EXHIBIT 2
---------
INVESTMENT AGREEMENT
AMONG
SPRINT CORPORATION,
FRANCE TELECOM
AND
DEUTSCHE TELEKOM AG
DATED AS OF JULY 31, 1995
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..................................................... 5
ARTICLE II PURCHASE AND SALE OF SHARES.................................... 23
Section 2.1. First Closing............................................ 23
Section 2.2. Additional Preference Stock Closing...................... 26
Section 2.3. Supplemental Preference Stock Closing.................... 28
Section 2.4. Deferred Common Stock Closing............................ 28
Section 2.5. Purchases of Optional Shares............................. 29
Section 2.6. Antidilution............................................. 31
Section 2.7. Reduction of Purchased Shares............................ 31
Section 2.8. Effect of Conversion..................................... 31
ARTICLE III CONDITIONS TO THE FIRST CLOSING............................... 32
Section 3.1. Conditions to Each Party's Obligations................... 32
Section 3.2. Conditions to the Buyers' Obligations.................... 33
Section 3.3. Conditions to the Company's Obligations.................. 35
ARTICLE IV CONDITIONS TO AN ADDITIONAL PREFERENCE STOCK CLOSING,
SUPPLEMENTAL PREFERENCE STOCK CLOSING AND
DEFERRED COMMON STOCK CLOSING................................. 35
Section 4.1. Condition to Each Party's Obligations.................... 35
Section 4.2. Conditions to the Buyers' Obligations.................... 36
Section 4.3. Conditions to the Company's Obligations.................. 37
Section 4.4. Effect of Certain Breaches............................... 38
ARTICLE V CONDITIONS TO THE OPTIONAL SHARES CLOSING....................... 38
Section 5.1. Condition to Each Party's Obligations.................... 38
Section 5.2. Conditions to the Buyers' Obligations.................... 38
Section 5.3. Conditions to the Company's Obligations.................. 40
Section 5.4. Effect of Certain Breaches............................... 41
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 41
Section 6.1. Organization, Qualification, Etc......................... 41
Section 6.2. Capital Stock and Other Matters.......................... 41
Section 6.3. Validity of Shares....................................... 42
Section 6.4. Corporate Authority; No Violation........................ 42
Section 6.5. Company Reports and Financial Statements................. 43
Section 6.6. Absence of Certain Changes or Events..................... 43
Section 6.7. Investigations; Litigation............................... 43
Section 6.8. Proxy Statement; Other Information....................... 44
Section 6.9. Certain Tax Matters...................................... 44
Section 6.10. Amendments of the Rights Agreement....................... 44
Section 6.11. Other Registration Rights................................ 44
Section 6.12. Takeover Statutes........................................ 44
Section 6.13. Vote Required; Board Recommendation...................... 45
Section 6.14. Long Distance Business................................... 45
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BUYERS.................. 45
Section 7.1. Representations and Warranties of FT..................... 45
Section 7.2. Representations and Warranties of DT..................... 47
2
PAGE
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ARTICLE VIII COVENANTS OF THE COMPANY.................................... 48
Section 8.1. Conduct of Business by the Company...................... 48
Section 8.2. Access and Information.................................. 49
Section 8.3. No Solicitation, Etc.................................... 49
Section 8.4. Stockholders Approval................................... 50
Section 8.5. Proxy Statement Filings................................. 50
Section 8.6. Use of Proceeds......................................... 50
Section 8.7. Advice of Changes....................................... 50
Section 8.8. No Action Relating to Takeover Statutes; Applicability
of Future Statutes and Regulations..................... 51
Section 8.9. Spin-offs............................................... 51
Section 8.10. Conduct of Business of Cellular......................... 51
ARTICLE IX OTHER AGREEMENTS.............................................. 52
Section 9.1. Information for Inclusion in the Proxy Statement........ 52
Section 9.2. Further Assurances...................................... 53
Section 9.3. Public Announcements.................................... 53
Section 9.4. Notification............................................ 54
Section 9.5. Brokers or Finders...................................... 54
Section 9.6. Notice of Proposals Regarding Acquisition Transactions.. 54
Section 9.7. Execution of Standstill Agreement....................... 55
Section 9.8. Confidentiality Agreements.............................. 55
Section 9.9. Actions by FT and DT in Connection with the Cellular
Spin-off............................................... 55
Section 9.10. Adjustment Certificates................................. 55
ARTICLE X TERM AND TERMINATION........................................... 55
Section 10.1. Termination............................................. 55
Section 10.2. Reimbursement of Expenses............................... 57
ARTICLE XI MISCELLANEOUS................................................. 57
Section 11.1. Survival of Representations and Warranties.............. 57
Section 11.2. Assignment.............................................. 58
Section 11.3. Entire Agreement........................................ 58
Section 11.4. Expenses................................................ 59
Section 11.5. Waiver, Amendment, Etc.................................. 59
Section 11.6. Binding Agreement; No Third Party Beneficiaries......... 59
Section 11.7. Notices................................................. 59
Section 11.8. GOVERNING LAW; DISPUTE RESOLUTION;
EQUITABLE RELIEF....................................... 60
Section 11.9. Severability............................................ 61
Section 11.10. Translation............................................. 61
Section 11.11. Table of Contents; Headings; Counterparts............... 62
Section 11.12. Waiver of Immunity...................................... 62
Section 11.13. Continuing Director Approval............................ 62
Section 11.14. Currency................................................ 62
EXHIBIT A--Form of Qualified Subsidiary Standstill Agreement
EXHIBIT B--Form of Registration Rights Agreement
EXHIBIT C--Form of Standstill Agreement
EXHIBIT D--Form of Stockholders' Agreement
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EXHIBIT E--Form of Strategic Investor Standstill Agreement
EXHIBIT F--Matters to be addressed by Company Counsel Opinions (First Closing)
EXHIBIT G--Matters to be addressed by FT Counsel Opinions (First Closing)
EXHIBIT H--Matters to be addressed by DT Counsel Opinions (First Closing)
EXHIBIT I--Matters to be addressed by Company General Counsel Opinion (Article
IV Closing)
EXHIBIT J--Matters to be addressed by Company General Counsel Opinion (Optional
Shares Closing)
EXHIBIT K--Form of Assumption Agreement
SCHEDULE A--Associate Positions of FT
SCHEDULE B--Associate Positions of DT
SCHEDULE C--Permitted Cellular Actions
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INVESTMENT AGREEMENT
Investment Agreement, dated as of July 31, 1995 (the "Agreement"), among
Sprint Corporation, a corporation organized under the laws of Kansas (the
"Company"); France Telecom, an exploitant public formed under the laws of
France ("FT"); and Deutsche Telekom AG, an Aktiengesellschaft formed under the
laws of Germany ("DT").
RECITALS
Whereas, the Company, Sprint Global Venture, Inc., a wholly-owned subsidiary
of the Company ("Sprint Sub"), FT and DT have agreed to form a joint venture
(the "Joint Venture") to provide telecommunications services as provided in the
Joint Venture Agreement, dated as of June 22, 1995, among FT, DT, the Company
and Sprint Sub (the "Joint Venture Agreement") and to pursue various
telecommunications opportunities around the world as further provided therein;
and
Whereas, FT and DT (each a "Buyer") desire to purchase certain shares of
capital stock from the Company and the Company desires to sell such shares to
FT and DT, all in accordance with the terms and conditions hereof.
Now, Therefore, in consideration of the mutual covenants and obligations set
forth herein, each of FT, DT and the Company (each a "Party") agrees as
follows:
ARTICLE I
DEFINITIONS
The following capitalized terms used in this Agreement shall have the
following meanings:
"Acquiring Person Statement" has the meaning set forth in Section 6.8(a)
hereof.
"Acquisition" means the acquisition by Cellular of assets (which may include
the acquisition of the common equity interests in a Person) that constitute a
business that, prior to such acquisition, has been operated as a company or a
division or has otherwise been operated as a separate business.
"Acquisition Proposal" has the meaning specified in Section 8.3(a) hereof.
"Additional Preference Stock Closing" has the meaning specified in Section
2.2(b) hereof.
"Additional Preference Stock Closing Date" has the meaning set forth in
Section 2.2(b) hereof.
"Additional Preference Stock Closing Notice" has the meaning set forth in
Section 2.2(c) hereof.
"Adjusted Cellular Price" means the Average Cellular Price multiplied by the
Capitalization Ratio.
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by, or is under common Control with, such Person, provided that (a)
no JV Entity shall be deemed an Affiliate of any Party unless (i) FT, DT and
Atlas own a majority of the Voting Power of such JV Entity and the Company does
not have the Tie-Breaking Vote (as defined in Section 18.1 of the Joint Venture
Agreement), or (ii) FT, DT or Atlas has the Tie-Breaking Vote; (b) FT, DT and
the Company shall not be deemed Affiliates of each other; (c) Atlas shall be
deemed an Affiliate of FT and DT; and (d) the term "Affiliate" shall not
include any Governmental Authority of France or Germany or any other Person
Controlled, directly or indirectly, by any such Governmental Authority, except
in each case for FT, DT, Atlas and any other Person directly, or indirectly
through one or more intermediaries, Controlled by FT, DT or Atlas.
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"Amendment" means a Certificate of Amendment to the Articles, satisfactory in
form and substance to each Party.
"Applicable Law" means all applicable provisions of all (a) constitutions,
treaties, statutes, laws (including common law), rules, regulations, ordinances
or codes of any Governmental Authority, and (b) orders, decisions, injunctions,
judgments, awards and decrees of any Governmental Authority.
"Articles" means the Articles of Incorporation of the Company, as amended or
supplemented from time to time.
"Article IV Closing" has the meaning specified in Section 4.1 hereof.
"Associate" has the meaning ascribed to such term in Rule 12b-2 under the
Exchange Act, provided that when used to indicate a relationship with FT or DT
or their respective Subsidiaries or Affiliates, the term "Associate" shall mean
(a) in the case of FT, any Person occupying any of the positions listed on
Schedule A hereto, and (b) in the case of DT, any Person occupying any of the
positions listed on Schedule B hereto, provided, further, that, in each case,
no Person occupying any such position described in clause (a) or (b) hereof
shall be deemed an "Associate" of FT or DT, as the case may be, unless the
Persons occupying all such positions described in clauses (a) and (b) hereof
Beneficially Own, in the aggregate, more than 0.2% of the Voting Power of the
Company.
"Atlas" means the company to be formed as a societe anonyme under the laws of
Belgium pursuant to the Joint Venture Agreement, dated as of December 15, 1994,
between FT and DT, as amended.
"Average Cellular Price" means, subject to adjustment as provided in the
Class A Provisions, the average of the Closing Prices of a share of Cellular
Common Stock for the 20 consecutive Trading Days on which such shares are
traded "regular way" starting on the first such Trading Day after the Cellular
Spin-off Date.
"Average Price" means, as to a security, the average of the Closing Prices of
a security for the 20 consecutive Trading Days ending on the fifteenth Trading
Day prior to the date of determination or ending on such other date specified
herein.
"Average Sprint Price" means, subject to adjustment as provided in the Class
A Provisions, the Average Price of a share of Common Stock at the date of
determination specified herein. For purposes of this definition, if any portion
of the relevant determination period occurs prior to the Cellular Spin-off and
the Closing Price of Common Stock on any Trading Day during the determination
period is quoted "ex" the distribution of Cellular Common Stock, the Closing
Price of the Common Stock for such Trading Day will be adjusted by adding the
product of the Closing Price of the Cellular Common Stock for such Trading Day
multiplied by the Capitalization Ratio.
"Beneficial Owner" (including, with its correlative meanings, "Beneficially
Own" and "Beneficial Ownership"), with respect to any securities, means any
Person which:
(a) has, or any of whose Affiliates or Associates has, directly or
indirectly, the right to acquire (whether such right is exercisable
immediately or only after the passage of time) such securities pursuant to
any agreement, arrangement or understanding (whether or not in writing),
including, without limitation, pursuant to this Agreement and the
Stockholders' Agreement, or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise;
(b) has, or any of whose Affiliates or Associates has, directly or
indirectly, the right to vote or dispose of (whether such right is
exercisable immediately or only after the passage of time) or "beneficial
ownership" of (as determined pursuant to Rule 13d-3 under the Exchange Act
but including all such securities which a Person has the right to acquire
beneficial ownership of whether or not such right is exercisable within the
60-day period specified therein) such securities, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); or
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(c) has, or any of whose Affiliates or Associates has, any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities which are
Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate thereof),
provided that Class A Stock and Common Stock held by one of FT or DT or its
Affiliates or Associates shall not also be deemed to be Beneficially Owned by
the other of FT or DT or its Affiliates or Associates.
"Board of Directors" means the board of directors of the Company.
"Burdensome Condition" means any requirement or condition that: (a) imposes
any material limitation on the ability or right of any Party or any of their
respective Subsidiaries to hold, or requires any Party or any of their
respective Subsidiaries to dispose of, any material interest in any material
portion of the assets of such Party, as the case may be, and its respective
Subsidiaries taken as a whole; (b) imposes any material limitation on the
ability or right of any Party or any of their respective Subsidiaries to
conduct any business (other than the investment contemplated by this Agreement,
the Transactions or the Atlas Transactions (each as defined in the Joint
Venture Agreement)) which such Party or any of their respective Subsidiaries
has publicly announced as of the date hereof an intention to conduct and which
business is material in relation to such Party, as the case may be, and its
respective Subsidiaries, taken as a whole; (c) materially limits the ability or
right of any Party, Sprint Sub or Atlas to acquire or hold, or requires any
Party, Sprint Sub or Atlas to dispose of, any material interest in the GBN
Group or a Regional Operating Group (each as defined in the Joint Venture
Agreement); (d) materially limits the ability or right of any Party, Sprint Sub
or Atlas to exercise its governance rights with respect to the Joint Venture or
any of the JV Entities; (e) otherwise would have a Material Adverse Effect on
the Joint Venture or would be materially adverse to the ability of any Party,
Sprint Sub or Atlas to receive the economic benefits of the Joint Venture; (f)
materially limits the ability or right of either FT or DT to acquire or hold or
dispose of any shares of Class A Stock; (g) materially limits the ability or
right of FT or DT to exercise its rights relating to, or receive the economic
benefits of, the investment pursuant to this Agreement, the Other Agreements,
the Bylaws as amended by the Bylaws Amendment or the Articles as amended by the
Amendment; (h) materially and adversely affects the ability of any Party to
perform its obligations under, or puts in doubt in any material respect the
validity of, this Agreement, the Other Agreements, the Bylaws as amended by the
Bylaws Amendment or the Articles as amended by the Amendment; (i) otherwise
would have a Material Adverse Effect on such Party and its Subsidiaries taken
as a whole; or (j) in the case of a Buyer, would affect materially and
adversely the intrinsic value of an investment in the Company's equity
securities (provided that a change in the Market Price of the Company's equity
securities arising from any such requirement or condition shall not, in and of
itself, be deemed to affect materially and adversely the intrinsic value of an
investment in the Company's equity securities) (any of the foregoing, a
"Burdensome Condition"), provided that if each Party affected, directly or
indirectly, by any condition or requirement (or, in the case of a Subsidiary so
affected, the Parent or Parents thereof that are a Party or Parties) provides a
notice to each other Party stating that such condition or requirement shall no
longer be deemed a Burdensome Condition, such condition or requirement shall no
longer be deemed a Burdensome Condition for any purpose under this Agreement
and provided, further, that no Party may declare a Burdensome Condition under
clause (b) if such material limitation is imposed pursuant to Section 310(b) of
the Communications Act due to the investment contemplated by this Agreement and
such material limitation would not be imposed but for the investment
contemplated by this Agreement. For purposes of this definition, no Qualified
Subsidiary or Qualified Stock Purchaser shall be deemed to be a "Party."
"Business Combination Statute" shall have the meaning set forth in Section
3.2(e) hereof.
"Business Day" means any day other than a day on which commercial banks in
The City of New York, Paris, France, or Frankfurt am Main, Germany, are
required or authorized by law to be closed.
"Buyer" has the meaning set forth in the second WHEREAS clause.
"Bylaws" means the Bylaws of the Company, as amended or supplemented from
time to time.
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"Bylaws Amendment" means an amendment to the Bylaws, satisfactory in form and
substance to each Party.
"Capitalization Ratio" means the quotient of the number of shares of Cellular
Common Stock outstanding immediately following the Cellular Spin-off, divided
by the number of shares of Common Stock outstanding immediately following the
Cellular Spin-off.
"Cellular" means (a) until immediately prior to the Cellular Spin-off Date,
the Cellular and Wireless Division, (b) immediately prior to the Cellular Spin-
off Date, the direct or indirect wholly owned subsidiary of the Company owning
the assets of the Cellular and Wireless Division, the shares of which
subsidiary are to be distributed to the Company's stockholders in connection
with the Cellular Spin-off, and (c) on and after the Cellular Spin-off Date,
such company, provided that the term "Cellular" shall not include any assets
retained by the Company after the Cellular Spin-off Date.
"Cellular and Wireless Division" means the Cellular and Wireless
Communications Services Division of the Company.
"Cellular Common Stock" means the shares of common stock of Cellular.
"Cellular Guarantee" means any liability, contingent or otherwise, of the
Company or any of its Affiliates (other than Cellular, the Subsidiaries of
Cellular and any Affiliates Controlled by Cellular) to make any payment with
respect to, or cause performance of, any indebtedness or lease, purchase or
other obligation of Cellular that is to be paid, discharged or otherwise
performed after the Cellular Spin-off Date, including without limitation,
liabilities and obligations such as keepwell agreements and arrangements to
make payments for services irrespective of the non-delivery of such services.
"Cellular Liabilities" means all liabilities and obligations of any nature of
Cellular and, as to periods when Cellular is operated as a division of the
Company, all liabilities and obligations of the Company whether known or
unknown, absolute, accrued, contingent or otherwise, and whether due or to
become due, arising out of or directly relating to the operation of Cellular's
business.
"Cellular Spin-off" means the distribution by the Company on a pro rata basis
to the holders of the Common Stock of shares of Cellular Common Stock
representing all of the common equity of Cellular.
"Cellular Spin-off Date" means the date on which shares of Cellular Common
Stock are distributed to the holders of Common Stock.
"Cellular Spin-off Reduction Factor" means, subject to adjustment as provided
in the Class A Provisions, (a) $5.25, if the Adjusted Cellular Price is not
less than $3.25 or more than $7.25, or (b) if the Adjusted Cellular Price is
more than $7.25 but not more than $8.25, $5.25 plus 50% of the difference
between the Adjusted Cellular Price and $7.25, or (c) if the Adjusted Cellular
Price is more than $8.25, $5.75 plus the difference between the Adjusted
Cellular Price and $8.25, or (d) if the Adjusted Cellular Price is less than
$3.25 but not less than $2.25, $5.25 minus 50% of the difference between $3.25
and the Adjusted Cellular Price or (e) if the Adjusted Cellular Price is below
$2.25, $4.75 minus the difference between $2.25 and the Adjusted Cellular
Price. Notwithstanding the foregoing, (i) if the Net Cellular Indebtedness
immediately after the Cellular Spin-off exceeds $2.955, each dollar amount set
forth in the first sentence of this definition (other than the Adjusted
Cellular Price) shall be reduced dollar-for-dollar by such excess; (ii) if
$2.955 exceeds the Net Cellular Indebtedness, each such dollar amount shall be
increased dollar-for-dollar by such excess; and (iii) if Cellular has effected
any Acquisition and/or Disposition after June 22, 1995 and prior to the
Cellular Spin-off Date, such dollar amounts shall be increased by the Net
Cellular Acquisition Amount, if positive, and decreased by the absolute value
of the Net Cellular Acquisition Amount, if negative.
"Cellular System" means a domestic public cellular radio telecommunications
service system licensed under Part 22 of the rules of the FCC, as amended from
time to time.
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"Change of Control" means a:
(a) decision by the Board of Directors to sell Control of the Company or
not to oppose a third party tender offer for Voting Securities of the
Company representing more than 35% of the Voting Power of the Company; or
(b) change in the identity of a majority of the Directors due to (i) a
proxy contest (or the threat to engage in a proxy contest) or the election
of Directors by the holders of Preferred Stock; or (ii) any unsolicited
tender, exchange or other purchase offer which has not been approved by a
majority of the Independent Directors,
provided that a Strategic Merger shall not be deemed to be a Change of Control
and, provided, further, that any transaction between the Company and FT and DT
or otherwise involving FT and DT and any of their direct or indirect
Subsidiaries which are party to a Contract therefor shall not be deemed to be a
Change of Control.
"Class A Common Issuance Date" means the date the Company first issues shares
of Class A Common Stock.
"Class A Common Stock" means the Class A Common Stock of the Company.
"Class A Conversion Shares" means the shares of Class A Common Stock or
Common Stock into which the then outstanding shares of Class A Preference Stock
(or, as the case may be, a specified number of shares of Class A Preference
Stock) would, at the time of determination, be convertible at the then
applicable Conversion Price if the conditions to establishment of the
Conversion Date had been met.
"Class A Holders" means the holders of the Class A Stock.
"Class A Preference Stock" means the Class A Preference Stock of the Company.
"Class A Provisions" means that portion of Paragraph 7 of the Amendment
entitled "GENERAL PROVISIONS RELATING TO CLASS A STOCK."
"Class A Stock" means the Class A Common Stock or, if shares of the Class A
Preference Stock are outstanding, the Class A Preference Stock.
"Closing Price" means, with respect to a security on any day, the last sale
price, regular way, or in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if such security is not listed or admitted to trading on such
exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the security is listed or admitted to trading or, if the
security is not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date such security
is not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
security selected in good faith by the Board of Directors. If the security is
not publicly held or so listed or publicly traded, "Closing Price" means the
Fair Market Value of such security.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock of the Company.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules and regulations from time to time promulgated thereunder. Any
reference to a particular section of the Communications Act shall refer to such
section as the same may be hereafter renumbered or otherwise amended.
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"Company" has the meaning set forth in the preamble.
"Company Disclosure Schedule" means the disclosure schedule of the Company
delivered to FT and DT on the date hereof.
"Continuing Director" means any Director who is unaffiliated with the Buyers
and their "affiliates" and "associates" (as each such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as in effect on October 1,
1982) and was a Director prior to the time that any Buyer or any such affiliate
or associate became an Interested Stockholder (as such term is defined in the
Fair Price Provisions) and any successor of a Continuing Director if such
successor is not affiliated with any such Interested Stockholder and is
recommended or elected to succeed a Continuing Director by a majority of
Continuing Directors, provided that such recommendation or election shall only
be effective if made at a meeting of Directors at which at least seven
Continuing Directors are present.
"Contract" means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, franchise, contract, or other agreement,
obligation, instrument or binding commitment of any nature.
"Control" means, with respect to a Person or Group, any of the following:
(a) ownership by such Person or Group of Votes entitling it to exercise
in the aggregate more than 35 percent of the Voting Power of the entity in
question; or
(b) possession by such Person or Group of the power, directly or
indirectly, (i) to elect a majority of the board of directors (or
equivalent governing body) of the entity in question; or (ii) to direct or
cause the direction of the management and policies of or with respect to
the entity in question, whether through ownership of securities, by
contract or otherwise.
"Control Share Acquisitions Plan" means the plan of FT and DT and, if
applicable, certain of their Qualified Subsidiaries identified and described in
the Acquiring Person Statement to make a control share acquisition, within the
meaning of the Kansas Control Share Acquisitions Statute, for one-fifth or
more, but less than one-third, of all the voting power of the Company,
evidenced by this Agreement and the Stockholders' Agreement.
"Conversion Date" has the meaning specified in Section 3(a)(i) of the Class A
Provisions.
"Conversion Price" means the applicable conversion price for shares of Class
A Preference Stock provided for in Section 3(b) of the Class A Provisions.
"Core Business" means all businesses in the fields of telecommunications and
information technology and applications, and equipment, software applications
and consumer and business services related thereto or making use of the
technology thereof, including value-added consumer and business services
generated through or as a result of underlying telecommunications services
using all technology (voice, data and image) and physical transport, network
intelligence, and software applications, and cable television (but not
including any programming or content-related activities with respect thereto).
"Damages" has the meaning specified in Section 11.1 hereof.
"Deferred Common Stock Closing" has the meaning specified in Section 2.4(b)
hereof.
"Deferred Common Stock Closing Date" has the meaning specified in Section
2.4(b) hereof.
"Director" means a member of the Board of Directors.
"Disclosure Schedules" means the Company Disclosure Schedule, the FT
Disclosure Schedule and the DT Disclosure Schedule.
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"Disposition" means the disposition by Cellular of assets (which may include
the disposition of the common equity interests in a Person) that constitute a
business that, prior to such disposition, has been operated as a company or a
division or has otherwise been operated as a separate business.
"DT" has the meaning set forth in the preamble.
"DT Disclosure Schedule" means the disclosure schedule of DT delivered to the
Company on the date hereof.
"DT Investor Confidentiality Agreement" means the confidentiality agreement
between the Company and DT, reasonably satisfactory in form and substance to
each Party.
"ESMR" means any commercial mobile radio service and the resale of such
service, of the type authorized under the rules for Specialized Mobile Radio
Services designated under Subpart S of Part 90 of the FCC's rules or similar
Applicable Laws of any other country in effect on the date hereof, including
the networking, marketing, distribution, sales, customer interface and
operations functions relating thereto.
"Europe" means the current geographic area covered by the following countries
and territories located on the European continent, plus, in the case of France,
its territories and possessions located outside the European continent:
Albania, Andorra, Austria, Belgium, Bosnia-Hercegovina, Bulgaria, Croatia,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar,
Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania,
Luxembourg, Macedonia, Malta, Monaco, Montenegro, Netherlands, Norway, Poland,
Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, Ukraine, United Kingdom, and Vatican City.
