code to the extent applicable thereto, except for such non-compliance which
individually or in the aggregate could not reasonably be expected to have a
Company Material Adverse Effect. There is no pending or anticipated Litigation
against or otherwise involving any of the Company Benefit Plans and no
Litigation (excluding claims for benefits incurred in the ordinary course of
Company Benefit Plan activities) has been brought against or with respect to any
such Company Benefit Plan, except for any of the foregoing which individually or
in the aggregate could not have a Company Material Adverse Effect. All
contributions required to be made as of the date
-17-
<PAGE>
hereof to the Company Benefit Plans have been made or provided for. Except as
described in the SEC Reports or as required by Law, neither the Company nor any
of its Subsidiaries maintains or contributes to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and neither the Company nor any of its
Subsidiaries has ever represented, promised or contracted (whether in oral or
written form) to any employee or former employee that such benefits would be
provided.
For purposes of this Agreement "ERISA Affiliate" means any business or
---------------
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
Section 3.17. Labor and Employment Matters. Except as set forth in the
----------------------------
Company Disclosure Letter:
(a) There are no agreements or arrangements on behalf of any officer,
director or employee providing for payment or other benefits to such person
contingent upon the execution of this Agreement, the Closing or a transaction
involving a change of control of the Company.
(b) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts, arrangements,
agreements or understandings with a labor union or labor organization that was
certified by the National Labor Relations Board ("NLRB"). Except for such
----
matters which, individually or in the aggregate, could not have a Company
Material Adverse Effect, there is no existing, pending or threatened (i) unfair
labor practice charge or complaint, labor dispute, labor arbitration proceeding
or any other matter before the NLRB or any other comparable state agency against
or involving the Company or any of its Subsidiaries, (ii) activity or proceeding
by a labor union or representative thereof to organize any employees of the
Company or any of its Subsidiaries, (iii) certification or decertification
question relating to collective bargaining units at the premises of the Company
or any of its Subsidiaries or (iv) lockout, strike, organized slowdown, work
stoppage or work interruption with respect to such employees.
(c) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act or
----
would otherwise trigger notice requirements or liability under any state or
local plant closing notice law. No agreement, arbitration or court decision or
governmental order in any way limits or restricts any of the Company, any of its
Subsidiaries or Parent from relocating or closing any of the operations of the
Company or any of its Subsidiaries.
-18-
<PAGE>
(d) Neither the Company nor any of its Subsidiaries has failed to pay
when due any wages, bonuses, commissions, benefits, taxes, penalties or
assessments or other monies, owed to, or arising out of the employment of or any
relationship or arrangement with, any officer, director, employee, sales
representative, contractor, consultant or other agent. There are no citations,
investigations, administrative proceedings or formal complaints of violations of
any federal or state wage and hour laws pending or threatened before the
Department of Labor or any federal, state or administrative agency or court
against or involving the Company or any of its Subsidiaries.
(e) The Company and each of its Subsidiaries are in compliance with
all immigration laws relating to employment and have properly completed and
maintained all applicable forms (including but not limited to I-9 forms) and, to
the knowledge of the Company, there are no citations, investigations,
administrative proceedings or formal complaints of violations of the immigration
laws pending or threatened before the Immigration and Naturalization Service or
any federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(f) There are no investigations, administrative proceedings, charges
or formal complaints of discrimination (including discrimination based upon sex,
age, marital status, race, national origin, sexual preference, disability,
handicap or veteran status) pending or threatened before the Equal Employment
Opportunity Commission or any federal, state or local agency or court against or
involving the Company or any of its Subsidiaries. No discrimination and/or
retaliation claim is pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries under the 1866, 1877, 1964 or
1991 Civil Rights Acts, the Equal Pay Act, the Age Discrimination in Employment
Act, as amended, the Americans with Disabilities Act, the Family and Medical
Leave Act, the Fair Labor Standards Act, ERISA, or any other federal law
relating to employment or any comparable state or local fair employment
practices act regulating discrimination in the workplace, and no wrongful
discharge, libel, slander, invasion of privacy or other claim (including but not
limited to violations of the Fair Credit Reporting Act, as amended, and any
applicable whistleblower statutes) under any state or federal law is pending or
threatened against the Company or any of its Subsidiaries.
(g) If the Company or any of its Subsidiaries is a Federal, State or
local contractor obligated to develop and maintain an affirmative action plan,
no discrimination claim, show-cause notice, conciliation proceeding, sanctions
or debarment proceedings is pending or has been threatened against the Company
or any of it Subsidiaries with the Office of Federal Contract Compliance
Programs or any other Federal agency or any comparable state or local agency or
court and no desk audit or on-site review is in progress.
(h) There are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending or threatened before the Occupational Safety and
Health Review Commission or any federal, state or local agency or court against
or involving the Company or any of its Subsidiaries.
-19-
<PAGE>
(i) No workers' compensation or retaliation claim is pending against
the Company or any of its Subsidiaries in excess of $250,000 in the aggregate
and the Company maintains adequate insurance with respect to workers'
compensation claims pursuant to insurance policies that are currently in force,
or has accrued an adequate liability for such obligations, including, without
limitation, adequate accruals with respect to accrued but unreported claims and
retroactive insurance premiums.
Section 3.18. Environmental Compliance and Disclosure. Except as set
---------------------------------------
forth in the Company Disclosure Letter:
(a) The Company possesses, and is in compliance in all material
respects with, all permits, licenses and government authorizations and has filed
all notices that are required under local, state and federal Laws and
regulations relating to protection of the environment, pollution control,
product registration and hazardous materials ("Environmental Laws") applicable
------------------
to the Company, and the Company is in compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any Law, regulation, code, plan, order, decree, judgment, notice, permit or
demand letter issued, entered, promulgated or approved thereunder;
(b) The Company has not received notice of actual or threatened
liability under the Federal Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") or any similar state or local statute or ordinance
------
from any governmental agency or any third party and, to the knowledge of the
Company, there are no facts or circumstances which could form the basis for the
assertion of any claim against the Company under any Environmental Laws
including, without limitation, CERCLA or any similar local, state or foreign Law
with respect to any on-site or off-site location;
(c) The Company has neither entered into nor agreed to, nor does it
contemplate entering into any consent decree or order, and is not subject to any
judgment, decree or judicial or administrative order relating to compliance
with, or the cleanup of hazardous materials under, any applicable Environmental
Laws;
(d) The Company has not been subject to any administrative or judicial
proceeding pursuant to and, to the knowledge of the Company, has not been
alleged to be in violation of, applicable Environmental Laws or regulations
either now or any time during the past five years;
(e) The Company has not received notice that it is subject to any
claim, obligation, liability, loss, damage or expense of whatever kind or
nature, contingent or otherwise, incurred or imposed or based upon any
provision of any Environmental Law and arising out of any act or omission of the
Company, its employees, agents or representatives or, to the knowledge of the
Company, arising out of the ownership, use, control or operation by the Company
of any plant, facility, site, area or property (including, without limitation,
any plant, facility, site, area or property
-20-
<PAGE>
currently or previously owned or leased by the Company) from which any hazardous
materials were released into the environment (the term "release" meaning any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment, and the term
"environment" meaning any surface or ground water, drinking water supply, soil,
surface or subsurface strata or medium, or the ambient air);
(f) The Company has heretofore provided Parent with true, correct and
complete copies of all files of the Company relating to environmental matters
(or an opportunity to review such files). The Company has not paid any fines,
penalties or assessments within the last five years with respect to
environmental matters; and
(g) To the Company's knowledge, none of the assets owned by the
Company or any real property leased by the Company contain any friable asbestos,
regulated PCBs or underground storage tanks.
As used in this Section 3.18, the term "Hazardous Materials" means any
-------------------
waste, pollutant, hazardous substance, toxic, ignitable, reactive or corrosive
substance, hazardous waste, special waste, industrial substance, by-product,
process intermediate product or waste, petroleum or petroleum-derived substance
or waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company is in any way governed by or subject to any applicable Law,
rule or regulation of any Governmental Entity.
Section 3.19. Intellectual Property.
---------------------
(a) The Company Disclosure Letter sets forth a true and complete list
of (i) all United States and foreign patents, trademark, service mark and
copyright registrations and applications therefor, and material trademarks,
trade names, service marks and copyrights owned by the Company and its
Subsidiaries (the "Intellectual Property Rights") and (ii) all United States and
----------------------------
foreign patents, trademarks, trade names, service marks and copyrights licensed
to the Company or any of its Subsidiaries (the "Licensed Rights"). The Company
---------------
represents and warrants that, except as set forth in the Company Disclosure
Letter, (i) the Intellectual Property Rights are free and clear of any liens,
claims or encumbrances, are not subject to any license (royalty bearing or
royalty free) and are not subject to any other arrangement requiring any payment
to any person or the obligation to grant rights to any person in exchange; (ii)
to the knowledge of the Company, the Licensed Rights are free and clear of any
liens, claims, encumbrances, royalties or other obligations; and (iii) the
Intellectual Property Rights and the Licensed Rights are all those material
rights necessary to the conduct of the business of each of the Company, its
Subsidiaries and the Company's affiliates as presently conducted. Except as set
forth in the Company Disclosure Letter, the validity of the Intellectual
Property Rights and title thereto, (i) have not been questioned in any prior
Litigation; (ii) are not being questioned in any pending Litigation; and (iii)
to the knowledge of the Company, are not the subject(s) of any threatened or
proposed Litigation. The business of each of the Company and its Subsidiaries,
as presently conducted, does not conflict with and, to the knowledge of the
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<PAGE>
Company, has not been alleged to conflict with any patents, trademarks, trade
names, service marks, copyrights or other intellectual property rights of
others. The consummation of the transactions contemplated hereby will not
result in the loss or impairment of any of the Intellectual Property Rights or
the Company's or its Subsidiaries' right to use any of the Licensed Rights. To
the knowledge of the Company, there are no third parties using any of the
Intellectual Property Rights material to the business of the Company or its
Subsidiaries as presently conducted.
