Exhibit 3 (a)
ARTICLES OF INCORPORATION
OF SPRINT CORPORATION
(as amended January 25, 2002)
First
The name of the Corporation is SPRINT CORPORATION.
Second
This Corporation is organized for profit, and the purpose for which it is
formed is to engage in any lawful act or activity for which corporations may be
organized under the Kansas General Corporation Code (the "General Corporation
Code").
Third
The Corporation's registered office is located at 2330 Shawnee Mission
Parkway, Westwood, Johnson County, Kansas 66205; Mr. J. Richard Devlin is the
registered agent at said address.
Fourth
The Corporation shall have perpetual existence.
Fifth
Section 1. Number of Directors. The number of Directors shall not be less
than eight nor more than 20 as may be determined from time to time by the
affirmative vote of the majority of the Board of Directors.
Section 2. Election of Directors. (a) Subject to clause (b) below, the
holders of Corporation Common Stock shall have the right to elect that number of
Directors equal to the excess of (x) the total number of Directors over (y) the
number of Directors, if any, that the holders of Preferred Stock, voting
separately by class or series, are entitled to elect in accordance with the
provisions of ARTICLE SIXTH of these Articles of Incorporation.
(b) So long as Section 310 remains in effect, under no circumstances shall
an Alien Director elected by the holders of Corporation Common Stock be
qualified to serve as a Director if the number of Aliens who would then be
serving as members of the Board of Directors, including such elected Alien,
would constitute more than the maximum number of Aliens permitted by Section 310
on the Board of Directors.
(c) The Directors (other than any Directors elected by the holders of any
one or more classes or series of Preferred Stock having the right, voting
separately by class or series, to elect Directors) shall be divided into three
classes, designated Class I, Class II and Class III, with the term of office of
one class expiring each year. The number of Class I, Class II and Class III
Directors shall consist, as nearly as practicable, of one third of the total
number of Directors (other than any Directors elected by the holders of any one
or more classes or series of Preferred Stock having the right, voting separately
by class or series, to elect Directors). At each annual meeting of stockholders
of this Corporation, successors to the class of Directors whose term expires at
that annual meeting shall be elected for a three-year term.
(d) Whenever the holders of any one or more classes or series of Preferred
Stock shall have the right, voting separately by class or series, to elect
Directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of these Articles of Incorporation applicable thereto, and
such Directors so elected shall not be divided into classes pursuant to this
ARTICLE FIFTH unless expressly provided by such terms.
Section 3. Change in Number of Directors. If the number of Directors (other
than any Directors elected by the holders of any one or more classes or series
of Preferred Stock having the right, voting separately by class or series, to
elect Directors) is changed, any increase or decrease shall be apportioned among
the classes so as to maintain the number of Directors in each class as nearly
equal as possible.
Section 4. Term of Office. (a) Each Director shall be elected for a
three-year term. A Director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify to serve, subject to prior death, resignation, retirement,
disqualification or removal from office.
(b) Any vacancy on the Board of Directors (whether resulting from an
increase in the total number of Directors, the departure of one of the Directors
or otherwise) may be filled by the affirmative vote of a majority of the
Directors elected by the same class or classes of stockholders which would be
entitled to elect the Director who would fill such vacancy if the annual meeting
of stockholders of this Corporation were held on the date on which such vacancy
occurred, provided that at any time when there is only one such Director so
elected and then serving, such Director may fill such vacancy and, provided
further, that at any time when there are no such Directors then serving, the
stockholders of the class or classes entitled to elect the Director who will
fill such vacancy shall have the right to fill such vacancy.
(c) Any additional Director of any class elected to fill a vacancy
resulting from an increase in the number of Directors of such class shall hold
office for a term that shall coincide with the remaining term of the Directors
of that class, but in no case will a decrease in the number of Directors shorten
the term of any incumbent Director. Any Director elected to fill a vacancy not
resulting from an increase in the number of Directors shall have the same
remaining term as that of his predecessor.
Section 5. Rights, Powers, Duties, Rules and Procedures; Amendment of
Bylaws.
(a) Except to the extent prohibited by law or as set forth in these
Articles of Incorporation or the Bylaws, the Board of Directors shall have the
right (which, to the extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from time to time shall govern
the Board of Directors and each of its members, including, without limitation,
the vote required for any action by the Board of Directors, and that from time
to time shall affect the Directors' power to manage the business and affairs of
this Corporation. Except to the extent required by law or as set forth in these
Articles of Incorporation or the Bylaws, no Bylaw shall be adopted by
stockholders which shall impair or impede the implementation of the foregoing.
(b) The Board of Directors is expressly authorized and empowered, in the
manner provided in the Bylaws of this Corporation, to adopt, amend and repeal
the Bylaws of this Corporation in any respect to the full extent permitted by
the General Corporation Code not inconsistent with the laws of the General
Corporation Code or with these Articles of Incorporation, provided that prior to
November 23, 2002, ARTICLE IV, SECTION 13 of the Bylaws may not be amended,
altered, repealed, superseded or made inoperative or ineffective by adoption of
other provisions to the Bylaws or these Articles of Incorporation any such
action, a "CP Covered Bylaws Amendment") without the affirmative vote of the
holders of record of (i) a majority of the votes represented by the shares of
PCS Stock and Class A Common Stock then outstanding, voting together as a single
class in accordance with ARTICLE SIXTH, Section 3.2(d), and (ii) a majority of
the votes represented by the shares of Corporation Common Stock, voting together
as a single class, at any annual or special meeting of stockholders, the notice
of which shall have specified or summarized the proposed CP Covered Bylaws
Amendment.
Section 6. Removal. A Director (other than a Director elected by the
holders of any class or series of Preferred Stock having the right, voting
separately by class or series, to elect Directors) may be removed only for
cause. No Director so removed may be reinstated for so long as the cause for
removal continues to exist. Such removal for cause may be effected only by the
affirmative vote of the holders of a majority of the votes represented by the
shares of the class or classes of stockholders which were entitled to elect such
Director.
Section 7. Definitions. Certain capitalized terms used in this ARTICLE
FIFTH without definition have the meanings set forth in Section 10 of ARTICLE
SIXTH.
Sixth
Section 1.1. Authorized Shares. The total number of shares of capital stock
which may be issued by this Corporation is 8,920,000,000, and the designation of
each class or series, the number of authorized shares of each class or series
and the par value of the shares of each class or series, are as follows:
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Designation Class Series No. of Shares Par Value
The "Series 1 FON Stock" FON Common Stock Series 1 2,500,000,000 $2.00 per share
The "Series 2 FON Stock" FON Common Stock Series 2 500,000,000 $2.00 per share
The "Series 3 FON Stock" FON Common Stock Series 3 1,200,000,000 $2.00 per share
The "Old Class A Common Stock" Class A Common Stock 100,000,000 $2.50 per share/1/
The "Series 1 PCS Stock" PCS Common Stock Series 1 3,000,000,000 $1.00 per share
The "Series 2 PCS Stock" PCS Common Stock Series 2 1,000,000,000 $1.00 per share
The "Series 3 PCS Stock" PCS Common Stock Series 3 600,000,000 $1.00 per share
The "Preferred Stock" Preferred Stock See Section 20,000,000 No par value
13 below
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/1/ Par value at February 13, 2001, before adjustment pursuant to Section
1.2(e) or Section 8.3(a).
Section 1.2. Representation of Equity Value; Exchange of Interests in Class
A Common Stock.
(a) The aggregate common equity value of the Corporation and each Business
Group shall, at any time, be represented as follows:
(i) The total common equity value of the Corporation shall be
represented by the sum of the outstanding shares of (A) the FON Stock, (B)
the PCS Stock and (C) the Class A Common Stock.
(ii) The total common equity value of the FON Group shall be
represented by the sum of (A) the outstanding shares of the FON Stock and
(B) the outstanding shares of Old Class A Common Stock (but only to the
extent such stock represents a Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The FON Group).
(iii) The total common equity value of the PCS Group shall be
represented by the sum of (A) the outstanding shares of the PCS Stock, (B)
the Number Of Shares Issuable With Respect To The FON Group Intergroup
Interest, and (C) the outstanding shares of Old Class A Common Stock (but
only to the extent such stock represents a Number Of Shares Issuable With
Respect To The Old Class A Equity Interest In The PCS Group).
(b) The Old Class A Common Stock shall, at all times, be deemed to
represent a number of shares of Series 3 FON Stock and/or Series 3 PCS Stock
equal to the Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The FON Group plus the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The PCS Group.