"Excess Shares" has the meaning set forth in Section 2.5(a)(i) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated from time to time thereunder.
"Exempt Asset Divestitures" mean, with respect to the Company and its
Subsidiaries:
(a) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) to joint ventures approved by FT and DT prior to the
Initial Issuance Date;
(b) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) to (i) any entity in exchange for equity interests in
such entity if, after such transaction, the Company owns at least 51
percent of both the Voting Power and equity interests in such entity or
(ii) any joint venture that is an operating joint venture not controlled by
any of its principals and in which (x) the Company has the right, acting
alone, to disapprove (and thereby prohibit) decisions relating to
acquisitions and divestitures involving more than 20 percent of the Fair
Market Value of such entity's assets, mergers, consolidations and
dissolution or liquidation of such entity and the adoption of such entity's
business plan and (y) Major Competitors of the Joint Venture do not in the
aggregate own more than 20% of the equity interests or Voting Power;
(c) transactions in which the Company exchanges one or more (i) local
exchange telephone businesses for one or more such businesses or (ii)
public cellular or wireless radio telecommunications service systems for
one or more such systems, provided that the Company shall not, directly or
indirectly, receive cash in any such transaction in an amount greater than
20 percent of the Fair Market Value of the property or properties
Transferred by it;
(d) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) by the Company to any of its Subsidiaries, or by any
of its Subsidiaries to the Company or any other Subsidiary of the Company;
(e) (i) any Spin-off of equity interests of a wholly-owned Subsidiary
that is not a Subsidiary which, directly or indirectly, owns Long Distance
Assets (for purposes of this definition, the "Spun-off Entity"),
11
provided that, in the case of a Spin-off that is consummated following the
Initial Issuance Date, the Class A Holders receive securities in the Spun-
off Entity of a separate class with rights no less favorable to the Class A
Holders than those applicable to the Class A Stock set forth in the
Articles and the Bylaws, or (ii) the Cellular Spin-off, unless a Notice of
Abandonment has been delivered;
(f) Transfers of assets (other than Long Distance Assets) of the Company
or any of its Subsidiaries that are primarily or exclusively used in
connection with providing information technology or data processing
functions or services (collectively, for purposes of this definition, the
"IT Assets"), to any Person that regularly provides information technology
or data processing functions or services on a commercial basis, in
connection with a contractual arrangement (for purposes of this definition,
an "IT Service Contract") pursuant to which such Person undertakes to
provide information technology or data processing functions or services to
the Company or any of its Subsidiaries of substantially the same nature as
the services associated with the use of such assets prior to such Transfer
and upon commercially reasonable terms to the Company as determined in good
faith by the Company, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted average
useful life of such assets, or the Company or such Subsidiary shall have
the right to cause such IT Service Contract to be renewed or extended for a
period at least as long as such weighted average useful life upon
commercially reasonable terms to the Company as determined in good faith by
the Company, and (ii) the Transfer of such assets will not materially and
adversely affect the operation of the Company; or
(g) Transfers of assets (other than Long Distance Assets or IT Assets) of
the Company or any of its Subsidiaries to any Person in connection with any
contractual arrangement (for purposes of this definition, a "Non-IT Service
Contract") pursuant to which such Person undertakes to provide services to
the Company or any of its Subsidiaries of substantially the same nature as
the services associated with the use of such assets prior to such Transfer
and upon commercially reasonable terms to the Company as determined in good
faith by the Company, provided, that (i) the Fair Market Value of such
assets, together with the Fair Market Value of assets of the Company
Transferred to such Person or other Persons in related transactions, do not
represent more than five percent of the Fair Market Value of the assets of
the Company, (ii) the Transfer of such assets will not materially and
adversely affect the operation of the Company, and (iii) the term of such
Non-IT Service Contract shall be for a period at least as long as the
weighted average useful life of the assets so Transferred or the Company or
such Subsidiary has the right to cause such Non-IT Service Contract to be
renewed or extended for a period at least as long as such weighted average
useful life upon commercially reasonable terms to the Company as determined
in good faith by the Company.
"Exempt Long Distance Asset Divestitures" mean, with respect to the Company
and its Subsidiaries:
(a) Transfers of Long Distance Assets to a Qualified Joint Venture;
(b) Transfers of Long Distance Assets to any entity if the Company and
its Subsidiaries after such transaction own at least 70 percent of both the
Voting Power and equity interests of such entity, provided that if a Major
Competitor of FT or DT or of the Joint Venture holds equity interests in
such entity, such Major Competitor's equity interest and Votes in such
entity as a percentage of the Voting Power of such entity shall not,
directly or indirectly, exceed 20 percent;
(c) Transfers of Long Distance Assets pursuant to an underwritten,
widely-distributed public offering at the conclusion of which the Company
and its Subsidiaries shall own at least 51 percent of both the Voting Power
and equity interests in the entity that owns such Long Distance Assets;
(d) Transfers in the ordinary course of business of Long Distance Assets
determined by the Company to be unnecessary for the orderly operation of
the Company's business, and sale-leasebacks of Long Distance Assets and
similar financing transactions after which the Company and its Subsidiaries
continue in possession and control of the Long Distance Assets involved in
such transaction;
(e) Transfers of Long Distance Assets by the Company to any of its
Subsidiaries, or by any of its Subsidiaries to the Company or any other
Subsidiary of the Company;
12
(f) Transfers of Long Distance Assets to FT or DT or any assignee thereof
pursuant to the Stockholders' Agreement;
(g) any Spin-off of equity interests of a wholly-owned Subsidiary which,
directly or indirectly, owns Long Distance Assets (for purposes of this
definition, the "Spun-off Entity"), provided that the Class A Holders
receive securities in the Spun-off Entity of a separate class with rights
no less favorable to the Class A Holders than those applicable to the Class
A Stock set forth in the Articles and the Bylaws;
(h) Transfers of Long Distance Assets of the Company or any of its
Subsidiaries that are primarily or exclusively used in connection with
providing information technology or data processing functions or services
(collectively, for purposes of this definition the "IT Assets"), to any
Person that regularly provides information technology or data processing
functions or services on a commercial basis, in connection with a
contractual arrangement (for purposes of this definition, an "IT Service
Contract") pursuant to which such Person undertakes to provide information
technology or data processing functions or services to the Company or any
of its Subsidiaries of substantially the same nature as the services
associated with the use of such Long Distance Assets prior to such Transfer
and upon commercially reasonable terms to the Company as determined in good
faith by the Company, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted average
useful life of such Long Distance Assets, or the Company or such Subsidiary
shall have the right to cause such IT Service Contract to be renewed or
extended for a period at least as long as such weighted average useful life
upon commercially reasonable terms to the Company as determined in good
faith by the Company, and (ii) the Transfer of such Long Distance Assets
will not materially and adversely affect the operation of the Long Distance
Business. Any such IT Service Contract involving Transfers of Long Distance
Assets, including any renewal or extension thereof, shall be deemed to be a
Long Distance Asset; or
(i) Transfers of Long Distance Assets (other than IT Assets) of the
Company or any of its Subsidiaries to any Person in connection with any
contractual arrangement (for purposes of this definition, a "Non-IT Service
Contract") pursuant to which such Person undertakes to provide services to
the Company or any of its Subsidiaries of substantially the same nature as
the services associated with the use of such Long Distance Assets prior to
such Transfer and upon commercially reasonable terms to the Company as
determined in good faith by the Company, provided that (i) the Fair Market
Value of such Long Distance Assets, together with the Fair Market Value of
Long Distance Assets Transferred to such Person or other Persons in related
transactions, do not represent more than three percent of the Fair Market
Value of the Long Distance Assets of the Company, (ii) the Transfer of such
Long Distance Assets will not materially and adversely affect the operation
of the Long Distance Business, and (iii) the term of such Non-IT Service
Contract shall be for a period at least as long as the weighted average
useful life of the Long Distance Assets so Transferred or the Company or
such Subsidiary has the right to cause such Service Contract to be renewed
or extended for a period at least as long as such weighted average useful
life upon commercially reasonable terms to the Company as determined in
good faith by the Company. Any such Non-IT Service Contract involving
Transfers of Long Distance Assets, including any renewal or extension
thereof, shall be deemed to be a Long Distance Asset.
"Existing Confidentiality Agreement" means the Confidentiality Agreement,
among the Company, FT and DT, dated as of February 2, 1994.
"Exon-▇▇▇▇▇▇" means Section 721 of the Defense Production Act of 1950, as
amended, and the rules promulgated thereunder.
"Extraordinary Dividend" means, with respect to capital stock of the Company,
a cash dividend or other cash distribution thereon, other than (a) a regular
periodic dividend payable in cash; or (b) a dividend payable in accordance with
the terms of the Preferred Stock or the Class A Preference Stock.
"Fair Market Value" means, with respect to any asset, shares or other
property, the cash price at which a willing seller would sell and a willing
buyer would buy such asset, shares or other property in an arm's-
13
length negotiated transaction without undue time restraints, as determined in
good faith by a majority of the Independent Directors as certified in a
resolution delivered to all of the Class A Holders.
"Fair Price Provisions" means ARTICLE SEVENTH of the Articles, and any
successor provision thereto.
"FCC" means the Federal Communications Commission.
"First Closing" has the meaning specified in Section 2.1(a) hereof.
"First Closing Company Notice" has the meaning specified in Section 2.1(a)
hereof.
"First Closing FT/DT Notice" has the meaning specified in Section 2.1(a)
hereof.
"First Closing Notice" means either a First Closing Company Notice or a First
Closing FT/DT Notice.
"Fix" or "Fixed" means in relation to the Conversion Price, the initial
establishment of the Conversion Price in accordance with Section 3(b) of the
Class A Provisions.
"Fixed Closing Date" means the date of the first closing to occur hereunder
after the date on which the Conversion Price is Fixed.
"France" means the Republic of France, including French Guiana, Guadeloupe,
Martinique and Reunion, and its territories and possessions.
"French Translation Law" means the loi n(degrees) 94-665 du 4 aout 1994
relative a l'emploi de la langue francaise.
"FT" has the meaning set forth in the preamble.
"FT Disclosure Schedule" means the disclosure schedule of FT delivered to the
Company on the date hereof.
"FT Investor Confidentiality Agreement" means the confidentiality agreement
between the Company and FT, reasonably satisfactory in form and substance to
each party.
"FT Law and Decrees" means (a) Loi n(degrees) 90-568 du 2 juillet 1990
relative a l'organisation du service public de la poste et des
telecommunications (as amended by Loi n(degrees) 91-1406 du 31 decembre 1991
portant diverses dispositions d'ordre social), (b) Decret n(degrees) 90-1112 du
12 decembre 1990 portant statut de France Telecom (as amended by Decret
n(degrees) 95-460 du 25 avril 1995 modifiant le decret n(degrees) 90-1112 du 12
decembre 1990 portant statut de France Telecom), (c) Decret n(degrees) 90-1213
du 29 decembre 1990 relatif au cahier des charges de France Telecom et au code
des postes et telecommunications, and (d) Decret n(degrees) 94-185 du 24
fevrier 1994 approuvant une modification du cahier des charges de France
Telecom.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Germany" means the Federal Republic of Germany.
"German Fee Regulations" has the meaning specified in Section 10.2 hereof.
"Governmental Approval" means any consent, waiver, grant, concession or
License of, registration or filing with, or declaration, report or notice to,
any Governmental Authority.
"Governmental Authority" means any federation, nation, state, sovereign, or
government, any federal, supranational, regional, state or local political
subdivision, any governmental or administrative body,
14
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission or other similar dispute resolving
panel or body, and any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of a government, provided that
the term "Governmental Authority" shall not include FT, DT, Atlas or any of
their respective Subsidiaries.
"Group" means any group within the meaning of Section 13(d)(3) of the
Exchange Act.
"HSR Act" has the meaning specified in Section 3.1(a) hereof.
"Independent Director" means any member of the Board of Directors who (a) is
not an officer or employee of the Company, or any Class A Holder, or any of
their respective Subsidiaries, (b) is not a former officer of the Company, or
any Class A Holder, or any of their respective Subsidiaries, (c) does not, in
addition to such person's role as a Director, act on a regular basis, either
individually or as a member or representative of an organization, serving as a
professional adviser, legal counsel or consultant to the Company, or any Class
A Holder, or their respective Subsidiaries, if, in the opinion of the
Nominating Committee of the Board of Directors of the Company (the "Nominating
Committee") or the Board of Directors if a Nominating Committee is not in
existence, such relationship is material to the Company, any Class A Holder, or
the organization so represented or such person, and (d) does not represent, and
is not a member of the immediate family of, a person who would not satisfy the
requirements of the preceding clauses (a), (b) and (c) of this sentence. A
person who has been or is a partner, officer or director of an organization
that has customary commercial, industrial, banking or underwriting
relationships with the Company, any Class A Holder, or any of their respective
Subsidiaries, that are carried on in the ordinary course of business on an
arms-length basis and who otherwise satisfies the requirements set forth in
clauses (a), (b), (c) and (d) of the first sentence of this definition, may
qualify as an Independent Director, unless, in the opinion of the Nominating
Committee or the Board of Directors if a Nominating Committee is not in
existence, such person is not independent of the management of the Company, or
any Class A Holder, or any of their respective Subsidiaries, or the
relationship would interfere with the exercise of independent judgment as a
member of the Board of Directors. A person who otherwise satisfies the
requirements set forth in clauses (a), (b), (c) and (d) of the first sentence
of this definition and who, in addition to fulfilling the customary director's
role, also provides additional services directly for the Board of Directors and
is separately compensated therefor, would nonetheless qualify as an Independent
Director. Notwithstanding anything to the contrary contained in this
definition, each Director as of the date hereof who is not an executive officer
of the Company shall be deemed to be an Independent Director hereunder.
"Initial Conversion Price" means the Conversion Price first Fixed.
"Initial Issuance Date" means the first date that any shares of Class A Stock
are issued.
"Investment Completion Date" means the date of the Supplemental Preference
Stock Closing or the Class A Common Issuance Date, whichever shall first occur.
"Joint Venture" has the meaning specified in the first WHEREAS clause.
"Joint Venture Agreement" has the meaning specified in the first WHEREAS
clause.
"Joint Venture Documents" mean the Joint Venture Agreement and the other
Operative Agreements (as defined in the Joint Venture Agreement).
"JV Entity" has the meaning set forth in the Joint Venture Agreement.
"Kansas Control Share Acquisitions Statute" means Kan. Stat. ▇▇▇. Section 17-
1286 et seq. (1988).
"License" means any license, ordinance, authorization, permit, certificate,
variance, exemption, order, franchise or approval, domestic or foreign.
15
"Lien" means any mortgage, pledge, security interest, adverse claim,
encumbrance, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
similar Applicable Law of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"Lien Transfer" shall mean the granting of any Lien on any Long Distance
Asset, other than:
(a) a Lien securing purchase money indebtedness that does not have a term
longer than the estimated useful life of the Long Distance Asset subject to
such Lien;
(b) Liens or other comparable arrangements relating to the financing of
accounts receivable; and
(c) Liens securing any other indebtedness for borrowed money, provided
that (i) the amount of such indebtedness, when added to the aggregate
amount of purchase money indebtedness referred to in clause (a) above, does
not exceed 30% of the total book value of the Long Distance Assets as at
the date of the most recently published balance sheet of the Company, (ii)
the indebtedness secured by such Liens is secured only by Liens on Long
Distance Assets, (iii) the face amount of such indebtedness does not exceed
the book value of the Long Distance Assets subject to such Liens, and (iv)
such indebtedness is for a term no longer than the estimated useful life of
the Long Distance Assets subject to such Liens.
"Liquidation Preference" has the meaning set forth in the Class A Provisions.
"Local Exchange Division" means the Local Communications Services Division of
the Company.
"Long Distance Assets" means:
(a) the assets reflected in the Company's balance sheet for the year
ended December 31, 1994 as included in the Long Distance Division;
(b) any assets acquired by the Company or any of its Subsidiaries
following December 31, 1994 that are reflected in the Company's balance
sheet as included in the Long Distance Division;
(c) any assets of the Company or any of its Subsidiaries that are not
reflected in the Company's balance sheet for the year ended December 31,
1994 as included in the Long Distance Division, which after December 31,
1994 are transferred by the Company or any of its Subsidiaries to, or
reclassified by the Company or any of its Subsidiaries as part of, the Long
Distance Division;
(d) any assets acquired by the Company after December 31, 1994 that are
used or held for use primarily for the benefit of the Long Distance
Business; and
(e) any assets referred to in clauses (a) through (c) above that are used
or held for use primarily for the benefit of the Long Distance Business
which are transferred or reclassified by the Company or any of its
Subsidiaries outside of the Long Distance Division, but which continue to
be owned by the Company or any of its Subsidiaries;
provided that the term "Long Distance Assets" shall not include (i) any assets
that are used or held for use primarily for the benefit of any Non-Long
Distance Business, or (ii) any other assets reflected in the Company's balance
sheet for the year ended December 31, 1994 as included in the Cellular and
Wireless Division or the Local Exchange Division (other than as such assets in
the Cellular and Wireless Division or the Local Exchange Division may be
transferred or reclassified in accordance with paragraph (c) of this
definition).
"Long Distance Business" means all long distance telecommunications
activities and services of the Company and its Subsidiaries at the relevant
time, including (but not limited to) all long distance transport services,
switching and value-added services for voice, data, video and multimedia
transmission, migration paths and intelligent overlapping architectures,
provided that the term "Long Distance Business" shall not include any
activities or services primarily related to any Non-Long Distance Business.
16
"Long Distance Division" means the Long Distance Communications Services
Division of the Company.
"Lower Threshold Sprint Price" means $34.982 (subject to adjustment as
provided in the Class A Provisions).
"Major Competitor" means (a) with respect to FT or DT, a Person that
materially competes with a major portion of the telecommunications services
business of FT or DT in Europe, or a Person that has taken substantial steps to
become such a Major Competitor and which FT or DT has reasonably concluded, in
its good faith judgment, will be such a competitor in the near future in France
or Germany, provided that FT and/or DT furnish in writing to the Company
reasonable evidence of the occurrence of such steps; (b) with respect to the
Company, a Person that materially competes with a major portion of the
telecommunications services business of the Company in North America, or a
Person that has taken substantial steps to become such a Major Competitor and
which the Company has reasonably concluded, in its good faith judgment, will be
such a competitor in the near future in the United States of America, provided
that the Company furnish in writing to each Class A Holder reasonable evidence
of the occurrence of such steps; and (c) with respect to the Joint Venture, a
Person that materially competes with a major portion of the telecommunications
services business of the Joint Venture, or a Person that has taken substantial
steps to become such a Major Competitor and which FT, DT or the Company has
reasonably concluded, in its good faith judgment, will be such a competitor in
the near future, provided that FT, DT or the Company furnish in writing to each
other Party reasonable evidence of the occurrence of such steps.
"Market Price" means, with respect to a security on any date, the Closing
Price of such security on the Trading Day immediately prior to such date. The
Market Price shall be deemed to be equal to (a) in the case of a share of Class
A Common Stock, the Market Price of a Share of Common Stock; and (b) in the
case of a Share of Class A Preference Stock, the Liquidation Preference. The
Market Price of any options, warrants, rights or other securities convertible
into or exercisable for Class A Common Stock (except for the Class A Preference
Shares) shall be equal to the Market Price of options, warrants, rights or
other securities convertible into or exercisable for Common Stock upon the same
terms and otherwise containing the same terms as such options, warrants, rights
or other securities convertible into or exercisable for Class A Common Stock.
"Material Adverse Effect" means, with respect to any Person, the effect of
any event, occurrence, fact, condition or change that is materially adverse to
the business, operations, results of operations, financial condition, assets or
liabilities of such Person.
"Maximum Price" means, subject to adjustment as provided in the Class A
Provisions, the lesser of (a) 125% of the Average Sprint Price for the relevant
period provided for herein and (b) $48.704.
"Minimum Price" means, subject to adjustment as provided in the Class A
Provisions, 135% of the Average Sprint Price for the relevant period provided
for herein.
"MSA" means a "Metropolitan Statistical Area," as such term is defined and
modified from time to time by the FCC for purposes of Cellular System
licensing.
"NASDAQ" means the National Association of Securities Dealers, Inc. Automated
Quotations System.
"Net Cellular Acquisition Amount" means, subject to adjustment as provided in
the Class A Provisions, the difference, which may be a negative number, of the
aggregate Purchase Prices paid by Cellular for Acquisitions after June 22,
1995, minus the aggregate value of the Sales Prices received by Cellular in
connection with Dispositions after June 22, 1995, such difference to be
calculated on a per share basis using the number of outstanding shares of
Common Stock immediately after the Cellular Spin-off Date.
"Net Cellular Indebtedness" means, subject to adjustment as provided in the
Class A Provisions, the amount of indebtedness for borrowed money of Cellular
outstanding immediately after the Cellular Spin-off Date, minus the amount of
Cellular's cash at such time, such amount to be calculated on a per share basis
using the number of outstanding shares of Common Stock immediately after the
Cellular Spin-off Date.
17
"New Lower Threshold Sprint Price" means, subject to adjustment as provided
in the Class A Provisions, the Lower Threshold Sprint Price minus 96.30% of the
Cellular Spin-off Reduction Factor.
"New Maximum Price" means, subject to adjustment as provided in the Class A
Provisions, (a) if the Cellular Spin-off Date occurs prior to the First
Closing, the lesser of (i) 125% of the Average Sprint Price for the relevant
period specified herein and (ii) $48.704 minus 125% of the Cellular Spin-off
Reduction Factor, and (b) if the Cellular Spin-off Date occurs after the First
Closing, the Maximum Price minus the product of (i) the lesser of (x) 1.25 and
(y) the quotient of $48.704 divided by such Average Sprint Price used in
calculating such Maximum Price, multiplied by (ii) the Cellular Spin-off
Reduction Factor.
"New Minimum Price" means, subject to adjustment as provided in the Class A
Provisions, the Minimum Price minus 135% of the Cellular Spin-off Reduction
Factor.
"New Sprint Price Range" means, subject to adjustment as provided in the
Class A Provisions, from and including the New Lower Threshold Sprint Price to
and including the New Upper Threshold Sprint Price.
"New Target Price" means, subject to adjustment as provided in the Class A
Provisions, the Target Price minus 130% of the Cellular Spin-off Reduction
Factor, provided that, if the Cellular Spin-off Date does not occur prior to
the First Closing and the Average Sprint Price determined at the date of the
First Closing is within the Sprint Price Range, the New Target Price shall be
the Target Price minus the product of (a) the quotient of $47.225 divided by
such Average Sprint Price, multiplied by (b) the Cellular Spin-off Reduction
Factor.
"New Upper Threshold Sprint Price" means, subject to adjustment as provided
in the Class A Provisions, $37.780 minus 104% of the Cellular Spin-off
Reduction Factor.
"New York Stock Exchange" means The New York Stock Exchange, Inc.
"Non-Long Distance Business" means (a) the ownership of any equity or other
interests in the Joint Venture or any of the JV Entities; the enforcement or
performance of any of the rights or obligations of the Company or any
Subsidiary of the Company pursuant to the Joint Venture Agreement; or any
activities or services of the Joint Venture or any of the JV Entities; (b) the
Triple Play Activities; (c) any activities or services primarily related to the
provision of subscriber connections to a local exchange or switch providing
access to the public switched telephone network; (d) any activities or services
primarily related to the provision of exchange access services for the purpose
of originating or terminating long distance telecommunications services; (e)
any activities or services primarily related to the resale by the Local
Exchange Division of long distance telecommunications services of the Company
or other carriers; (f) any activities or services primarily related to the
provision of inter-LATA long distance telecommunications services that are
incidental to the local exchange services business of the Local Exchange
Division; (g) any activities or services primarily related to the provision of
intra-LATA long distance telecommunications services; (h) any activities or
services (whether local, intra-LATA or inter-LATA) primarily related to the
provision of cellular, PCS, ESMR or paging services, mobile telecommunications
services or any other voice, data or voice/data wireless services, whether
fixed or mobile, or related to telecommunications services provided through
communications satellite systems (whether low, medium or high orbit systems);
and (i) the use of the "Sprint" brand name or any other brand names, trade
names or trademarks owned or licensed by the Company or any of its
Subsidiaries.
"North America" shall mean the current geographic area covered by the
following countries: Canada, the United States of Mexico and the United States
of America.
"Notice of Abandonment" has the meaning specified in Section 2.1(b)(i)
hereof, provided that if the Cellular Spin-off Date does not occur on or prior
to the fifth anniversary of the Initial Issuance Date, the Company shall be
conclusively deemed to have delivered a Notice of Abandonment on such fifth
anniversary.
18
"Optional Shares" has the meaning specified in Section 2.5(a) hereof.
"Optional Shares Closing" has the meaning specified in Section 2.5(c) hereof.
"Other Agreements" mean the Registration Rights Agreement, the Standstill
Agreement, the Stockholders' Agreement, the FT Investor Confidentiality
Agreement and the DT Investor Confidentiality Agreement.
"Parent" has the meaning specified in the definition of "Subsidiary".
"Party" has the meaning set forth in the paragraph following the second
WHEREAS clause.
"Passive Financial Institution" means a bank (or comparable financial
institution), insurance company, pension or retirement fund that acquires
Voting Securities or other equity interests in a Qualified Subsidiary without
the purpose or effect of changing or influencing the control of the Qualified
Subsidiary or the Company, nor in connection with or as a participant in any
transaction having such purpose or effect, provided that the term "Passive
Financial Institution" shall not include any Major Competitor of the Company or
of the Joint Venture.
"PCS" means a radio communications system of the type authorized under the
rules for broadband personal communications services designated as Subpart E of
Part 24 of the FCC's rules or similar Applicable Laws of any other country,
including the network, marketing, distribution, sales, customer interface and
operations functions relating thereto.