(b) Except as identified in the Company Disclosure Letter, each of the
Company and its Subsidiaries owns, or possesses valid rights to, all computer
software programs that are material to the conduct of the business of the
Company and its Subsidiaries. To the Company's knowledge, there are no
infringement suits, actions or proceedings pending or threatened against the
Company or any Subsidiary with respect to any software owned or licensed by the
Company or any Subsidiary.
Section 3.20. Year 2000 Compliance. The Company has made available to
--------------------
Parent the Company's plan to ensure that it will be Year 2000 Compliant (the
"Year 2000 Plan"). To the Company's knowledge, the Year 2000 Plan will enable
- ---------------
the Company to be Year 2000 Compliant in a timely manner except as to matters
which are not reasonably likely to result in a Company Material Adverse Effect
and the cost for the Company to become Year 2000 Compliant is estimated to be
$400,000.
"Year 2000 Compliant" means that (a) the products, services, or other
-------------------
item(s) at issue accurately process, provide and/or receive date/time data
(including calculating, comparing, and sequencing), within, from, into, and
between centuries (including the twentieth and twenty-first centuries and the
years 1999 and 2000), including leap year calculations, and (b) neither the
performance nor the functionality nor the supply of the products, services, and
other item at issue will be affected by dates/times prior to, on, after, or
spanning January 1, 2000. The design of the products, services, and other item
at issue to ensure compliance with the foregoing warranties and representations
includes proper date/time data century recognition and recognition of 1999 and
2000, calculations that accommodate same century and multicentury formulae and
date/time values before, on, after, and spanning January 1, 2000, and date/time
data interface values that reflect the century, 1999, and 2000. In particular,
but without limitation, (i) no value for current date/time will cause any error,
interruption, or decreased performance in or for such product, service, and
other item, (ii) all manipulations of date and time related data (including
calculating, comparing, sequencing, processing, and outputting) will produce
correct results for all valid dates and times, including when used in
combination with other products, services, or items, (iii) all date/time
elements in interfaces and data storage will specify the century to eliminate
date ambiguity without human intervention, including leap year calculations,
(iv) where any date/time element is represented without a century, the correct
century will be unambiguous for all manipulations involving that element, (v)
authorization codes, passwords, and zaps (purge functions) will function
normally and in the same manner during prior to, on, and after January 1, 2000,
including the manner in which they function with respect to expiration dates and
CPU serial numbers, and (vi) the Company's and its Subsidiaries'
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<PAGE>
supply of the product, service, and other item will not be interrupted, delayed,
decreased, or otherwise affected by the advent of the year 2000.
Section 3.21. Brokers. Except pursuant to the Independent Advisor
-------
Engagement Letters (as hereinafter defined), no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with this Agreement, the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company Disclosure Letter includes a complete and correct copy
of all agreements between the Company and the Independent Advisors pursuant to
which such firms would be entitled to any payment relating to this Agreement,
the Merger or the other transactions contemplated by this Agreement.
Section 3.22. [Intentionally Omitted.]
Section 3.23. Insurance Policies. The Company has delivered to Parent
------------------
prior to the date hereof a complete and accurate list of all insurance policies
in force naming the Company, any of its Subsidiaries or employees thereof as an
insured or beneficiary or as a loss payable payee or for which the Company or
any Subsidiary has paid or is obligated to pay all or part of the premiums.
Neither the Company nor any Subsidiary has received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect thereto, and each of the Company and the Subsidiaries is in compliance
in all material respects with all conditions contained therein. There are no
material pending claims against such insurance policies by the Company or any
Subsidiary as to which insurers are defending under reservation of rights or
have denied liability, and there exists no material claim under such insurance
policies that has not been properly filed by the Company or any Subsidiary.
Except for the self-insurance retentions or deductibles set forth in the
policies contained in the aforementioned list, the policies are adequate in
scope and amount to cover all prudent and reasonably foreseeable risks which may
arise in the conduct of the business of the Company and the Subsidiaries that
would reasonably be expected to have a Company Material Adverse Effect.
Section 3.24. Notes and Accounts Receivable.
-----------------------------
(a) Except as disclosed in the Company Disclosure Letter, there are no
notes receivable of the Company or any Subsidiary owing by any director,
officer, stockholder or employee of the Company or any Subsidiary.
(b) Except as disclosed in the Company Disclosure Letter, all accounts
receivable of the Company and any Subsidiary are current or covered by adequate
reserves for uncollectability, and there are no material disputes regarding the
collectibility of any such accounts receivable that would reasonably be expected
to have a Company Material Adverse Effect.
Section 3.25. Transactions with Affiliates. Except as set forth in the
----------------------------
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an
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<PAGE>
employee or director of the Company or its Subsidiaries), no director, officer
or other "affiliate" or "associate" (as such terms are defined in Rule 12b-2
under the Exchange Act) of the Company or any Subsidiary or any entity in which,
to the knowledge of the Company, any such director, officer or other affiliate
or associate, owns any beneficial interest (other than a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by any such persons) has any interest in: (i) any contract, arrangement or
understanding with, or relating to the business or operations of Company or any
Subsidiary; (ii) any loan, arrangement, understanding, agreement or contract for
or relating to indebtedness of the Company or any Subsidiary; or (iii) any
property (real, personal or mixed), tangible, or intangible, used or currently
intended to be used in, the business or operations of the Company or any
Subsidiary.
Section 3.26. No Existing Discussions. As of the date hereof, the Company
-----------------------
is not engaged, directly or indirectly, in any negotiations or discussions with
any other party with respect to an Acquisition Proposal (as hereinafter
defined).
Section 3.27. Disclosure. No representation, warranty or covenant made by
----------
the Company in this Agreement or in the Company Disclosure Letter contains an
untrue statement of a material fact or omits to state a material fact required
to be stated herein or therein or necessary to make the statements contained
herein or therein not misleading. Any matter expressly disclosed in the Company
Disclosure Letter shall be deemed to be disclosed as to such matter so long as
such disclosure being made states clearly the matter being disclosed and the
context for which it is being disclosed.
Section 3.28. Company Warrants. Upon the consummation of the Merger, each
----------------
of the Company's outstanding warrants to acquire shares of Company Common Stock
shall, pursuant to their terms, become exercisable, upon payment of the
applicable exercise price thereof, into the right to receive an amount in cash
determined by multiplying (A) the Merger Consideration by (B) the number of
----------- --
shares of Company Common Stock such holder could have purchased had such holder
exercised such warrant in full immediately prior to the consummation of the
Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND BUYER
Each of Parent and Buyer represents and warrants to the Company as follows:
Section 4.1. Organization and Standing. Such person (a) is a corporation
-------------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate it properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign
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<PAGE>
corporation and is in good standing in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed would not, individually or in the aggregate, have a
material adverse effect on Parent or Buyer.
Section 4.2. Authority for Agreement. Such person has all necessary
-----------------------
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by such person of this Agreement, and the consummation by each such
person of the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of such person are necessary to authorize this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly executed and delivered by such person and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of such person enforceable against such person in
accordance with its terms.
Section 4.3. No Conflict. The execution and delivery of this Agreement by
-----------
such person do not, and the performance of this Agreement by such person and the
consummation of the Merger and the other transactions contemplated by this
Agreement will not, (i) conflict with or violate the certificate of
incorporation or bylaws of such person, (ii) conflict with or violate any Law
applicable to such person or by which any property or asset of such person is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of such person pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such person is a party or by which such person
or any property or asset of either of them is bound or affected, except in the
case of clauses (ii) and (iii) for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
prevent or materially delay the performance by such person of its respective
obligations under this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
Section 4.4. Required Filings and Consents. The execution and delivery of
-----------------------------
this Agreement by such person do not, and the performance of this Agreement by
such person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the HSR Act, (iii) for the FCC Filings, (iv) for filings
contemplated by Section 3.15 and (v) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, prevent or materially delay the
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<PAGE>
performance by such person of any of its respective obligations under this
Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
Section 4.5. Information Supplied. None of the information supplied or to
--------------------
be supplied by such person for inclusion or incorporation by reference in the
Proxy Statement will, at the date such document is first published, sent or
delivered to Company Stockholders or, unless promptly corrected, at any time
during the pendency 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 made therein, in light of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made by such person with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
foregoing document.
Section 4.6. Brokers. No broker, finder or investment banker (other than
-------
Warburg Dillon Read LLC) is entitled to any brokerage, finder's or other fee or
commission payable by such person in connection with this Agreement, the Merger
or the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of such person.
Section 4.7 No Prior Activities. Except for obligations or liabilities
-------------------
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement, the Merger and the transactions contemplated
hereby and the purchase of the shares of Convertible Preferred Stock, Buyer has
not incurred any obligations or liabilities, and has not engaged in any business
or activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Business Pending the Merger.
------------------------------------------
(a) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, unless Parent shall otherwise agree in
writing, (i) the business of the Company and its Subsidiaries shall be conducted
only in, and the Company and its Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with prior
practice, (ii) the Company and its Subsidiaries shall use all commercially
reasonable efforts to maintain and protect the FCC Licenses and Channel Leases,
to preserve substantially intact their business organizations, to keep available
the services of their current officers and employees and to preserve the current
relationships of the Company and its Subsidiaries with customers, suppliers and
other persons with which the Company or its Subsidiaries has significant
business relations, and (iii) the Company will comply in all material respects
with all applicable Laws and regulations wherever
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its business is conducted, including, without limitation, the timely filing of
all reports, forms or other documents with the FCC and with the SEC required
pursuant to the Securities Act or the Exchange Act.