(c) Each holder of a share of Old Class A Common Stock shall have the
right, exercisable at any time and from time to time, to cause the Corporation
to issue the following:
(i) in respect of each share notionally represented in the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The FON
Group, either a share of Series 3 FON Stock to such holder (or to a
Qualified Subsidiary of such holder) or a share of Series 1 FON Stock to a
designee of such holder, provided a transfer of such share to such designee
is permitted under the Stockholders' Agreement; or
(ii) in respect of each share notionally represented in the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The PCS
Group, either a share of Series 3 PCS Stock to such holder (or to a
Qualified Subsidiary of such holder) or a share of Series 1 PCS Stock to a
designee of such holder, provided a transfer of such share to such designee
is permitted under the Stockholders' Agreement.
A holder of Old Class A Common Stock may exercise its right to cause any
such issuance solely with respect to the Number Of Shares Issuable With Respect
To The Old Class A Equity Interest In The FON Group, solely with respect to the
Number Of Shares Issuable With Respect To The Old Class A Equity Interest In The
PCS Group, or any combination thereof; provided,
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(x) when the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The FON Group is reduced to zero, no further shares of
Series 1 FON Stock or Series 3 FON Stock may be issued pursuant to this
Section 1.2(c),
(y) when the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The PCS Group is reduced to zero, no further shares of
Series 1 PCS Stock or Series 3 PCS Stock may be issued pursuant to this
Section 1.2(c), and
(z) if at any time the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The FON Group and the Number Of Shares
Issuable With Respect To The Old Class A Equity Interest In The PCS Group
are both zero, the Old Class A Common Stock may be redeemed, at the
Corporation's option, at a redemption price of $0.001 per share.
(d) Deleted.
(e) Automatic Reclassification and Adjustment to Par Value Amount.
Upon each issuance of any shares of Series 1 FON Stock and/or Series 3
FON Stock, on the one hand, and Series 1 PCS Stock and/or Series 3 PCS
Stock, on the other, in accordance with Section 1.2(c) or Section 8.3(a),
each share of the Corporation's existing Old Class A Common Stock will be
automatically reclassified into a share of Class A Common Stock with a par
value amount equal to the Reduced Par Value Amount and the Number Of Shares
Issuable With Respect To The Old Class A Equity Interest In The FON Group
and the Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The PCS Group, respectively, will be reduced in accordance with
the definitions of such terms set forth in ARTICLE SIXTH, Section 10;
provided that after each such reclassification, the sum of (x) the total
number of outstanding shares of Series 1 FON Stock and/or Series 3 FON
Stock, on the one hand, or Series 1 PCS Stock and/or Series 3 PCS Stock, on
the other, so issued in accordance with Section 1.2(c) or Section 8.3(a)
times the par value per share of such stock and (y) the total number of
outstanding shares of Old Class A Common Stock immediately after such
issuance times the Reduced Par Value Amount will always equal (z) the total
number of outstanding shares of Old Class A Common Stock immediately prior
to such issuance times the par value per share of such shares existing
immediately prior to such issuance.
(f) Notice Provisions; Issuance of Stock Certificates, etc.
(i) A Class A Holder shall exercise its rights under this Section 1.2
by delivering a written notice to the Corporation (an "Issuance Notice")
signed by an authorized officer of the Class A Holder specifying (1) the
class and series of the Shares to be issued by the Corporation, (2) the
number of shares of each to be issued pursuant to such request, and (3) the
name of the Person in whose name the shares are to be issued (such a
Person, a "Designee").
(ii) As promptly as practical after receipt of an Issuance Notice, and
in no event later than 5 Business Days thereafter, the Corporation will
deliver or cause to be delivered a certificate or certificates representing
the number of duly issued, fully paid and nonassessable shares issued
pursuant to the Issuance Notice; provided, however, that the Corporation
shall not be obligated to issue such shares if any material defect exists
with respect to such Issuance Notice.
(iii) Immediately upon the issuance of the shares of Series 1 FON
Stock, Series 3 FON Stock, Series 1 PCS Stock and Series 3 PCS Stock
pursuant to an Issuance Notice, the Designee shall be treated for all
purposes as having become the record holder of the shares of such stock so
issued.
(iv) This Corporation shall pay all United States federal, state or
local documentary, stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares in connection with an Issuance
Notice pursuant to this Section 1.2, provided that this Corporation shall
not be required to pay any tax which may be payable in respect of any
registration of Transfer involved in the issue or delivery of such shares
in a name other than that of the registered holder of the Class A Common
Stock that gave rise to the right to cause the issuance of such Shares, and
no such issue or delivery shall be made unless and until the person
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requesting such issue has paid to this Corporation the amount of any such
tax or has established, to the satisfaction of this Corporation, that such
tax has been paid.
(v) In addition to the obligations of the Corporation contained in
these Articles of Incorporation to reserve and keep available Shares, this
Corporation shall at all times reserve and keep available, out of the
aggregate of its authorized but unissued Series 3 FON Stock, Series 3 PCS
Stock, Series 1 PCS Stock and Series 1 FON Stock and its issued Series 1
FON Stock or Series 1 PCS Stock held in its treasury, Shares for the
purpose of effecting the issuances of the Series 3 FON Stock, Series 1 FON
Stock, Series 3 PCS Stock and Series 1 PCS Stock contemplated hereby.
Section 2. General Provisions Relating to All Stock.
2.1. Preemptive Rights; Cumulative Voting. No holder of shares of capital
stock of any class or series of this Corporation or holder of any security or
obligation convertible into shares of capital stock of any class or series of
this Corporation shall have any preemptive right whatsoever to subscribe for,
purchase or otherwise acquire shares of capital stock of any class or series of
this Corporation, whether now or hereafter authorized; provided that this
provision shall not (i) prohibit this Corporation from granting, contractually
or otherwise, to any such holder, the right to purchase additional securities of
this Corporation or (ii) otherwise limit or otherwise modify any rights of any
such holder pursuant to any such contract or other agreement. Stockholders of
this Corporation shall not be entitled to cumulative voting of their shares in
elections of Directors.
2.2. Redemption of Shares Held by Aliens. Notwithstanding any other
provision of these Articles of Incorporation to the contrary, outstanding shares
of Non-Class A Common Stock Beneficially Owned by Aliens and Class A Stock
Beneficially Owned by Aliens may be redeemed by this Corporation, by action duly
taken by the Board of Directors (with the approval of a majority of the
Continuing Directors (as defined in ARTICLE SEVENTH) at a meeting at which at
least seven Continuing Directors are present, except that no such approval of
the Continuing Directors shall be required if:
(i) the Fair Price Provisions have been deleted in their entirety,
(ii) 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 under these Articles of
Incorporation,
(iii) the transaction in question is not a "Business Combination"
within the meaning of the Fair Price Provisions, or
(iv) 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 no longer an "Interested
Stockholder" or "Affiliate" of an "Interested Stockholder" within the
meaning of the Fair Price Provisions), to the extent necessary or
advisable, in the judgment of the Board of Directors, for this Corporation
or any of its Subsidiaries to comply with the requirements of Section 310
(each of (i) through (iv), a "Fair Price Condition"), provided that (i) for
purposes of these Articles of Incorporation, redemption of the Class A
Common Stock is deemed to occur upon the reduction, in consideration of
payments otherwise made in respect of redemptions under this Section 2.2,
of Shares Issuable With Respect To The Class A Equity Interest In The FON
Group or Shares Issuable With Respect To The Class A Equity Interest In The
PCS Group that are represented by the Class A Common Stock (with any such
redemption of shares of Class A Common Stock being referred to in this
Section 2.2 as a redemption of Shares Issuable With Respect To The Class A
Equity Interest In The FON Group or Shares Issuable With Respect To The
Class A Equity Interest In The PCS Group, as applicable) and (ii) Series 3
FON Stock, Series 3 PCS Stock, Shares Issuable With Respect To The Class A
Equity Interest In The FON Group and Shares Issuable With Respect To The
Class A Equity Interest In The PCS Group may only be redeemed if, and only
to the extent that, they represent in the aggregate Votes constituting
greater than 20% of the aggregate Voting Power of this Corporation
immediately prior to the time of such redemption.