"Percentage Ownership Interest" means, with respect to any Person, that
percentage of the Voting Power of the Company represented by Votes associated
with the Voting Securities of the Company owned of record by such Person or by
its nominees.
"Person" means an individual, a partnership, an association, a joint venture,
a corporation, a business, a trust, any entity organized or existing under
Applicable Law, an unincorporated organization or any Governmental Authority.
"POPs" means, with respect to Cellular, the sum of the products of (a) the
percentage ownership interest held by Cellular in each entity licensed or
designated to receive a license by the FCC to construct or operate a Cellular
System for a particular MSA or MSAs and/or RSA or RSAs, and (b) the number of
residents of such MSAs and/or RSAs, as the case may be (as reflected in the
figures obtained in the census conducted by the U.S. Census Bureau in 1990).
"Preferred Stock" means any series of Preferred Stock of the Company, but
shall not include the Class A Preference Stock.
"Proceeding" means any action, litigation, suit, proceeding or formal
investigation or review of any nature, civil, criminal, regulatory or
otherwise, before any Governmental Authority.
"Proposals" mean (a) the proposal for the stockholders of the Company to
approve this Agreement and the performance by the Company of all transactions
and acts on the part of the Company contemplated under this Agreement and the
Other Agreements, including the authorization and issuance of shares of the
Company's capital stock pursuant to this Agreement, the Stockholders' Agreement
and the Articles as amended by the Amendment, (b) the proposal for the
stockholders of the Company to approve and adopt the Amendment and the Bylaws
Amendment, and (c) the proposal for the stockholders of the Company to (i)
approve for purposes of the Kansas Control Share Acquisitions Statute the
Control Share Acquisitions Plan, and (ii) accord such shares acquired pursuant
to the Control Share Acquisitions Plan voting rights in accordance with Section
17-1294 of the Kansas Control Share Acquisitions Statute.
"Proxy Statement" means the notices of meeting, proxy statement, forms of
proxy and any accompanying letters to stockholders to be distributed by the
Company in connection with the Proposals or any schedules or exhibits required
to be filed with the SEC in connection therewith.
19
"Purchase Price" means, as to Acquisitions by Cellular, the amount paid in
cash plus the Fair Market Value of non-cash consideration paid to effect such
Acquisition, provided that any indebtedness assumed by Cellular shall not be
included in the Purchase Price paid in respect of any Acquisition to the extent
that it is included in Net Cellular Indebtedness.
"Qualified Joint Venture" has the meaning set forth in Article I of the
Stockholders' Agreement.
"Qualified Subsidiary" means any Person which
(a) is a Subsidiary of either FT or DT or an entity that would be such a
Subsidiary if FT's and DT's aggregate ownership in such entity were held
individually by one of FT or DT, provided that until the second anniversary
of the Initial Issuance Date, no Voting Securities of such entity may be
Beneficially Owned by a Major Competitor of the Company or of the Joint
Venture, and thereafter no such Major Competitor or Major Competitors may,
individually or in the aggregate, Beneficially Own Voting Securities
representing ten percent or more of the Voting Power of such entity, and
provided, further, that if the Voting Securities of such entity owned
directly by FT and DT or indirectly through Wholly-Owned Subsidiaries of
either of them are entitled to a number of Votes representing in the
aggregate less than 80 percent of the Voting Power of such entity, then:
(i) the Voting Securities owned directly by FT and DT and Wholly-
Owned Subsidiaries, plus Voting Securities, if any, owned by Passive
Financial Institutions, must in the aggregate be entitled to a number
of Votes representing at least 80 percent of the Voting Power of such
entity; and
(ii) FT and DT and Wholly-Owned Subsidiaries must in the aggregate
directly own Voting Securities entitled to a number of Votes
representing more than 50 percent of the Voting Power of, and more than
50 percent of the outstanding equity interests in, such entity; and
(b) has (i) entered into a Qualified Subsidiary Standstill Agreement and
a confidentiality agreement satisfactory in form and substance to each
Party, and (ii) (x) caused all holders of any of its equity interests
(other than FT, DT and Passive Financial Institutions) (each a "Strategic
Investor") to enter into a Strategic Investor Standstill Agreement and (y)
caused all holders of any of its equity interests (other than FT and DT) to
enter into a confidentiality agreement satisfactory in form and substance
to each Party.
"Qualified Subsidiary Standstill Agreement" means a Qualified Subsidiary
Standstill Agreement between the Company and a Qualified Subsidiary,
substantially in the form of Exhibit A attached hereto.
"Registration Rights Agreement" means the Registration Rights Agreement,
among the Company, FT and DT, dated the Initial Issuance Date, substantially in
the form of Exhibit B attached hereto, as it may be amended or supplemented
from time to time.
"Rights" has the meaning set forth in Section 2.5(a)(i) hereof.
"Rights Agreement" means the Rights Agreement, dated as of August 8, 1989,
between the Company and UMB Bank, n.a., as amended on June 4, 1992 and as of
July 31, 1995, and as it may be amended or supplemented from time to time.
"RSA" means a "Rural Service Area," as such term is defined and modified from
time to time by the FCC for purposes of Cellular System licensing.
"Sales Prices" means, as to any Disposition by Cellular, the amount received
in cash plus the Fair Market Value of non-cash consideration received to effect
such Disposition, provided that any indebtedness assumed or retained by
Cellular shall not be deducted from the Sales Price to the extent that it is
included in Net Cellular Indebtedness.
"Schedule of Permitted Cellular Actions" has the meaning specified in Section
8.10 hereof.
"SEC" means the United States Securities and Exchange Commission.
20
"SEC Documents" has the meaning specified in Section 6.5(a) hereof.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated from time to time thereunder.
"Shares" means (a) shares of Class A Stock, Common Stock or any other Voting
Securities of the Company, (b) securities of the Company convertible into
Voting Securities of the Company and (c) options, warrants or other rights to
acquire such Voting Securities, but in the case of this clause (c), excluding
any rights of the Class A Holders or FT and DT to acquire Voting Securities of
the Company pursuant to the Stockholders' Agreement and this Agreement (but not
excluding any Voting Securities received upon the exercise of such rights).
"Spin-off" means any spin-off or other pro rata distribution of equity
interests of a wholly-owned direct or indirect Subsidiary of the Company to the
stockholders of the Company, provided that the term "Spin-off" shall not
include the Cellular Spin-off unless a Notice of Abandonment has been
delivered.
"Spin-off Investment Agreement" shall have the meaning set forth in Section
7.10(a) of the Stockholders' Agreement.
"Sprint Price Range" means from and including the Lower Threshold Sprint
Price to and including the Upper Threshold Sprint Price.
"Sprint Sub" has the meaning set forth in the first WHEREAS clause.
"Standstill Agreement" means the Standstill Agreement, among the Company, FT
and DT, dated as of the date hereof, substantially in the form of Exhibit C
attached hereto, as it may be amended or supplemented from time to time.
"Stockholders' Agreement" means the Stockholders' Agreement, among the
Company, FT and DT, dated as of the Initial Issuance Date, substantially in the
form of Exhibit D hereto (and all exhibits thereto), as it may be amended or
supplemented from time to time.
"Stockholders' Meeting" has the meaning specified in Section 8.4 hereof.
"Strategic Investor" has the meaning specified in the definition of
"Qualified Subsidiary".
"Strategic Investor Standstill Agreement" means the Strategic Investor
Standstill Agreement, between the Company and a Strategic Investor,
substantially in the form of Exhibit E attached hereto.
"Strategic Merger" means a merger or other business combination involving the
Company (a) in which the Class A Holders are entitled to retain or receive, as
the case may be, voting equity securities of the surviving parent entity in
exchange for or in respect of (by conversion or otherwise) such Class A Stock,
with an aggregate Fair Market Value equal to at least 75% of the sum of (i) the
Fair Market Value of all consideration which such Class A Holders have a right
to receive with respect to such merger or other business combination, and (ii)
if the Company is the surviving parent entity, the Fair Market Value of the
equity securities of the surviving parent entity which the Class A Holders are
entitled to retain, (b) immediately after which the surviving parent entity is
an entity whose voting equity securities are registered pursuant to Section
12(b) or Section 12(g) of the Exchange Act or which otherwise has any class or
series of its voting equity securities held by at least 500 holders and (c)
immediately after which no Person or Group (other than the Class A Holders)
owns Voting Securities of such surviving parent entity with Votes equal to more
than 35 percent of the Voting Power of such surviving parent entity.
"Subsidiary" means, with respect to any Person (the "Parent"), any other
Person in which the Parent, one or more direct or indirect Subsidiaries of the
Parent, or the Parent and one or more of its direct or indirect
21
Subsidiaries (a) have the ability, through ownership of securities individually
or as a group, ordinarily, in the absence of contingencies, to elect a majority
of the directors (or individuals performing similar functions) of such other
Person, and (b) own more than 50% of the equity interests, provided that Atlas
shall be deemed to be a Subsidiary of each of FT and DT.
"Supplemental Preference Stock Closing" has the meaning set forth in Section
2.3 hereof.
"Supplemental Preference Stock Closing Date" has the meaning set forth in
Section 2.3(b) hereof.
"Surviving Representations" has the meaning set forth in Section 11.1 hereof.
"Target Price" means $47.225 (subject to adjustment as provided in the Class
A Provisions).
"Taxes" means all federal, state, local and foreign income, profits,
franchise, sales, use, occupancy, property, transfer, withholding, payroll,
receipts, excise and other taxes, fees, duties and governmental charges
(including interest, additions thereto and penalties thereon) whether or not
based in whole or in part on income.
"Third Party Approval" means any consent, waiver, grant, concession, license,
authorization, permit, franchise or approval of, or notice to, any Person other
than a Governmental Authority.
"Trading Day" means, with respect to any security, any day on which the
principal national securities exchange on which such security is listed or
admitted to trading, or NASDAQ, if such security is listed or admitted to
trading thereon, is open for the transaction of business (unless such trading
shall have been suspended for the entire day) or, if such security shall have
been not listed or admitted to trading on any national securities exchange or
NASDAQ, any day other than a Saturday, Sunday, or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
"Transfer" means any act pursuant to which, directly or indirectly, the
ownership of the assets or securities in question is sold, transferred,
conveyed, delivered or otherwise disposed, but shall not include (a) any grant
of Liens, (b) any conversion or exchange of any security of the Company
pursuant to a merger or other business combination involving the Company, (c)
any transfer of ownership of assets to the surviving entity in a Strategic
Merger or pursuant to any other merger or other business combination not
prohibited by the Class A Provisions, or (d) any foreclosure or other execution
upon any of the assets of the Company or any of its Subsidiaries other than
foreclosures resulting from Lien Transfers.
"Triple Play Activities" means (a) the ownership of any equity or other
interests in MajorCo, L.P. or any of its successors or Affiliates; the
enforcement or performance of any of the rights or obligations of the Company
or any Subsidiary of the Company pursuant to the Agreement of Limited
Partnership of MajorCo, L.P. or any other agreement or arrangement contemplated
thereby, except to the extent relating to the provision of services by the
Company as the long distance telecommunications provider to MajorCo, L.P.; or
any activities or services of MajorCo, L.P. or any of its successors or
Affiliates; (b) the ownership of any equity or other interests in any Teleport
Entity (as that term is defined in the Contribution Agreement (the
"Contribution Agreement"), dated as of March 28, 1995, by and among TCI Network
Services, Comcast Telephony Services, Cox Telephony Partnership, MajorCo, L.P.
and NewTelco, L.P.); or any activities or services of any Teleport Entity or
any of their respective successors or Affiliates; and (c) the ownership of any
equity or other interests in PhillieCo, L.P., or any of its successors or
Affiliates; the enforcement or performance of any of the rights or obligations
of the Company or any Subsidiary of the Company pursuant to the Amended and
Restated Agreement of Limited Partnership of PhillieCo, L.P., dated as of
February 17, 1995, or any other agreement or arrangement contemplated thereby,
except to the extent relating to the provision of services by the Company as
the long distance telecommunications provider to PhillieCo, L.P.; or any
activities or services of PhillieCo, L.P. or any of its successors or
Affiliates.
"Upper Threshold Sprint Price" means, subject to adjustment as provided in
the Class A Provisions, $37.780.
22
"Vote" means, with respect to any entity, the ability to cast a vote at a
stockholders', members' or comparable meeting of such entity with respect to
the election of directors, managers or other members of such entity's governing
body, or the ability to cast a general partnership or comparable vote, provided
that with respect to the Company only, the term "Vote" means the ability to
exercise general voting power (as opposed to the exercise of special voting or
disapproval rights such as those set forth in the Class A Provisions) with
respect to matters other than the election of directors at a meeting of the
stockholders of the Company.
"Voting Power" means, with respect to any entity as at any date, the
aggregate number of Votes outstanding as at such date in respect of such
entity.
"Voting Securities" means, with respect to an entity, any capital stock or
debt securities of such entity if the holders thereof are ordinarily, in the
absence of contingencies, entitled to a Vote, even though the right to such
Vote has been suspended by the happening of such a contingency, and in the case
of the Company, shall include, without limitation, the Common Stock and the
Class A Stock, but shall not include any shares issued pursuant to the Rights
Agreement to the extent such issuance is caused by action of a Class A Holder.
"Weighted Average Price" means the weighted average per unit price paid by
the purchasers of any capital stock, debt instrument or security of the
Company. In determining the price of shares of Common Stock or Class A Common
Stock issued upon the conversion or exchange of securities or issued upon the
exercise of options, warrants or other rights, the consideration for such
shares shall be deemed to include the price paid to purchase the convertible
security or the warrant, option or other right, plus any additional
consideration paid upon conversion or exercise. If any portion of the price
paid is not cash, the Independent Directors (acting by majority vote) shall
determine in good faith the Fair Market Value of such non-cash consideration.
If any new shares of Common Stock are issued together with other shares or
securities or distributions of other assets of the Company for consideration
which covers both the new shares and such other shares, securities or other
assets, the portion of such consideration allocable to such new shares shall be
determined in good faith by the Independent Directors (acting by majority
vote), in each case as certified in a resolution sent to all Class A Holders.
"Wholly-Owned Subsidiaries" means companies or other business organizations
all of the outstanding Voting Securities of which are owned, directly or
indirectly, by either or both of FT and DT, other than any de minimis ownership
required by Applicable Law.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1. First Closing. (a) (i) The Parties shall schedule the first
closing of the purchase and sale of shares of Class A Stock hereunder (the
"First Closing") for the tenth Business Day after all the conditions set forth
in Article III are reasonably expected to be satisfied, except for conditions
to be satisfied concurrently with the First Closing. Prior to scheduling the
date of the First Closing, the Parties shall consult with regard to the status
of such conditions with a view to determining when they will be satisfied. The
First Closing shall take place ten Business Days after the date on which all
conditions set forth in Article III are satisfied (except for those conditions
to be satisfied concurrently with the First Closing), provided that the Company
shall retain discretion over the timing of the Cellular Spin-off, and if the
Cellular Spin-off Date shall occur less than 35 Trading Days before the date on
which the First Closing is otherwise scheduled to occur, the First Closing
shall instead occur on the 35th Trading Day after the Cellular Spin-off Date,
and provided, further, that the First Closing may take place at such other date
and time as the Parties shall agree in writing.
(ii) When pursuant to paragraph (b) of this Section 2.1 or Section 3(b) of
the Class A Provisions, the Company, on the one hand, or FT and DT, on the
other hand, may make an election with respect to the purchase price of the
shares of Class A Common Stock to be purchased at the First Closing or the
Initial
23
Conversion Price of shares of Class A Preference Stock to be purchased at the
First Closing, such election shall be made by notice delivered by the Company
to FT and DT, or by FT and DT to the Company, as the case may be, at least five
Business Days (or in the case of a First Closing FT/DT Notice delivered
pursuant to Section 2.1(b)(ii)(I)(B) hereof, at least seven Business Days)
prior to the date of the First Closing (such notice being referred to herein as
a "First Closing Company Notice" or "First Closing FT/DT Notice", as the case
may be), provided that the Company may only deliver such a First Closing
Company Notice if a majority of the Continuing Directors shall have first
approved (unless such approval is not required pursuant to Section 11.13), at a
meeting of Directors at which at least seven Continuing Directors are present,
the setting of the purchase price of the shares of Class A Common Stock to be
purchased at the First Closing or the Fixing of the Initial Conversion Price of
the shares of Class A Preference Stock to be purchased at the First Closing, as
the case may be, by the Company as provided in Section 3(b) of the Class A
Provisions. If both the Company, on the one hand, and FT and DT, on the other,
deliver First Closing Notices, the First Closing Notice first delivered in
accordance with Section 11.7 hereof shall be operative and the second shall be
of no force or effect.
(b) Upon the terms and subject to the conditions of this Agreement, the
Company shall issue, sell and deliver to each of FT and DT, and each of FT and
DT, severally and not jointly, shall purchase and accept, shares of Class A
Common Stock or Class A Preference Stock, as the case may be, at the First
Closing as set forth below in this Section 2.1:
(i) FT and DT shall purchase 86,236,036 shares of Class A Common Stock
(subject to adjustment as provided in Sections 2.6 and 2.7 hereof) at the
applicable price specified below in this Section 2.1(b)(i) and determined
at the date of the First Closing, if at least 35 Trading Days prior to the
date of the First Closing, the Cellular Spin-off Date shall have occurred
or the Company shall have notified FT and DT that the Company has abandoned
the Cellular Spin-off (a "Notice of Abandonment") at least ten Business
Days before the First Closing, as follows:
(x) if the Company shall have timely delivered a Notice of
Abandonment to FT and DT, the purchase price of such shares of Class A
Common Stock shall be:
(I) the Target Price, if (A) the Average Sprint Price determined
at the date of the First Closing is within the Sprint Price Range,
or (B) such Average Sprint Price is below the Lower Threshold Sprint
Price and FT and DT have timely delivered to the Company a First
Closing FT/DT Notice specifying their election to purchase such
shares of Class A Common Stock at the Target Price;
(II) the Maximum Price (determined with reference to such Average
Sprint Price), if such Average Sprint Price is above the Upper
Threshold Sprint Price; or
(III) the Minimum Price (determined with reference to such Average
Sprint Price), if such Average Sprint Price is below the Lower
Threshold Sprint Price and the Company shall have timely delivered
to FT and DT a First Closing Company Notice specifying its election
to issue and sell such shares of Class A Common Stock at such
Minimum Price; or
(y) if the Cellular Spin-off Date has occurred, the purchase price of
such shares of Class A Common Stock shall be:
(I) the New Target Price, if (A) such Average Sprint Price is
within the New Sprint Price Range, or (B) such Average Sprint Price
is below the New Lower Threshold Sprint Price and FT and DT have
timely delivered to the Company a First Closing FT/DT Notice
specifying their election to purchase such shares of Class A Common
Stock at the New Target Price;
(II) the New Maximum Price (determined with reference to such
Average Sprint Price), if such Average Sprint Price is above the New
Upper Threshold Sprint Price; or
(III) the Minimum Price (determined with reference to such Average
Sprint Price), if such Average Sprint Price is below the New Lower
Threshold Sprint Price and the Company has
24
timely delivered to FT and DT a First Closing Company Notice
specifying its election to issue and sell such shares of Class A
Common Stock at such Minimum Price.
(ii) FT and DT shall purchase shares of Class A Preference Stock if (x)
the Cellular Spin-off Date has occurred or a Notice of Abandonment has been
delivered, but the Average Sprint Price determined at the date of the First
Closing is below the New Lower Threshold Sprint Price or the Lower
Threshold Sprint Price, as the case may be, and neither FT and DT, on the
one hand, nor the Company, on the other hand, have timely delivered a First
Closing Notice, or (y) the Cellular Spin-off Date has not occurred and the
Company has not timely delivered a Notice of Abandonment, as follows, all
such shares of Class A Preference Stock to be purchased for a price equal
to their liquidation value:
(I) if the Cellular Spin-off Date has not occurred and the Company
has not timely delivered a Notice of Abandonment and if (A) such
Average Sprint Price is within the Sprint Price Range or (B) such
Average Sprint Price is below the Lower Threshold Sprint Price and FT
and DT shall have timely delivered to the Company a First Closing FT/DT
Notice specifying their election to purchase shares of Class A
Preference Stock with an Initial Conversion Price equal to the Target
Price in accordance with this clause (I), such shares of Class A
Preference Stock shall be purchased at a per share price, and have a
per share liquidation value, equal to the Target Price and shall have
an aggregate liquidation value (and purchase price) of $3.0 billion (or
such lesser amount not less than $2.0 billion, as determined by the
Company upon notice to FT and DT not later than five Business Days
prior to the First Closing), such shares to have an Initial Conversion
Price equal to the Target Price;
(II) if the Cellular Spin-off Date has not occurred and the Company
has not timely delivered a Notice of Abandonment and if such Average
Sprint Price is above the Upper Threshold Sprint Price, such shares of
Class A Preference Stock will be purchased at a per share price, and
have a per share liquidation value, equal to the Target Price and shall
have an aggregate liquidation value (and purchase price) of $3.0
billion (or such lesser amount not less than $2.0 billion as determined
by the Company upon notice to FT and DT not later than five Business
Days prior to the First Closing), such shares to have an Initial
Conversion Price equal to the Maximum Price (determined with reference
to such Average Sprint Price);
(III) if the Cellular Spin-off Date has not occurred, the Company has
not timely delivered a Notice of Abandonment, such Average Sprint Price
is below the Lower Threshold Sprint Price and the Company has timely
delivered to FT and DT a First Closing Company Notice specifying its
election to issue and sell such shares of Class A Preference Stock with
an Initial Conversion Price equal to the Minimum Price (determined with
reference to such Average Sprint Price) in accordance with this clause
(III), such shares of Class A Preference Stock shall be purchased at a
per share price, and have a per share liquidation value, equal to the
Target Price and shall have an aggregate liquidation value (and
purchase price) of $3.0 billion (or such lesser amount not less than
$2.0 billion as determined by the Company upon notice to FT and DT not
later than five Business Days prior to the First Closing), such shares
to have an Initial Conversion Price equal to such Minimum Price; or
(IV) if (A) the Cellular Spin-off Date has not occurred and the
Company has not timely delivered a Notice of Abandonment, such Average
Sprint Price is below the Lower Threshold Sprint Price, and neither the
Company, on the one hand, nor FT and DT on the other hand, have timely
delivered a First Closing Notice, or (B) the conditions described in
Section 2.1(b)(ii)(x) are satisfied, such shares of Class A Preference
Stock shall be purchased at a per share price, and have a per share
liquidation value equal to the Target Price, and shall have an
aggregate liquidation value (and purchase price) of $1.5 billion, such
shares to be convertible as provided in Section 3 of the Class A
Provisions,
the purchase price in each case payable as provided in this Section 2.1. The
Company may only deliver the notice referenced in clause (I), (II) or (III) of
this Section 2.1(b)(ii) decreasing the aggregate liquidation value of the
shares of Class A Preference Stock to be purchased if a majority of the
Continuing Directors shall
25
have first approved (unless such approval is not required pursuant to Section
11.13 hereof), at a meeting of Directors at which at least seven Continuing
Directors are present, so decreasing the aggregate liquidation value of the
shares of Class A Preference Stock to be purchased at the First Closing in
accordance with such notice.
(c) The First Closing shall take place at the offices of Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York City
time, on the date determined in accordance with Section 2.1(a)(i) hereof.
(i) At the First Closing, the Company shall deliver, or cause to be
delivered, the following to each of FT and DT:
(x) certificates representing one-half of the shares of Class A
Common Stock or Class A Preference Stock, as the case may be, to be
purchased at the First Closing, in the name of FT or DT, as the case
may be, against payment of the purchase price therefor, as provided
below; and
(y) the opinions, certificates, agreements and other documents
required to be delivered by the Company pursuant to Article III.
(ii) At the First Closing, each of FT and DT shall deliver the following
to the Company:
(x) cash in the amount of one-half of the purchase price provided for
in Section 2.1(b) hereof, in each case by wire transfer of immediately
available funds to an account designated by the Company at least five
Business Days prior to the Initial Issuance Date; and
(y) the opinions, certificates, agreements and other documents
required to be delivered by FT or DT, as the case may be, pursuant to
Article III.
(iii) The purchase of shares of capital stock by FT and DT pursuant to
this Section 2.1 shall be consummated concurrently, and no purchase of
shares by FT or DT pursuant to this Section 2.1 shall be made unless and
until the concurrent purchase by the other Party is so effected.
Section 2.2. Additional Preference Stock Closing. (a) If (i) FT and DT shall
have purchased shares of Class A Preference Stock at the First Closing pursuant
to Section 2.1(b)(ii)(IV)(A) hereof, (ii) the Conversion Price of such shares
thereafter becomes Fixed, and (iii) the Cellular Spin-off Date has not occurred
and the Company has not delivered a Notice of Abandonment, then, upon the terms
and subject to the conditions of this Agreement, the Company shall issue, sell
and deliver to each of FT and DT, and each of FT and DT, severally and not
jointly, shall purchase and accept, the number of additional shares of Class A
Preference Stock determined in accordance with the following sentence. Such
shares shall have a per share liquidation value equal to the Target Price and
an aggregate liquidation value of $1.5 billion (or such amount not less than
$0.5 billion, as determined by the Company and set forth in the Additional
Preference Stock Closing Notice) and shall be purchased at one Additional
Preference Stock Closing (or such greater number of Additional Preference Stock
Closings, not to exceed three, as determined by the Company and set forth in
the Additional Preference Stock Closing Notice). Such shares of Class A
Preference Stock shall be purchased for a purchase price equal to their
liquidation value, the purchase price in each case payable as provided in this
Section 2.2. No Party shall have any obligations under this Section 2.2
following the occurrence of the Cellular Spin-off Date or the delivery of a
Notice of Abandonment.