(b) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, the Company shall not, nor shall the Company
permit any of its Subsidiaries to, (i) declare or pay any dividends on or make
other distributions (whether in cash, stock or property) in respect of any of
its capital stock, except for dividends (x) by a wholly owned Subsidiary of the
Company to the Company or another wholly owned Subsidiary of the Company, (y)
with respect to the Convertible Preferred Stock and (z) with respect to the
preferred stock of Speedchoice of Detroit, Inc.; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (iii) repurchase or otherwise acquire any
shares of its capital stock; (iv) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares or convertible securities
or any stock appreciation rights, phantom stock plans or stock equivalents,
other than the issuance of shares of Company Common Stock upon (x) the exercise
of Company Options outstanding as of the date of this Agreement, (y) exercise of
warrants and (z) conversion of Convertible Preferred Stock; (v) willfully take
any action that would make the Company's representations and warranties set
forth in Article III not true and correct in all material respects; or (vi) take
any action that would, or could reasonably be expected to, result in any of the
conditions set forth in Article VI not being satisfied.
(c) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, the Company shall not, nor shall the Company
permit any of its Subsidiaries to, (i) amend its certificate of incorporation
(including any certificate of designations attached thereto) or bylaws or other
equivalent organizational documents; (ii) incur any indebtedness for borrowed
money or guaranty any such indebtedness of another person, other than (A)
borrowings under existing lines of credit (or under any refinancing of such
existing lines) or (B) indebtedness owing to, or guaranties of indebtedness
owing to, the Company (iii) make any loans or advances to any other person other
than loans or advances between any Subsidiaries of the Company or between the
Company and any of its Subsidiaries (other than loans or advances less than
$50,000 made in the ordinary course of business consistent with past practice);
(iv) merge or consolidate with any other entity in any transaction, or sell any
business or assets in a single transaction or series of transactions in which
the aggregate consideration is $100,000 or greater; (v) change its accounting
policies except as required by GAAP; (vi) make any change in employment terms
for any of its directors or officers; (vii) alter, amend or create any
obligations with respect to compensation, severance, benefits, change of control
payments or any other payments to employees, directors or affiliates of the
Company or its Subsidiaries, other than with respect to alterations or
amendments made with respect to non-officers and non-directors in the ordinary
course of business consistent with past practice or as expressly contemplated by
this Agreement or consented to in writing by Parent; (viii) make any change to
the Company Benefit Plans; (ix) enter into any leasing or licensing agreements,
take-or-pay arrangements or other affiliations, alignments or agreements with
respect
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<PAGE>
to the FCC Licenses, provided, the Company may renegotiate any Channel Leases in
--------
the ordinary course of business; or (x) commit or agree to take any of the
actions described in this Section 5.1.
(d) The Company Disclosure Letter sets forth the projected operating
expenses and capital expenditures for Company and its Subsidiaries on a
consolidated basis from the date of this Agreement through December 31, 1999 as
agreed to by the Company and Parent (the "Projections"). The Company agrees
-----------
that it shall not incur material operating expenses or capital expenditures, in
the aggregate, in excess of those identified in the Projections.
Section 5.2. Access to Information; Confidentiality.
--------------------------------------
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys, financial
advisors, lenders and other agents (collectively, the "Representatives") of the
---------------
Company to, afford the Representatives of Parent and Buyer reasonable access at
all reasonable times to the officers, employees, agents, properties, offices and
other facilities, books and records of the Company and its Subsidiaries, and
shall furnish Parent and Buyer with all financial, operating and other data and
information as Parent or Buyer, through its Representatives, may reasonably
request. Parent will remain subject to the terms of a confidentiality agreement
with the Company dated March 20, 1998 (the "Confidentiality Agreement").
-------------------------
(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.3. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or nonoccurrence, of any event which would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by such party (or Buyer, in the case of Parent)
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
-------- -------
notice pursuant to this Section 5.3 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice. If any event
or matter arises after the date of this Agreement which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Company Disclosure Letter or which is necessary to
correct any information in the Company Disclosure Letter which has been rendered
inaccurate thereby, then the Company shall promptly supplement, or amend, and
deliver to Parent the Company Disclosure Letter which it has delivered pursuant
to this Agreement.
Section 5.4. Further Assurances.
------------------
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all commercially reasonable efforts to take, or cause
to be taken, all appropriate action, and
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<PAGE>
to do, or cause to be done, all things necessary, proper or advisable under Law
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement, including, without limitation, using all
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of each Governmental Entity
and parties to contracts with the Company and its Subsidiaries as are necessary
for the consummation of the Merger and the other transactions contemplated by
this Agreement and to fulfill the conditions set forth in Article VI. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers of each party to
this Agreement and the Surviving Corporation shall use all commercially
reasonable efforts to take all such action.
(b) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no state
antitakeover statute or similar statute or regulation is or becomes operative
with respect to this Agreement, the Merger or any other transactions
contemplated by this Agreement and (ii) if any state antitakeover statute or
similar statute or regulation is or becomes operative with respect to this
Agreement, the Merger or any other transaction contemplated by this Agreement,
take all actions necessary to ensure that this Agreement, the Merger and any
other transactions contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(c) The parties hereto shall use their best efforts to secure promptly
all necessary approvals from the FCC that are required to consummate this
Agreement. Without limitation to the foregoing, promptly after the date of this
Agreement, the parties shall file with the FCC applications seeking
authorization for the transfer of control of the Company to Buyer at the Closing
and the assignment of any FCC Licenses held by the Alda Companies to an entity
designated by Buyer at the Closing. The parties shall use their best efforts to
prosecute such applications with diligence and shall diligently oppose any
objections to such applications to the end that each application, as soon as
practicable, shall be granted by the FCC and such grants shall no longer be
subject to any further administrative or judicial review.
Section 5.5. Board Recommendations.
---------------------
(a) In connection with the Merger and Stockholders' Meeting, the Board
of Directors of the Company shall (i) subject to Section 5.5(b), recommend to
the holders of the Company Common Stock to vote in favor of the Merger and use
all commercially reasonable efforts to obtain the necessary approvals by the
Company Stockholders of this Agreement and (ii) otherwise comply with all legal
requirements applicable to such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this Section 5.5(b) (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to Parent, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (ii)
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<PAGE>
approve or recommend, or propose publicly to approve or recommend, any
transaction involving an Acquisition Proposal (as hereinafter defined) from a
third party (an "Alternative Transaction"), or (iii) cause the Company to enter
-----------------------
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
---------------------
Alternative Transaction. Notwithstanding the foregoing, if prior to the approval
of this Agreement by the Company Stockholders, the Board of Directors of the
Company determines in good faith, after it has received a Superior Proposal (as
hereinafter defined) in compliance with Section 5.9 and after receipt of written
advice from outside counsel that it is required to do so by its fiduciary duties
to Company Stockholders under applicable Law, the Board of Directors of the
Company may (subject to this and the following sentences) inform Company
Stockholders that it no longer believes that the Merger is advisable and no
longer recommends approval (a "Subsequent Determination") and enter into an
------------------------
Acquisition Agreement with respect to a Superior Proposal, but only at a time
that is after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company has received a
Superior Proposal. Such written notice shall specify the material terms and
conditions of such Superior Proposal (and include a copy thereof with all
accompanying documentation, if in writing), identify the person making such
Superior Proposal and state that the Board of Directors of the Company intend to
make a Subsequent Determination. During such three business day period, the
Company shall provide an opportunity for Parent to propose such adjustments to
the terms and conditions of this Agreement as would enable the Company to
proceed with its recommendation to its stockholders without a Subsequent
Determination; provided, however, that any such proposed adjustment shall be at
-------- -------
the discretion of the parties hereto at the time. For purposes of this
Agreement, a "Superior Proposal" means any proposal (on its most recently
-----------------
amended or modified terms, if amended or modified) made by a third party to
enter into an Alternative Transaction which the Board of Directors of the
Company determines in its good faith judgment (based on, among other things, the
written advice of an independent financial advisor) to be more favorable to the
Company Stockholders than the Merger, taking into account all relevant factors
(including whether, in the good faith judgment of the Board of Directors of the
Company, after obtaining the advice of such independent financial advisor, the
third party is reasonably able to finance the transaction, and any proposed
changes to this Agreement that may be proposed by Parent in response to such
Alternative Transaction). Notwithstanding any other provision of this
Agreement, the Company shall submit this Agreement (whether or not terminated)
to the Company Stockholders whether or not the Board of Directors of the Company
makes a Subsequent Determination. Nothing contained in this Section 5.5 or any
other provision hereof shall prohibit the Company or the Board of Directors of
the Company from (A) taking and disclosing to the Company Stockholders pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act a position with
respect to a tender or exchange offer by a third party, which is consistent with
its obligations hereunder or (B) making such disclosure to the Company
Stockholders as, in the good faith judgment of the Board of Directors of the
Company, after receiving advice from outside counsel is consistent with its
obligations hereunder and is required by applicable law; provided, that the
--------
Company may not, except as provided by this Section 5.5(b), withdraw, qualify or
modify, in a manner adverse to Parent, the approval or recommendation of such
Board of Directors of the Merger or this Agreement.
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<PAGE>
Section 5.6. Stockholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement or the Merger; provided, however, that no such
-------- -------
settlement shall be agreed to without Parent's consent which consent will not be
unreasonably withheld.
Section 5.7. Indemnification.