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The terms and conditions of such redemption shall be as follows, subject in
any case to any other rights of a particular Alien or of this Corporation
pursuant to any contract or agreement between such Alien and this Corporation:
(a) except as provided in Section 2.2(f), the redemption price of the
shares to be redeemed pursuant to this Section 2.2 shall be equal to the Market
Price of such shares on the third Business Day prior to the date notice of such
redemption is given pursuant to Section 2.2(d), provided that, except as
provided in Section 2.2(f), such redemption price as to any Alien who purchased
such shares of Non-Class A Common Stock after November 21, 1995 and within one
year prior to the Redemption Date shall not (unless otherwise determined by the
Board of Directors) exceed the purchase price paid by such Alien for such
shares;
(b) the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof;
(c) if less than all of the shares Beneficially Owned by Aliens are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors to be equitable, provided that
this Corporation shall
(i) in all cases be entitled to redeem shares of Non-Class A Common
Stock Beneficially Owned by Aliens prior to redeeming any shares of Series
3 FON Stock, Series 3 PCS Stock, Shares Issuable With Respect To The Class
A Equity Interest In The FON Group or Shares Issuable With Respect To The
Class A Equity Interest In The PCS Group Beneficially Owned by Aliens,
(ii) redeem Shares Issuable With Respect To The Class A Equity
Interest In The FON Group or Shares Issuable With Respect To The Class A
Equity Interest In The PCS Group of the holders of Old Class A Common Stock
on a pro rata basis, and
(iii) redeem shares of Series 3 PCS Stock and Series 3 FON Stock prior
to redeeming Shares Issuable With Respect To The Class A Equity Interest In
The FON Group and Shares Issuable With Respect To The Class A Equity
Interest In The PCS Group;
(d) this Corporation shall give notice of the Redemption Date at least 30
days prior to the Redemption Date to the record holders of the shares selected
to be redeemed (unless waived in writing by any such holder) by delivering a
written notice by first class mail, postage pre-paid, to the holders of record
of the shares selected to be redeemed, addressed to such holders at their last
address as shown upon the stock transfer books of this Corporation (each such
notice of redemption specifying the date fixed for redemption, the redemption
price, the place or places of payment and that payment will be made upon
presentation and surrender of the certificates representing such shares),
provided that the Redemption Date may be the date on which written notice shall
be given to record holders if the cash or Redemption Securities necessary to
effect the redemption shall have been deposited in trust for the benefit of such
record holders and subject to immediate withdrawal by them upon surrender of the
stock certificates for their shares to be redeemed;
(e) on the Redemption Date, unless this Corporation shall have defaulted in
paying or setting aside for payment the cash or Redemption Securities payable
upon such redemption, any and all rights of Aliens in respect of shares so
redeemed (including without limitation any rights to vote or participate in
dividends), shall cease and terminate, and from and after such Redemption Date
such Aliens shall be entitled only to receive the cash or Redemption Securities
payable upon redemption of the shares to be redeemed; and
(f) such other terms and conditions as the Board of Directors shall
determine to be equitable, provided that,
(1) if any Shares Issuable With Respect To The Class A Equity Interest
In The FON Group or Shares Issuable With Respect To The Class A Equity
Interest In The PCS Group are redeemed pursuant to this Section 2.2, (x)
the redemption price, on a per share basis, of Shares Issuable With Respect
To The Class A Equity Interest In The FON Group shall be an amount equal to
the redemption price of a share of Series 3 FON Stock calculated pursuant
to subsection (f)(2) of this Section 2.2, and (y) the redemption price, on
a per share basis, of Shares Issuable With Respect To The Class A Equity
Interest In The PCS Group shall be an amount equal to the redemption price
of shares of Series 3 PCS Stock calculated pursuant to subsection (f)(4) of
this Section 2.2;
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(2) if any shares of Series 3 FON Stock are redeemed pursuant to this
Section 2.2, the redemption price thereof shall be the Market Price of a
share of Series 1 FON Stock on the Redemption Date;
(3) if any shares of Series 2 PCS Stock (or Series 2 FON Stock, if
applicable) are redeemed pursuant to this Section 2.2, the redemption price
of any such shares redeemed shall be the Market Price of a share of Series
1 PCS Stock (or Series 1 FON Stock, if applicable) on the Redemption Date;
and
(4) if any shares of Series 3 PCS Stock are redeemed pursuant to this
Section 2.2, the redemption price thereof shall be the Market Price of a
share of Series 1 PCS Stock on the Redemption Date.
The redemption price to be paid to the Class A Holders shall be modified in
accordance with Article IX of the Stockholders' Agreement if such redemption is
effected within the 120-day period described in the last sentence of Section
2.11 of the Stockholders' Agreement (as such period may be extended pursuant
thereto) following an election by this Corporation to redeem shares in
accordance with such Section.
Any notice that is mailed as herein provided shall be conclusively presumed
to have been duly given, whether or not the holder of shares to be redeemed
received such notice, provided that all notices to be given to the Class A
Holders shall be made and deemed delivered in accordance with Section 11 of
ARTICLE SIXTH and failure to give such notice by mail, or any defect in such
notice, to holders of shares designated for redemption shall not affect the
validity of the proceedings for the redemption of any other shares.
2.3. Beneficial Ownership Inquiry. (a) This Corporation may by written
notice require a Person that is a holder of record of Non-Class A Common Stock
or Class A Stock or that this Corporation knows to have, or has reasonable cause
to believe has, Beneficial Ownership of Non-Class A Common Stock or Class A
Stock, to certify that, to the knowledge of such Person:
(i) no Non-Class A Common Stock or Class A Stock as to which such
Person has record ownership or Beneficial Ownership is Beneficially Owned
by Aliens; or
(ii) the number and class or series of shares of Non-Class A Common
Stock or Class A Stock owned of record or Beneficially Owned by such Person
that are owned of record or Beneficially Owned by Persons that are Aliens
are as set forth in such certificate.
(b) With respect to any Non-Class A Common Stock or Class A Stock
identified by such Person in response to Section 2.3(a)(ii) above, this
Corporation may require such Person to provide such further information as this
Corporation may reasonably require in order to implement the provisions of
Section 2.2 of ARTICLE SIXTH.
(c) For purposes of applying Section 2.2 of ARTICLE SIXTH with respect to
any Non-Class A Common Stock or Class A Stock, if any Person fails to provide
the certificate or other information to which this Corporation is entitled
pursuant to this Section 2.3, this Corporation in its sole discretion may
presume that the Non-Class A Common Stock or Class A Stock in question is, or is
not, Beneficially Owned by Aliens.
2.4. Factual Determinations. The Board of Directors shall have the power
and duty to construe and apply the provisions of Sections 2.2 and 2.3 of ARTICLE
SIXTH and, with respect to shares of Non-Class A Common Stock, to make all
determinations necessary or desirable to implement such provisions, including
but not limited to: (a) the number of shares of Non-Class A Common Stock that
are Beneficially Owned by any Person; (b) whether a Person is an Alien; (c) the
application of any other definition of these Articles of Incorporation to the
given facts; and (d) any other matter relating to the applicability or effect of
Section 2.2 of ARTICLE SIXTH.
2.5. Loss of Voting Rights. If (a) there is a breach by FT, DT, any
Qualified Subsidiary, any Strategic Investor or any Qualified Stock Purchaser of
any of the provisions of Sections 3.1(a) or 3.2(b) (as it relates to matters
described in Section 3.1(a)) of the Standstill Agreement or any corresponding
provision of any Qualified Subsidiary Standstill Agreement, Strategic Investor
Standstill Agreement or Qualified Stock Purchaser Standstill Agreement, (b)
there is a willful breach in any material respect by FT, DT, any Qualified
Subsidiary, any Strategic Investor or any Qualified Stock Purchaser of any
provision of Section 3.1 (other than Section 3.1(a)) of the Standstill Agreement
or any corresponding provision of any Qualified Subsidiary Standstill Agreement,
Strategic Investor Standstill Agreement or
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Qualified Stock Purchaser Standstill Agreement, or (c) a Government Affiliate or
Related Company (each as defined in the Standstill Agreement) takes an action
which if taken by FT or DT would violate Sections 3.1 or 3.2(b) (as it relates
to matters other than those described in Section 3.1(a)) of the Standstill
Agreement, then FT and its Qualified Subsidiaries (except in the case of a
breach arising from the action of a Government Affiliate of Germany, a Related
Company of DT or a Strategic Investor in a Qualified Subsidiary of DT in which
FT is not an investor), DT and its Qualified Subsidiaries (except in the case of
a breach arising from the action of a Government Affiliate of France, a Related
Company of FT or a Strategic Investor in a Qualified Subsidiary of FT in which
DT is not an investor) and each Qualified Stock Purchaser shall not be entitled
to vote any of their shares of capital stock of this Corporation with respect to
any matter or proposal arising from, relating to or involving, such breach or
action, and no such purported vote by such Class A Holders on such matter shall
be effective or shall be counted.
Section 3. Voting Powers.