(b) Each closing (each, an "Additional Preference Stock Closing") of the
purchase of such shares of Class A Preference Stock shall take place at the
offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00
a.m., New York City time, on the date (the "Additional Preference Stock Closing
Date") which (i) in the case of the first Additional Preference Stock Closing,
shall be the tenth Business Day after the later of (x) the date the Conversion
Price of the Class A Preference Stock becomes Fixed and (y) the date all of the
conditions in respect of the Additional Preference Stock Closing set forth in
Article IV have been fulfilled or waived (except for such conditions to be
fulfilled concurrently with the Additional Preference Stock Closing), and (ii)
in the case of any subsequent Additional Preference Stock Closing, the date
therefor set forth in the Additional Preference Stock Closing Notice, provided
that no Additional Preference Stock
26
Closing shall take place (w) more than one year after the first Additional
Preference Stock Closing, (x) more than five years and 60 days after the
Initial Issuance Date (as such period may be extended pursuant to the provisos
to Sections 4.2(a), 4.2(b), 4.3(a) and 4.3(b) hereof), (y) after the occurrence
of the Cellular Spin-off Date or (z) after delivery by the Company of a Notice
of Abandonment, and provided, further, that any Additional Preference Stock
Closing may take place at such other date and time as the Parties shall agree
in writing.
(i) At each Additional Preference Stock Closing, the Company shall
deliver, or cause to be delivered, the following to each of FT and DT:
(x) certificates representing one-half of the shares of Class A
Preference Stock to be purchased at such Additional Preference Stock
Closing in the name of FT or DT, respectively, against payment of the
purchase price therefor, as provided below; and
(y) the certificates and other documents required to be delivered by
the Company pursuant to Article IV.
(ii) At each Additional Preference Stock Closing, each of FT and DT shall
deliver the following to the Company:
(x) cash in the amount of one-half of the purchase price for the
shares of Class A Preference Stock being purchased at such Additional
Preference Stock Closing, such cash to be delivered by wire transfer of
immediately available funds to an account designated by the Company at
least five Business Days prior to the date of such Additional
Preference Stock Closing; and
(y) the certificates and other documents required to be delivered by
FT or DT, as the case may be, pursuant to Article IV.
(iii) The purchase of shares of Class A Preference Stock by FT and DT
pursuant to this Section 2.2 shall be consummated concurrently, and no
purchase of shares by FT or DT pursuant to this Section 2.2 shall be deemed
to be effected unless and until the concurrent purchase by the other Party
is so effected.
(c) If FT and DT have purchased shares of Class A Preference Stock at the
First Closing pursuant to Section 2.1(b)(ii)(IV)(A) hereof, the Company may,
not later than five Business Days after the date on which the Conversion Price
of such shares first becomes Fixed, deliver to FT and DT a notice (the
"Additional Preference Stock Closing Notice") specifying
(i) the number of Additional Preference Stock Closings scheduled to
occur, provided that
(x) no more than one Additional Preference Stock Closing shall be
scheduled to occur unless the aggregate liquidation value of the Shares
to be issued and delivered at all Additional Preference Stock Closings
exceeds $500 million, and
(y) there shall not be more than three Additional Preference Stock
Closings,
(ii) if more than one Additional Preference Stock Closing is scheduled,
the date of each subsequent Additional Preference Stock Closing, provided
that no Additional Preference Stock Closing may occur more than one year
after the date of the first Additional Preference Stock Closing, and
(iii) if more than one Additional Preference Stock Closing is scheduled,
the liquidation value of the Shares to be issued and delivered at each
Additional Preference Stock Closing, provided, further, that
(x) the aggregate liquidation value of the Shares purchased at the
first Additional Preference Stock Closing shall be at least $500
million,
(y) the aggregate liquidation value of the Shares to be purchased at
any subsequent Additional Preference Stock Closing shall be at least
$100 million, and
(z) if there are three Additional Preference Stock Closings, the
Shares to be purchased at the second and third Additional Preference
Stock Closings must have identical aggregate liquidation values,
provided that the Company may only deliver such Additional Preference
Stock Closing
27
Notice with respect to a decrease in the aggregate liquidation value of
the shares of Class A Preference Stock to be purchased at the
Additional Preference Stock Closing or Closings if a majority of the
Continuing Directors shall have first approved (unless such approval is
not required pursuant to Section 11.13), at a meeting of Directors at
which at least seven Continuing Directors are present, such decrease in
the aggregate liquidation value of the shares of Class A Preference
Stock to be purchased at the Additional Preference Stock Closing or
Closings.
Section 2.3. Supplemental Preference Stock Closing. (a) If the Class A
Holders make an election to defer conversion of the Class A Preference Stock in
accordance with Section 3(a)(iii) of the Class A Provisions, the Company shall
issue, sell and deliver to each of FT and DT, and each of FT and DT, severally
and not jointly, shall purchase and accept, additional shares of Class A
Preference Stock with an aggregate liquidation value equal to the excess of (i)
the product of 86,236,036 (subject to adjustment as provided in Sections 2.6
and 2.7 hereof) and the per share Conversion Price over the (ii) aggregate
liquidation value of the shares of Class A Preference Stock previously
purchased (whether or not such Shares have been Transferred or redeemed). The
purchase price of each such additional share shall be equal to its liquidation
value.
(b) A closing (the "Supplemental Preference Stock Closing") of the purchase
of such shares of Class A Preference Stock shall take place at the offices of
Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New
York City time, on the date (the "Supplemental Preference Stock Closing Date")
which is the tenth Business Day after the later of (i) the date of the election
specified in Section 3(a)(iii) of the Class A Provisions and (ii) the date all
of the conditions in respect of the Supplemental Preference Stock Closing set
forth in Article IV have been fulfilled or waived (except for such conditions
to be fulfilled concurrently with the Supplemental Preference Stock Closing),
provided that the Supplemental Preference Stock Closing shall not take place
more than five years and 60 days after the date of the First Closing (as such
period may be extended pursuant to the provisos to Sections 4.2(a), 4.2(b),
4.3(a) and 4.3(b) hereof) and that the Supplemental Preference Stock Closing
may take place at such other date and time as the Parties shall agree in
writing.
(i) At the Supplemental Preference Stock Closing, the Company shall
deliver, or cause to be delivered, the following to each of FT and DT:
(x) certificates representing one-half of the shares of Class A
Preference Stock to be purchased at the Supplemental Preference Stock
Closing in the name of FT or DT, respectively, against payment of the
purchase price therefor, as provided below; and
(y) the certificates and other documents required to be delivered by
the Company pursuant to Article IV.
(ii) At the Supplemental Preference Stock Closing, each of FT and DT
shall deliver the following to the Company:
(x) cash in the amount of one-half of the purchase price for such
shares of Class A Preference Stock being purchased, such cash to be
delivered by wire transfer of immediately available funds to an account
designated by the Company at least five Business Days prior to the
Supplemental Preference Stock Closing Date; and
(y) the certificates and other documents required to be delivered by
FT or DT, as the case may be, pursuant to Article IV.
(iii) The purchase of shares of Class A Preference Stock by FT and DT
pursuant to this Section 2.3 shall be consummated concurrently, and no
purchase of shares by FT or DT pursuant to this Section 2.3 shall be deemed
to be effected unless and until the concurrent purchase by the other Party
is so effected.
Section 2.4. Deferred Common Stock Closing. (a) If (i) FT and DT shall have
purchased shares of Class A Preference Stock at the First Closing, (ii) the
Cellular Spin-off Date shall have occurred or the Company
28
shall have delivered a Notice of Abandonment, (iii) the conditions to the
establishment of the Conversion Date (as defined in the Articles) have been
satisfied, (iv) the shares of Class A Preference Stock are to be converted on
the Conversion Date pursuant to the Class A Provisions, and (v) such conversion
has not been deferred as contemplated by Section 2.3 hereof, then, upon the
terms and subject to the conditions of this Agreement, the Company shall issue,
sell (if applicable) and deliver to each of FT and DT, and each of FT and DT,
severally and not jointly, shall purchase and accept a number of shares of
Class A Common Stock equal to the excess of (i) 86,236,036 shares (subject to
adjustment as provided in Section 2.6 or 2.7) over (ii) the sum of (x) the
number of such shares issued upon conversion of the outstanding shares of Class
A Preference Stock, and (y) the number of shares that would have been issued in
respect of shares of Class A Preference Stock previously purchased but which
have been Transferred to Persons other than Class A Holders or redeemed, for a
per share purchase price equal to the Conversion Price at which such shares of
Class A Preference Stock were so converted into shares of Class A Common Stock,
the purchase price payable as provided in this Section 2.4.
(b) A closing (the "Deferred Common Stock Closing") of the purchase of shares
of Class A Common Stock pursuant to this Section 2.4 shall take place at the
offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00
a.m., New York City time, on the date (the "Deferred Common Stock Closing
Date") which is the later of (i) the Conversion Date, and (ii) the date all of
the conditions set forth in Article IV have been fulfilled or waived, provided
that the Deferred Common Stock Closing shall not take place more than five
years and 60 days after the date of the First Closing (as such period may be
extended pursuant to the provisos to Sections 4.2(a), 4.2(b), 4.3(a) and 4.3(b)
hereof) or fewer than 30 Business Days after the date of the Cellular Spin-off,
if any, by the Company, and provided, further, that the Deferred Common Stock
Closing may take place at such other date and time as the Parties shall agree
in writing.
(i) At the Deferred Common Stock Closing, the Company shall deliver, or
cause to be delivered, the following to each of FT and DT:
(x) certificates representing one-half of the shares of Class A
Common Stock to be purchased at the Deferred Common Stock Closing, in
the name of FT or DT, respectively, against payment of the purchase
price therefor, as provided below;
(y) certificates representing the shares of Class A Common Stock to
be delivered by the Company to FT and DT upon the conversion of the
Class A Preference Stock if the Deferred Common Stock Closing shall
take place on the Conversion Date; and
(z) the certificates and other documents required to be delivered by
the Company pursuant to Article IV.
(ii) At the Deferred Common Stock Closing, each of FT and DT shall
deliver the following to the Company:
(x) certificates representing the outstanding shares of Class A
Preference Stock for conversion if the Deferred Common Stock Closing
shall take place on the Conversion Date and cash in the amount of one-
half of the purchase price for the shares being purchased, such cash to
be delivered by wire transfer of immediately available funds to an
account designated by the Company at least five Business Days prior to
the Deferred Common Stock Closing Date; and
(y) the certificates and other documents required to be delivered by
FT or DT, as the case may be, pursuant to Article IV.
(iii) The purchase of shares of Class A Common Stock by FT and DT
pursuant to this Section 2.4 shall be consummated concurrently, and no
purchase of shares by FT or DT pursuant to this Section 2.4 shall be deemed
to be effected unless and until the concurrent purchase by the other Party
is so effected.
Section 2.5. Purchases of Optional Shares. (a) Upon the terms and subject to
the conditions of this Agreement, each of FT and DT shall have the right (but
not the obligation) to purchase from the Company, and the Company shall issue,
sell and deliver to each of FT and DT, as the case may be, shares ("Optional
29
Shares") of either Class A Common Stock, if the Class A Common Issuance Date
has occurred, or Class A Preference Stock, if the Supplemental Preference Stock
Closing has occurred, in a number equal to up to one-half of:
(i) that number of additional shares of Class A Common Stock equal to, or
Class A Preference Stock with a related number of Class A Conversion Shares
equal to, 25% of the number of (x) shares of Common Stock issued by the
Company after June 14, 1994 and on or prior to the Investment Completion
Date but excluding shares of Common Stock issued in respect of the exercise
of stock options, warrants or other rights (except rights issued pursuant
to the Rights Agreement) in existence on or before the Initial Issuance
Date (including any issued pursuant to employee benefit plans) or upon the
conversion of any securities outstanding on or before the Initial Issuance
Date, for a per share purchase price equal to (A) in the case of Class A
Common Stock, the Weighted Average Price for such Common Stock, and (B) in
the case of Class A Preference Stock, the product of the Weighted Average
Price for such Common Stock multiplied by the number of Class A Conversion
Shares related to one share of Class A Preference Stock outstanding
immediately prior to such purchase and (y) shares of Common Stock issued by
the Company after June 14, 1994 and on or prior to the Initial Issuance
Date in respect of the exercise of stock options, warrants or other rights
(except rights issued pursuant to the Rights Agreement) in existence at any
time on or before the Initial Issuance Date (including any issued pursuant
to employee benefit plans) or upon the conversion of any securities
outstanding on or before the Initial Issuance Date, for a per share
purchase price equal to, (A) in the case of Class A Common Stock, the
higher of the price at which Class A Common Stock was issued and sold to FT
and DT at the Class A Common Issuance Date and the Weighted Average Price
for such Common Stock, and (B) in the case of Class A Preference Stock, the
higher of (I) the price at which Class A Preference Stock was sold to FT
and DT at the Supplemental Preference Stock Closing, and (II) the product
of the Weighted Average Price for such Common Stock multiplied by the
number of Class A Conversion Shares related to one share of Class A
Preference Stock outstanding immediately prior to such purchase, provided
that, notwithstanding clause (y) above, shares of Class A Stock purchased
hereunder with respect to the issuance of Excess Shares shall be purchased
for a per share purchase price equal to (A) in the case of Class A Common
Stock, the Weighted Average Price for such Excess Shares, and (B) in the
case of Class A Preference Stock, the product of the Weighted Average Price
for such Excess Shares multiplied by the number of Class A Conversion
Shares related to one share of Class A Preference Stock outstanding
immediately prior to such purchase. As used in this clause (i), "Excess
Shares" means those shares of Common Stock issued by the Company after the
date hereof and on or prior to the Initial Issuance Date (other than
pursuant to employee benefit plans) in respect of the exercise of rights
("Rights") to purchase Common Stock or similar instruments (except rights
issued pursuant to the Rights Agreement) issued after the date hereof and
on or prior to the Initial Issuance Date that, when aggregated with all
other shares of Common Stock which have been issued by the Company after
the date hereof in respect of the exercise of Rights issued after the date
hereof and on or prior to the Initial Issuance Date, exceed five percent of
the number of shares of Common Stock outstanding on the date hereof
(adjusted to reflect any stock split, subdivision, stock dividend or other
reclassification, consolidation or combination of the Company's Voting
Securities after the date hereof); and
(ii) if after June 14, 1994 and on or prior to the Investment Completion
Date the Company shall have issued or shall issue Voting Securities other
than Common Stock or Class A Stock, a number of additional shares of Class
A Stock sufficient for such additional shares of Class A Stock to represent
25% of the Votes represented by such Voting Securities, such Class A Stock
to be purchased for a per share purchase price equal to (A) in the case of
Class A Common Stock, the Market Price of a share of Common Stock on the
date or dates such Voting Securities are issued, and (B) in the case of
Class A Preference Stock, the product of the Market Price of a share of
Common Stock on the date or dates such Voting Securities are issued,
multiplied by the number of Class A Conversion Shares related to one share
of Class A Preference Stock outstanding immediately prior to such purchase,
provided that shares of Class A Preference Stock purchased at the Optional
Shares Closing shall have a per share liquidation value equal to their per
share purchase price.
30
(b) Within ten Business Days following the Investment Completion Date, the
Company shall deliver to each of FT and DT written notice of the number of
Optional Shares they are entitled to purchase, setting forth in reasonable
detail a description of the issuances of Voting Securities that gave rise to FT
and DT's right to purchase the Optional Shares and the basis for its
computation of the price per share of Common Stock associated with each
Optional Share. Each of FT and DT may exercise its right to purchase any or all
of the Optional Shares by written notice delivered to the Company prior to the
tenth Business Day after the Company's delivery of such notice (the "Notice of
Exercise") setting forth the number of Optional Shares that it wishes to
purchase and the related per share price or prices for such Optional Shares.
The Notice of Exercise shall constitute a binding commitment on the part of the
Buyer in question to purchase such Optional Shares upon the terms set forth in
this Agreement.
(c) The closing (the "Optional Shares Closing") of the purchase and sale of
the Optional Shares, if any, shall take place at the offices of Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m., New York City
time, on the thirtieth Business Day after the Company's receipt of the notice
described in clause (b), or at such other date and time as the Parties shall
agree in writing, provided that, if the Optional Shares Closing shall not have
occurred prior to the 60th day following the Investment Completion Date, the
Class A Holders may, upon written notice delivered to the Company, be released
from all obligations to purchase Shares pursuant to this Section 2.5,
notwithstanding any delivery of the Notice of Exercise.
(i) At the Optional Shares Closing, the Company shall deliver, or cause
to be delivered, the following to each of FT and DT:
(x) certificates representing the number of Optional Shares to be
purchased by FT or DT, respectively, in the name of FT or DT, as the
case may be, against payment of the purchase price therefor; and
(y) the certificates and other documents required to be delivered by
the Company pursuant to Article V.
(ii) At the Optional Shares Closing, each of FT and DT shall deliver the
following to the Company:
(x) cash in the amount of the aggregate purchase price for the
Optional Shares to be purchased by it, by wire transfer of immediately
available funds to an account designated by the Company at least five
Business Days prior to the date of the Optional Shares Closing; and
(y) the certificates and other documents required to be delivered by
FT or DT, as the case may be, pursuant to Article V.
Section 2.6. Antidilution. The number of shares of Class A Stock to be
purchased by the Buyers hereunder, and, in accordance with the Class A
Provisions, the purchase price therefor and the dollar amounts used in
calculating the foregoing, shall be adjusted to reflect any stock split,
subdivision, stock dividend, or other reclassification, consolidation or a
combination of the Voting Securities of the Company or similar action or
transaction in each case occurring during the period beginning June 14, 1994
and ending on the Investment Completion Date, provided that no adjustment shall
be made under this Section 2.6 in respect of the Cellular Spin-off.
Section 2.7. Reduction of Purchased Shares. The number of shares of Class A
Stock to be purchased by FT and DT hereunder shall be reduced by the minimum
number of shares, if any, necessary so that, following the Investment
Completion Date, FT and DT and their respective Affiliates shall Beneficially
Own in the aggregate 20% of the sum of (a) the aggregate number of Votes of the
Company outstanding at that time and (b) the aggregate number of Votes
represented by the Voting Securities which FT and DT and their respective
Affiliates have committed to purchase from the Company. Any reduction in shares
pursuant to this Section 2.7 shall be borne one-half by each of FT and DT.
Section 2.8. Effect of Conversion. If after the Initial Issuance Date, the
Fundamental Rights (as such term is defined in the Stockholders' Agreement)
shall have terminated as to all outstanding shares of Class A
31
Preference Stock, or all outstanding shares of Class A Common Stock shall have
converted into Common Stock, in each case pursuant to Section 7 of the Class A
Provisions, each share of Class A Stock to have been issued by the Company
pursuant to this Agreement shall (i) in the case of shares of Class A Common
Stock, instead be issued as one duly issued, fully paid and nonassessable share
of Common Stock, and (ii) in the case of shares of Class A Preference Stock,
instead be issued as that number of duly issued, fully paid and nonassessable
shares of Common Stock equal to the number of related Class A Conversion Shares
immediately prior to such issuance.
ARTICLE III
CONDITIONS TO THE FIRST CLOSING
Section 3.1. Conditions to Each Party's Obligations. The obligation of each
Party to consummate the transactions contemplated hereby at the First Closing
is subject to the fulfillment of each of the following conditions on or prior
to the Initial Issuance Date:
(a) All notifications required pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), to carry
out the transactions contemplated by this Agreement or by the Other
Agreements shall have been made, and the applicable waiting period and any
extensions thereof shall have expired or been terminated, without the
imposition of any Burdensome Condition.
(b) (i) The Commission of the European Communities, pursuant to Article
85(3) of the Treaty of Rome, shall have granted an exemption which exempts
the Joint Venture Documents and the transactions contemplated thereby (and,
if necessary, this Agreement and each Other Agreement, and the transactions
contemplated hereby and thereby) from the operation of Article 85(1) of the
Treaty of Rome, without the imposition of any Burdensome Condition, or (ii)
each Party shall have determined, in its individual and sole discretion,
that it is satisfied that such exemption will be granted in a reasonable
time and without the imposition of a Burdensome Condition.
(c) FT shall have received the approval of the French minister in charge
of economic affairs and finance (ministre charge de l'economie et des
finances) and the French minister in charge of posts and telecommunications
(ministre charge des postes et des telecommunications) to carry out the
transactions contemplated hereby, and by the Other Agreements and the Joint
Venture Documents, without the imposition of a Burdensome Condition.
(d) Either (i) DT shall have received the approval of the
Bundeskartellamt to carry out the transactions contemplated hereby, and by
the Other Agreements and the Joint Venture Documents, without the
imposition of a Burdensome Condition, or (ii) the exemption referred to in
clause (b)(i) of this Section 3.1 shall have been obtained.
(e) All other Governmental Approvals required to be obtained to
consummate the transactions contemplated by this Agreement, the Other
Agreements and the Joint Venture Documents shall have been obtained, and
all other applicable pre-consummation waiting periods shall have expired,
except for Governmental Approvals and waiting periods the failure of which
to obtain or satisfy would not, individually or in the aggregate, be
reasonably likely to impose a Burdensome Condition or materially and
adversely affect the ability of any Party to perform its obligations
hereunder or under the Other Agreements.
(f) No order of any Governmental Authority (including a court order)
shall have been entered that enjoins, restrains or prohibits consummation
of the transactions contemplated by this Agreement or the Other Agreements,
or puts in doubt the validity of this Agreement or the Other Agreements in
any material respect.
(g) No action shall have been taken by any Governmental Authority to
rescind or withdraw any of the Governmental Approvals described or referred
to in this Section 3.1 or to rescind the termination of the review and
investigation of the transactions contemplated by this Agreement and the
Other Agreements under Exon-▇▇▇▇▇▇, and no action shall have been taken to
modify any such Governmental Approvals or any determination with respect to
the investigation under Exon-▇▇▇▇▇▇ in a manner that would impose a
Burdensome Condition.
32
(h) The stockholders of the Company shall have duly approved the
Proposals by the requisite vote at the Stockholders' Meeting.
(i) The Company shall have been advised by the New York Stock Exchange
that the Common Stock will continue to be listed on the New York Stock
Exchange after (i) the issuance and sale of the Class A Common Stock and/or
the Class A Preference Stock and (ii) the effectiveness of the provisions
of this Agreement, the Other Agreements and the Amendment.
(j) The conditions to closing set forth in Article 13 of the Joint
Venture Agreement shall have been fulfilled or validly waived and the
"Closing" as such term is defined in the Joint Venture Agreement shall have
occurred simultaneously with the First Closing.
(k) (i) An effective written order or other final action from the FCC
(either in the first instance or upon review or reconsideration) affirming
that (x) the transactions contemplated by this Agreement and the Other
Agreements do not result in a transfer of control within the meaning of
Section 310(d) of the Communications Act; (y) a level of foreign ownership
in the Company of up to 28 percent is not inconsistent with the public
interest; and (z) the transactions contemplated by this Agreement and the
Other Agreements are not otherwise inconsistent with the public interest,
or an effective written order or other final action by the FCC (either in
the first instance or upon review or reconsideration) to the effect that no
such approval is required; or
(ii) an effective written order from, or other final action taken by, the
FCC pursuant to delegated authority (either in the first instance or upon
review or reconsideration) affirming that (x) the transactions contemplated
by this Agreement and the Other Agreements do not result in a transfer of
control within the meaning of Section 310(d) of the Communications Act; (y)
a level of foreign ownership in the Company of up to 28 percent is not
inconsistent with the public interest; and (z) the transactions
contemplated by this Agreement and the Other Agreements are not otherwise
inconsistent with the public interest, or an effective written order from,
or other final action taken by, the FCC pursuant to delegated authority
(either in the first instance or upon review or reconsideration) to the
effect that no such approval is required, which order or final action shall
no longer be subject to further administrative review;
shall have been obtained, and shall not have been revoked or stayed as of
the Initial Issuance Date, and such order or final action shall not impose
any Burdensome Condition, provided that any Party may waive the requirement
that any such order or final action contain the provision described in
clause (y) of subsection (k)(i) or (k)(ii) of this Section 3.1 and such
waiver shall be binding upon all Parties. For purposes of Section
3.1(k)(ii), an order from, or other final action taken by, the FCC pursuant
to delegated authority shall be deemed no longer subject to further
administrative review:
(x) if no petition for reconsideration or application for review by
the FCC of such order or final action has been filed within thirty days
after the date of public notice of such order or final action, as such
30-day period is computed and as such date is defined in Sections 1.104
and 1.4 (or any successor provisions), as applicable, of the FCC's
rules, and the FCC has not initiated review of such order or final
action on its own motion within forty days after the date of public
notice of the order or final action, as such 40-day period is computed
and such date is defined in Sections 1.117 and 1.4 (or any successor
provisions) of the FCC's rules; or
(y) if any such petition for reconsideration or application for
review has been filed, or, if the FCC has initiated review of such
order or final action on its own motion, the FCC has issued an
effective written order or taken final action to the effect set forth
in clause (i) above.
Section 3.2. Conditions to the Buyers' Obligations. The obligation of each
Buyer to consummate the transactions contemplated hereby at the First Closing
is subject to the fulfillment of each of the following conditions on or prior
to the Initial Issuance Date:
(a) The representations and warranties of the Company made pursuant to
this Agreement and the Other Agreements shall be true and correct in all
material respects at and as of the date hereof and at
33
and as of the Initial Issuance Date as if such representations and
warranties were made at and as of the Initial Issuance Date except for
representations and warranties that relate solely to a date prior to the
Initial Issuance Date and except to the extent contemplated or permitted by
this Agreement, the Other Agreements, the Articles as amended by the
Amendment or the Joint Venture Documents.