---------------
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director, officer,
employee and agent of the Company or its Subsidiaries (the "Indemnified
-----------
Parties") as provided in the Company Certificate of Incorporation or the Company
- -------
Bylaws, in each case as in effect on the date of this Agreement, or pursuant to
any other agreements in effect on the date hereof, copies of which have been
provided to Parent, shall survive the Merger and Parent shall (i) cause the
Surviving Corporation to continue in full force and effect for a period of at
least six (6) years from the Effective Time and (ii) perform, or cause the
Surviving Corporation to perform, in a timely manner, the Surviving
Corporation's obligation with respect thereto. Parent and Buyer agree that any
claims for indemnification hereunder as to which they have received written
notice prior to the sixth anniversary of the Effective Time shall survive,
whether or not such claims shall have been finally adjudicated or settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for six (6) years from the Effective Time,
if available, the current directors' and officers' liability insurance policies
("D&O Insurance") covered by such policies (provided that the Surviving
-------------
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
-------- -------
that in no event shall the Surviving Corporation be required to expend pursuant
to this Section 5.7(b) more than an amount per year equal to one hundred fifty
percent (150%) of current annual premiums paid by the Company for such
insurance. In the event that, but for the proviso to the immediately preceding
sentence, the Surviving Corporation would be required to expend more than one
hundred fifty percent (150%) of current annual premiums, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to one hundred fifty percent (150%) of current
annual premiums. If the Surviving Corporation elects to reduce the amount of
insurance coverage pursuant to the preceding sentence, it will furnish to the
officers and directors currently covered by such D&O Insurance reasonable notice
of such reduction in coverage and shall, to the extent additional coverage is
available, afford such persons the opportunity to pay such additional premiums
as may be necessary to maintain the existing level of D&O Insurance coverage.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
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<PAGE>
successors and assigns of the Surviving Corporation shall assume the obligations
set forth in this Section 5.7.
(d) The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 5.8. Public Announcements. Parent and the Company shall consult
--------------------
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by Law or any listing agreement with a national
securities exchange or trading system to which Parent or the Company is a party.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement is set forth in Exhibit 5.8 to
-----------
this Agreement.
Section 5.9. Acquisition Proposals. The Company shall not, nor shall it
---------------------
authorize or permit any of its Subsidiaries or Representatives to, directly or
indirectly, (a) solicit, initiate or encourage the submission of any Acquisition
Proposal or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
-------- -------
the Board of Directors of the Company from furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited Acquisition Proposal prior to the approval of this Agreement by
the Company Stockholders if, and to the extent that, (A) the Board of Directors
of the Company, based upon the written advice of independent outside legal
counsel, determines in good faith that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to the Company
Stockholders under applicable Delaware law, (B) prior to taking such action, the
Company receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (C) the Board of Directors of the Company concludes in
good faith, based upon written advice from its independent financial advisor,
that the Acquisition Proposal is a Superior Proposal. The Company shall provide
immediate oral and written notice to Parent of (a) the receipt of any such
Acquisition Proposal or any inquiry which could reasonably be expected to lead
to any Acquisition Proposal, (b) the material terms and conditions of such
Acquisition Proposal or inquiry, (c) the identity of such person or entity
making any such Acquisition Proposal or inquiry and (d) the Company's intention
to furnish information to, or enter into discussions or negotiations with, such
person or entity. The Company shall continue to keep Parent informed of the
status and details of any such Acquisition Proposal or inquiry. For purposes of
this Agreement, "Acquisition Proposal" means any bona fide proposal with respect
--------------------
to a merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or any equity interest in the
Company.
Section 5.10. Company Stockholders' Meeting.
-----------------------------
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(a) The Company shall cause the Stockholders' Meeting to be duly
called and held as soon as practicable for the purpose of voting on the approval
and adoption of this Agreement and the Merger. The Company shall take all
action necessary in accordance with applicable Law and the Company Certificate
of Incorporation and Company Bylaws to duly call, give notice of, and convene
the Stockholders' Meeting.
(b) The Company shall, at the direction of Parent, solicit from
holders of shares of Company Stock entitled to vote at the Stockholders' Meeting
proxies in favor of such approval and shall take all other action necessary or,
in the reasonable judgment of Parent, helpful to secure the vote or consent of
such holders required by the DGCL or this Agreement to effect the Merger.
Section 5.11. Proxy Statement.
---------------
(a) Parent and the Company will as promptly as practicable following
the execution of this Agreement jointly prepare, and the Company shall file, the
Proxy Statement with the SEC and will use all commercially reasonable efforts to
respond to the comments of the SEC and to cause the Proxy Statement to be mailed
to the Company Stockholders at the earliest practical time. The Company shall
furnish all information concerning it and the holders of its capital stock as
Parent may reasonably request in connection with such actions. Each party to
this Agreement will notify the other parties and the Board of Directors of the
Company promptly of the receipt of the comments of the SEC, if any, and of any
request by the SEC for amendments or supplements to the Proxy Statement or for
additional information with respect thereto, and will supply the other parties
with copies of all correspondence between such party or its Representatives, on
the one hand, and the SEC or members of its staff, on the other hand, with
respect to the Proxy Statement or the Merger. If (A) at any time prior to the
Stockholders' Meeting, any event should occur relating to the Company or any of
its Subsidiaries which should be set forth in an amendment of, or a supplement
to, the Proxy Statement, the Company will promptly inform Parent and (B) if at
any time prior to the Stockholders' Meeting, any event should occur relating to
Parent or Buyer or any of their respective associates or affiliates, or relating
to the plans of any such persons for the Company after the Effective Time that
should be set forth in an amendment of, or a supplement to, the Proxy Statement,
Parent will promptly inform the Company, and in the case of (A) or (B) the
Company and Parent, will, upon learning of such event, promptly prepare, and the
Company shall file and, if required, mail such amendment or supplement to the
Company Stockholders; provided, prior to such filing or mailing, the Company and
--------
Parent shall consult with each other with respect to such amendment or
supplement and shall incorporate the other's comments thereon. Parent shall
vote, or cause to be voted, in favor of the Merger and this Agreement all shares
of Company Stock directly or indirectly beneficially owned by it.
(b) The Company hereby consents to the inclusion in the Proxy
Statement of the recommendation of the Board of Directors of the Company
described in Section 3.3, subject to any modification, amendment or withdrawal
thereof, and represents that the Independent Advisors have, subject to the terms
of their engagement letters with the Company and the Board of Directors of the
Company (the "Independent Advisor Engagement Letters"), consented to the
--------------------------------------
inclusion of references
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<PAGE>
to their opinions in the Proxy Statement. The Company and its counsel shall
permit Parent and its counsel to participate in all communications with the SEC
and its staff, including any meetings and telephone conferences, relating to the
Proxy Statement, the Merger or this Agreement.
Section 5.12. Stockholder Lists. The Company shall promptly upon the
-----------------
request by Parent, or shall cause its transfer agent to promptly, furnish Parent
and Buyer with mailing labels containing the names and addresses of all record
holders of shares of Company Stock and with security position listings of shares
of Company Stock held in stock depositories, each as of the most recent
practicable date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of shares of Company Stock. The Company shall furnish Parent
and Buyer with such additional information, including, without limitation,
updated listings and computer files of the Company Stockholders, mailing labels
and security position listings, and such other assistance as Parent, Buyer or
their agents may reasonably request.
Section 5.13. [Intentionally Omitted.]
Section 5.14. [Intentionally Omitted.]
Section 5.15. FCC Application. The Company and Parent shall coordinate
---------------
efforts and cooperate with each other, to the extent permitted by the FCC rules,
in the preparation and filing of Colocation Applications and Other Applications
with the FCC. Without limitation to the foregoing, upon the request of Parent,
the Company shall use all commercially reasonable efforts to prepare and file
and/or to cause the lessor of a Channel Lease to prepare and file, at the
Company's expense, a Colocation Application or Other Application to be filed
with the FCC, as soon as practicable, and to the extent applicable, in no event
after: (i) the end of the initial one week filing window in which the FCC will
accept Other Applications for the provision of Two-Way Services pursuant to the
newly adopted FCC rules governing the provision of Two-Way Services; or (ii) the
end of a filing window for ITFS major modification applications established
pursuant to Section 74.911(c) of the FCC rules.
Section 5.16. Undertakings of Parent. Parent shall perform, or cause to
----------------------
be performed, when due all obligations of Buyer under this Agreement.
Section 5.17. Transfer of FCC Licenses. The Company shall cause, prior to
------------------------
the consummation of the Merger, the FCC Licenses and Channel Leases owned by
Alda Wireless Holdings, Inc., Alda Tucson, Inc. and Alda Gold, Inc.
(collectively, the "Alda Companies") to be transferred to the Company in a
--------------
manner reasonably satisfactory to Parent. In connection with such transfer, the
Company shall cause each of the Alda Companies to release the Company from any
liabilities to the Alda Companies associated with such FCC Licenses and Channel
Leases and acknowledge that the Company has no further obligations to the Alda
Companies with respect to such FCC Licenses and Channel Leases.
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<PAGE>
Section 5.18. Director Resignations. The Company shall cause to be
---------------------
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the consummation of the Merger. The Company
shall cause such directors, prior to resignation, to appoint new directors
nominated by Parent to fill such vacancies.
Section 5.19. Company Options. As promptly as practicable following the
---------------
date hereof, the Company shall use all commercially reasonable efforts to cause
all of the holders of Company Options to agree to the termination and expiration
of their Company Options immediately prior to the consummation of the Merger in
exchange for the Option Consideration described in Section 1.6.
Section 5.20. [Intentionally Omitted.]
Section 5.21. Rights Plan. The Board of Directors of Company shall as
-----------
promptly as practicable, and in any event prior to 5:00 p.m., New York time, on
April 12, 1999, adopt a Rights Agreement between the Company and Harris Trust
Company of New York (the "Rights Plan") and shall approve the appropriate
-----------
resolutions so that (i) neither Parent nor Buyer will become an "Acquiring
Person" (as defined in the Rights Plan) as a result of the transactions
contemplated by this Agreement or the Merger, (ii) no "Stock Acquisition Date"
or "Distribution Date" (as such terms are defined in the Rights Plan) will occur
as a result of this Agreement or the Merger or the consummation of the
transactions contemplated by this Agreement or the Merger, and (iii) all
outstanding rights to purchase Series A Junior Participating Preferred Stock
issued and outstanding under the Rights Plan will expire at the Effective Time.
Section 5.22. Year 2000 Plan. The Company shall use all commercially
--------------
reasonable efforts to ensure that the Year 2000 Plan shall be completed in a
timely manner. The Company shall (i) allow Parent to monitor the Company's Year
2000 Compliance issues and Year 2000 Plan, (ii) provide prompt notice to Parent
if the Company does not achieve, or reasonably expects it shall not achieve,
milestones and objectives identified in the Year 2000 Plan and (iii) cooperate
in good faith with Parent's efforts to ensure that the Company is Year 2000
Compliant.