Section 3.1. General. Except as otherwise provided by law or as expressly
set forth in ARTICLE FIFTH or in this ARTICLE SIXTH, each share of Corporation
Common Stock shall be entitled to vote, as provided in ARTICLE SIXTH, Section
3.2 and ARTICLE SIXTH, Section 7.5(d) (with respect to Class A Stock only), on
all matters in respect of which the holders of Corporation Common Stock are
entitled to vote, and, except as otherwise provided by the terms of any
outstanding series of Preferred Stock, the holders of Corporation Common Stock
shall vote together with the holders of all other classes or series of capital
stock which have general voting power on all such matters as a single class;
provided, however, that
(i) holders of FON Stock and Class A Common Stock, voting together as
a single class in accordance with Section 3.2(c), shall be entitled to vote
upon a proposed amendment to these Articles of Incorporation if such
amendment would (A) increase or decrease the aggregate number of authorized
shares of FON Stock, (B) increase or decrease the par value of the shares
of FON Stock or (C) alter or change the powers, preferences or special
rights of the shares of FON Stock so as to affect them adversely, and
(ii) holders of PCS Stock and Class A Common Stock, voting together as
a single class in accordance with Section 3.2(d), shall be entitled to vote
upon a proposed amendment to these Articles of Incorporation if such
amendment would (A) increase or decrease the aggregate number of authorized
shares of PCS Stock, (B) increase or decrease the par value of shares of
PCS Stock or (C) alter or change the powers, preferences or special rights
of the shares of PCS Stock so as to affect them adversely.
The Board of Directors is authorized to adopt resolutions requiring the
approval of any class or series of capital stock, alone or together with any
other class or series of capital stock, as a condition precedent, or condition
subsequent, to the approval, adoption, authorization or consummation of any
action, transaction or any other matter by or involving the Corporation, and no
provision contained in the Amended and Restated Articles of Incorporation shall
be interpreted to limit or restrict such authority in any way.
Section 3.2. Number of Votes. (a) On each matter to be voted on by the holders
of Non-Class A Common Stock and Class A Stock voting together as a single class,
(i) each outstanding share of Series 1 FON and Series 3 FON Stock is
entitled to one vote (subject, in the case of the Series 3 FON Stock, to
any increase in accordance with ARTICLE SIXTH, Section 7.5(d));
(ii) subject to any increase resulting from the provisions of ARTICLE
SIXTH, Section 7.5(d), each outstanding share of Old Class A Common Stock
is entitled to a number of votes (which, at any time, may be more or less
than one whole vote and may include a fraction of a vote) equal to the sum
of the Old Class A FON Vote Per Share and the Old Class A PCS Vote Per
Share (computed as of the tenth Trading Day preceding the record date for
determining the stockholders entitled to vote, expressed as a decimal
fraction rounded to the nearest three decimal places);
(iii) each outstanding share of Series 1 PCS Stock is entitled to a
number of votes (which, at any time, may be more or less than one whole
vote and may include a fraction of a vote) (the "PCS Per Share Vote") equal
to the number of votes determined by multiplying one by the ratio of the
Average Trading Price of one share of Series 1 PCS Stock to the Average
Trading Price of one share of Series 1 FON Stock computed
8
as of the tenth Trading Day preceding the record date for determining the
stockholders entitled to vote, expressed as a decimal fraction rounded to
the nearest three decimal places;
(iv) each outstanding share of Series 2 PCS Stock is entitled to a
number of votes (which, at any time, may be more or less than one whole
vote and may include a fraction of one vote) equal to ten percent of the
applicable PCS Per Share Vote as determined in accordance with Section
3.2(a)(iii);
(v) each outstanding share of Series 3 PCS Stock is entitled to a
number of votes (which, at any time, may be more or less than one whole
vote and may include a fraction of one vote) equal to the applicable PCS
Per Share Vote as determined in accordance with Section 3.2(a)(iii)
(subject to any increase in accordance with ARTICLE SIXTH, Section 7.5(d));
and
(vi) each outstanding share of Series 2 FON Stock is entitled to ten
percent of one vote.
(b) On each matter to be voted on by the holders of Non-Class A Common
Stock voting together as a single class,
(i) each outstanding share of Series 1 FON Stock is entitled to one
vote;
(ii) each outstanding share of Series 1 PCS Stock is entitled to the
PCS Per Share Vote determined in accordance with Section 3.2(a)(iii);
(iii) each outstanding share of Series 2 PCS Stock is entitled to a
number of votes determined in accordance with Section 3.2(a)(iv); and
(iv) each outstanding share of Series 2 FON Stock is entitled to ten
percent of one vote.
(c) On each matter to be voted on by the holders of FON Stock and Class A
Common Stock, voting together as a single class, each outstanding share of (i)
Series 1 FON Stock, Series 2 FON Stock and Series 3 FON Stock is entitled to one
vote and (ii) Old Class A Common Stock is entitled to the Old Class A FON Vote
Per Share .
(d) On each matter to be voted on by the holders of the PCS Stock and Class
A Common Stock voting together as a single class, each outstanding share of (i)
Series 1 PCS Stock, Series 2 PCS Stock and Series 3 PCS Stock is entitled to one
vote and (ii) Old Class A Common Stock is entitled to the Old Class A PCS Vote
Per Share.
(e) On each matter to be voted on by the holders of the Class A Stock
voting together as a single class, each outstanding share of (i) Series 3 FON
Stock is entitled to one vote, (ii) Series 3 PCS Stock is entitled to the PCS
Vote Per Share determined in accordance with Section 3.2(a)(v), and (iii) Old
Class A Common Stock is entitled to the per share vote determined in accordance
with Section 3.2(a)(ii).
(f) In addition to the foregoing provisions of this Section 3, (i) if
shares of only one class or series of Corporation Common Stock are outstanding
on the record date for determining the holders of Corporation Common Stock
entitled to vote on any matter, then each share of that class or series shall be
entitled to one vote and (ii) if any class or any series of Corporation Common
Stock votes as a single class with respect to any matter, each share of that
class or series shall, for purposes of such vote, be entitled to one vote on
such matter except with respect to a vote of Old Class A Common Stock voting as
a single class, in which case each share of such stock shall be entitled to its
per share vote determined in accordance with Section 3.2(a)(ii).
Section 4. Liquidation Rights. If any voluntary or involuntary liquidation,
dissolution or winding up of this Corporation occurs, then after payment or
provision for payment of the debts and other liabilities of this Corporation,
including the liquidation preferences of any series of Preferred Stock, the
holders of Corporation Common Stock shall be entitled to receive the remaining
assets of the Corporation, regardless of the Business Group to which such assets
are attributed in accordance with Section 10 of this ARTICLE SIXTH, divided
among such holders in accordance with the per share "Liquidation Units"
attributable to each such class or series of stock as follows:
(i) each share of Series 1 FON Stock, Series 2 FON Stock and Series 3
FON Stock is hereby attributed one "Liquidation Unit,"
9
(ii) at the time of the liquidation, dissolution or winding up of this
Corporation, each share of Old Class A Common Stock will be attributed a
number of "Liquidation Units" (which may be more or less than one whole
"Liquidation Unit" and may include a fraction of a "Liquidation Unit")
equal to (A) the sum of (I) the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The FON Group and (II) the product of
the Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The PCS Group and the PCS Ratio, divided by (B) the aggregate
number of shares of Old Class A Common Stock outstanding; and
(iii) each share of PCS Stock is hereby attributed the number of
"Liquidation Units" determined by multiplying one by the PCS Ratio.
The per share "Liquidation Units" of each such class or series of stock are
subject to adjustment as determined by the Board of Directors to be appropriate
to reflect equitably (i) any subdivision (by stock split or otherwise) or
combination (by reverse stock split or otherwise) of such class or series of
stock or (ii) any dividend or other distribution of shares of such class or
series of stock to holders of shares of such class or series of stock. Neither
the merger nor consolidation of this Corporation, nor the Transfer of all or
part of its assets, shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of this Corporation within the meaning of
this Section 4. Notwithstanding the foregoing, any transaction or series of
related transactions which results in the distribution of all or substantially
all of the assets of the PCS Group (excluding any portion of such assets
retained by the Corporation or distributed to holders of FON Stock in respect of
the FON Group Intergroup Interest Fraction) to the holders of the outstanding
PCS Stock and Class A Common Stock (to the extent of any Shares Issuable With
Respect To The Class A Equity Interest In The PCS Group) by way of the
distribution of equity interests in one or more entities that collectively hold,
directly or indirectly, all or substantially all of the assets of the PCS Group
(including, without limitation, the PCS Group Subsidiary) shall not constitute a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation for purposes of this Section 4 but shall be subject to ARTICLE
SIXTH, Section 7.2.
Section 5. Dividends. Dividends shall be declared and paid only out of net
income or surplus of this Corporation and may be declared and paid upon each
class and series of Corporation Common Stock, upon the terms with respect to
each such class and series, and subject to the limitations provided for in this
Section 5 and in Section 13, as the Board of Directors may determine.
5.1. Generally. Dividends on Corporation Common Stock may be declared and
paid only out of the funds of the Corporation legally available therefor.