(b) The Company shall have duly performed and complied in all material
respects with each agreement, covenant and condition herein and in each
Other Agreement required to be performed or complied with by it on or prior
to the Initial Issuance Date.
(c) No Proceeding shall be pending or threatened that (i) restrains,
prohibits, prevents or materially changes, or presents a substantial
possibility of restraining, prohibiting, preventing or materially changing,
the terms of the transactions contemplated by this Agreement or the Other
Agreements or (ii) presents a substantial possibility of resulting in
material Damages to FT or DT or their Subsidiaries, or imposing a
Burdensome Condition as to FT or DT or Atlas, in each case arising from
such transactions. For purposes of this Section 3.2(c), the term "material
Damages" shall mean Damages material to any Buyer and its Subsidiaries
taken as a whole or material in relation to the amount to be invested by
such Buyer in the Company pursuant to this Agreement.
(d) The Company shall have delivered to each of the Buyers a certificate,
dated the Initial Issuance Date, signed by a duly authorized senior officer
certifying that the conditions specified in Sections 3.2(a), (b) and (c)
(as to Proceedings involving the Company) have been fulfilled.
(e) The Board of Directors shall have taken appropriate action so that
the provisions of Kan. Stat. ▇▇▇. (S) 17-12,101 (1994) (the "Business
Combination Statute") restricting "business combinations" with "interested
stockholders" (each as defined in Kan. Stat. ▇▇▇. (S) 17-12,100 (1994))
will not apply to FT, DT or any Person who as of the date hereof is an
Affiliate of FT or DT with respect to the purchase and sale of shares of
capital stock of the Company pursuant to this Agreement.
(f) Each of the Buyers shall have received opinions, dated as of the
Initial Issuance Date, from counsel to the Company reasonably satisfactory
to the Buyers which address favorably the matters set forth in Exhibit F
and which are in form and substance reasonably satisfactory to the Buyers.
(g) The Common Stock issuable upon conversion of the Class A Stock shall
have been duly authorized and reserved for issuance by the Company, and
listed on the New York Stock Exchange, subject to official notice of
issuance.
(h) The Company shall have duly executed and delivered the following:
(i) the Stockholders' Agreement;
(ii) the Registration Rights Agreement;
(iii) the FT Investor Confidentiality Agreement; and
(iv) the DT Investor Confidentiality Agreement.
(i) The Amendment shall have been duly adopted pursuant to the applicable
provisions of the General Corporation Code of the State of Kansas and filed
with the appropriate Kansas Governmental Authorities, and shall be in full
force and effect.
(j) The Company shall have duly adopted the Bylaws Amendment and such
amended terms shall be in full force and effect.
(k) No Major Competitor of FT or DT or of the Joint Venture shall have
acquired Voting Securities of the Company, if (i) such Voting Securities
were acquired as a result of a transaction with the Company, and following
such transaction such Major Competitor possesses a Percentage Ownership
Interest in the Company greater than ten percent, or (ii) the Company
otherwise has taken steps for the purpose of encouraging or facilitating an
acquisition by such a Major Competitor of a Percentage Ownership Interest
in the Company greater than ten percent (including, without limitation, by
any waiver, amendment or termination of the Rights Agreement). No Change of
Control shall have occurred.
34
Section 3.3. Conditions to the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated hereby at the First Closing
is subject to the fulfillment of each of the following conditions on or prior
to the Initial Issuance Date:
(a) The representations and warranties of each of the Buyers made
pursuant to this Agreement and the Other Agreements shall be true and
correct in all material respects at and as of the date hereof, and at and
as of the Initial Issuance Date as if such representations and warranties
were made at and as of the Initial Issuance Date except for representations
and warranties that relate solely to a date prior to the Initial Issuance
Date and except to the extent contemplated or permitted by this Agreement,
the Other Agreements, the Articles as amended by the Amendment or the Joint
Venture Documents.
(b) FT and DT and each of their respective Affiliates shall have duly
performed and complied in all material respects with each agreement,
covenant and condition herein and in each Other Agreement required to be
performed or complied with by it on or prior to the Initial Issuance Date.
(c) No Proceeding shall be pending or threatened that (i) restrains,
prohibits, prevents or materially changes, or presents a substantial
possibility of restraining, prohibiting, preventing or materially changing,
the terms of the transactions contemplated by this Agreement or the Other
Agreements, or (ii) presents a substantial possibility of resulting in
material Damages to the Company or its Subsidiaries, or imposing a
Burdensome Condition as to the Company or Sprint Sub, in each case arising
from such transactions. For purposes of this Section 3.3(c), the term
"material Damages" shall mean Damages material to the Company and its
Subsidiaries taken as a whole or material in relation to the amount to be
invested in the Company pursuant to this Agreement.
(d) Each Buyer shall have delivered to the Company a certificate, dated
the Initial Issuance Date, signed by a duly authorized senior officer,
certifying that the conditions specified in Sections 3.3(a), (b) and (c)
(as to Proceedings involving such Buyer) have been fulfilled.
(e) The Company shall have received opinions, dated as of the Initial
Issuance Date, from: (i) counsel to FT reasonably satisfactory to the
Company which address favorably the matters set forth in Exhibit G and
which are in form and substance reasonably satisfactory to the Company, and
(ii) counsel to DT reasonably satisfactory to the Company which address
favorably the matters set forth in Exhibit H and which are in form and
substance reasonably satisfactory to the Company.
(f) Each Buyer shall have duly executed and delivered the following:
(i) the Stockholders' Agreement; and
(ii) the Registration Rights Agreement.
(g) FT shall have duly executed and delivered the FT Investor
Confidentiality Agreement.
(h) DT shall have duly executed and delivered the DT Investor
Confidentiality Agreement.
ARTICLE IV
CONDITIONS TO AN ADDITIONAL PREFERENCE STOCK CLOSING, SUPPLEMENTAL
PREFERENCE STOCK CLOSING AND DEFERRED COMMON STOCK CLOSING
Section 4.1. Condition to Each Party's Obligations. The obligation of each
Party to consummate the transactions contemplated hereby at an Additional
Preference Stock Closing, Supplemental Preference Stock Closing, or Deferred
Common Stock Closing (each an "Article IV Closing") is subject to the
fulfillment of the condition that, on or prior to the date of the Article IV
Closing in question, no order of any Governmental Authority (including a court
order) shall have been entered that enjoins, restrains or prohibits
consummation of the transactions contemplated by this Agreement or the Other
Agreements or puts in doubt the validity of this Agreement or the Other
Agreements in any material respect, provided that, if such an order is entered,
the date of the Article IV Closing in question shall be delayed for a period of
not more than one year from
35
the date on which such Article IV Closing would have occurred but for such
order (but not beyond the end of such one-year period), if during such time any
Party shall be appealing, challenging or otherwise attempting to resolve such
order in a diligent manner, provided, further, that the purchase price for
shares sold at such Article IV Closing shall be that which would have obtained
if no such order had been entered and such Article IV Closing had taken place
on the date on which it would have taken place but for such order.
Section 4.2. Conditions to the Buyers' Obligations. The obligation of each
Buyer to consummate the transactions contemplated hereby at an Article IV
Closing is subject to the fulfillment of each of the following conditions on or
prior to the date of such Article IV Closing:
(a) The representations and warranties of the Company set forth in:
(i) Sections 6.1, 6.2(a), 6.3 and 6.4 shall be true and correct in
all material respects at and as of the date hereof and at and as of the
date of such Article IV Closing as if such representations and
warranties were made at and as of such date except (x) with respect to
representations and warranties that relate solely to a date prior to
such date, and were true and correct in all material respects on such
prior date, and (y) to the extent contemplated or permitted by this
Agreement, the Other Agreements, the Articles as amended by the
Amendment or the Joint Venture Documents; and
(ii) the first two sentences of Section 6.5(a) (as to SEC Documents
filed prior to the Initial Issuance Date) and Section 6.6 (but in the
case of Section 6.6 only as to changes prior to the Initial Issuance
Date, but after the later of (x) the end of the quarter covered by the
last Quarterly Report on Form 10-Q of the Company filed prior to the
Initial Issuance Date, and (y) the end of the year covered by the last
Annual Report on Form 10-K of the Company filed prior to the Initial
Issuance Date) shall be true and correct in all material respects at
and as of the date hereof, except to the extent such failure to be true
and correct does not relate to, and is not reasonably likely to relate
to, a material adverse change in the business, operations, results of
operations, financial condition, assets or liabilities of the Company
compared to the last to be filed prior to the Initial Issuance Date of
the Annual Report on Form 10-K of the Company or the Quarterly Report
on Form 10-Q of the Company;
provided that if this condition fails to be satisfied, and such failure is
capable of being cured without adversely affecting in any material respect
the Buyers or their rights hereunder (other than as to the timing of such
Article IV Closing) or under the Other Agreements, the Articles as amended
by the Amendment or the Bylaws as amended by the Bylaws Amendment, or there
is a dispute as to whether such condition has been satisfied, the date of
the Article IV Closing in question may be delayed by the Company (i) for a
period of not more than 180 days from the date such Article IV Closing
would have occurred but for the failure of such condition to be satisfied,
if during such time the Company is attempting in a diligent manner to cause
such condition to be satisfied, or (ii) in the case of such a dispute until
the later to occur of (x) 90 days following the rendering of an order of a
court of competent jurisdiction to the effect that such condition involved
in such dispute was not satisfied, if during such 90-day period the Company
is attempting in a diligent manner to cause such condition to be satisfied,
and (y) 90 days following the rendering of a final and non-appealable
judgment of a court of competent jurisdiction following an appeal or
related action with respect to such order (if such judgment is to the
effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the Company shall be prosecuting such appeal in a diligent
manner, provided, further, that the purchase price for shares sold at such
Article IV Closing shall be that which would have obtained but for the
delay pursuant to the proviso to this Section 4.2(a).
(b) The Company shall have performed and complied in all material
respects with its obligations under Section 8.8 of this Agreement; Article
FIFTH of the Articles as amended by the Amendment (to the extent such
Article relates to the rights of the holders of Class A Stock); the Class A
Provisions; and Articles III, IV, V and VI, and Sections 7.1, 7.4, 7.8,
7.10 and 7.11 of the Stockholders' Agreement,
36
provided, that, if this condition fails to be satisfied, and such failure
is capable of being cured without adversely affecting in any material
respect the Buyers or their rights hereunder (other than as to the timing
of such Article IV Closing) or under the Other Agreements, the Articles as
amended by the Amendment or the Bylaws as amended by the Bylaws Amendment,
or there is a dispute as to whether such condition has been satisfied, the
date of such Article IV Closing may be delayed by the Company (i) for a
period of not more than 180 days from the date such Article IV Closing
would have occurred but for the failure of such condition to be satisfied,
if during such time the Company is attempting in a diligent manner to cause
such condition to be satisfied, or (ii) in the case of such a dispute until
the later to occur of (x) 90 days following the rendering of an order of a
court of competent jurisdiction to the effect that such condition involved
in such dispute was not satisfied, if during such 90-day period the Company
is attempting in a diligent manner to cause such condition to be satisfied,
and (y) 90 days following the rendering of a final and non-appealable
judgment of a court of competent jurisdiction following an appeal or
related action with respect to such order (if such judgment is to the
effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the Company shall be prosecuting such appeal in a diligent
manner, provided, further, that the purchase price for shares sold at such
Article IV Closing shall be that which would have obtained but for the
delay pursuant to the proviso to this Section 4.2(b).
(c) There shall not have occurred a Change of Control.
(d) The Company shall have delivered to the Buyers a certificate, dated
the date of such Article IV Closing, signed by a duly authorized senior
officer of the Company, certifying that the conditions specified in Section
4.2(a), (b) and (c) have been fulfilled.
(e) Each of the Buyers shall have received an opinion, dated the date of
such Article IV Closing, from the General Counsel of the Company which
addresses favorably the matters set forth in Exhibit I and which is in form
and substance reasonably satisfactory to the Buyers.
Section 4.3. Conditions to the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated hereby at an Article IV
Closing is subject to the fulfillment of each of the following conditions on or
prior to the date of such Article IV Closing:
(a) The respective representations and warranties of each of the Buyers
set forth in Sections 7.1(a), 7.1(b), 7.1(e), 7.1(g), 7.2(a), 7.2(b) and
7.2(e) shall be true and correct in all material respects at and as of the
date hereof, and at and as of the date of the Article IV Closing in
question as if such representations and warranties were made at and as of
such date except (i) with respect to representations and warranties that
relate solely to a date prior to such date and were true and correct in all
material respects on such prior date, and (ii) to the extent contemplated
or permitted by this Agreement, the Other Agreements or the Articles as
amended by the Amendment, provided that, if this condition fails to be
satisfied, and such failure is capable of being cured without adversely
affecting in any material respect the Company or its rights hereunder
(other than as to the timing of such Article IV Closing) or under the Other
Agreements, the Articles as amended by the Amendment or the Bylaws as
amended by the Bylaws Amendment, or there is a dispute as to whether such
condition has been satisfied, the date of such Article IV Closing may be
delayed by the relevant Buyer (i) for a period of not more than 180 days
from the date such Article IV Closing would have occurred but for the
failure of such condition to be satisfied, if during such time the relevant
Buyer is attempting in a diligent manner to cause such condition to be
satisfied, or (ii) in the case of such a dispute until the later to occur
of (x) 90 days following the rendering of an order of a court of competent
jurisdiction to the effect that such condition involved in such dispute was
not satisfied, if during such 90-day period the relevant Buyer is
attempting in a diligent manner to cause such condition to be satisfied,
and (y) 90 days following the rendering of a final and non-appealable
judgment of a court of competent jurisdiction following an appeal or
related action with respect to such order (if such judgment is to the
effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the relevant Buyer shall be prosecuting such appeal in a
diligent manner, provided, further, that the purchase price for shares sold
at such Article IV Closing shall be that which would have obtained but for
the delay pursuant to the proviso to this Section 4.3(a).
37
(b) Each Buyer shall have performed and complied in all material respects
with its obligations under Article II of this Agreement; Article II and
Section 7.5 of the Stockholders' Agreement; Sections 2.1, 3.1 and 3.2(b) of
the Standstill Agreement; and the FT Investor Confidentiality Agreement (in
the case of FT) or the DT Investor Confidentiality Agreement (in the case
of DT), provided that, if this condition fails to be satisfied, and such
failure is capable of being cured without adversely affecting in any
material respect the Company or its rights hereunder (other than as to the
timing of such Article IV Closing) or under the Other Agreements, the
Articles as amended by the Amendment or the Bylaws as amended by the Bylaws
Amendment, or there is a dispute as to whether such condition has been
satisfied, the date of such Article IV Closing may be delayed by the
relevant Buyer (i) for a period of not more than 180 days from the date
such Article IV Closing would have occurred but for the failure of such
condition to be satisfied, if during such time the relevant Buyer is
attempting in a diligent manner to cause such condition to be satisfied, or
(ii) in the case of such a dispute until the later to occur of (x) 90 days
following the rendering of an order of a court of competent jurisdiction to
the effect that such condition involved in such dispute was not satisfied,
if during such 90-day period the relevant Buyer is attempting in a diligent
manner to cause such condition to be satisfied, and (y) 90 days following
the rendering of a final and non-appealable judgment of a court of
competent jurisdiction following an appeal or related action with respect
to such order (if such judgment is to the effect that such condition
involved in such dispute was satisfied at or prior to the end of the 90-day
period provided in the immediately preceding clause (x)), if the relevant
Buyer shall be prosecuting such appeal in a diligent manner, provided,
further, that the purchase price for shares sold at such Article IV Closing
shall be that which would have obtained but for the delay pursuant to the
proviso to this Section 4.3(b).
(c) Each Buyer shall have delivered to the Company a certificate, signed
by a duly authorized senior officer, dated the date of such Article IV
Closing, certifying that the conditions specified in Section 4.3(a) and (b)
have been fulfilled.
Section 4.4. Effect of Certain Breaches. Except as set forth in Sections 4.2,
4.3 and 10.1, no breach of the representations, warranties, covenants or
agreements contained in this Agreement or any of the Other Agreements shall
affect the obligations of the Parties to consummate the purchase and sale of
capital stock of the Company at any Article IV Closing, provided that this
sentence shall not affect any other rights, liabilities, duties or obligations
of the Parties arising under this Agreement, any of the Other Agreements or any
of the Joint Venture Documents as a result of such breach.
ARTICLE V
CONDITIONS TO THE OPTIONAL SHARES CLOSING
Section 5.1. Condition to Each Party's Obligations. The obligation of each
Party to consummate the transactions contemplated hereby at the Optional Shares
Closing is subject to the fulfillment of the condition that, on or prior to the
date of the Optional Shares Closing, no order of any Governmental Authority
(including a court order) shall have been entered that enjoins, restrains or
prohibits consummation of the transactions contemplated by this Agreement or
the Other Agreements or puts in doubt the validity of this Agreement or the
Other Agreements in any material respect, provided that, if such an order is
entered, the date of the Optional Shares Closing shall be delayed for a period
of not more than one year from the date on which the Optional Shares Closing
would have occurred but for such order (but not beyond the end of such one-year
period), if during such time any Party shall be appealing, challenging or
otherwise attempting to resolve such order in a diligent manner.
Section 5.2. Conditions to the Buyers' Obligations. The obligation of each
Buyer to consummate the transactions contemplated hereby at the Optional Shares
Closing is subject to the fulfillment of each of the following conditions on or
prior to the date of the Optional Shares Closing:
(a) The representations and warranties of the Company set forth in:
(i) Sections 6.1, 6.2(a), 6.3 and 6.4 shall be true and correct in
all material respects at and as of the date hereof and at and as of the
date of the Optional Shares Closing as if such representations
38
and warranties were made at and as of the date of the Optional Shares
Closing except (x) with respect to representations and warranties that
relate solely to a date prior to the date of the Optional Shares
Closing, and were true and correct in all material respects on such
prior date, and (y) to the extent contemplated or permitted by this
Agreement, the Other Agreements or the Articles as amended by the
Amendment or the Joint Venture Documents; and
(ii) the first two sentences of Section 6.5(a) (as to SEC Documents
filed prior to the Initial Issuance Date) and Section 6.6 (but in the
case of Section 6.6 only as to changes prior to the Initial Issuance
Date, but after the later of (x) the end of the quarter covered by the
last Quarterly Report on Form 10-Q of the Company filed prior to the
Initial Issuance Date, and (y) the end of the year covered by the last
Annual Report on Form 10-K of the Company filed prior to the Initial
Issuance Date) shall be true and correct in all material respects at
and as of the date hereof, except to the extent such failure to be true
and correct does not relate to, and is not reasonably likely to relate
to, a material adverse change in the business, operations, results of
operations, financial condition, assets or liabilities of the Company
compared to the last to be filed prior to the Initial Issuance Date of
the Annual Report on Form 10-K of the Company or the Quarterly Report
on Form 10-Q of the Company;
provided that if this condition fails to be satisfied, and such failure is
capable of being cured without adversely affecting in any material respect
the Buyers or their rights hereunder (other than as to the timing of the
Optional Shares Closing) or under the Other Agreements, the Articles as
amended by the Amendment or the Bylaws as amended by the Bylaws Amendment,
or there is a dispute as to whether this condition has been satisfied, the
date of the Optional Shares Closing may be delayed by the Company (i) for a
period of not more than 180 days from the date the Optional Shares Closing
would have occurred but for the failure of such condition to be satisfied,
if during such time the Company is attempting in a diligent manner to cause
all such conditions to be satisfied, or (ii) in the case of such a dispute,
until the later to occur of (x) 90 days following the rendering of an order
of a court of competent jurisdiction to the effect that such condition
involved in such dispute was not satisfied, if during such 90-day period
the Company is attempting in a diligent manner to cause such condition to
be satisfied, and (y) 90 days following the rendering of a final and non-
appealable judgment of a court of competent jurisdiction following an
appeal or related action with respect to such order (if such judgment is to
the effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period in the immediately preceding clause
(x)), if the Company shall be prosecuting such appeal in a diligent manner,
provided, further, that the purchase price for Shares sold at the Optional
Shares Closing shall be that which would have been obtained but for the
delay pursuant to the proviso to this Section 5.2(a).
(b) The Company shall have performed and complied in all material
respects with its obligations under Section 8.8 of this Agreement; Article
FIFTH of the Articles as amended by the Amendment (to the extent such
Article relates to the rights of the holders of Class A Stock); that
portion of Article SIXTH of the Articles as amended by the Amendment
entitled "General Provisions Relating to Class A Stock"; and Articles III,
IV, V and VI, and Sections 7.1, 7.4, 7.8, 7.10 and 7.11 of the
Stockholders' Agreement, provided that, if this condition fails to be
satisfied, and such failure is capable of being cured without adversely
affecting in any material respect the Buyers or their rights hereunder
(other than as to the timing of the Optional Shares Closing) or under the
Other Agreements, the Articles as amended by the Amendment or the Bylaws as
amended by the Bylaws Amendment, or there is a dispute as to whether such
condition has been satisfied, the date of the Optional Shares Closing may
be delayed by the Company (i) for a period of not more than 180 days from
the date the Optional Shares Closing would have occurred but for the
failure of such condition to be satisfied, if during such time the Company
is attempting in a diligent manner to cause such condition to be satisfied,
or (ii) in the case of such a dispute until the later to occur of (x) 90
days following the rendering of an order of a court of competent
jurisdiction to the effect that such condition involved in such dispute was
not satisfied, if during such 90-day period the Company is attempting in a
diligent manner to cause such condition to be satisfied, and (y) 90 days
following the rendering of a final and non-appealable judgment of a court
of competent jurisdiction following an appeal or related action with
respect to such order (if such judgment is to the
39
effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the Company shall be prosecuting such appeal in a diligent
manner, provided, further, that the purchase price for Shares sold at the
Optional Shares Closing shall be that which would have been obtained but
for the delay pursuant to the proviso to this Section 5.2(b).
(c) There shall not have occurred a Change of Control.
(d) The Company shall have delivered to each of the Buyers a certificate,
dated the date of the Optional Shares Closing, signed by a duly authorized
senior officer of the Company, certifying that the conditions specified in
Section 5.2(a), (b) and (c) have been fulfilled.
(e) Each of the Buyers shall have received an opinion, dated as of the
date of the Optional Shares Closing, from the General Counsel of the
Company which addresses favorably the matters set forth in Exhibit J and
which is in form and substance reasonably satisfactory to the Buyers.
Section 5.3. Conditions to the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated hereby at the Optional
Shares Closing is subject to the fulfillment of each of the following
conditions on or prior to the date of the Optional Shares Closing:
(a) The respective representations and warranties of each of the Buyers
set forth in Sections 7.1(a), 7.1(b), 7.1(e), 7.1(g), 7.2(a), 7.2(b) and
7.2(e) shall be true and correct in all material respects at and as of the
date hereof, and on and as of the date of the Optional Shares Closing as if
such representations and warranties were made at and as of the date of the
Optional Shares Closing except (i) with respect to representations and
warranties that relate solely to a date prior to the date of the Optional
Shares Closing and were true and correct in all material respects on such
prior date, and (ii) to the extent contemplated or permitted by this
Agreement, the Other Agreements or the Articles as amended by the
Amendment, provided that, if this condition fails to be satisfied, and such
failure is capable of being cured without adversely affecting in any
material respect the Company or its rights hereunder (other than as to the
timing of the Optional Shares Closing) or under the Other Agreements, the
Articles as amended by the Amendment or the Bylaws as amended by the Bylaws
Amendment, or there is a dispute as to whether such condition has been
satisfied, the date of the Optional Shares Closing may be delayed by the
relevant Buyer (i) for a period of not more than 180 days from the date the
Optional Shares Closing would have occurred but for the failure of such
condition to be satisfied, if during such time the relevant Buyer is
attempting in a diligent manner to cause such condition to be satisfied, or
(ii) in the case of such dispute as to whether such condition has been
satisfied, until the later to occur of (x) 90 days following the rendering
of an order of a court of competent jurisdiction to the effect that such
condition involved in such dispute was not satisfied, if during such 90-day
period the relevant Buyer is attempting in a diligent manner to cause such
condition to be satisfied, and (y) the rendering of a final and non-
appealable judgment of a court of competent jurisdiction following an
appeal or related action with respect to such order (if such judgment is to
the effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the relevant Buyer shall be prosecuting such appeal in a
diligent manner, provided, further, that the purchase price for Shares sold
at the Optional Shares Closing shall be that which would have been obtained
but for the delay pursuant to the proviso to this Section 5.3(a).
(b) Each Buyer shall have performed and complied in all material respects
with its obligations under Article II of this Agreement; Article II and
Section 7.5 of the Stockholders' Agreement; Sections 2.1, 3.1 and 3.2(b) of
the Standstill Agreement; and the FT Investor Confidentiality Agreement (in
the case of FT) or the DT Investor Confidentiality Agreement (in the case
of DT), provided that, if this condition fails to be satisfied, and such
failure is capable of being cured without adversely affecting in any
material respect the Company or its rights hereunder (other than as to the
timing of the Optional Shares Closing) or under the Other Agreements, the
Articles as amended by the Amendment or the Bylaws as amended by the Bylaws
Amendment, or there is a dispute as to whether such condition has been
satisfied, the date of the Optional Shares Closing may be delayed by the
relevant Buyer (i) for a period of not more
40
than 180 days from the date the Optional Shares Closing would have occurred
but for the failure of such condition to be satisfied, if during such time
the relevant Buyer is attempting in a diligent manner to cause such
condition to be satisfied, or (ii) in the case of such a dispute until the
later to occur of (x) 90 days following the rendering of an order of a
court of competent jurisdiction to the effect that such condition involved
in such dispute was not satisfied, if during such 90-day period the
relevant Buyer is attempting in a diligent manner to cause such condition
to be satisfied, and (y) 90 days following the rendering of a final and
non-appealable judgment of a court of competent jurisdiction following an
appeal or related action with respect to such order (if such judgment is to
the effect that such condition involved in such dispute was satisfied at or
prior to the end of the 90-day period provided in the immediately preceding
clause (x)), if the relevant Buyer shall be prosecuting such appeal in a
diligent manner, provided, further, that the purchase price for Shares sold
at the Optional Shares Closing shall be that which would have been obtained
but for the delay pursuant to the proviso to this Section 5.3(b).