Section 5.23. Purchase of Company Stock. The Company shall in no way
-------------------------
prohibit Parent or any of its affiliates from purchasing shares of Company Stock
or entering into option, lock-up, voting or proxy agreements or any other
similar agreements with respect to Company Stock (including, but not limited to,
amending the Rights Plan to cause such acquisition or agreement to trigger a
Stock Acquisition Date or Distribution Date or cause Parent or any or its
affiliates to become an Acquiring Person) at any time prior to the consummation
of the Merger.
Section 5.24 Appointment of Directors. Unless or until permitted by FCC
------------------------
rules and regulations, Parent shall not appoint any directors to the Board of
Directors of the Company pursuant to rights relating to shares of Company Stock
owned directly or indirectly by Parent.
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<PAGE>
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The respective
------------------------------------------
obligations of Parent, Buyer and the Company to effect the Merger are subject to
the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Stockholders, as required by the DGCL, the
Company Certificate of Incorporation and the Company Bylaws;
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition (including, any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to, or any consent or approval withheld with respect to, the
Merger, by any Governmental Entity) preventing the consummation of the Merger
shall be in effect; provided, however, that the parties invoking this condition
-------- -------
shall use all commercially reasonable efforts to have any such order or
injunction vacated; and
(d) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made (including any necessary approval by the FCC and the expiration
or termination of any applicable waiting period under the HSR Act).
Section 6.2. Conditions to Obligations of Parent and Buyer to Effect the
-----------------------------------------------------------
Merger. The obligations of Parent and Buyer to effect the Merger are further
- ------
subject to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) (i) the representations and warranties of the Company in this
Agreement that are qualified by materiality shall be true and correct in all
respects as of the date of the Agreement and as of the Effective Time; (ii) the
representations and warranties of the Company in the Agreement that are not
qualified by materiality shall be true and correct in all material respects as
of the date of this Agreement and as of the Effective Time; (iii) the Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement; (iv) the Alda Companies shall have
transferred to the Company the FCC Licenses and Channel Leases pursuant to
Section 5.17; (v) the directors of the Company's Subsidiaries shall have
resigned and appointed nominees to fill their vacancies as provided in Section
5.18; and (vi) an officer of the Company shall have delivered to Parent and
Buyer a certificate to the effect that each of the foregoing conditions is
satisfied in all respects; provided, however, for purposes of this condition, as
-------- -------
used in the representations and warranties of the Company contained in Article
III of this Agreement, a Company Material Adverse Effect shall not include
adverse developments in the
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<PAGE>
Company's or its Subsidiaries' revenue or results of operations so long as the
operating expenses and capital expenditures, in the aggregate, are not in excess
of those identified in the Projections;
(b) The Company and its Subsidiaries shall have procured all necessary
third party consents in connection with the consummation of the Merger and the
transactions contemplated hereby;
(c) There shall not be instituted, pending or threatened any action,
investigation or proceeding by any Governmental Entity, or there shall not be
instituted, pending or threatened any action or proceeding by any other person,
domestic or foreign, before any Governmental Entity, which is reasonably likely
to be determined adversely to Buyer, (A) challenging or seeking to make illegal,
to delay materially or otherwise, directly or indirectly, to restrain or
prohibit the consummation of the Merger, seeking to obtain material damages or
imposing any material adverse conditions in connection therewith or otherwise,
directly or indirectly, relating to the transactions contemplated by the Merger,
(B) seeking to restrain, prohibit or delay the exercise of full rights of
ownership or operation by Buyer or its affiliates of all or any portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, or to compel Buyer or any of its affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Buyer or any
of its affiliates, (C) seeking to impose or confirm material limitations on the
ability of Buyer or any of its affiliates effectively to exercise full rights of
ownership of the shares of Company Common Stock, including, without limitation,
the right to vote the shares of Company Common Stock acquired or owned by Buyer
or any of its affiliates on all matters properly presented to the Company
Stockholders, (D) seeking to require divestiture by Buyer or any of its
affiliates of the shares of Company Common Stock, or (E) that otherwise would
reasonably be expected to have a Company Material Adverse Effect; or
(d) There shall not have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result in,
a Company Material Adverse Effect; provided, that for purposes of this
--------
condition, a Company Material Adverse Effect shall not include adverse
developments in the Company's or its Subsidiaries' revenue or results of
operations so long as the operating expenses and capital expenditures, in the
aggregate, are not in excess of those identified in the Projections.
Section 6.3. Conditions to Obligations of the Company to Effect the
------------------------------------------------------
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Parent and Buyer in this
Agreement that are qualified by materiality shall be true and correct in all
respects as of the date of this Agreement and as of the Effective Time;
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<PAGE>
(b) The representations and warranties of Parent and Buyer in this
Agreement that are not qualified by materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Time;
(c) Parent and Buyer shall have performed in all material respects all
obligations required to be performed by them under this Agreement; and
(d) Parent and Buyer shall have delivered to the Company a certificate
to the effect that each of the conditions specified in Sections 6.3(a), (b) and
(c) is satisfied in all respects.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
Company Stockholders:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) By any of Parent, Buyer or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree,
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; provided however, that the party terminating
-------- -------
this Agreement pursuant to this Section 7.1(b) shall use all commercially
reasonable efforts to have such order, decree, ruling or action vacated;
(c) By any of Parent, Buyer or the Company if the Merger shall not
have been consummated on or before December 31, 1999; provided, however, that
-------- -------
the right to terminate this Agreement under this Section 7.1(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the primary cause of, or resulted in, the failure to
consummate the Merger on or before such date;
(d) By Parent or Buyer if the Board of Directors of the Company (i)
shall have withdrawn or shall have modified in a manner adverse to Parent or
Buyer its approval or recommendation of the Merger or this Agreement, (ii)
causes the Company to enter into an agreement with respect to an Acquisition
Proposal, (iii) shall have endorsed, approved or recommended any Acquisition
Proposal or (iv) shall have resolved to do any of the foregoing;
(e) By any of the Company, Parent or Buyer, if this Agreement and the
Merger shall fail to be approved and adopted by the Company Stockholders at the
Stockholders' Meeting;
-38-
<PAGE>
(f) By Parent or Buyer, if (i) any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment and shall not have been
waived by Parent and Buyer or (ii) the Company shall breach in any material
respect any of its representations, warranties, covenants or other obligations
hereunder and, within ten (10) days after written notice of such breach to the
Company from Parent, such breach shall not have been cured in all material
respects or waived by Parent or Buyer and the Company shall not have provided
reasonable assurance to Parent and Buyer that such breach will be cured in all
material respects on or before the Effective Time;
(g) By the Company, if (i) any of the conditions set forth in Section
6.3 shall have become incapable of fulfillment and shall not have been waived by
the Company or (ii) Parent or Buyer shall breach in any material respect any of
their respective representations, warranties or obligations hereunder and,
within ten (10) days after written notice of such breach to Parent from the
Company, such breach shall not have been cured in all material respects or
waived by the Company and Parent or Buyer, as the case may be, shall not have
provided reasonable assurance to the Company that such breach will be cured in
all material respects on or before the Effective Time; or
(h) By the Company if, in compliance with its obligations under
Sections 5.5 and 5.9, (i) the Board of Directors of the Company shall have
withdrawn or shall have modified in a manner adverse to Parent or Buyer its
approval or recommendation of the Merger or this Agreement and (ii) the Company
shall have entered into an agreement with respect to a Superior Proposal.
Section 7.2. Effect of Termination.
---------------------
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have no
further effect except as specifically provided herein and, except as provided in
this Section 7.2 and in Section 8.12, there shall be no liability on the part of
any party hereto, provided that nothing herein shall relieve any party from
liability for any willful breach hereof.
(b) If (i) Parent or Buyer exercises its right to terminate this
Agreement under Section 7.1(d), the Company shall pay to Parent $14 million (the
"Termination Fee"), payable in same-day funds, as liquidated damages and not as
---------------
a penalty to reimburse Parent for its time, expense and lost opportunity costs
of pursuing the Merger, upon consummation of the transaction relating to such
Acquisition Proposal.
(c) If within one year after termination of this Agreement, the
Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal with a person other than Parent or Buyer, then immediately
prior to, and as a condition of, consummation of such transaction the Company
shall pay to Parent upon demand $14 million, payable in same-day funds, as
liquidated damages and not as a penalty, to reimburse Parent for its time,
expense and lost opportunity costs of pursuing the Merger; provided that no such
--------
amount shall be payable if the Termination Fee shall have become payable or have
been paid in accordance with Section 7.2(b) of
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<PAGE>
this Agreement or if this Agreement shall have been terminated by the Company in
accordance with clause (ii) of Section 7.1(g); provided, no such amount shall be
--------
payable if the fair market value of the per share consideration to be received
by the holders of Company Stock pursuant to such Acquisition Proposal is less
than 90% of the Merger Consideration on a pre tax basis determined as of the
effective date of such transaction.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due under
this Section 7.2, the Company shall pay the costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee or obligation at the publicly
announced prime rate of Citibank, N.A. in effect from time to time from the date
such fee or obligation was required to be paid.
Section 7.3. Amendments. This Agreement may not be amended except by
----------
action of the board of directors of each of the parties hereto (and, in the case
of the Company, with the approval of the Board of Directors of the Company) set
forth in an instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after approval of the Merger by the Company
-------- -------
Stockholders (if required), no amendment may be made without the further
approval of the Company Stockholders if the effect of such amendment would be to
reduce the Merger Consideration or change the form thereof.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
------
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any other party hereto or (ii) waive
any inaccuracy of any representations or warranties or compliance with any of
the agreements, covenants or conditions of any other party or with any
conditions to its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by its duly authorized
officer. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
The waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions of
----------------------------
Sections 5.6 and 5.7 hereof, nothing in this Agreement shall confer any rights
or remedies upon any person other than the parties hereto.