5.1.1. The holders of the Series 1 FON Stock shall be entitled to receive,
when and if declared by the Board of Directors in accordance with this Section
5.1, dividends in respect of the Series 1 FON Stock equivalent on a per share
basis to those payable on the Series 2 FON Stock. Dividends on the Series 1 FON
Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 2 FON Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 2 FON Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 2 FON Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 2 FON Stock
payable in shares of Series 2 FON Stock or Series 2 PCS Stock, or in options,
warrants or rights to acquire shares of Series 2 FON Stock or Series 2 PCS
Stock, or in securities convertible into or exchangeable for shares of Series 2
FON Stock or Series 2 PCS Stock, then in each case, this Corporation shall
declare and pay, at the same time that it declares and pays any such dividend,
an equivalent dividend per share on the Series 1 FON Stock payable in shares of
Series 1 FON Stock or Series 1 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 1 FON
Stock or Series 1 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 1 FON Stock or
Series 1 PCS Stock, respectively.
5.1.2. The holders of the Series 1 FON Stock shall be entitled to receive,
when and if declared by the Board of Directors in accordance with this Section
5.1, dividends in respect of the Series 1 FON Stock equivalent on a per share
basis to those payable on the Series 3 FON Stock. Dividends on the Series 1 FON
Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 3 FON Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 3 FON Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 3 FON Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 3 FON Stock
payable in shares of Series 3 FON
10
Stock or Series 3 PCS Stock, or in options, warrants or rights to acquire shares
of Series 3 FON Stock or Series 3 PCS Stock, or in securities convertible into
or exchangeable for shares of Series 3 FON Stock or Series 3 PCS Stock, then in
each case, this Corporation shall declare and pay, at the same time that it
declares and pays any such dividend, an equivalent dividend per share on the
Series 1 FON Stock payable in shares of Series 1 FON Stock or Series 1 PCS
Stock, respectively, or equivalent corresponding options, warrants or rights to
acquire shares of Series 1 FON Stock or Series 1 PCS Stock, respectively, or
equivalent corresponding securities convertible into or exchangeable for shares
of Series 1 FON Stock or Series 1 PCS Stock, respectively.
5.1.3. The holders of shares of Series 2 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 FON Stock equivalent on a per
share basis to those payable on the Series 1 FON Stock. Dividends on the Series
2 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 1 FON Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 1 FON Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 1 FON Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 1 FON Stock
payable in shares of Series 1 FON Stock or Series 1 PCS Stock, or in options,
warrants or rights to acquire shares of Series 1 FON Stock or Series 1 PCS
Stock, or in securities convertible into or exchangeable for shares of Series 1
FON Stock or Series 1 PCS Stock, then in each case, this Corporation shall
declare and pay, at the same time that it declares and pays any such dividend,
an equivalent dividend per share on the Series 2 FON Stock payable in shares of
Series 2 FON Stock or Series 2 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 2 FON
Stock or Series 2 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 2 FON Stock or
Series 2 PCS Stock, respectively.
5.1.4. The holders of shares of Series 2 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 FON Stock equivalent on a per
share basis to those payable on the Series 3 FON Stock. Dividends on the Series
2 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 3 FON Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 3 FON Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 3 FON Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 3 FON Stock
payable in shares of Series 3 FON Stock or Series 3 PCS Stock, or in options,
warrants or rights to acquire shares of Series 3 FON Stock or Series 3 PCS
Stock, or in securities convertible into or exchangeable for shares of Series 3
FON Stock or Series 3 PCS Stock, then in each case, this Corporation shall
declare and pay, at the same time that it declares and pays any such dividend,
an equivalent dividend per share on the Series 2 FON Stock payable in shares of
Series 2 FON Stock or Series 2 PCS Stock, respectively or equivalent
corresponding options, warrants or rights to acquire shares of Series 2 FON
Stock or Series 2 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 2 FON Stock or
Series 2 PCS Stock, respectively.
5.1.5. The holders of shares of Series 3 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 FON Stock equivalent on a per
share basis to those payable on the Series 1 FON Stock. Dividends on the Series
3 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 1 FON Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 1 FON Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 1 FON Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 1 FON Stock
payable in shares of Series 1 FON Stock or Series 1 PCS Stock, or in options,
warrants or rights to acquire shares of Series 1 FON Stock or Series 1 PCS
Stock, or in securities convertible into or exchangeable for shares of Series 1
FON Stock or Series 1 PCS Stock, then in each case, this Corporation shall
declare and pay, at the same time that it declares and pays any such dividend,
an equivalent dividend per share on the Series 3 FON Stock payable in shares of
Series 3 FON Stock or Series 3 PCS stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 3 FON
Stock or Series 3 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 3 FON Stock or
Series 3 PCS Stock, respectively.
5.1.6. The holders of shares of Series 3 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 FON Stock equivalent on a per
share basis to those payable on the Series 2 FON Stock. Dividends on the Series
3 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 2 FON Stock and shall be in an
11
amount per share equal to the full per share amount of any cash dividend paid on
shares of Series 2 FON Stock, plus the full per share amount (payable in kind)
of any non-cash dividend paid on shares of Series 2 FON Stock, provided that if
this Corporation shall declare and pay any dividend on shares of Series 2 FON
Stock payable in shares of Series 2 FON Stock or Series 2 PCS Stock, or in
options, warrants or rights to acquire shares of Series 2 FON Stock or Series 2
PCS Stock, or in securities convertible into or exchangeable for shares of
Series 2 FON Stock or Series 2 PCS Stock, then in each case, this Corporation
shall declare and pay, at the same time that it declares and pays any such
dividend, an equivalent dividend per share on the Series 3 FON Stock payable in
shares of Series 3 FON Stock or Series 3 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 3 FON
Stock or Series 3 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 3 FON Stock or
Series 3 PCS Stock, respectively.
5.1.7. In addition to the entitlement with respect to dividends contained
in Sections 5.1.16 through 5.1.18, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock equivalent on a Per Class A FON Share Basis to those payable on a per
share basis to the Series 1 FON Stock. Dividends on the Class A Common Stock
shall be payable on the same date fixed for the payment of the corresponding
dividend on shares of Series 1 FON Stock and shall be in an amount, on a Per
Class A FON Share Basis, equal to (i) the full per share amount of any cash
dividend paid on shares of Series 1 FON Stock plus (ii) the full per share
amount (payable in kind) of any non-cash dividend paid on shares of Series 1 FON
Stock, provided that if this Corporation shall declare and pay any dividend on
shares of Series 1 FON Stock payable in shares of Series 1 FON Stock or Series 1
PCS Stock, or in options, warrants or rights to acquire shares of Series 1 FON
Stock or Series 1 PCS Stock, or in securities convertible into or exchangeable
for shares of Series 1 FON Stock or Series 1 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend on a Per Class A FON Share Basis on
the Class A Common Stock payable in shares of Series 3 FON Stock or Series 3 PCS
Stock, respectively, or equivalent corresponding options, warrants or rights to
acquire shares of Series 3 FON Stock or Series 3 PCS Stock, respectively, or
equivalent corresponding securities convertible into or exchangeable for shares
of Series 3 FON Stock or Series 3 PCS Stock, respectively.
5.1.8. In addition to the entitlement with respect to dividends contained
in Sections 5.1.16 through 5.1.18, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock equivalent on a Per Class A FON Share Basis to those payable on a per
share basis to the Series 2 FON Stock. Dividends on the Class A Common Stock
shall be payable on the same date fixed for the payment of the corresponding
dividend on shares of Series 2 FON Stock and shall be in an amount, on a Per
Class A FON Share Basis, equal to (i) the full per share amount of any cash
dividend paid on shares of Series 2 FON Stock plus (ii) the full per share
amount (payable in kind) of any non-cash dividend paid on shares of Series 2 FON
Stock, provided that if this Corporation shall declare and pay any dividend on
shares of Series 2 FON Stock payable in shares of Series 2 FON Stock or Series 2
PCS Stock, or in options, warrants or rights to acquire shares of Series 2 FON
Stock or Series 2 PCS Stock, or in securities convertible into or exchangeable
for shares of Series 2 FON Stock or Series 2 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend on a Per Class A FON Share Basis on
the Class A Common Stock payable in shares of Series 3 FON Stock or Series 3 PCS
Stock, respectively, or equivalent corresponding options, warrants or rights to
acquire shares of Series 3 FON Stock or Series 3 PCS Stock, respectively, or
equivalent corresponding securities convertible into or exchangeable for shares
of Series 3 FON Stock or Series 3 PCS Stock, respectively.