(c) Each Buyer shall have delivered to the Company a certificate, signed
by a duly authorized senior officer, dated the date of the Optional Shares
Closing, certifying that the conditions specified in Section 5.3(a) and (b)
have been fulfilled.
Section 5.4. Effect of Certain Breaches. Except as set forth in Sections 5.2,
5.3 and 10.1, no breach of the representations, warranties, covenants or
agreements contained in this Agreement or any of the Other Agreements shall
affect the obligations of the Parties to consummate the purchase and sale of
the Optional Shares at the Optional Shares Closing, provided, that this
sentence shall not affect any other rights, liabilities, duties or obligations
of the Parties arising under this Agreement, any of the Other Agreements or any
of the Joint Venture Documents as a result of such breach.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of FT and DT as follows:
Section 6.1. Organization, Qualification, Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Kansas. The Company has all requisite corporate power and authority
to: (a) enter into this Agreement and each Other Agreement, (b) subject to
approval by the stockholders of the Company and to the filing of the Amendment,
issue and sell (or deliver upon conversion, as the case may be) shares of Class
A Common Stock, Class A Preference Stock and Common Stock to the Buyers
pursuant to this Agreement, the Stockholders' Agreement and the Articles as
amended by the Amendment and comply with its obligations under this Agreement
and each Other Agreement, and (c) own, lease and operate its properties and
assets and to carry on in all material respects its business as now being
conducted and proposed to be conducted as shall be described in the Proxy
Statement. The copies of the Articles and the Bylaws, which have been delivered
previously to each Buyer, are complete and correct and in full force and
effect, in each case on the date hereof.
Section 6.2. Capital Stock and Other Matters. (a) Section 6.2 of the Company
Disclosure Schedule sets forth the authorized capital stock of the Company, the
number of each class of shares issued and outstanding, the number of each class
of shares reserved for issuance pursuant to convertible securities, options and
other agreements, and the number of each class of shares held by the Company in
its treasury or held by its Subsidiaries, at June 14, 1994 and as at a date
which is no more than ten Business Days prior to the date hereof (the
"Capitalization Date"). The Company has issued no more than 150,000 shares of
Common Stock and no shares of Preferred Stock between the Capitalization Date
and the date hereof. No bonds, debentures, notes or other indebtedness of the
Company or any of its Subsidiaries having the right to vote (or convertible
into securities having the right to vote) on any matters on which holders of
shares of capital stock of the Company may vote were issued or outstanding on
June 14, 1994 or are issued and outstanding on the date hereof. All of the
issued and outstanding shares of the Company's capital stock are validly
issued, fully paid and nonassessable. No holder of the outstanding shares of
the Company's capital stock is entitled to preemptive rights with respect to
any issuance of shares of Class A Common Stock.
41
(b) No class of capital stock is entitled to preemptive rights. Except as set
forth in Section 6.2 of the Company Disclosure Schedule, there are no
stockholder agreements, voting trusts or other Contracts to which the Company
is a party or by which it is bound relating to the voting or transfer of any
shares or units of any Voting Securities of the Company.
Section 6.3. Validity of Shares. Subject to obtaining the approval of the
stockholders of the Company specified in Section 8.4 hereof and to the filing
of the Amendment with the appropriate Kansas Governmental Authorities, when the
shares of Class A Common Stock and Class A Preference Stock, as the case may
be, are issued and delivered, or any shares of Common Stock are sold and
delivered, in each case against payment therefor (or upon conversion, as the
case may be) at the relevant closing as provided hereby, each such share shall
be validly issued, free of any Lien (other than any Lien arising due to action
or inaction of any of the Buyers), fully paid and a non-assessable share of
capital stock of the Company.
Section 6.4. Corporate Authority; No Violation. (a) The execution, delivery
and performance of this Agreement and each Other Agreement, and the
consummation of the transactions contemplated hereby and thereby (including,
without limitation, the issuance and sale of the Company's capital stock) have
been duly authorized by all requisite corporate action on the part of the
Company, subject to obtaining the approval of the stockholders of the Company
specified in Section 8.4 hereof and to the filing of the Amendment with the
appropriate Kansas Governmental Authorities and, assuming that, with respect
solely to those provisions of this Agreement, the Stockholders' Agreement and
the Amendment that require explicitly the receipt of Continuing Director
approval for the performance of obligations or consummation of transactions on
the part of the Company hereunder or thereunder, Continuing Director approval
is obtained in the manner provided herein or therein. Upon the execution and
delivery of this Agreement and each Other Agreement by the Company, each such
agreement will constitute a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(b) Neither the execution, delivery and performance by the Company of this
Agreement and each Other Agreement, the adoption of the Bylaws Amendment and
the adoption and filing of the Amendment nor the consummation by the Company of
the transactions contemplated hereby or thereby will: (i) subject to the
approval of the Proposals by the stockholders of the Company and the filing of
the Amendment with the appropriate Kansas Governmental Authorities, violate or
conflict with any provision of the Articles or Bylaws, assuming that, with
respect solely to those provisions of this Agreement, the Stockholders'
Agreement and the Amendment that require explicitly the receipt of Continuing
Director approval for the performance of obligations or consummation of
transactions on the part of the Company hereunder or thereunder, Continuing
Director approval is obtained in the manner provided herein or therein; (ii)
require any Governmental Approvals or Third Party Approvals, except (x) as set
forth in Section 6.4 of the Company Disclosure Schedule or (y) where the
failure to so obtain, make or file such Governmental Approvals or Third Party
Approvals, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole or
adversely affect in any material respect the Company's ability to perform its
obligations hereunder or under the Other Agreements; (iii) except as set forth
in Section 6.4 of the Company Disclosure Schedule, result in a default (or an
event that, with notice or lapse of time or both, would become a default) or
give rise to any right of termination by any third party, cancellation,
amendment or acceleration of any obligation or the loss of any benefit under,
or result in the creation of any Lien on any of the assets or properties of the
Company or any of its Subsidiaries pursuant to, any Contract to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets or properties is bound,
except for any such defaults, terminations, cancellations, amendments,
accelerations, losses, or Liens that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or adversely affect in any material respect the
Company's ability to perform its obligations hereunder or under the Other
Agreements; or (iv) except as set forth in Section 6.4 of the Company
Disclosure Schedule, violate or conflict with any Applicable Law applicable to
the Company or any of its Subsidiaries, or any of
42
the properties, businesses, or assets of any of the Company or any of its
Subsidiaries, except violations and conflicts that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole or adversely affect in any
material respect the Company's ability to perform its obligations hereunder or
under the Other Agreements.
Section 6.5. Company Reports and Financial Statements. (a) The Company has
previously made available to FT and DT complete and correct copies of each: (i)
annual report on Form 10-K for the Company; (ii) quarterly report on Form 10-Q
for the Company; (iii) definitive proxy statement for the Company; (iv) current
report on Form 8-K for the Company; and (v) other form, report, schedule and
statement, in the case of each of clauses (i), (ii), (iii), (iv) and (v) filed
by the Company with the SEC under the Exchange Act since January 1, 1993
(collectively, the "SEC Documents"). As of their respective dates, each of the
SEC Documents complied (or will comply) in all material respects with the
requirements of the Exchange Act to the extent applicable to such SEC Document,
and none of such SEC Documents (as of their respective dates) contained (or
will contain) an untrue statement of a material fact or omitted (or will omit)
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except as the same was corrected or superseded in a
subsequent document duly filed with the SEC, that has been delivered to the
Buyers. Since January 1, 1993, the Company has timely filed all reports and
registration statements and made all filings required to be filed under the
Exchange Act with the SEC under the rules and regulations of the SEC.
(b) The audited consolidated financial statements and unaudited consolidated
interim financial statements included in the SEC Documents (including any
related notes) fairly present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of operations
and changes in cash flows for the periods specified, subject, where
appropriate, to normal year-end audit adjustments, in each case in accordance
with past practice and GAAP applied on a consistent basis during the periods
involved (except as otherwise stated therein). Except as and to the extent set
forth in the SEC Documents or Section 6.5 of the Company Disclosure Schedule,
since March 31, 1995, the Company and its Subsidiaries have incurred no
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) other than liabilities and obligations that, individually and in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole or materially and adversely
affect the Company's ability to perform its obligations hereunder or under the
Other Agreements.
Section 6.6. Absence of Certain Changes or Events. Except as set forth in
Section 6.6 of the Company Disclosure Schedule, since March 31, 1995 there has
not been, occurred or arisen any change in the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole,
other than as a result of changes in general business conditions or legal or
regulatory changes affecting the U.S. telecommunications industry generally
(including the effect on competition resulting therefrom) or actions by
competitors, having a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or any change that adversely affects in any
material respect the Company's ability to perform its obligations hereunder or
under the Other Agreements.
Section 6.7. Investigations; Litigation. Except as set forth in Section 6.7
of the Company Disclosure Schedule, or as the Company has previously advised
the Buyers in writing on or prior to the date hereof, there is no Proceeding
pending, or to the best of the Company's knowledge, threatened against or
relating to the Company or any of its Subsidiaries at law or in equity that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or
adversely affect in any material respect the Company's ability to perform its
obligations hereunder or under the Other Agreements. There is no judgment,
decree, injunction, rule or order of any Governmental Authority outstanding
against the Company or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole or adversely affect in any
material respect the Company's ability to perform its obligations hereunder or
under the Other Agreements.
43
Section 6.8. Proxy Statement; Other Information. (a) None of the information
included, or incorporated by reference, in the Proxy Statement or any amendment
or supplement thereto, will at the time of the mailing of the definitive Proxy
Statement, and at the time of the Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, provided
that the foregoing shall not apply to any investment bank's fairness opinion
included therein and that no representation is made by the Company with respect
to (i) information provided by FT or DT or their Affiliates in writing
specifically for inclusion, or incorporation by reference, in the Proxy
Statement, (ii) any information set forth in the acquiring person statement
delivered by FT, DT and any of their Affiliates pursuant to Section 17-1291 of
the Kansas Control Share Acquisitions Statute (the "Acquiring Person
Statement"), or (iii) any representations or warranties made by FT or DT in any
agreement that is included as a schedule or exhibit to the Proxy Statement. The
Proxy Statement, at the time of mailing and at the time of the Stockholders'
Meeting, will comply in all material respects with the provisions of the
Exchange Act.
(b) All documents that the Company is responsible for filing with any
Governmental Authority in connection with the transactions contemplated hereby
other than those described in Section 6.8(a) have complied and will comply in
all material respects with Applicable Law. All information supplied or to be
supplied by the Company in any document filed with any Governmental Authority
in connection with the transactions contemplated hereby or by the Other
Agreements will be, at the time of filing, true and correct in all material
respects, except where the failure to be true and correct, individually or in
the aggregate, would not be reasonably likely to have a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole and would not adversely
affect in any material respect the consummation of the transactions
contemplated by this Agreement or any Other Agreement.
Section 6.9. Certain Tax Matters. To the best of the Company's knowledge and
belief, it is reasonable to assert that the Company is not a United States Real
Property Holding Corporation, as that term is defined under Section 897 of the
Code and the regulations promulgated thereunder.
Section 6.10. Amendments of the Rights Agreement. The Board of Directors has
taken all necessary action to amend the Rights Agreement to provide that the
ownership by FT, DT and their respective Affiliates and Associates of all of
the Voting Securities permitted to be owned by them under Sections 2.1(a)(i),
2.1(a)(ii) and 2.3 of the Standstill Agreement (but not Sections 2.1(a)(iii) or
2.2 thereof or Section 2.3 thereof to the extent based upon an applicable
Percentage Limitation (as defined in the Standstill Agreement) as determined by
Section 2.1(a)(iii) or 2.2 thereof) will not result in FT, DT or any of their
respective Affiliates or Associates (as such terms are defined in the Rights
Agreement) being deemed an Acquiring Person (as such term is defined in the
Rights Agreement) or result in the occurrence of a Stock Acquisition Date,
Distribution Date, Section 11(a)(ii) Event or Section 13 Event (as such terms
are defined in the Rights Agreement).
Section 6.11. Other Registration Rights. The Company has not granted, and has
not agreed to grant, any demand or incidental registration rights to any Person
other than (a) rights to be granted pursuant to the Registration Rights
Agreement, and (b) rights that will not adversely affect the registration
rights to be granted to the Buyers in the Registration Rights Agreement.
Section 6.12. Takeover Statutes. The Board of Directors has taken appropriate
action so that the provisions of the Business Combination Statute will not,
prior to the termination of this Agreement, apply to FT, DT or any Person who
as of the date hereof is an Affiliate of FT or DT. Subject to the approval of
the stockholders of the Company specified in Section 8.4 hereof, the ownership
by FT and DT and any Qualified Subsidiary identified in the Acquiring Person
Statement of shares of the Company's capital stock representing in the
aggregate less than one-third of the voting power of the Company (assuming for
purposes of the Kansas Control Share Acquisitions Statute that none of FT, DT,
any Qualified Subsidiary identified in the Acquiring Person Statement, or their
respective affiliates and associates (as each such term is defined in the
Kansas Control Share Acquisitions Statute), acquires any Voting Securities
other than as contemplated or permitted
44
by this Agreement, any Other Agreement, or the Amendment, or owned, directly or
indirectly, or had or exercised the power to vote or direct the vote of, in
each case alone or as part of a group, any Voting Securities as of the date of
this Agreement or at the time of the vote contemplated by Section 6.13 hereof)
will not result in a loss of voting rights with respect to such shares due to
the Kansas Control Share Acquisitions Statute. No other "fair price,"
"moratorium," "control share acquisition," "business combination," "shareholder
protection" or similar anti-takeover statute or regulation enacted under the
Applicable Laws of any state of the United States of America will apply to this
Agreement or any Other Agreement, or the transactions contemplated hereby or
thereby (assuming that none of FT, DT and their respective Affiliates
Beneficially Own any Voting Securities as of the date hereof and that none of
such Persons acquires any Voting Securities other than as contemplated or
permitted by this Agreement, any Other Agreement or the Amendment) except for
statutes or regulations the failure of the Company with which to comply would
not have a material adverse effect on (a) the transactions contemplated in this
Agreement or any Other Agreement, (b) the ability of the Buyers to exercise
fully their rights under this Agreement or any Other Agreement or the
Amendment, or (c) the intrinsic value of an investment in the Company's equity
securities (provided that a change in the Market Price of the Company's equity
securities shall not, in and of itself, be deemed to have a material adverse
effect on the intrinsic value of an investment in the Company's equity
securities).
Section 6.13. Vote Required; Board Recommendation. The only votes of the
stockholders of the Company required under Kansas law and the Articles and
Bylaws to approve the transactions contemplated by this Agreement and by the
Other Agreements are (a) the affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock, the Preferred Stock-First Series,
the Preferred Stock-Second Series and the Preferred Stock-Fifth Series of the
Company, voting together as a single class, (b) the affirmative vote of the
holders of a majority of the outstanding shares of the Common Stock, voting as
a single class, and (c) in the case of clause (c) of the definition of
"Proposals," the affirmative vote of the holders of a majority of such
outstanding shares, but excluding all "interested shares" within the meaning of
Section 17-1288 of the Kansas Control Share Acquisitions Statute (assuming for
the purposes of the Kansas Control Share Acquisitions Statute that none of FT,
DT and their respective affiliates and associates (as each such term is defined
in the Kansas Control Share Acquisitions Statute) owned, directly or
indirectly, or had or exercised the power to vote or direct the vote of, in
each case alone or as part of a group, any Voting Securities as of the date
hereof or at the time of the vote contemplated by this Section 6.13 and that
none of such Persons acquires any Voting Securities other than as contemplated
or permitted by this Agreement, any Other Agreement or the Amendment). The
Board of Directors has unanimously determined that the Proposals are advisable
and in the best interests of the stockholders of the Company.
Section 6.14. Long Distance Business. There are no assets in the Local
Exchange Division, the Cellular and Wireless Division or any other division of
the Company other than the Long Distance Division which are primarily used, or
held primarily for use, in or for the benefit of the Long Distance Business,
except for assets that in the aggregate are not material to the operation of
the Long Distance Business.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
Section 7.1. Representations and Warranties of FT. FT represents and warrants
to, and covenants with, the Company as follows:
(a) FT is an exploitant public validly existing under the laws of the
Republic of France, and has all requisite power and authority to: (i) enter
into this Agreement and each Other Agreement, (ii) purchase the shares of
the Company's capital stock as provided herein, and in the Stockholders'
Agreement and the Articles as amended by the Amendment, and (iii) comply
with its obligations under this Agreement and each Other Agreement.
45
(b) (i) The execution, delivery and performance of this Agreement and
each Other Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite action on
the part of FT. Upon the execution and delivery of this Agreement and each
Other Agreement by FT, each such agreement will constitute a legal, valid
and binding agreement of FT, enforceable against FT in accordance with its
terms.
(ii) Neither the execution, delivery and performance by FT of this
Agreement and each Other Agreement, nor the consummation by FT of the
transactions contemplated hereby or thereby will: (w) violate or conflict
with any provision of the FT Law and Decrees; (x) require any Governmental
Approvals or Third Party Approvals, except (A) as set forth in Section
7.1(b) of the FT Disclosure Schedule or (B) where the failure to so obtain,
make or file such Governmental Approvals or Third Party Approvals is not
reasonably likely to affect adversely in any material respect FT's ability
to perform its obligations hereunder or under the Other Agreements; (y)
result in a default (or an event that, with notice or lapse of time or
both, would become a default) under any Contract to which FT or any of its
Subsidiaries is a party, or by which FT or any of its Subsidiaries or any
of their respective assets or properties is bound, except for any such
defaults that, individually or in the aggregate, are not reasonably likely
to affect adversely in any material respect FT's ability to perform its
obligations hereunder or under the Other Agreements; or (z) violate or
conflict with Applicable Law applicable to FT or any of its Subsidiaries,
or any of the properties, businesses, or assets of FT or any of its
Subsidiaries, except violations and conflicts that, individually or in the
aggregate, are not reasonably likely to affect adversely in any material
respect FT's ability to perform its obligations hereunder or under the
Other Agreements.
(c) Except as set forth in Section 7.1(c) of the FT Disclosure Schedule,
there is no Proceeding pending or, to the best of FT's knowledge,
threatened against or relating to FT or any of its Subsidiaries at law or
in equity that, individually or in the aggregate, is reasonably likely to
affect adversely in any material respect FT's ability to perform its
obligations hereunder or under the Other Agreements. There is no judgment,
decree, injunction, rule or order of any Governmental Authority outstanding
against FT or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect
FT's ability to perform its obligations hereunder or under the Other
Agreements.
(d) All documents that FT is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby or by
each Other Agreement have complied and will comply in all material respects
with Applicable Law. All information supplied or to be supplied by FT in
any document filed with any Governmental Authority in connection with the
transactions contemplated hereby or by the Other Agreements will be, at the
time of filing, true and correct in all material respects, except where the
failure to be true and correct, individually or in the aggregate, would not
adversely affect in any material respect the consummation of the
transactions contemplated by this Agreement or any Other Agreement.
(e) FT is purchasing the shares of the Company's capital stock to be
purchased by it pursuant to this Agreement and the Stockholders' Agreement
for its own account for investment, and not with a view to the distribution
of such shares or any part thereof. FT is a party to no Contract with any
Person for resale of such shares in connection with such a distribution. FT
acknowledges that the offering of the shares pursuant to this Agreement and
the Stockholders' Agreement will not be registered under the Securities Act
or under any state securities or blue sky law or the securities laws of any
other country, on the grounds (with respect to the Securities Act and such
state securities or blue sky laws) that the offering and sale of shares of
capital stock contemplated by this Agreement and the Stockholders'
Agreement are exempt from registration pursuant to exceptions available
under such laws, and that the Company's reliance upon such exemptions is
predicated upon FT's representations set forth in this Agreement and the
Stockholders' Agreement. FT understands that the shares of the Company's
capital stock purchased by it pursuant to this Agreement and the
Stockholders' Agreement may not be sold or transferred unless such shares
are subsequently registered under the Securities Act and/or applicable
state securities or blue sky laws or any applicable securities laws of any
other country or an exemption from such registration is available.
46
(f) Except for such rights as may be conferred on FT as contemplated by
this Agreement and the Other Agreements, as of the date hereof, neither FT
nor any of its Affiliates Beneficially Owns, directly or indirectly, any
shares of capital stock of the Company.
(g) No Subsidiary of FT is entitled to any immunity on the grounds of
sovereignty or otherwise (including, without limitation, pursuant to the
Foreign Sovereign Immunities Act, 28 U.S.C. Paragraph 1602 et seq.), based
upon its status as an agency or instrumentality of government, from any legal
action, suit or proceeding or from set off or counterclaim, from the
jurisdiction of any competent court described in Section 11.8, from service of
process, from attachment prior to judgment, from attachment in aid of
execution of a judgment, from execution pursuant to a judgment or arbitral
award, or from any other legal process in any jurisdiction, in each case
relating to this Agreement or any Other Agreement.
(h) FT has delivered to the Company a copy of its annual report for the
year ended December 31, 1994.
Section 7.2. Representations and Warranties of DT. DT represents and warrants
to, and covenants with, the Company as follows:
(a) DT is an Aktiengesellschaft duly formed and validly existing under
the laws of Germany, and has all requisite corporate power and authority
to: (i) enter into this Agreement and each of the Other Agreements, (ii)
purchase the shares of the Company's capital stock as provided herein, and
in the Stockholders' Agreement and the Articles as amended by the Amendment
and (iii) comply with its obligations under this Agreement and each Other
Agreement.
(b) (i) The execution, delivery and performance of this Agreement and
each Other Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate
action on the part of DT. Upon the execution and delivery of this Agreement
and each Other Agreement by DT, each such agreement will constitute a
legal, valid and binding agreement of DT, enforceable against DT in
accordance with its terms.
(ii) Neither the execution, delivery and performance by DT of this
Agreement and each of the Other Agreements, nor the consummation by DT of
the transactions contemplated hereby or thereby, will (w) violate or
conflict with any provision of the Satzung or other governing documents of
DT or any of its Subsidiaries; (x) require any Governmental Approvals or
Third Party Approvals, except (A) as set forth in Section 7.2(b) of the DT
Disclosure Schedule or (B) where the failure to so obtain, make or file
such Governmental Approvals or Third Party Approvals, individually or in
the aggregate, is not reasonably likely to affect adversely in any material
respect DT's ability to perform its obligations hereunder or under the
Other Agreements; (y) result in a default (or an event that, with notice or
lapse of time or both, would become a default) under any Contract to which
DT or any of its Subsidiaries is a party, or by which DT or any of its
Subsidiaries or any of their respective assets or properties is bound,
except for any such defaults that, individually or in the aggregate, are
not reasonably likely to affect adversely in any material respect DT's
ability to perform its obligations hereunder or under the Other Agreements;
or (z) violate or conflict with any Applicable Law applicable to DT or any
of its Subsidiaries, or any of the properties, businesses, or assets of DT
or any of its Subsidiaries, except violations and conflicts that,
individually or in the aggregate, are not reasonably likely to affect
adversely in any material respect DT's ability to perform its obligations
hereunder or under the Other Agreements.
(c) Except as set forth in Section 7.2(c) of the DT Disclosure Schedule,
there is no Proceeding pending or, to the best of DT's knowledge,
threatened against or relating to DT or any of its Subsidiaries at law or
in equity that, individually or in the aggregate, is reasonably likely to
affect adversely in any material respect DT's ability to perform its
obligations hereunder or under the Other Agreements. There is no judgment,
decree, injunction, rule or order of any Governmental Authority outstanding
against DT or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect
DT's ability to perform its obligations hereunder or under the Other
Agreements.
47
(d) All documents that DT is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby have
complied and will comply in all material respects with Applicable Law. All
information supplied or to be supplied by DT in any document filed with any
Governmental Authority in connection with the transactions contemplated
hereby or by the Other Agreements will be, at the time of filing, true and
correct in all material respects, except where the failure to be true and
correct, individually or in the aggregate, would not adversely affect in
any material respect the consummation of the transactions contemplated by
this Agreement or any Other Agreement.
(e) DT is purchasing the shares of the Company's capital stock to be
purchased by it pursuant to this Agreement and the Stockholders' Agreement
for its own account for investment, and not with a view to the distribution
of such shares or any part thereof. DT is a party to no Contract with any
Person for resale of such shares in connection with such a distribution. DT
acknowledges that the offering of the shares pursuant to this Agreement and
the Stockholders' Agreement will not be registered under the Securities Act
or under any state securities or blue sky law or the securities laws of any
other country, on the grounds (with respect to the Securities Act and such
state securities or blue sky laws) that the offering and sale of shares of
capital stock contemplated by this Agreement and the Stockholders'
Agreement are exempt from registration pursuant to exceptions available
under such laws, and that the Company's reliance upon such exemptions is
predicated upon DT's representations set forth in this Agreement and the
Stockholders' Agreement. DT understands that the shares of the Company's
capital stock purchased by it pursuant to this Agreement and the
Stockholders' Agreement may not be sold or transferred unless such shares
are subsequently registered under the Securities Act and/or applicable
state securities or blue sky laws or any applicable securities laws of any
other country or an exemption from such registration is available.