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<PAGE>
Section 8.2. Entire Agreement. This Agreement constitutes the entire
----------------
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
Section 8.3. Succession and Assignment. This Agreement shall be binding
-------------------------
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties; provided, however, that Buyer may freely assign its rights to
-------- -------
another wholly owned subsidiary of Parent without such prior written approval
but no such assignment shall relieve Buyer of any of its obligations hereunder.
Section 8.4. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The section headings contained in this Agreement
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 8.8. Specific Performance. Each of the parties acknowledges and
--------------------
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
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<PAGE>
Section 8.9. Construction. The language used in this Agreement shall be
------------
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties and
--------------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
- ----------
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that (i) the agreements set
forth in Articles I and VIII and Sections 5.4, 5.6 and 5.7 shall survive the
Effective Time indefinitely and (ii) the agreements set forth in Sections 5.6,
5.7, 5.23 and 7.2 and in Article VIII shall survive the termination of this
Agreement indefinitely.
Section 8.11. Certain Definitions. For purposes of this Agreement, the
-------------------
terms "associate" and "affiliate" shall have the same meaning as set forth in
Rule l2b-2 promulgated under the Exchange Act, and the term "person" shall mean
any individual, corporation, partnership (general or limited), limited liability
company, limited liability partnership, trust, joint venture, joint-stock
company, syndicate, association, entity, unincorporated organization or
government or any political subdivision, agency or instrumentality thereof.
Section 8.12. Fees and Expenses. Each party hereto shall pay its own
-----------------
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
Section 8.13. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses, or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.13:
If to Parent or Buyer:
Sprint Corporation
2330 Shawmee Mission Parkway
Westwood, Kansas 66205
Telecopier: (913) 624-8426
Attention: President
with a copy to:
Sprint Corporation
2330 Shawmee Mission Parkway
Westwood, Kansas 66205
Telecopier: (913) 624-8426
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<PAGE>
Attention: J. Richard Devlin
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: Bruce N. Hawthorne, Esq.
If to the Company:
People's Choice TV Corp.
2 Corporate Drive
Shelton, Connecticut 06484
Telecopier: (203) 925-6250
Attention: Matthew Oristano
Donald Olander
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Telecopier: (212) 728-8111
Attention: Mario M. Cuomo
Daniel D. Rubino
Section 8.14. Control. Buyer has not exercised and shall not exercise any
-------
control of the Company or the FCC Licenses held by the Company or the Alda
Companies prior to the Closing and the grant of the necessary approvals by the
FCC.
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<PAGE>
IN WITNESS WHEREOF, the Company, Parent and Buyer and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PEOPLE'S CHOICE TV CORP.
By: /s/ Matthew Oristano
-----------------------------
Name: Matthew Oristano
------------------------
Title: Chairman
-----------------------
SPRINT CORPORATION
By: /s/ Theodore H. Schell
-----------------------------
Name: Theodore H. Schell
------------------------
Title: Sr. Vice President
-----------------------
MM ACQUISITION CORP.
By: /s/ Theodore H. Schell
-----------------------------
Name: Theodore H. Schell
------------------------
Title: Sr. Vice President
-----------------------
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<PAGE>
EXHIBIT 3.1
STOCKHOLDER AND OPTION AGREEMENT
--------------------------------
THIS STOCKHOLDER AND OPTION AGREEMENT (this "Agreement") dated as of April
12, 1999, is entered into between Sprint Corporation, a Kansas corporation
("Parent"), and Matthew Oristano, an individual resident of the State of
Connecticut, on his own behalf and as attorney-in-fact for the stockholders
identified on Schedule I hereto (collectively, "Stockholder"), with respect to
the shares of common stock, par value $.01 per share (the "Company Common
Stock"), of People's Choice TV Corp., a Delaware corporation (the "Company"),
owned by Stockholder.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the date hereof, the Stockholder beneficially owns and has
the power to vote 1,694,823 shares of Company Common Stock as identified on
Schedule I hereto (including any and all rights attached thereto to acquire
shares of stock of the Company if the Company adopts a stockholders' rights
plan, and any other rights associated therewith, the "Option Shares"); and
WHEREAS, Parent desires to enter into this Agreement in connection with its
efforts to consummate an acquisition of the Company and Parent requires that
Stockholder enter into this Agreement as a condition to its willingness to enter
into an acquisition agreement with the Company.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Covenants.
-----------------
1.1 Lock-Up. Stockholder hereby covenants and agrees during the term
-------
of this Agreement that (a) except as consented to in writing by Parent in its
sole discretion, Stockholder will not sell, transfer, assign, pledge,
hypothecate, tender or otherwise dispose of or limit its right to vote in any
manner any of the Option Shares, or agree to do any of the foregoing, and (b)
Stockholder will not take any action which would have the effect of preventing
or disabling Stockholder from performing its obligations under this Agreement.
1.2 Irrevocable Proxy. Stockholder has revoked or terminated any
-----------------
proxies, voting agreements or similar arrangements previously given or entered
into with respect to the Option Shares and hereby irrevocably appoints Parent,
during the term of this Agreement, as proxy for Stockholder to vote (or refrain
from voting) in any manner as Parent, in its sole discretion, may see fit, all
of the Option Shares for Stockholder and in Stockholder's name, place and stead,
at any annual, special or other meeting or action of the stockholders of the
Company, as applicable, or at any adjournment thereof or pursuant to any consent
of the stockholders of the Company, in lieu of a meeting or otherwise, with
respect to any issue brought before the stockholders of the Company,
<PAGE>
other than with respect to the election of directors of the Company, for which
the stockholders of the Company are entitled to vote.
1.3 Public Announcement. Stockholder shall consult with Parent
-------------------
before issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Parent,
except as may be required by law.
1.4 Stop Transfer Instruction. Promptly following the date hereof,
-------------------------
Stockholder and Parent shall deliver joint written instructions to the Company
and to the Company's transfer agent stating that the Option Shares may not be
sold, transferred, pledged, assigned, hypothecated, tendered or otherwise
disposed of in any manner without the prior written consent of Parent or except
in accordance with the terms and conditions of this Agreement.
1.5 HSR Filing. Promptly following the date hereof, Parent will make
----------
all filings with and give all notices to governmental or regulatory authorities
required of Parent pursuant to the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act"), in connection with consummating the
transactions contemplated by this Agreement. Parent will use all commercially
reasonable efforts to obtain early termination of all applicable waiting periods
under the HSR Act.
2. Grant of Option.
---------------
2.1 Option. Upon the terms and subject to the conditions of this
------
Agreement, Stockholder hereby grants to Parent or Parent's designee an
irrevocable option (the "Option") to purchase the Option Shares. Upon exercise
of the Option and purchase of the Option Shares, Parent shall not assume any
liabilities or obligations (if any) of Stockholder related to or in connection
with such Option Shares and arising prior to the Option Closing Date (as defined
hereinafter).
2.2 Option Price. The purchase price payable by Parent or its
------------
designee at the Option Closing (as hereinafter defined) for the Option Shares
shall be an amount equal to $8.00 per Option Share (the "Option Price");
provided, however, if prior to the Option Closing, Parent shall purchase any
- -------- -------
shares of the Company Common Stock for an amount per share in excess of the
Option Price (the "Excess Amount"), then the amount per Option Share to be paid
by Parent shall equal the sum of the Option Price plus the Excess Amount. If
following the Option Closing, Parent shall purchase any shares of the Company
Common Stock for an amount per share in excess of the sum of the Option Price
plus, if applicable, the Excess Amount plus any other amount previously remitted
pursuant to this Section 2.2 (the "Subsequent Excess Amount"), then Parent shall
forthwith remit to Stockholder an amount equal to the Subsequent Excess Amount
for each Option Share purchased at the Option Closing.
-2-
<PAGE>
2.3 Exercise.
--------
(a) Parent or its designee shall be entitled to exercise the Option by
giving written notice to Stockholder. Such notice shall specify a date (not
earlier than one business day or later than three business days from the date
such notice is delivered to Stockholder) and place for closing of the exercise
of the Option (the "Option Closing"). Upon delivery of notice exercising the
Option, the Option shall be deemed to have been exercised by Parent or its
designee irrespective of the actual date of the Option Closing (the actual date
of the Option Closing is referred to hereinafter as the "Option Closing Date").
At the Option Closing, Parent or its designee will deliver to Stockholder the
Option Price (as adjusted pursuant to Section 2.2, if necessary) with respect to
the Option Shares, by wire transfer of immediately available funds to an account
designated in writing by Stockholder prior to the Option Closing Date.
(b) Upon payment of the Option Price as provided in Section 2.3
hereof, the Stockholder shall deliver to Parent or its designee at the Option
Closing, (i) the certificates representing the Option Shares duly endorsed in
blank for transfer, or accompanied by duly executed stock powers in blank, in
each case with signatures guaranteed by a national bank or trust company or a
member firm of the New York Stock Exchange, Inc. and (ii) all such other
agreements, endorsements, assignments and other instruments as are necessary or
desirable, in Parent's sole and absolute discretion, to vest in Parent or its
designee good and marketable title to such Option Shares or to evidence of
record the sale and assignment of such Option Shares to Parent or its designee.
2.4 Option Expiration/Put Right. Except as provided below, the
---------------------------
Option shall terminate and expire ten days after the transactions contemplated
by this Agreement receive approval required by the HSR Act ("HSR Approval") if
the Option has not been exercised by Parent or its designee on or before such
date (the "Expiration Date"). If the Option has not been exercised by Parent on
or before the Expiration Date, Stockholder shall have the right at such time,
and for a period of 30 days thereafter, to deliver a written notice to Parent
(the "Stockholder Notice") requiring that Parent or its designee purchase the
Option Shares at the Option Price, as adjusted (if necessary) in accordance with
Section 2.2 hereof (the "Put Right"). Upon the exercise by Stockholder of the
Put Right, the parties hereto shall consummate the purchase and sale of the
Option Shares in accordance with Section 2.3 hereof.