5.1.9. In addition to the entitlement with respect to dividends contained
in Sections 5.1.16 through 5.1.18, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock, on a Per Class A FON Share Basis, equal to those payable on a per share
basis to the Series 3 FON Stock. Dividends on the Class A Common Stock shall be
payable on the same date fixed for the payment of the corresponding dividend on
shares of Series 3 FON Stock and shall be in an amount, on a Per Class A FON
Share Basis, equal to (i) the full per share amount of any cash dividend paid on
shares of Series 3 FON Stock plus (ii) the full per share amount (payable in
kind) of any non-cash dividend paid on shares of Series 3 FON Stock, provided
that if this Corporation shall declare and pay any dividend on shares of Series
3 FON Stock payable in shares of Series 3 FON Stock or Series 3 PCS Stock, or in
options, warrants or rights to acquire shares of Series 3 FON Stock or Series 3
PCS Stock, or in securities convertible into or exchangeable for shares of
Series 3 FON Stock or Series 3 PCS Stock, then in each case, this Corporation
shall declare and pay, at the same time that it declares and pays any such
dividend, an equivalent dividend on a Per Class A FON Share Basis on the
12
Class A Common Stock payable in shares of Series 3 FON Stock or Series 3 PCS
Stock, respectively, or equivalent corresponding options, warrants or rights to
acquire shares of Series 3 FON Stock or Series 3 PCS Stock, respectively, or
equivalent corresponding securities convertible into or exchangeable for shares
of Series 3 FON Stock or Series 3 PCS Stock, respectively.
5.1.10. The holders of the Series 1 PCS Stock shall be entitled to receive,
when and if declared by the Board of Directors in accordance with this Section
5.1, dividends in respect of the Series 1 PCS Stock equivalent on a per share
basis to those payable on the Series 2 PCS Stock. Dividends on the Series 1 PCS
Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 2 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 2 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 2 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 2 PCS Stock
payable in shares of Series 2 PCS Stock, or in options, warrants or rights to
acquire shares of Series 2 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 2 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 1 PCS Stock
payable in shares of Series 1 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 1 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 1
PCS Stock.
5.1.11. The holders of the Series 1 PCS Stock shall be entitled to receive,
when and if declared by the Board of Directors in accordance with this Section
5.1, dividends in respect of the Series 1 PCS Stock equivalent on a per share
basis to those payable on the Series 3 PCS Stock. Dividends on the Series 1 PCS
Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 3 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 3 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 3 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 3 PCS Stock
payable in shares of Series 3 PCS Stock, or in options, warrants or rights to
acquire shares of Series 3 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 3 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 1 PCS Stock
payable in shares of Series 1 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 1 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 1
PCS Stock.
5.1.12. The holders of shares of Series 2 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 PCS Stock equivalent on a per
share basis to those payable on the Series 1 PCS Stock. Dividends on the Series
2 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 1 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 1 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 1 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 1 PCS Stock
payable in shares of Series 1 PCS Stock, or in options, warrants or rights to
acquire shares of Series 1 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 1 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 2 PCS Stock
payable in shares of Series 2 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 2 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 2
PCS Stock.
5.1.13. The holders of shares of Series 2 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 PCS Stock equivalent on a per
share basis to those payable on the Series 3 PCS Stock. Dividends on the Series
2 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 3 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 3 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 3 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 3 PCS Stock
payable in shares of Series 3 PCS Stock, or in options, warrants or rights to
acquire shares of Series 3 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 3 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 2 PCS Stock
payable in shares of Series 2 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 2 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 2
PCS Stock.
13
5.1.14. The holders of shares of Series 3 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 PCS Stock equivalent on a per
share basis to those payable on the Series 1 PCS Stock. Dividends on the Series
3 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 1 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 1 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 1 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 1 PCS Stock
payable in shares of Series 1 PCS Stock, or in options, warrants or rights to
acquire shares of Series 1 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 1 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 3 PCS Stock
payable in shares of Series 3 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 3 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 3
PCS Stock.
5.1.15. The holders of shares of Series 3 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 PCS Stock equivalent on a per
share basis to those payable on the Series 2 PCS Stock. Dividends on the Series
3 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Series 2 PCS Stock and shall be in an amount
per share equal to the full per share amount of any cash dividend paid on shares
of Series 2 PCS Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Series 2 PCS Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Series 2 PCS Stock
payable in shares of Series 2 PCS Stock, or in options, warrants or rights to
acquire shares of Series 2 PCS Stock, or in securities convertible into or
exchangeable for shares of Series 2 PCS Stock, then in each case, this
Corporation shall declare and pay, at the same time that it declares and pays
any such dividend, an equivalent dividend per share on the Series 3 PCS Stock
payable in shares of Series 3 PCS Stock, or equivalent corresponding options,
warrants or rights to acquire shares of Series 3 PCS Stock, or equivalent
corresponding securities convertible into or exchangeable for shares of Series 3
PCS Stock.
5.1.16. In addition to the entitlement with respect to dividends contained
in Sections 5.1.7 through 5.1.9, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock equivalent on a Per Class A PCS Share Basis to those payable on a per
share basis to the Series 1 PCS Stock. Dividends on the Class A Common Stock
shall be payable on the same date fixed for the payment of the corresponding
dividend on shares of Series 1 PCS Stock and shall be in an amount, on a Per
Class A PCS Share Basis, equal to (i) the full per share amount of any cash
dividend paid on shares of Series 1 PCS Stock plus (ii) the full per share
amount (payable in kind) of any non-cash dividend paid on shares of Series 1 PCS
Stock, provided that if this Corporation shall declare and pay any dividend on
shares of Series 1 PCS Stock payable in shares of Series 1 PCS Stock, or in
options, warrants or rights to acquire shares of Series 1 PCS Stock, or in
securities convertible into or exchangeable for shares of Series 1 PCS Stock,
then in each case, this Corporation shall declare and pay, at the same time that
it declares and pays any such dividend, an equivalent dividend on a Per Class A
PCS Share Basis on the Class A Common Stock payable in shares of Series 3 PCS
Stock, or equivalent corresponding options, warrants or rights to acquire shares
of Series 3 PCS Stock, or equivalent corresponding securities convertible into
or exchangeable for shares of Series 3 PCS Stock.
5.1.17. In addition to the entitlement with respect to dividends contained
in Sections 5.1.7 through 5.1.9, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock equivalent on a Per Class A PCS Share Basis to those payable on a per
share basis to the Series 2 PCS Stock. Dividends on the Class A Common Stock
shall be payable on the same date fixed for the payment of the corresponding
dividend on shares of Series 2 PCS Stock and shall be in an amount, on a Per
Class A PCS Share Basis, equal to (i) the full per share amount of any cash
dividend paid on shares of Series 2 PCS Stock plus (ii) the full per share
amount (payable in kind) of any non-cash dividend paid on shares of Series 2 PCS
Stock, provided that if this Corporation shall declare and pay any dividend on
shares of Series 2 PCS Stock payable in shares of Series 2 PCS Stock, or in
options, warrants or rights to acquire shares of Series 2 PCS Stock, or in
securities convertible into or exchangeable for shares of Series 2 PCS Stock,
then in each case, this Corporation shall declare and pay, at the same time that
it declares and pays any such dividend, an equivalent dividend on a Per Class A
PCS Share Basis on the Class A Common Stock payable in shares of Series 3 PCS
Stock, or equivalent corresponding options, warrants or rights to acquire shares
of Series 3 PCS Stock, or equivalent corresponding securities convertible into
or exchangeable for shares of Series 3 PCS Stock.
14
5.1.18. In addition to the entitlement with respect to dividends contained
in Sections 5.1.7 through 5.1.9, the holders of shares of Class A Common Stock
shall be entitled to receive, when and if declared by the Board of Directors in
accordance with this Section 5.1, dividends in respect of the Class A Common
Stock equivalent on a Per Class A PCS Share Basis to those payable on a per
share basis to the Series 3 PCS Stock. Dividends on the Class A Common Stock
shall be payable on the same date fixed for the payment of the corresponding
dividend on shares of Series 3 PCS Stock and shall be in an amount, on a Per
Class A PCS Share Basis, equal to (i) the full per share amount of any cash
dividend paid on shares of Series 3 PCS Stock plus (ii) the full per share
amount (payable in kind) of any non-cash dividend paid on shares of Series 3 PCS
Stock, provided that if this Corporation shall declare and pay any dividend on
shares of Series 3 PCS Stock payable in shares of Series 3 PCS Stock, or in
options, warrants or rights to acquire shares of Series 3 PCS Stock, or in
securities convertible into or exchangeable for shares of Series 3 PCS Stock,
then in each case, this Corporation shall declare and pay, at the same time that
it declares and pays any such dividend, an equivalent dividend on a Per Class A
PCS Share Basis on the Class A Common Stock payable in shares of Series 3 PCS
Stock, or equivalent corresponding options, warrants or rights to acquire shares
of Series 3 PCS Stock, or equivalent corresponding securities convertible into
or exchangeable for shares of Series 3 PCS Stock.