(f) Except for such rights as may be conferred on DT as contemplated by
this Agreement and the Other Agreements, as of the date hereof neither DT
nor any of its Affiliates Beneficially Owns, directly or indirectly, any
shares of capital stock of the Company.
(g) DT has delivered to the Company a copy of its annual report for the
year ended December 31, 1994.
ARTICLE VIII
COVENANTS OF THE COMPANY
Section 8.1. Conduct of Business by the Company. Except to the extent that
each of the Buyers otherwise consents in writing, or as otherwise contemplated
by this Agreement, the Other Agreements or the Joint Venture Documents, until
the First Closing:
(a) The Company shall, and shall cause each of its Subsidiaries to,
conduct its operations so that the conduct of business of the Company and
its Subsidiaries, taken as a whole, is not materially inconsistent with the
scope and nature of such business on the date hereof and as shall be
described in the Proxy Statement; provided that this Section 8.1(a) shall
not prohibit the Company or any of its Subsidiaries from (i) engaging in
any activity relating to a Core Business (whether or not the Company as of
the date of this Agreement is engaged in such activity or such Core
Business), (ii) effecting any Exempt Asset Divestiture or any Exempt Long
Distance Asset Divestiture (except for a transaction described in clause
(g) of the definition of Exempt Long Distance Asset Divestiture) or (iii)
effecting the Cellular Spin-off or any transaction permitted by Section
8.10 hereof. The Company shall consult with each of the Buyers in good
faith prior to undertaking any material action that would reasonably be
viewed as outside the ordinary course of the Company's and its
Subsidiaries' business.
(b) The Company shall not redeem, repurchase or otherwise acquire, or
permit any Subsidiary to redeem, repurchase or otherwise acquire, Voting
Securities of the Company (including any securities convertible or
exchangeable into such Voting Securities) in excess of Voting Securities
representing 50% of the aggregate Votes of the Voting Securities of the
Company as of the date hereof, except as required by the terms of the
securities of the Company outstanding on the date hereof or as contemplated
by any employee benefit plans.
48
(c) The Company shall not amend or propose to amend the Articles or
Bylaws in any manner that would adversely affect the consummation of the
transactions contemplated by, or otherwise adversely affect the rights of
the Buyers under, this Agreement, each Other Agreement, the Articles as
proposed to be amended by the Amendment and the Bylaws as proposed to be
amended by the Bylaws Amendment, nor shall it permit any of its
Subsidiaries to amend or propose to amend the articles of incorporation or
bylaws of any such Subsidiary, in any manner that would adversely affect
the consummation of the transactions contemplated by, or otherwise
adversely affect the rights of the Buyers under, this Agreement and each
Other Agreement.
(d) The Company shall not authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or dissolution
of the Company; provided that this Section 8.1(d) shall not prohibit the
Company or any of its Subsidiaries from effecting any Exempt Asset
Divestiture or any Exempt Long Distance Asset Divestiture (except for a
transaction described in clause (g) of the definition of Exempt Long
Distance Asset Divestiture).
(e) Without limiting the foregoing, the Company shall not undertake any
action or transaction described in Sections 4, 5 and 6(a) of the Class A
Provisions.
Section 8.2. Access and Information. Until the First Closing, the Company
shall provide to the Buyers and their representatives upon reasonable notice,
during mutually agreeable hours, full and complete access during normal
business hours to its properties, personnel, books, records and Contracts and
those of its Subsidiaries and shall furnish or make available all such
information and documents relating to its properties and business and those of
its Subsidiaries as the Buyers may reasonably request, unless and to the extent
that, in connection with a Contract between the Company or any Subsidiary of
the Company and any Governmental Authority, such Governmental Authority
requires the Company or any of its Subsidiaries to restrict access to any
properties or information reasonably related to such Contract on the basis of
Applicable Law with respect to national security matters, and unless and to the
extent that Applicable Law otherwise requires the Company to restrict FT's and
DT's access to any properties or information, provided that any such
investigation by the Buyers shall be conducted in such a manner as not to
interfere unreasonably with the business or operations of the Company or any of
its Subsidiaries; and the Company shall use its reasonable efforts to cause
Ernst & Young or its successor to give to any independent public accountants
engaged by the Buyers full access to its books, records and work papers
relating to the Company and its Affiliates, subject to the execution by FT and
DT of such agreement as the Company and Ernst & Young may reasonably request as
a condition to such access. All confidential information provided to the Buyers
pursuant to this Section will be subject to the Existing Confidentiality
Agreement. Notwithstanding the foregoing, FT and DT may not have access to (a)
information or documents subject to existing confidentiality restrictions with
any third party without the approval of the third party, or (b) information or
documents subject to attorney/client privilege.
Section 8.3. No Solicitation, Etc. (a) Until the First Closing, neither the
Company nor any of its Subsidiaries or Affiliates nor any of their respective
officers, directors, employees, agents or representatives (including, without
limitation, investment bankers, attorneys and accountants) shall, directly or
indirectly, (i) solicit any proposal involving a transaction of the kind
described in Section 8 of the Class A Provisions (an "Acquisition Proposal") or
(ii) enter into substantive negotiations with any third party in response to an
Acquisition Proposal unless the Board of Directors determines in good faith
that it is in the best interests of the Company's stockholders to engage in
such substantive negotiations (after considering the benefits to the Company of
the transactions contemplated by this Agreement and the Joint Venture Agreement
and the potential impact of such negotiations on such transactions).
(b) Until the First Closing, neither the Company nor any of its
Subsidiaries or Affiliates nor any of their respective officers, directors,
employees, agents or representatives (including, without limitation,
investment bankers, attorneys and accountants) shall, directly or
indirectly (i) solicit any proposal involving any commercial or other
arrangements or relationships in nature and scope similar to the
arrangements and relationships contemplated by this Agreement or the Joint
Venture Agreement if
49
inconsistent with the purposes and scope of this Agreement and the Joint
Venture (an "Alternative Transaction"), (ii) disclose directly or
indirectly any information not customarily disclosed publicly concerning
its business and properties to, or afford any access to its properties,
books and records to, any Person in connection with any possible
Alternative Transaction or (iii) enter into substantive negotiations with
any third party relating to an Alternative Transaction.
(c) Until the approval by the stockholders of the Company of the
Proposals shall have been obtained as contemplated by Section 8.4 hereof,
if the Board of Directors or any committee thereof is notified during any
meeting of the Board of Directors or such committee of substantive
negotiations with respect to any transaction or action whose consummation
would be prohibited by Section 8.1(e) hereof, the Company shall discontinue
such negotiations, unless prior to such time the Company shall have
notified each of FT and DT of its desire that such negotiations continue
(and shall have provided each of FT and DT with a description in reasonable
detail of the transaction or action that is the subject of such
negotiations) and both FT and DT shall have failed to notify the Company of
their disapproval of such negotiations within five Business Days after
receipt by each of FT and DT of the Company's notice.
(d) Until the First Closing, the Company shall notify each of FT and DT
promptly if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any such information is requested, with
respect to a potential Acquisition Proposal or an Alternative Transaction.
Section 8.4. Stockholders Approval. Unless the Board of Directors determines
in good faith, after receipt of written advice from the Company's outside
counsel as to the nature and scope of the Directors' fiduciary duties, that it
would be inconsistent with the Directors' fiduciary duties to the Company and
to the Company's stockholders under Applicable Law not to withdraw or change
such recommendation, the Board of Directors shall (a) as soon as practicable
after the date hereof, in accordance with Applicable Law, take all steps
necessary to call, give notice of, convene and hold a special meeting of its
stockholders for the purpose of voting upon the Proposals (the "Stockholders'
Meeting"), (b) recommend to the stockholders of the Company the adoption and
approval of the Proposals and (c) use its reasonable efforts to obtain the
necessary approvals by the Company's stockholders of the Proposals.
Section 8.5. Proxy Statement Filings. (a) As promptly as practicable after
the date hereof, the Company shall prepare and, after consultation with each of
FT and DT, file the Proxy Statement with the SEC pursuant to the Exchange Act,
and, after consultation with each of FT and DT, shall respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof, and at the earliest practical time shall mail such
Proxy Statement to the stockholders entitled to vote at the Stockholders'
Meeting.
(b) If at any time after the mailing of the definitive Proxy Statement and
prior to the Stockholders' Meeting any event should occur that results in the
Proxy Statement containing an untrue statement of a material fact or omitting
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, or that otherwise should be described in an amendment or
supplement to the Proxy Statement, the Company shall promptly notify the Buyers
of the occurrence of such event and then promptly prepare, file and clear with
the SEC and mail to the Company's stockholders each such amendment or
supplement.
Section 8.6. Use of Proceeds. The proceeds of the transactions contemplated
herein may be used for the repayment of indebtedness, funding the Company's
investment in the JV Entities and other corporate purposes as determined by the
Board of Directors.
Section 8.7. Advice of Changes. Until the First Closing, the Company shall
promptly advise the Buyers orally and in writing of any change or event known
to the Chief Executive Officer or any Executive Vice President of the Company
which such Person in his reasonable good faith judgment believes has had or is
likely to have, either individually or together with other changes or events, a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
50
Section 8.8. No Action Relating to Takeover Statutes; Applicability of Future
Statutes and Regulations. The Company shall (a) take no action, by resolution
of its Board of Directors or otherwise, to cause the Business Combination
Statute or the provisions of the Kansas Control Share Acquisitions Statute to
apply to FT, DT or their respective Affiliates by virtue of the transactions
contemplated by this Agreement, any Other Agreement or the Amendment; and (b)
use reasonable efforts to avoid (to the extent possible) the application of any
"fair price," "moratorium," "control share acquisition," "business
combination," "shareholder protection" or similar anti-takeover statute or
regulation promulgated under Kansas law after the date hereof to FT, DT or
their respective Affiliates by virtue of the transactions contemplated by this
Agreement, any Other Agreement or the Amendment.
Section 8.9. Spin-offs. (a) Prior to the Investment Completion Date, the
Company shall not undertake any Spin-off, split-off or other distribution to
any of its stockholders of equity interests of a Subsidiary of the Company
other than the Cellular Spin-off prior to delivery of a Notice of Abandonment,
provided that if the Company proposes to undertake a transaction described in
the preceding sentence prior to the Investment Completion Date, the Parties
shall negotiate in good faith a Spin-off Investment Agreement and any necessary
or advisable modifications to this Agreement, the Stockholders' Agreement and
the Amendment (or the Articles as amended by the Amendment; as the case may be)
in connection with such transaction, and the Company shall be permitted,
subject to the rights of the Class A Holders set forth in Section 7.10 of the
Stockholders' Agreement, to undertake such transaction, only if the Parties are
able to reach agreement regarding such modifications.
(b) Between the Investment Completion Date and the earlier of the date of the
Optional Shares Closing and 60 days after the Investment Completion Date, the
Company shall not effect any Spin-off, split-off or other distribution to any
of its stockholders of any equity interests of any Subsidiary of the Company.
(c) Nothing in this Agreement, any Other Agreement or the Amendment shall
prohibit the Company from effecting the Cellular Spin-off prior to delivery of
the Notice of Abandonment.
Section 8.10. Conduct of Business of Cellular. (a) Except (v) for the
Cellular Spin-off, (w) for any financings or refinancings in contemplation of
the Cellular Spin-off, (x) as set forth in the Schedule of Permitted Cellular
Actions attached as Schedule C hereto, (y) as otherwise may be necessary to
comply with an order, rule or other requirement of the FCC, or (z) as otherwise
may be consented to in writing by the Buyers, until the earlier of (A) the
occurrence of the Cellular Spin-off Date, and (B) the delivery of a Notice of
Abandonment:
(i) The Company shall cause the business of Cellular to be conducted only
in the ordinary course of business consistent with past practices (except
for any internal reorganization of Cellular that the Company believes in
good faith is appropriate in connection with the Cellular Spin-off),
provided that nothing in this Agreement, the Other Agreements or the
Amendment shall prohibit the Company from effecting any Acquisitions or
Dispositions with respect to Cellular so long as the number of POPs of
Cellular at the Cellular Spin-off Date do not vary by more than 10% from
the number of POPs of Cellular at June 22, 1995.
(ii) Neither the Company nor any of its Affiliates (other than Cellular
and the Subsidiaries and Affiliates Controlled by Cellular) shall engage in
any transaction (including, without limitation, the purchase, sale,
transfer or exchange of assets or the rendering of any service) with
Cellular that is to be performed, in whole or in part, after the Cellular
Spin-off Date, except upon terms that following the Cellular Spin-off Date
are no less favorable to the Company or such an Affiliate of the Company
than those that might, in the good faith judgment of the Company, be
obtained in an arms' length transaction at the time from Persons which are
not the Company or such an Affiliate of the Company, other than
transactions that individually and in the aggregate are immaterial to the
value of Cellular, provided that the transactions between the Company and
Cellular that are to be performed, in whole or in part, after the Cellular
Spin-off Date (other than any transactions that individually and in the
aggregate are immaterial to the value of Cellular) shall be approved by the
Board of Directors.
51
(iii) The Company shall not enter into any Cellular Guarantee in respect
of any Cellular Liabilities other than guarantees of purchase money
indebtedness or other non-financial indebtedness that, individually and in
the aggregate, do not exceed $5 million. Cellular shall assume or retain
all Cellular Liabilities incurred by the Company or its Subsidiaries in
connection with the conduct of the business of Cellular prior to the
Cellular Spin-off Date, other than (i) liabilities that are in the
aggregate immaterial to the Company and to Cellular, and (ii) indebtedness
for borrowed money, it being understood that the Company may establish the
amount of indebtedness for borrowed money, if any, to be borne by Cellular
in connection with the Cellular Spin-off.
(iv) In connection with the Cellular Spin-off, the Company and Cellular
shall enter into a Tax Sharing and Indemnification Agreement which will
include, among other things, the following provisions: (i) in the event
that the Cellular Spin-off fails to constitute a tax-free distribution
under section 355 of the Code, Taxes resulting from such failure (including
the liability of the Company or Cellular arising from Taxes imposed on
shareholders of the Company to the extent any shareholders successfully
seek recourse against the Company or Cellular on account of such failure)
will be allocated between the Company and Cellular in such a manner as will
take into account the extent to which each contributed to such failure, and
the Company and Cellular will indemnify and hold harmless the other from
and against the Taxes so allocated to the indemnifying party; (ii)(x) the
Company will agree to be responsible for, and to indemnify and hold
Cellular and the Cellular Affiliates harmless from and against, Taxes in an
amount up to $25 million arising from the recognition of gain upon a
distribution of Cellular Common Stock to non-U.S. persons pursuant to
section 367(e) of the Code in connection with the Cellular Spin-off and
from the transfer of assets and liabilities by the Company and the Sprint
Affiliates to Cellular and the Cellular Affiliates in connection with the
Cellular Spin-off, and (y) Cellular will agree to be responsible for, and
to indemnify and hold the Company and the Sprint Affiliates harmless from
and against, Taxes in excess of $25 million arising from such recognition
of gain and such transfer of assets and liabilities as described in
subclause (x) of this clause (ii); (iii) with respect to Taxes other than
those to which clauses (i) and (ii) above apply, Cellular will agree to be
responsible for, and to indemnify and hold the Company and the Sprint
Affiliates harmless from and against, any liability for Taxes of or
relating to Cellular or the Cellular Affiliates or their assets or the
operation of their businesses for periods up to and including the Cellular
Spin-off Date (including Taxes attributable to any deferred intercompany
transactions or excess loss accounts that are recognized as a result of the
Cellular Spin-off or any transfer of any asset or liability in connection
therewith); and, (iv) with respect to Taxes other than those to which
clauses (i), (ii) and (iii) above apply, the Company will agree to be
responsible for, and to indemnify and hold Cellular and the Cellular
Affiliates harmless from and against, any liability for Taxes of or
relating to the Company or the Sprint Affiliates or their assets or the
operation of their businesses (A) for periods up to and including the
Cellular Spin-off Date, and (B) for periods after the Cellular Spin-off
Date and imposed on Cellular or the Cellular Affiliates under section
1.1502-6 of the Treasury regulations or any comparable provision of any
applicable state, local or foreign tax law. For purposes of this Section
8.10(a)(iv), the term "Cellular Affiliates" shall mean all direct and
indirect parents and Subsidiaries, if any, of Cellular immediately after
the Cellular Spin-off, and the term "Sprint Affiliates" shall mean all
direct and indirect parents and Subsidiaries, if any, of the Company
immediately after the Cellular Spin-off.
(b) The Company shall not have any liability for any breach of any of the
covenants or agreements set forth in this Section 8.10 if the Company shall
have delivered a Notice of Abandonment.
ARTICLE IX
OTHER AGREEMENTS
Section 9.1. Information for Inclusion in the Proxy Statement. Each of FT and
DT shall provide such information regarding itself and its Affiliates
(including, without limitation, such information necessary to describe in
sufficient detail the Control Share Acquisitions Plan) as may reasonably be
requested by the
52
Company for inclusion in the Proxy Statement, and each of FT and DT will
deliver as promptly as practicable after the date hereof to the Company an
Acquiring Person Statement in compliance with Section 17-1291 of the Kansas
Control Share Acquisitions Statute. The information provided by FT and DT for
inclusion in the Proxy Statement and the information contained in the Acquiring
Person Statement will not contain any material misstatement of fact or omit to
state any material fact necessary to make the statements, in the light of the
circumstances under which they are made, not misleading. All statements
included in the Proxy Statement relating to FT or DT shall be subject to the
approval of FT and DT, such approval not to be unreasonably withheld. If, at
any time after the mailing of the definitive Proxy Statement and prior to the
Stockholders' Meeting, any event should occur that results in the information
supplied by FT, DT or their respective Affiliates for inclusion in the Proxy
Statement or the information contained in the Acquiring Person Statement
containing an untrue statement of a material fact or omitting to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, FT and DT shall promptly notify the Company of the occurrence of
such event.
Section 9.2. Further Assurances. (a) Each Party shall (i) execute and deliver
such additional instruments and other documents, and (ii) use its reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary under Applicable Law to consummate the transactions
contemplated hereby and by the Other Agreements and to satisfy the applicable
conditions to closing hereunder.
(b) Each of the Parties agrees to make all filings with Governmental
Authorities required in connection with the transactions contemplated by this
Agreement and the Other Agreements, including all filings necessary to obtain
the Governmental Approvals described in Sections 3.1(a), (b), (c), (d), (e) and
(k) of this Agreement as promptly as practicable after the date of this
Agreement and to use its reasonable efforts to furnish or cause to be
furnished, as promptly as practicable, all information and documents reasonably
required to obtain such approvals and shall otherwise cooperate in all
reasonable respects with the applicable Governmental Authorities to obtain any
required Governmental Approvals in as expeditious a manner as possible.
(c) Each of the Parties shall use its reasonable efforts to resolve such
objections, if any, as any Governmental Authority may assert with respect to
this Agreement and the Other Agreements and the transactions contemplated
hereby and thereby under Applicable Laws, including requesting reconsideration
(which may be initiated by the Party affected thereby or requested by any other
Party) of any adverse ruling of any Governmental Authority and taking
administrative appeals, if available and reasonably likely to result in a
reversal of such adverse ruling. If any Proceeding is instituted by any Person
challenging this Agreement, the Other Agreements or the transactions
contemplated hereby or thereby, the Parties shall promptly consult with each
other to determine the most appropriate response to such Proceeding and shall
cooperate in all reasonable respects with any Party subject to any such
Proceeding, provided that the decision whether to initiate, and the control of,
any Proceeding involving any Party shall remain within the sole discretion of
such Party.
(d) FT shall comply, to the extent permitted by Applicable Law of France,
with final and nonappealable discovery orders rendered by a court of competent
jurisdiction as provided in Section 11.8 hereof or in any corresponding section
of any Other Agreement, and shall take such reasonable action as appropriate in
order to permit FT to so comply with such orders.
(e) DT shall comply, to the extent permitted by Applicable Law of Germany,
with final and nonappealable discovery orders rendered by a court of competent
jurisdiction as provided in Section 11.8 hereof or in any corresponding section
of any Other Agreement, and shall take such reasonable action as appropriate in
order to permit DT to so comply with such orders.
Section 9.3. Public Announcements. In addition to any obligations under the
Standstill Agreement, the Parties shall use reasonable efforts to consult in
good faith with each other with a view to agreeing upon any press release or
public announcement relating to the transactions contemplated hereby or by the
Other Agreements prior to the consummation thereof.
53
Section 9.4. Notification. Each Party shall notify each other Party of the
occurrence or nonoccurrence of any event known to a senior officer of such
Party which in such Person's reasonable good faith judgment has caused or is
likely to cause:
(a) any covenant or agreement of such Party contained herein not to be
performed or complied with in any material respect, or any condition set
forth in Article III to become incapable of being fulfilled, in each case
until the First Closing (except as provided in clauses (b), (c) and (d)
below);
(b) any covenant or agreement of such Party set forth in Section 2.2, 2.3
or 2.4 of this Agreement not to be performed or complied with in any
material respect, or any condition set forth in Article IV to become
incapable of being fulfilled, in each case until the relevant Article IV
Closing;
(c) any covenant or agreement of such Party set forth in Section 2.5 of
this Agreement not to be performed or complied with in any material
respect, or any condition set forth in Article V to become incapable of
being fulfilled, in each case until the Optional Shares Closing; or
(d) any covenant or agreement of such Party set forth in Sections 8.8,
9.2, 9.3, 11.2 or 11.12 of this Agreement not to be performed or complied
with in any material respect, in each case for so long as shares of Class A
Stock are outstanding;
provided that the delivery of any notice pursuant to this Section 9.4 will not
cure such breach or noncompliance or limit or otherwise affect the remedies
available hereunder to any Party, and provided, further, that, with respect to
any representation or warranty, no Party shall have any liability for a breach
of this Section 9.4, if the claim with respect to such breach is made at a time
when the representation or warranty to which it relates does not continue to
survive as provided in Section 11.1 hereof.
Section 9.5. Brokers or Finders. (a) Other than ▇▇▇▇▇▇, Read & Co. Inc., no
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee as a result of any action by the Company or any of
its Affiliates in connection with the transactions contemplated by this
Agreement and the Other Agreements. The Company agrees to indemnify and hold
harmless each of FT and DT from and against any and all claims, liabilities and
obligations (including attorneys' fees (but not including the portion of any
such fees determined pursuant to the German Fee Regulations) and disbursements
of counsel) with respect to any such fees asserted by any Person as a result of
any action by the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement and the Other Agreements.
(b) Other than ▇▇▇▇▇▇▇, Sachs & Co., no Person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee as a result of
any action by FT or any of its Affiliates in connection with the transactions
contemplated by this Agreement and the Other Agreements. FT agrees to indemnify
and hold the Company harmless from and against any and all claims, liabilities
and obligations (including attorneys' fees and disbursements of counsel) with
respect to any such fees asserted by any Person as a result of any actions by
FT or its Affiliates in connection with the transactions contemplated by this
Agreement and the Other Agreements.
(c) Other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., no Person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee as a result of
any action by DT or any of its Affiliates in connection with the transactions
contemplated by this Agreement and the Other Agreements. DT agrees to indemnify
and hold the Company harmless from and against any and all claims, liabilities
and obligations (including attorneys' fees and disbursements of counsel) with
respect to any such fees asserted by any Person as a result of any actions by
DT or its Affiliates in connection with the transactions contemplated by this
Agreement and the Other Agreements.
Section 9.6. Notice of Proposals Regarding Acquisition Transactions. Until
the First Closing, each of FT and DT shall promptly notify the Company if any
inquiries or proposals are received by, any information is requested from, or
any negotiations or discussions are sought to be initiated or continued with,
FT or DT or any of their respective Affiliates regarding any Acquisition
Proposal involving the Company or any purchase of any of the shares of capital
stock of the Company Beneficially Owned by FT, DT or any of their respective
Affiliates (whether by way of a tender offer or exchange offer or otherwise).
54
Section 9.7. Execution of Standstill Agreement. Concurrently with the
execution of this Agreement, each Party shall execute the Standstill
Agreement.
Section 9.8. Confidentiality Agreements. As soon as reasonably practicable
after the date hereof but prior to the Initial Issuance Date, the Parties
shall negotiate in good faith to reach mutual agreement regarding the
definitive terms and conditions of the FT Investor Confidentiality Agreement
and the DT Investor Confidentiality Agreement.
Section 9.9. Actions by FT and DT in Connection with the Cellular Spin-off.
Upon the request of the Company, by notice given not fewer than ten Business
Days prior to the planned date of the Cellular Spin-off, each of FT and DT
shall represent and warrant to the Company that, to the best of their
knowledge, on or prior to the Cellular Spin-off Date they do not have a plan
to purchase Common Stock from any officer or director of the Company or from
any shareholder of the Company owning more than one percent of the outstanding
capital stock of the Company. The above representation and warranty shall
survive until the applicable statute of limitations pursuant to the Code
(including any extension thereof) for the taxable year of the Company
including the Cellular Spin-off expires.
Section 9.10. Adjustment Certificates. From time to time, at the request of
FT or DT, the Company shall, within 20 Business Days of the date of the
request therefor, deliver to each Class A Holder a certificate signed by a
duly authorized officer of the Company setting forth any adjustment pursuant
to the Class A Provisions or the Stockholders' Agreement, as the case may be,
to the Adjusted Cellular Price, the Net Cellular Acquisition Amount, the Net
Cellular Indebtedness, the Average Sprint Price, the Average Cellular Price,
the Lower Threshold Sprint Price, the New Lower Threshold Sprint Price, the
Upper Threshold Sprint Price, the New Upper Threshold Sprint Price, the Second
Anniversary Threshold Sprint Price (as such term is defined in the Class A
Provisions), the Target Price, the New Target Price, the Minimum Price, the
New Minimum Price, the Maximum Price, the New Maximum Price, the Cellular
Spin-off Reduction Factor, the Dividend Factor (as such term is defined in the
Class A Provisions), the conversion ratio expressed in Section 3(c)(ii) of
that portion of ARTICLE SIXTH entitled GENERAL PROVISIONS RELATING TO COMMON
STOCK AND CLASS A STOCK, the Modified Lower Threshold (as such term is defined
in the Class A Provisions), and the Modified New Lower Threshold (as such term
is defined in the Articles), as the case may be, and showing in reasonable
detail the facts upon which such adjustment or adjustments are based.