3. Representations and Warranties of Stockholder. Stockholder hereby
---------------------------------------------
represents and warrants to Parent, as of the date hereof and as of the Closing
Date, as follows:
3.1 Ownership. Stockholder has good and marketable title to, and is
---------
the sole legal and beneficial owner of the Option Shares, in each case free and
clear of all liabilities, claims, liens, options, proxies, charges,
participations and encumbrances of any kind or character whatsoever. At the
Option Closing, Stockholder will transfer and convey to Parent or its designee
good and marketable title to the Option Shares, free and clear of all
liabilities, claims, liens, options, proxies, charges, participations and
encumbrances of any kind or character whatsoever created by or arising through
Stockholder.
-3-
<PAGE>
3.2 Authorization. Stockholder has all requisite power and authority
-------------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby and has sole voting power and sole power of disposition,
with respect to all of the Option Shares owned by Stockholder with no
restrictions on its voting rights or rights of disposition pertaining thereto.
Stockholder has duly executed and delivered this Agreement and this Agreement
is a legal, valid and binding agreement of Stockholder, enforceable against
Stockholder in accordance with its terms.
3.3 Stockholder Has Adequate Information. Stockholder is a
------------------------------------
sophisticated seller with respect to the Option Shares and has adequate
information concerning the business and financial condition of the Company to
make an informed decision regarding the sale of the Option Shares and has
independently and without reliance upon Parent and based on such information as
Stockholder has deemed appropriate, made its own analysis and decision to enter
into this Agreement. Stockholder acknowledges that Parent has not made and does
not make any representation or warranty, whether express or implied, of any kind
or character except as expressly set forth in this Agreement. Stockholder
acknowledges that the sale of the Option Shares by Stockholder to Parent is
irrevocable, and that Stockholder shall have no recourse to the Option Shares or
Parent, except with respect to breaches of representations, warranties,
covenants and agreements expressly set forth in this Agreement.
3.4 Parent's Excluded Information. Stockholder acknowledges and
-----------------------------
confirms that (a) Parent may possess or hereafter come into possession of
certain non-public information concerning the Option Shares and the Company
which is not known to Stockholder and which may be material to Stockholder's
decision to sell the Option Shares ("Parent's Excluded Information"), (b)
Stockholder has requested not to receive Parent's Excluded Information and has
determined to sell the Option Shares notwithstanding its lack of knowledge of
Parent's Excluded Information, and (c) Parent shall have no liability or
obligation to Stockholder in connection with, and Stockholder hereby waives and
releases Parent from, any claims which Stockholder or its successors and assigns
may have against Parent (whether pursuant to applicable Option Shares, laws or
otherwise) with respect to the non-disclosure of Parent's Excluded Information;
provided, however, nothing contained in this Section 3.4 shall limit
- -------- -------
Stockholder's right to rely upon the express representations and warranties made
by Parent in this Agreement, or Stockholder's remedies in respect of breaches of
any such representations and warranties.
4. Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of Stockholder and Parent contained herein shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, and each representation and warranty contained herein shall
survive the closing of the transactions contemplated hereby until the expiration
of the applicable statute of limitations, including extensions thereof.
5. Specific Performance. Stockholder acknowledges that Parent will be
--------------------
irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of Stockholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Parent upon the breach by Stockholder
of
-4-
<PAGE>
such covenants and agreements, Parent shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such covenants
or agreements.
6. Miscellaneous.
-------------
6.1 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
6.2 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
6.3 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to all
provisions of this Agreement.
6.4 Assignment. This Agreement may not be transferred or assigned by
----------
Stockholder but may be assigned by Parent to any of its affiliates or to any
successor to its business and will be binding upon and inure to the benefit of
any such affiliate or successor.
6.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be an original, but each of which together
shall constitute one and the same Agreement.
6.6 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) If to Parent: Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Corporate Secretary
Telecopy: (913) 624-2256
with a copy to: King & Spalding
-5-
<PAGE>
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Bruce N. Hawthorne, Esq.
Telecopy: (404) 572-5146
(b) If to
Stockholder: Matthew Oristano
68 Old Quarry Road
Woodbridge, CT 06525
Telecopy: (203) 393-3852
with a copy to: Cummings & Lockwood
4 Stamford Plaza
P.O. Box 120
Stamford, CT 06904
Attention: John Flaherty
Telecopy: (203) 351-4140
6.7 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
6.8 Enforceability. The invalidity or unenforceability of any
--------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
6.9 Further Assurances. From time to time at or after the Option
------------------
Closing, at Parent's request and without further consideration, Stockholder
shall execute and deliver to Parent such documents and take such action as
Parent may reasonably request in order to consummate more effectively the
transactions contemplated hereby and to vest in Parent good, valid and
marketable title to the Option Shares, including, but not limited to, using its
best efforts to cause the appropriate transfer agent or registrar to transfer of
record the Option Shares.
-6-
<PAGE>
IN WITNESS WHEREOF, Parent and Stockholder have caused this Agreement to be
duly executed as of the day and year first above written.
SPRINT CORPORATION
By: /s/ Theodore H. Schell
-------------------------------
Name: Theodore H. Schell
Title: Sr. Vice President
MATTHEW ORISTANO
/s/ Matthew Oristano
----------------------------------
In his individual capacity and as
attorney-in-fact for the
stockholders identified on Schedule
I hereto
-7-
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
Name of Stockholder Shares of Company Common Stock
- -------------------------------------------- ------------------------------
- ----------------------------------------------------------------------------
<S> <C>
Alda Multichannels Limited 936,327
- ----------------------------------------------------------------------------
Matthew Oristano 10,000
- ----------------------------------------------------------------------------
Jean Oristano 45,000
- ----------------------------------------------------------------------------
Matthew Oristano, as custodian for
Rachel Oristano 110,000
- ----------------------------------------------------------------------------
Mark Oristano 79,357
- ----------------------------------------------------------------------------
Michael Oristano 105,809
- ----------------------------------------------------------------------------
Trust FBO Stacey Oristano 13,226
- ----------------------------------------------------------------------------
Trust FBO Kelley Oristano 13,226
- ----------------------------------------------------------------------------
Victor Oristano 5,000
- ----------------------------------------------------------------------------
Joan and Victor Oristano Gifting Trust # 1 179,522
- ----------------------------------------------------------------------------
Joan and Victor Oristano Gifting Trust # 2 72,743
- ----------------------------------------------------------------------------
Joan Oristano Generation Skipping Trust
exempt marital trust 6,613
- ----------------------------------------------------------------------------
The Oristano Foundation 108,000
- ----------------------------------------------------------------------------
Alda LP 10,000
- ----------------------------------------------------------------------------
TOTAL: 1,694,823
- -------------------------------------------- ---------
- ----------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
EXHIBIT 4.1
STOCKHOLDER AND OPTION AGREEMENT
--------------------------------
THIS STOCKHOLDER AND OPTION AGREEMENT (this "Agreement") dated as of April
12, 1999, is entered into between Sprint Corporation, a Kansas corporation
("Sprint"), and Bay Harbour Management, LC, a Florida limited company, for its
managed accounts ("Stockholder"), with respect to the shares of common stock,
par value $.01 per share (the "Company Common Stock"), of People's Choice TV
Corp., a Delaware corporation (the "Company"), owned by Stockholder.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the date hereof, the Stockholder beneficially owns and has
the power to vote 881,600 shares of Company Common Stock (including any and all
rights attached thereto to acquire shares of stock of the Company if the Company
adopts a stockholders' rights plan, and any other rights associated therewith,
the "Option Shares"); and
WHEREAS, Sprint desires to enter into this Agreement in connection with its
efforts to consummate an acquisition of the Company.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Covenants.
-----------------
1.1 Lock-Up. Stockholder hereby covenants and agrees during the term
-------
of this Agreement that (a) except as consented to in writing by Sprint in its
sole discretion, Stockholder will not sell, transfer, assign, pledge,
hypothecate, tender or otherwise dispose of or limit its right to vote in any
manner any of the Option Shares, or agree to do any of the foregoing, and (b)
Stockholder will not take any action which would have the effect of preventing
or disabling Stockholder from performing its obligations under this Agreement.
1.2 Irrevocable Proxy. Stockholder has revoked or terminated any
-----------------
proxies, voting agreements or similar arrangements previously given or entered
into with respect to the Option Shares and hereby irrevocably appoints Sprint,
during the term of this Agreement, as proxy for Stockholder to vote (or refrain
from voting) in any manner as Sprint, in its sole discretion, may see fit, all
of the Option Shares for Stockholder and in Stockholder's name, place and stead,
at any annual, special or other meeting or action of the stockholders of the
Company, as applicable, or at any adjournment thereof or pursuant to any consent
of the stockholders of the Company, in lieu of a meeting or otherwise, with
respect to any issue brought before the stockholders of the Company, other than
with respect to the election of directors of the Company, for which the
stockholders of the Company are entitled to vote.
<PAGE>
1.3 Public Announcement. Stockholder shall consult with Sprint
-------------------
before issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the approval of Sprint,
except as may be required by law.
1.4 Stop Transfer Instruction. Promptly following the date hereof,
-------------------------
Stockholder and Sprint shall deliver joint written instructions to the Company
and to the Company's transfer agent stating that the Option Shares may not be
sold, transferred, pledged, assigned, hypothecated, tendered or otherwise
disposed of in any manner without the prior written consent of Sprint or except
in accordance with the terms and conditions of this Agreement.
1.5 HSR Filing. Promptly following the date hereof, Sprint will make
----------
all filings with and give all notices to governmental or regulatory authorities
required of Sprint pursuant to the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act"), in connection with consummating the
transactions contemplated by this Agreement. Sprint will use all commercially
reasonable efforts to obtain early termination of all applicable waiting periods
under the HSR Act.