5.1.19. Deleted.
5.1.20. Deleted.
5.1.21. The holders of shares of Series 1 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 1 FON Stock equivalent on a per
share basis to those payable, on a Per Class A FON Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The FON Group only). Dividends on the Series
1 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Old Class A Common Stock and shall be in an
amount per share equal to the full amount, on a Per Class A FON Share Basis, of
any cash dividend paid on shares of Old Class A Common Stock, plus the full
amount, on a Per Class A FON Share Basis, (payable in kind) of any non-cash
dividend paid on shares of Old Class A Common Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Old Class A Common
Stock (with respect to the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The FON Group only) payable in shares of FON Stock or
PCS Stock, or in options, warrants or rights to acquire shares of FON Stock or
PCS Stock, or in securities convertible into or exchangeable for shares of FON
Stock or PCS Stock, then in each case this Corporation shall declare and pay, at
the same time that it declares and pays any such dividend, a dividend per share
on the Series 1 FON Stock (equivalent to that declared and paid on shares of Old
Class A Common Stock on a Per Class A FON Share Basis) payable in shares of
Series 1 FON Stock or Series 1 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 1 FON
Stock or Series 1 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 1 FON Stock or
Series 1 PCS Stock, respectively.
5.1.22. The holders of shares of Series 2 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 FON Stock equivalent on a per
share basis to those payable, on a Per Class A FON Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The FON Group only). Dividends on the Series
2 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Old Class A Common Stock and shall be in an
amount per share equal to the full amount, on a Per Class A FON Share Basis, of
any cash dividend paid on shares of Old Class A Common Stock, plus the full
amount, on a Per Class A FON Share Basis, (payable in kind) of any non-cash
dividend paid on shares of Old Class A Common Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Old Class A Common
Stock (with respect to the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The FON Group only) payable in shares of FON Stock or
PCS Stock, or in options, warrants or rights to acquire shares of FON Stock or
PCS Stock, or in securities convertible into or exchangeable for shares of FON
Stock or PCS Stock, then in each case this Corporation shall declare and pay, at
the same time that it declares and pays any such dividend, a dividend per share
on the Series 2 FON Stock (equivalent to that declared and paid on shares of Old
Class A Common Stock on a Per Class A FON Share Basis) payable in shares of
Series 2 FON Stock or Series 2 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 2 FON
Stock or Series 2 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 2 FON Stock or
Series 2 PCS Stock, respectively.
15
5.1.23. The holders of shares of Series 3 FON Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 FON Stock equivalent on a per
share basis to those payable, on a Per Class A FON Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The FON Group only). Dividends on the Series
3 FON Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Old Class A Common Stock and shall be in an
amount per share equal to the full amount, on a Per Class A FON Share Basis, of
any cash dividend paid on shares of Old Class A Common Stock, plus the full
amount, on a Per Class A FON Share Basis, (payable in kind) of any non-cash
dividend paid on shares of Old Class A Common Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Old Class A Common
Stock (with respect to the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The FON Group only) payable in shares of FON Stock or
PCS Stock, or in options, warrants or rights to acquire shares of FON Stock or
PCS Stock, or in securities convertible into or exchangeable for shares of FON
Stock or PCS Stock, then in each case this Corporation shall declare and pay, at
the same time that it declares and pays any such dividend, a dividend per share
on the Series 3 FON Stock (equivalent to that declared and paid on shares of Old
Class A Common Stock on a Per Class A FON Share Basis) payable in shares of
Series 3 FON Stock or Series 3 PCS Stock, respectively, or equivalent
corresponding options, warrants or rights to acquire shares of Series 3 FON
Stock or Series 3 PCS Stock, respectively, or equivalent corresponding
securities convertible into or exchangeable for shares of Series 3 FON Stock or
Series 3 PCS Stock, respectively.
5.1.24. The holders of shares of Series 1 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 1 PCS Stock equivalent on a per
share basis to those payable, on a Per Class A PCS Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The PCS Group only). Dividends on the Series
1 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Old Class A Common Stock and shall be in an
amount per share equal to the full amount, on a Per Class A PCS Share Basis, of
any cash dividend paid on shares of Old Class A Common Stock, plus the full
amount, on a Per Class A PCS Share Basis, (payable in kind) of any non-cash
dividend paid on shares of Old Class A Common Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Old Class A Common
Stock (with respect to the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The PCS Group only) payable in shares of PCS Stock,
or in options, warrants or rights to acquire shares of PCS Stock, or in
securities convertible into or exchangeable for shares of PCS Stock, then in
each case this Corporation shall declare and pay, at the same time that it
declares and pays any such dividend, a dividend per share on the Series 1 PCS
Stock (equivalent to that declared and paid on shares of Old Class A Common
Stock on a Per Class A PCS Share Basis) payable in shares of Series 1 PCS Stock,
or equivalent corresponding options, warrants or rights to acquire shares of
Series 1 PCS Stock, or equivalent corresponding securities convertible into or
exchangeable for shares of Series 1 PCS Stock.
5.1.25. The holders of shares of Series 2 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 2 PCS Stock equivalent on a per
share basis to those payable, on a Per Class A PCS Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The PCS Group only). Dividends on the Series
2 PCS Stock shall be payable on the same date fixed for the payment of the
corresponding dividend on shares of Old Class A Common Stock and shall be in an
amount per share equal to the full amount, on a Per Class A PCS Share Basis, of
any cash dividend paid on shares of Old Class A Common Stock, plus the full
amount, on a Per Class A PCS Share Basis, (payable in kind) of any non-cash
dividend paid on shares of Old Class A Common Stock, provided that if this
Corporation shall declare and pay any dividend on shares of Old Class A Common
Stock (with respect to the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The PCS Group only) payable in shares of PCS Stock,
or in options, warrants or rights to acquire shares of PCS Stock, or in
securities convertible into or exchangeable for shares of PCS Stock, then in
each case this Corporation shall declare and pay, at the same time that it
declares and pays any such dividend, a dividend per share on the Series 2 PCS
Stock (equivalent to that declared and paid on shares of Old Class A Common
Stock on a Per Class A PCS Share Basis) payable in shares of Series 2 PCS Stock,
or equivalent corresponding options, warrants or rights to acquire shares of
Series 2 PCS Stock, or equivalent corresponding securities convertible into or
exchangeable for shares of Series 2 PCS Stock.
5.1.26. The holders of shares of Series 3 PCS Stock shall be entitled to
receive, when and if declared by the Board of Directors in accordance with this
Section 5.1, dividends in respect of the Series 3 PCS Stock equivalent on a per
share basis to those payable, on a Per Class A PCS Share Basis, on the Old Class
A Common Stock (with respect to the Number Of Shares Issuable With Respect To
The Old Class A Equity Interest In The PCS Group only). Dividends
16
on the Series 3 PCS Stock shall be payable on the same date fixed for the
payment of the corresponding dividend on shares of Old Class A Common Stock and
shall be in an amount per share equal to the full amount, on a Per Class A PCS
Share Basis, of any cash dividend paid on shares of Old Class A Common Stock,
plus the full amount, on a Per Class A PCS Share Basis, (payable in kind) of any
non-cash dividend paid on shares of Old Class A Common Stock, provided that if
this Corporation shall declare and pay any dividend on shares of Old Class A
Common Stock (with respect to the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The PCS Group only) payable in shares of PCS
Stock, or in options, warrants or rights to acquire shares of PCS Stock, or in
securities convertible into or exchangeable for shares of PCS Stock, then in
each case this Corporation shall declare and pay, at the same time that it
declares and pays any such dividend, a dividend per share on the Series 3 PCS
Stock (equivalent to that declared and paid on shares of Old Class A Common
Stock on a Per Class A PCS Share Basis) payable in shares of Series 3 PCS Stock,
or equivalent corresponding options, warrants or rights to acquire shares of
Series 3 PCS Stock, or equivalent corresponding securities convertible into or
exchangeable for shares of Series 3 PCS Stock.
5.2. Separate Declaration of Dividends. The Board of Directors, in
accordance with the applicable provisions of Section 5.1, may at any time
declare and pay dividends (i) exclusively on the FON Stock and the Class A
Common Stock (on a Per Class A FON Share Basis), (ii) exclusively on the PCS
Stock and the Class A Common Stock (on a Per Class A PCS Share Basis) or (iii)
on the FON Stock and the Class A Common Stock (on a Per Class A FON Share
Basis), on the one hand, and the PCS Stock and the Class A Common Stock (on a
Per Class A PCS Share Basis), on the other, in equal or unequal per share
amounts, notwithstanding the amount of dividends previously declared on each
class or series of stock, the respective voting or liquidation rights of each
class or series of stock or any other factor.