ARTICLE X
TERM AND TERMINATION
Section 10.1. Termination. (a) This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Initial Issuance Date (whether before or after the Stockholders' Meeting):
(i) by FT, DT or the Company, if the First Closing has not been
consummated on or before February 15, 1996/1/ other than as a result of the
failure of the Party seeking to terminate this Agreement to perform its
obligations under this Agreement or the Other Agreements;
(ii) by FT or DT:
(1) upon the occurrence of a Change of Control,
(2) if the Company or any of its Subsidiaries or Affiliates, or any
of their respective officers, directors, employees, agents or
representatives (including, without limitation, investment bankers,
attorneys and accountants), undertakes any action prohibited by clause
(b) of Section 8.3, unless prior to such time the Company shall have
notified each of FT and DT of its desire that such Person or Persons
undertake such action (and shall have provided each of FT and DT with a
description in reasonable detail of the action proposed, the Person or
Persons involved, and the transaction or proposal to which it relates)
and both FT and DT shall have failed to notify the Company of their
disapproval of such action within five Business Days after receipt by
both FT and DT of the Company's notice,
--------
/1/ Pursuant to a letter agreement dated as of November 21, 1995, Sprint, FT
and DT agreed to change this date from December 31,1995 to February 15, 1996.
55
(3) until the approval of the Proposals by the stockholders of the
Company shall have been obtained as contemplated by Section 8.4 hereof,
if the Board of Directors or any committee thereof is notified during
any meeting of the Board of Directors or any committee thereof of
substantive negotiations with respect to any transaction or action
whose consummation would be prohibited by Section 8.1(e) hereof, and
the Board of Directors or such committee has not instructed that the
Company discontinue such negotiations, unless prior to such time the
Company shall have notified each of FT and DT of its desire that such
negotiations continue (and shall have provided each of FT and DT with a
description in reasonable detail of the transaction or action that is
the subject of such negotiations) and both FT and DT shall have failed
to notify the Company of their disapproval of such negotiations within
five Business Days after receipt by both FT and DT of the Company's
notice,
(4) if the Board of Directors or any committee thereof is notified
during any meeting of the Board of Directors or such committee of
negotiations involving the Company and any Person relating to an
Acquisition Proposal and the Board of Directors or such committee has
not instructed that the Company discontinue such negotiations, unless
prior to such time the Company shall have notified each of FT and DT of
its desire that such negotiations continue (and shall have provided
each of FT and DT with a description in reasonable detail of the scope
and substance of the negotiations and the Acquisition Proposal to which
they relate) and both FT and DT shall have failed to notify the Company
of their disapproval of such negotiations within five Business Days
after receipt by both FT and DT of the Company's notice,
(5) if the Board of Directors shall have withdrawn or qualified or
resolved to withdraw or qualify in any manner that is adverse to FT or
DT, its recommendation or approval of the Proposals, provided, that for
purposes of this clause (5) and clause (3) of Section 10.1(a)(iii), if
the Board of Directors continues its recommendation and approval of the
Proposals, but reflects in its recommendation additional information,
inclusion of such additional information, in and of itself, shall not
be deemed to be a qualification that is adverse to FT or DT,
(6) if it has become impossible for any condition precedent to its
obligations under this Agreement or the Other Agreements to be
satisfied, provided that such condition precedent has become impossible
to satisfy other than as a result of the failure of FT or DT to perform
its obligations under this Agreement or the Other Agreements,
(7) if there is a material breach by the Company of its
representations and warranties contained in this Agreement and the
Other Agreements, which breach is not cured within 30 days after
written notice by FT or DT of such breach, or
(8) if the stockholders of the Company fail to approve the Proposals
by the requisite vote at the Stockholders' Meeting;
(iii) by the Company:
(1) if it has become impossible for any condition precedent to its
obligations under this Agreement or the Other Agreements to be
satisfied, provided that such condition precedent has become impossible
to satisfy other than as a result of the failure of the Company to
perform its obligations under this Agreement or the Other Agreements,
(2) if there is a material breach by FT or DT of its representations
and warranties contained in this Agreement and the Other Agreements,
which breach is not cured within 30 days after written notice by the
Company of such breach,
(3) if, in accordance with Section 8.4 hereof, the Board of Directors
of the Company fails to recommend or withdraws or qualifies its
recommendation to the stockholders of the Proposals, or
(4) if the stockholders of the Company fail to approve the Proposals
by the requisite vote at the Stockholders' Meeting;
(iv) by the Company, FT or DT, if the Joint Venture Agreement shall have
been terminated in accordance with the terms thereof; or
56
(v) by consent in writing of all of the Parties.
(b) If this Agreement is terminated pursuant to Section 10.1(a), written
notice thereof shall forthwith be given by the terminating Party to the other
Parties hereto, and this Agreement shall terminate without further action by
any of the Parties hereto. Any termination of this Agreement as provided herein
shall be without prejudice to the rights of any Party hereto arising out of
breach by any other Party of any representation, warranty, covenant or
agreement contained in this Agreement. Notwithstanding any such termination,
the provisions of Sections 10.1(b), 10.2, 11.8, 11.10 and 11.12 of this
Agreement, the Existing Confidentiality Agreement and the Standstill Agreement
shall survive such termination in accordance with their terms.
Section 10.2. Reimbursement of Expenses. If this Agreement is terminated (a)
pursuant to clauses (1), (2) or (4) of Section 10.1(a)(ii) or (b) pursuant to
clause (5) of Section 10.1(a)(ii) if the Board of Directors shall have
withdrawn or qualified or resolved to withdraw or qualify its recommendation or
approval of the Proposals after receiving an Acquisition Proposal, in addition
to any other remedies the Buyers may have hereunder, at law, in equity or
otherwise, the Company shall promptly reimburse each of FT and DT for their
actual reasonable out-of-pocket expenses (including attorneys' fees, but
notwithstanding the foregoing, not including the portion of any fees determined
pursuant to the Bundesgebuhrenordnung fur Rechtsanwalte vom 26. Juli 1957
(BGBl) I S. 907 (as it or any successor provision is from time to time in
effect) (the "German Fee Regulations")) incurred by it relating to the
transactions contemplated by this Agreement, the Other Agreements and the Joint
Venture Documents up to a maximum aggregate amount of $15 million for each of
FT and DT, as set forth on a certificate or certificates executed by an officer
of each of FT and DT describing such expenses in reasonable detail.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Survival of Representations and Warranties. (a) The
representations and warranties made by (i) the Company in Sections 6.1 through
6.4, the first two sentences of Section 6.5(a) and Section 6.6 (but, in the
case of Section 6.6, only to the extent that a change described in such Section
relates to a Material Adverse Effect on the Company and its Subsidiaries taken
as a whole that existed on the Initial Issuance Date, but arose after the later
of (x) the date of the end of the quarter covered by the last Quarterly Report
on Form 10-Q of the Company filed prior to the Initial Issuance Date and (y)
the date of the end of the year covered by the last Annual Report on Form 10-K
of the Company filed prior to the Initial Issuance Date) of this Agreement, and
(ii) the Buyers in Sections 7.1 and 7.2 of this Agreement (the "Surviving
Representations") will survive until the earlier to occur of (x) 15 months
after the date of the First Closing and (y) 90 days after the publication of
the results of the first full audit of the consolidated financial statements of
the Company and its Subsidiaries by the Company's independent auditors
following the First Closing, such financial statements to include a balance
sheet and statements of income and cash flows as of a date following the
Initial Issuance Date and to be prepared in accordance with GAAP applied on a
consistent basis with the financial statements included in the SEC Documents.
The Company shall have the right to cause its independent auditors to conduct
such an audit at any time after the Initial Issuance Date. No action may be
brought with respect to a breach of any Surviving Representation after such
time unless, prior to such time, the Party seeking to bring such an action has
notified the other Parties of such claim, specifying in reasonable detail the
nature of the loss suffered. The representations and warranties provided in
Sections 6.9 (as of the date hereof and as of the Initial Issuance Date) and
7.1(g) shall survive without limitation as to time, and the representation and
warranty provided in Section 9.9 hereof shall survive for the time period
provided therein. None of the other representations and warranties made by any
Party in this Agreement or any Other Agreement or in any certificate or
document delivered pursuant hereto or thereto prior to or on the Initial
Issuance Date shall survive the First Closing. None of the representations and
warranties made by any Party in this Agreement or any Other Agreement or in any
certificate or document delivered pursuant hereto or thereto at the Optional
Shares Closing or Article IV Closing shall survive such Optional Shares Closing
or
57
Article IV Closing, as the case may be, provided that if any certificate or
document delivered pursuant hereto, or any portion thereof, pertains to a
Surviving Representation, such certificate or document, or such portion
thereof, shall survive until the Surviving Representation to which it pertains
shall no longer survive as provided herein.
(b) The Buyers shall be entitled to recovery with respect to breaches of the
Surviving Representations and to the representation and warranty provided in
Section 6.9 made by the Company pursuant to this Agreement (and in any
certificate pertaining to any such representation) only if the aggregate amount
of loss, liability or damage (including reasonable attorneys' fees (but not
including the portion of any fees determined pursuant to the German Fee
Regulations) and other costs and expenses) (collectively, "Damages") incurred
or sustained by the Buyers arising from or relating to such breaches, in the
aggregate, exceeds $100,000,000. The Company shall be entitled to recovery with
respect to breach of the Surviving Representations and the representation and
warranty provided in Section 9.9 made by the Buyers pursuant to this Agreement
(and in any certificate pertaining to any such representation) only if the
aggregate amount of Damages sustained by the Company arising from or relating
to such breaches exceeds $100,000,000. The Company shall not incur any
liability under the representation and warranty provided in Section 6.9 or
under any certificate pertaining to such representation (even if the Company
turns out in fact to be a U.S. real property holding corporation), provided
that such representation and warranty is made to the best of the Company's
knowledge and belief.
Section 11.2. Assignment. No Party will assign this Agreement or any rights,
interests or obligations hereunder, or delegate performance of any of its
obligations hereunder, without the prior written consent of each other Party,
provided that each of the Buyers may assign this Agreement, or part or all of
its rights, interests or obligations hereunder, or delegate performance
hereunder, to one or more Qualified Subsidiaries, in which case (i) such Buyer
and such Qualified Subsidiary or Subsidiaries shall be jointly and severally
liable for all of such Buyer's obligations hereunder, (ii) such Buyer shall act
as agent for such Qualified Subsidiary in connection with the receipt or giving
of any and all notices or approvals under this Agreement or the Other
Agreements and the Articles as amended by the Amendment, and (iii) such Buyer
shall not cause or permit any such Subsidiary to lose its status as a Qualified
Subsidiary at any time when such Subsidiary owns Shares, and provided, further,
that an assignment of the right to purchase Shares under this Agreement shall
be permitted to be made to a Qualified Subsidiary or Qualified Subsidiaries
only if each such Subsidiary is identified in the Acquiring Person Statement
contemplated by Section 6.8 hereof and all information required by the Kansas
Control Share Acquisitions Statute with respect to each such Subsidiary is
included in such Acquiring Person Statement. Any assignment of this Agreement
or any rights, interests or obligations hereunder to a Qualified Subsidiary
made pursuant to this Section 11.2 shall be effective only if (a) the Buyers
disclose to the Company the identity of the shareholders of such Qualified
Subsidiary and (b) such Qualified Subsidiary agrees to be bound by the terms
and conditions of (i) this Agreement and a Qualified Subsidiary Standstill
Agreement, and (ii) if such assignment is made after the Initial Issuance Date,
the Stockholders' Agreement, a Qualified Subsidiary Confidentiality Agreement
and the Registration Rights Agreement upon the purchase by such Qualified
Subsidiary of Class A Stock hereunder, in each case pursuant to an instrument
of assumption substantially in the form of Exhibit K hereto, and such Qualified
Subsidiary shall become a party to each such agreement assumed thereby.
Section 11.3. Entire Agreement. This Agreement, including the Disclosure
Schedules, the Exhibits attached hereto, and the Other Agreements embody the
entire agreement and understanding of the Parties in respect of the subject
matter contained herein, provided that this provision shall not abrogate (a)
any other written agreement between the Parties executed simultaneously with
this Agreement, (b) the letter agreement referred to in Section 11.4 hereof, or
(c) the understanding set forth in Item 1 of Schedule 2 to that certain
memorandum dated June 22, 1995 among the Company, FT and DT. This Agreement
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter, except as so provided in the preceding
sentence.
58
Section 11.4. Expenses. Except as expressly otherwise provided in Section
10.2 of this Agreement and that certain letter agreement dated as of June 22,
1995 among the Company, FT and DT regarding expenses incurred in the
translation of this Agreement and certain related documents to comply with the
French Translation Law, each Party and each of its Affiliates will bear its own
expenses (including the fees and expenses of any attorneys, accountants,
investment bankers, brokers, or other Persons engaged by it) incurred in
connection with the preparation, negotiation, authorization, execution and
delivery hereof and each Other Agreement to which it or any of its Affiliates
is a party, and the transactions contemplated hereby and thereby.
Section 11.5. Waiver, Amendment, Etc. This Agreement may not be amended or
supplemented, and, except to the extent permitted by Section 3.1(k) and with
respect to any Burdensome Condition affecting a particular Party, no waivers of
or consents to departures from the provisions hereof shall be effective, unless
set forth in a writing signed by, and delivered to, all the Parties. No failure
or delay of any Party in exercising any power or right under this Agreement
will operate as a waiver thereof, nor will any single or partial exercise of
any right or power, or any abandonment or discontinuance of steps to enforce
such right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
Section 11.6. Binding Agreement; No Third Party Beneficiaries. This Agreement
will be binding upon and inure to the benefit of the Parties and their
successors (including, without limitation, any successor of FT in a
privatization) and permitted assigns. Nothing expressed or implied herein is
intended or will be construed to confer upon or to give to any third party any
rights or remedies by virtue hereof. In the event of a reorganization of FT
pursuant to, as a result of or in connection with, a privatization, the
corporation or other entity formed to continue the business activities of FT
shall assume the rights and obligations of FT under this Agreement and the
Other Agreements.
Section 11.7. Notices. All notices and other communications required or
permitted by this Agreement shall be made in writing in the English language
and any such notice or communication shall be deemed delivered when delivered
in person, transmitted by telex or telecopier, or seven days after it has been
sent by air mail, as follows:
FT:
▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Cedex 15
France
Attn: Executive Vice President, International
Tel: (▇▇-▇) ▇▇-▇▇-▇▇-▇▇
Fax: (▇▇-▇) ▇▇-▇▇-▇▇-▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
DT:
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Tel: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
59
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
U.S.A.
Attn: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Sprint:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ Wing
Westwood, Kansas 66205
U.S.A.
Attn: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Parties shall promptly notify each other in the manner provided in this
Section 11.7 of any change in their respective addresses. A notice of change of
address shall not be deemed to have been given until received by the addressee.
Communications by telex or telecopier also shall be sent concurrently by mail,
but shall in any event be effective as stated above.
Section 11.8. GOVERNING LAW; DISPUTE RESOLUTION; EQUITABLE RELIEF. (a) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW).
(b) EACH PARTY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION, SUIT OR
PROCEEDING AGAINST IT WITH RESPECT TO ITS OBLIGATIONS OR LIABILITIES UNDER OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT BY SUCH
PARTY ONLY IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK OR, IN THE EVENT (BUT ONLY IN THE EVENT) SUCH COURT DOES NOT HAVE SUBJECT
MATTER JURISDICTION OVER SUCH ACTION, SUIT OR PROCEEDING, IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ SITTING IN THE CITY OF NEW YORK, AND EACH PARTY HEREBY
IRREVOCABLY ACCEPTS AND SUBMITS TO THE JURISDICTION OF EACH OF THE AFORESAID
COURTS IN PERSONAM, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING
(INCLUDING, WITHOUT LIMITATION, CLAIMS FOR INTERIM RELIEF, COUNTERCLAIMS,
ACTIONS WITH MULTIPLE DEFENDANTS AND ACTIONS IN WHICH SUCH PARTY IS IMPLIED).
EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO
A JURY TRIAL IN ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO, OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
60
(c) EACH OF FT AND DT HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM (IN
SUCH CAPACITY, THE "PROCESS AGENT"), WITH ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS
BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDINGS WITH RESPECT TO THIS AGREEMENT AND THE OTHER AGREEMENTS, AND SUCH
SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT,
PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY
EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO FT AND DT IN THE
MANNER PROVIDED IN SECTION 11.7. FT AND DT SHALL TAKE ALL SUCH ACTION AS MAY BE
NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT
ANOTHER AGENT SO THAT FT AND DT WILL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF
PROCESS FOR THE ABOVE PURPOSES IN NEW YORK, NEW YORK. IN THE EVENT OF THE
TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS AND BUSINESS OF THE PROCESS
AGENT TO ANY OTHER CORPORATION BY CONSOLIDATION, MERGER, SALE OF ASSETS OR
OTHERWISE, SUCH OTHER CORPORATION SHALL BE SUBSTITUTED HEREUNDER FOR THE
PROCESS AGENT WITH THE SAME EFFECT AS IF NAMED HEREIN IN PLACE OF CT
CORPORATION SYSTEM. EACH OF FT AND DT FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED AIRMAIL, POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN THIS AGREEMENT, SUCH SERVICE
OF PROCESS TO BE EFFECTIVE UPON ACKNOWLEDGMENT OF RECEIPT OF SUCH REGISTERED
MAIL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. EACH OF FT AND DT EXPRESSLY
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE
LAWS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA.
(d) EACH PARTY AGREES THAT MONEY DAMAGES WOULD NOT BE A SUFFICIENT REMEDY FOR
THE OTHER PARTIES FOR ANY BREACH OF THIS AGREEMENT BY IT, AND THAT IN ADDITION
TO ALL OTHER REMEDIES THE OTHER PARTIES MAY HAVE, THEY SHALL BE ENTITLED TO
SPECIFIC PERFORMANCE AND TO INJUNCTIVE OR OTHER EQUITABLE RELIEF AS A REMEDY
FOR ANY SUCH BREACH. EACH PARTY AGREES NOT TO OPPOSE THE GRANTING OF SUCH
RELIEF IN THE EVENT A COURT DETERMINES THAT SUCH A BREACH HAS OCCURRED, AND TO
WAIVE ANY REQUIREMENT FOR THE SECURING OR POSTING OF ANY BOND IN CONNECTION
WITH SUCH REMEDY.
Section 11.9. Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by Applicable Law, each Party waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect. If any provision of this Agreement is held to be unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the Parties to the extent possible.
Section 11.10. Translation. (a) The Parties have negotiated both this
Agreement and the Memorandum of Understanding, dated June 14, 1994 (the "MOU"),
among each of the Parties, in the English language, and have prepared
successive drafts and the definitive texts of the MOU and this Agreement in the
English language. For purposes of complying with the French Translation Law,
the Parties have prepared a French version of this Agreement, which French
version was executed and delivered simultaneously with the execution and
delivery of the English version hereof, such English version having likewise
been executed and delivered. The Parties deem the French and English versions
of this Agreement to be equally authoritative.
61
(b) The Parties acknowledge that the Amendment, the Bylaws Amendment, the
Qualified Stock Purchaser Standstill Agreement (as such term is defined in the
Stockholders' Agreement), the Company Stock Payment Notes (as such term is
defined in the Stockholders' Agreement) and the Company Eligible Notes (as such
term is defined in the Stockholders' Agreement), and any draft forms thereof,
are not required to be translated into the French language to comply with the
French Translation Law.
Section 11.11. Table of Contents; Headings; Counterparts. The table of
contents and the headings in this Agreement are for convenience of reference
only and will not affect the construction of any provisions hereof. This
Agreement may be executed in one or more counterparts, each of which when so
executed and delivered will be deemed an original but all of which will
constitute one and the same Agreement.
Section 11.12. Waiver of Immunity. Each of FT and DT agrees that, to the
extent that it or any of its property is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise based upon its status as an
agency or instrumentality of government from any legal action, suit or
proceeding or from set off or counterclaim relating to this Agreement from the
jurisdiction of any competent court described in Section 11.8, from service of
process, from attachment prior to judgment, from attachment in aid of execution
of a judgment, from execution pursuant to a judgment or arbitral award, or from
any other legal process in any jurisdiction, it, for itself and its property
expressly, irrevocably and unconditionally waives, and agrees not to plead or
claim, any such immunity with respect to such matters arising with respect to
this Agreement or the subject matter hereof (including any obligation for the
payment of money). Each of FT and DT agrees that the waiver in this provision
is irrevocable and is not subject to withdrawal in any jurisdiction or under
any statute, including the Foreign Sovereign ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. (▇)▇▇▇▇
et seq. The foregoing waiver shall constitute a present waiver of immunity at
any time any action is initiated against FT or DT with respect to this
Agreement.
Section 11.13. Continuing Director Approval. Where Continuing Director
approval is otherwise explicitly required under this Agreement with respect to
a transaction or determination on the part of the Company, such approval shall
not be required if (a) the Fair Price Provisions have been deleted in their
entirety, (b) the Fair Price Provisions have been modified so as explicitly not
to apply to any Class A Holder, or they have been modified in a manner
reasonably satisfactory to FT and DT so as explicitly not to apply to any
transactions with any Class A Holder contemplated by this Agreement, the
Stockholders' Agreement or the Other Investment Documents (as such term is
defined in the Stockholders' Agreement) or the Articles as amended by the
Amendment, (c) the transaction in question is not a "Business Combination"
within the meaning of the Fair Price Provisions, or (d) the Class A Holder that
is a party to the transaction, along with its Affiliates (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as in effect
on October 1, 1982) and Associates (as such term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as in effect on October 1, 1982), is not
an "Interested Stockholder" or an "Affiliate" of an "Interested Stockholder"
within the meaning of the Fair Price Provisions. Where this Agreement provides
that Continuing Director approval is explicitly required to undertake a
transaction or make a determination on the part of the Company, the Company
shall not undertake such transaction or make such determination unless it first
delivers a certificate, signed by a duly authorized officer of the Company, to
each of FT and DT certifying that such approval either has been obtained or is
not required as set forth in the preceding sentence, and FT and DT shall be
entitled to rely on such certificate.
Section 11.14. Currency. All amounts payable under this Agreement and the
Other Agreements shall be payable in U.S. dollars.
62
In Witness Whereof, the Parties have caused this Agreement to be duly
executed as of the date first above written.
Sprint Corporation
/s/ ▇. ▇. ▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
France Telecom
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Directeur General
Deutsche Telekom AG
/s/ ▇▇▇ ▇▇▇▇▇▇
By: _________________________________
Name: Dr. ▇▇▇ ▇▇▇▇▇▇
Title: Vorsitzender des Vorstandes
63
CONFIDENTIAL
------------
SPRINT CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ Wing
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
As of November 21, 1995
FRANCE TELECOM
▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Cedex 15
France
DEUTSCHE TELEKOM AG
Godesberger Allee 107B
D-53175 Bonn
Germany
Re: Investment Agreement, dated as of July 31, 1995, among Sprint
Corporation, France Telecom and Deutsche Telekom AG
Gentlemen:
Reference is made to the Investment Agreement, dated as of July 31, 1995
(the "Investment Agreement"), among Sprint Corporation ("Sprint"), France
Telecom ("FT") and Deutsche Telekom AG ("DT"). Capitalized terms used without
definition herein shall have the meanings set forth in the Investment Agreement.
Each of Sprint, FT and DT hereby agrees as follows:
1. Paragraph (i) of Section 10.1(a) of the Investment Agreement is
hereby amended to delete therefrom the terms "December 31, 1995" and to
insert in lieu thereof the terms "February 15, 1996".
2. This letter shall not constitute a waiver or amendment of any other
provision of the Investment Agreement not explicitly waived or amended
hereby. The provisions of the Investment Agreement are and shall remain
in full force and effect as amended hereby.
3. This letter shall be governed by and construed in accordance with
the laws of the State of New York (regardless of the laws that might
otherwise govern under applicable principles of conflicts of law).
4. The Parties have negotiated this letter in the English language,
and have prepared successive drafts and the definitive texts of this
letter in the English language. For purposes of complying with the
French Translation Law, the Parties have prepared a French version of
this letter, which French version was executed and delivered
simultaneously with the execution and delivery of the English version
hereof, such English version having likewise been executed and
delivered. The Parties deem the French and English versions of this
letter to be equally authoritative.
Please acknowledge the foregoing agreement by signing this letter agreement
in the space provided below and returning one copy to each of the undersigned.
This letter agreement may be executed in counterparts, which together shall
constitute one and the same instrument.
Very truly yours,
SPRINT CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇▇
Title: Chairman
Agreed as of the date
first above written.
FRANCE TELECOM
By: /s/ ▇▇▇▇▇▇ ▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Vice President
DEUTSCHE TELEKOM AG
By: /s/ Dr. ▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: Dr. ▇▇▇ ▇▇▇▇▇▇
Title: Vorsitzender des Vorstandes
By: /s/ Dr. Gead ▇▇▇▇▇▇
---------------------------
Name: Gead ▇▇▇▇▇▇
Title: Mitglied des Vorstandes