2. Grant of Option.
---------------
2.1 Option. Upon the terms and subject to the conditions of this
------
Agreement, Stockholder hereby grants to Sprint or Sprint's designee an
irrevocable option (the "Option") to purchase the Option Shares. Upon exercise
of the Option and purchase of the Option Shares, Sprint shall not assume any
liabilities or obligations (if any) of Stockholder related to or in connection
with such Option Shares and arising prior to the Option Closing Date (as defined
hereinafter).
2.2 Option Price. The purchase price payable by Sprint or its
------------
designee at the Option Closing (as hereinafter defined) for the Option Shares
shall be an amount equal to $8.00 per Option Share (the "Option Price");
provided, however, if prior to the Option Closing, Sprint shall purchase any
- -------- -------
shares of the Company Common Stock for an amount per share in excess of the
Option Price (the "Excess Amount"), then the amount per Option Share to be paid
by Sprint shall equal the sum of the Option Price plus the Excess Amount. If
following the Option Closing, Sprint shall purchase any shares of the Company
Common Stock for an amount per share in excess of the sum of the Option Price
plus, if applicable, the Excess Amount plus any other amount previously remitted
pursuant to this Section 2.2 (the "Subsequent Excess Amount"), then Sprint shall
forthwith remit to Stockholder an amount equal to the Subsequent Excess Amount
for each Option Share purchased at the Option Closing. References in this
Section 2.2 to the purchase of shares of Company Common Stock shall include such
purchases pursuant to a merger agreement with the Company.
2.3 Exercise.
--------
(a) Sprint or its designee shall be entitled to exercise the Option by
giving written notice to Stockholder. Such notice shall specify a date (not
earlier than one business day or
-2-
<PAGE>
later than three business days from the date such notice is delivered to
Stockholder) and place for closing of the exercise of the Option (the "Option
Closing"). Upon delivery of notice exercising the Option, the Option shall be
deemed to have been exercised by Sprint or its designee irrespective of the
actual date of the Option Closing (the actual date of the Option Closing is
referred to hereinafter as the "Option Closing Date"). At the Option Closing,
Sprint or its designee will deliver to Stockholder the Option Price (as adjusted
pursuant to Section 2.2, if necessary) with respect to the Option Shares, by
wire transfer of immediately available funds to an account designated in writing
by Stockholder prior to the Option Closing Date.
(b) Upon payment of the Option Price as provided in Section 2.3
hereof, the Stockholder shall deliver to Sprint or its designee at the Option
Closing, (i) the certificates representing the Option Shares duly endorsed in
blank for transfer, or accompanied by duly executed stock powers in blank, in
each case with signatures guaranteed by a national bank or trust company or a
member firm of the New York Stock Exchange, Inc. and (ii) all such other
agreements, endorsements, assignments and other instruments as are necessary or
desirable, in Sprint's sole and absolute discretion, to vest in Sprint or its
designee good and marketable title to such Option Shares or to evidence of
record the sale and assignment of such Option Shares to Sprint or its designee.
2.4 Option Expiration/Put Right. Except as provided below, the
---------------------------
Option shall terminate and expire ten days after the transactions contemplated
by this Agreement receive approval required by the HSR Act, including early
termination or lapse of the HSR Act waiting period ("HSR Approval"), if the
Option has not been exercised by Sprint or its designee on or before such date
(the "Expiration Date"). If the Option has not been exercised by Sprint on or
before the Expiration Date, Stockholder shall have the right at such time, and
for a period of 30 days thereafter, to deliver a written notice to Sprint (the
"Stockholder Notice") requiring that Sprint or its designee purchase the Option
Shares at the Option Price, as adjusted (if necessary), including payment of any
Excess Amount or Subsequent Excess Amount that would be payable if Sprint
exercised the Option, in accordance with Section 2.2 hereof (the "Put Right").
Upon the exercise by Stockholder of the Put Right, the parties hereto shall
consummate the purchase and sale of the Option Shares in accordance with Section
2.3 hereof.
3. Representations and Warranties of Stockholder. Stockholder hereby
---------------------------------------------
represents and warrants to Sprint, as of the date hereof and as of the Closing
Date, as follows:
3.1 Ownership. Stockholder has good and marketable title to, and is
---------
the beneficial owner of, the Option Shares, in each case free and clear of all
liabilities, claims, liens, options, proxies, charges, participations and
encumbrances of any kind or character whatsoever. At the Option Closing,
Stockholder will transfer and convey to Sprint or its designee good and
marketable title to the Option Shares, free and clear of all liabilities,
claims, liens, options, proxies, charges, participations and encumbrances of any
kind or character whatsoever created by or arising through Stockholder.
-3-
<PAGE>
3.2 Authorization. Stockholder has all requisite power and authority
-------------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby and has sole voting power and sole power of disposition,
with respect to all of the Option Shares owned by Stockholder with no
restrictions on its voting rights or rights of disposition pertaining thereto.
Stockholder has duly executed and delivered this Agreement and this Agreement
is a legal, valid and binding agreement of Stockholder, enforceable against
Stockholder in accordance with its terms.
3.3 Stockholder Has Adequate Information. Stockholder is a
------------------------------------
sophisticated seller with respect to the Option Shares and has adequate
information concerning the business and financial condition of the Company to
make an informed decision regarding the sale of the Option Shares and has
independently and without reliance upon Sprint and based on such information as
Stockholder has deemed appropriate, made its own analysis and decision to enter
into this Agreement. Stockholder acknowledges that Sprint has not made and does
not make any representation or warranty, whether express or implied, of any kind
or character except as expressly set forth in this Agreement. Stockholder
acknowledges that the sale of the Option Shares by Stockholder to Sprint is
irrevocable, and that Stockholder shall have no recourse to the Option Shares or
Sprint, except with respect to breaches of representations, warranties,
covenants and agreements expressly set forth in this Agreement.
3.4 Sprint's Excluded Information. Stockholder acknowledges and
-----------------------------
confirms that (a) Sprint may possess or hereafter come into possession of
certain non-public information concerning the Option Shares and the Company
which is not known to Stockholder and which may be material to Stockholder's
decision to sell the Option Shares ("Sprint's Excluded Information"), (b)
Stockholder has requested not to receive Sprint's Excluded Information and has
determined to sell the Option Shares notwithstanding its lack of knowledge of
Sprint's Excluded Information, and (c) Sprint shall have no liability or
obligation to Stockholder in connection with, and Stockholder hereby waives and
releases Sprint from, any claims which Stockholder or its successors and assigns
may have against Sprint (whether pursuant to applicable Option Shares, laws or
otherwise) with respect to the non-disclosure of Sprint's Excluded Information;
provided, however, nothing contained in this Section 3.4 shall limit
- -------- -------
Stockholder's right to rely upon the express representations and warranties made
by Sprint in this Agreement, or Stockholder's remedies in respect of breaches of
any such representations and warranties.
4. Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of Stockholder and Sprint contained herein shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, and each representation and warranty contained herein shall
survive the closing of the transactions contemplated hereby until the expiration
of the applicable statute of limitations, including extensions thereof.
5. Specific Performance. Stockholder acknowledges that Sprint will be
--------------------
irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of Stockholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Sprint upon the breach by Stockholder
of
-4-
<PAGE>
such covenants and agreements, Sprint shall have the right to obtain
injunctive relief to restrain any breach or threatened breach of such covenants
or agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
6. Miscellaneous.
-------------
6.1 Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of and be enforceable by the parties hereto and their respective
representatives and permitted successors and assigns.
6.2 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
6.3 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to all
provisions of this Agreement.
6.4 Assignment. This Agreement may not be transferred or assigned by
----------
Stockholder but may be assigned by Sprint to any of its affiliates or to any
successor to its business and will be binding upon and inure to the benefit of
any such affiliate or successor.
6.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be an original, but each of which together
shall constitute one and the same Agreement.
6.6 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by delivery, telegram or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any national courier service, provided that any notice
delivered as herein provided shall also be delivered by telecopy at the time of
such delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof):
(a) If to Sprint: Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Corporate Secretary
Telecopy: (913) 624-2256
-5-
<PAGE>
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Bruce N. Hawthorne, Esq.
Telecopy: (404) 572-5146
(b) If to Stockholder: Bay Harbour Management, LC
885 3rd Avenue, 34th Floor
New York, NY 10022
Attention: Doug Teitelbaum
Telecopy: (212) 371-7497
with a copy to: Howard Smith & Levin
1330 Avenue of the Americas
New York, NY 10019
Attention: Leonard Chazn
Telecopy: (212) 841-1010
6.7 Equal Treatment of Option Holders. Simultaneously with the
---------------------------------
execution of this Agreement, Sprint is entering into an agreement with the
beneficial owners of not less than 1.2 million shares of the Company Common
Stock, with the terms of such agreement being substantially identical to the
terms of this Agreement.
6.8 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
6.9 Enforceability. The invalidity or unenforceability of any
--------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
6.10 Further Assurances. From time to time at or after the Option
------------------
Closing, at Sprint's request and without further consideration, Stockholder
shall execute and deliver to Sprint such documents and take such action as
Sprint may reasonably request in order to consummate more effectively the
transactions contemplated hereby and to vest in Sprint good, valid and
marketable title to the Option Shares, including, but not limited to, using its
best efforts to cause the appropriate transfer agent or registrar to transfer of
record the Option Shares.
-6-
<PAGE>
IN WITNESS WHEREOF, Sprint and Stockholder have caused this Agreement to be
duly executed as of the day and year first above written.
SPRINT CORPORATION
By: /s/ Theodore H. Schell
----------------------------------
Name: Theodore H. Schell
Title: Sr. Vice President
BAY HARBOUR MANAGEMENT, LC
for its managed accounts
By: /s/ Douglas P. Teitelbaum
----------------------------------
Name: Douglas P. Teitelbaum
Title: Principal and Portfolio Manager
-7-