5.3. Share Distributions. Subject to ARTICLE SIXTH, Section 5 and except as
permitted by ARTICLE SIXTH, Sections 7.1 and 7.2, the Board of Directors may
declare and pay dividends or distributions of shares of Corporation Common Stock
(or Convertible Securities convertible into or exchangeable or exercisable for
shares of Corporation Common Stock) on shares of Corporation Common Stock or
shares of Preferred Stock only as follows:
(A) dividends or distributions of shares of (i) Series 1 FON Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of Series 1 FON Stock), (ii) Series 2 FON Stock (or Convertible
Securities convertible into or exchangeable or exercisable for Shares of Series
2 FON Stock) and (iii) Series 3 FON Stock (or Convertible Securities convertible
into or exchangeable or exercisable for shares of Series 3 FON Stock) on shares
of (i) Series 1 FON Stock, (ii) Series 2 FON Stock and (iii) Series 3 FON Stock
and shares of Class A Common Stock (but only in respect of the Shares Issuable
With Respect To The Class A Equity Interest In The FON Group), respectively, as
well as on Preferred Stock attributed to the Sprint FON Group exclusively in
accordance with ARTICLE SIXTH, Section 13;
(B) dividends or distributions of shares of (i) Series 1 PCS Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of Series 1 PCS Stock), (ii) Series 2 PCS Stock (or Convertible
Securities convertible into or exchangeable or exercisable for shares of Series
2 PCS Stock) and (iii) Series 3 PCS Stock (or Convertible Securities convertible
into or exchangeable or exercisable for shares of Series 3 PCS Stock) on shares
of (i) Series 1 PCS Stock, (ii) Series 2 PCS Stock and (iii) Series 3 PCS Stock
and shares of Class A Common Stock (but only in respect of the Shares Issuable
With Respect To The Class A Equity Interest In The PCS Group), respectively, and
Preferred Stock attributed to the PCS Group exclusively in accordance with
ARTICLE SIXTH, Section 13;
(C) dividends or distributions of shares of (i) Series 1 PCS Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of Series 1 PCS Stock), (ii) Series 2 PCS Stock (or Convertible
Securities convertible into or exchangeable or exercisable for shares of Series
2 PCS Stock) and (iii) Series 3 PCS Stock (or Convertible Securities convertible
into or exchangeable or exercisable for shares of Series 3 PCS Stock) on (x)
shares of (i) Series 1 FON Stock, (ii) Series 2 FON Stock and (iii) Series 3 FON
Stock and shares of Class A Common Stock (but only in respect of the Shares
Issuable With Respect To The Class A Equity Interest In The FON Group),
respectively, or (y) shares of FON Preferred Stock, but in any such case only if
immediately prior to such dividend or distribution the Number Of Shares Issuable
With Respect To The FON Group Intergroup Interest is greater than or equal to
the sum of (1) the amount of any decrease in the Number Of Shares Issuable With
Respect To The FON Group Intergroup Interest required by paragraph (B) of the
definition of such term in ARTICLE SIXTH, Section 10 as a result of such
dividend or distribution, plus (2) the number of shares of PCS Stock issuable
upon conversion, exchange or exercise of any Convertible Securities to be so
issued or any other outstanding Convertible Securities that have been issued as
a dividend or other distribution (including in connection with any
reclassification or exchange of shares) to holders of FON Stock or Class A
Common Stock (but only in respect of the Shares Issuable With Respect To The
Class A Equity
17
Interest In The FON Group) or shares of Preferred Stock to the extent attributed
to the Sprint FON Group in accordance with ARTICLE SIXTH, Section 13; and
(D) dividends or distributions of shares of PCS Preferred Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of PCS Preferred Stock) on shares of FON Stock or Class A Common Stock
(but only in respect of the Shares Issuable With Respect To The Class A Equity
Interest In The FON Group) or shares of Preferred Stock to the extent attributed
to the Sprint FON Group in accordance with ARTICLE SIXTH, Section 13, but in any
such case only if immediately prior to such dividend or distribution the Number
Of Shares Issuable With Respect To The FON Group Intergroup Interest is greater
than or equal to the sum of (1) the amount of any decrease in the Number Of
Shares Issuable With Respect To The FON Group Intergroup Interest required by
paragraph (B) of the definition of such term in ARTICLE SIXTH, Section 10 as a
result of such dividend or distribution plus (2) the number of shares of PCS
Stock issuable upon conversion, exchange or exercise of any Convertible
Securities that have been issued as a dividend or other distribution (including
in connection with any reclassification or exchange of shares) to holders of FON
Stock or Class A Common Stock (but only in respect of the Shares Issuable With
Respect To The Class A Equity Interest In The FON Group) or shares of Preferred
Stock to the extent attributed to the Sprint FON Group in accordance with
ARTICLE SIXTH, Section 13.
For purposes of this Section 5.3, any outstanding Convertible Securities
that are convertible into or exchangeable or exercisable for any other
Convertible Securities which are themselves convertible into or exchangeable or
exercisable for FON Stock (or other Convertible Securities that are so
convertible, exchangeable or exercisable) or PCS Stock (or other Convertible
Securities that are so convertible, exchangeable or exercisable) shall be deemed
to have been converted, exchanged or exercised in full for such Convertible
Securities.
Section 6. No Dilution or Impairment; Certain Tender Offers.
(a) No reclassification, subdivision or combination of the outstanding
shares of Series 2 FON Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 1 FON Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 1 FON Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 2 FON Stock as were
represented by the shares of Series 1 FON Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 1 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 2 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(b) No reclassification, subdivision or combination of the outstanding
shares of Series 3 FON Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 1 FON Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 1 FON Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 3 FON Stock as were
represented by the shares of Series 1 FON Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 1 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 3 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(c) No reclassification, subdivision or combination of the outstanding
shares of Series 1 FON Stock shall be effected directly or indirectly (including
without limitation any reclassification, subdivision or combination effected
pursuant to a consolidation, merger or liquidation) unless at the same time the
Series 2 FON Stock is reclassified, subdivided or combined on an equal per share
basis so that the holders of the Series 2 FON Stock (i) are entitled, in the
aggregate, to a number of Votes representing the same percentage of the Voting
Power of this Corporation relative to the Series 1 FON Stock as were represented
by the shares of Series 2 FON Stock outstanding immediately prior to such
reclassification, subdivision or combination and (ii) maintain all of the rights
associated with the Series 2 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 1 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
18
(d) No reclassification, subdivision or combination of the outstanding
shares of Series 3 FON Stock shall be effected directly or indirectly (including
without limitation any reclassification, subdivision or combination effected
pursuant to a consolidation, merger or liquidation) unless at the same time the
Series 2 FON Stock is reclassified, subdivided or combined on an equal per share
basis so that the holders of the Series 2 FON Stock (i) are entitled, in the
aggregate, to a number of Votes representing the same percentage of the Voting
Power of this Corporation relative to the Series 3 FON Stock as were represented
by the shares of Series 2 FON Stock outstanding immediately prior to such
reclassification, subdivision or combination and (ii) maintain all of the rights
associated with the Series 2 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 3 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(e) No reclassification, subdivision or combination of the outstanding
shares of Series 1 FON Stock shall be effected directly or indirectly (including
without limitation any reclassification, subdivision or combination effected
pursuant to a consolidation, merger or liquidation) unless at the same time the
Series 3 FON Stock is reclassified, subdivided or combined on an equal per share
basis so that the holders of the Series 3 FON Stock (i) are entitled, in the
aggregate, to a number of Votes representing the same percentage of the Voting
Power of this Corporation relative to the Series 1 FON Stock as were represented
by the shares of Series 3 FON Stock outstanding immediately prior to such
reclassification, subdivision or combination and (ii) maintain all of the rights
associated with the Series 3 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 1 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(f) No reclassification, subdivision or combination of the outstanding
shares of Series 2 FON Stock shall be effected directly or indirectly (including
without limitation any reclassification, subdivision or combination effected
pursuant to a consolidation, merger or liquidation) unless at the same time the
Series 3 FON Stock is reclassified, subdivided or combined on an equal per share
basis so that the holders of the Series 3 FON Stock (i) are entitled, in the
aggregate, to a number of Votes representing the same percentage of the Voting
Power of this Corporation relative to the Series 2 FON Stock as were represented
by the shares of Series 3 FON Stock outstanding immediately prior to such
reclassification, subdivision or combination and (ii) maintain all of the rights
associated with the Series 3 FON Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 2 FON
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(g) Deleted.
(h) Deleted.
(i) No reclassification, subdivision or combination of the outstanding
shares of Series 2 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 1 PCS Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 1 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 2 PCS Stock as were
represented by the shares of Series 1 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 1 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 2 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(j) No reclassification, subdivision or combination of the outstanding
shares of Series 3 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 1 PCS Stock is reclassified, subdivided or combined on a equal
per share basis so that the holders of the Series 1 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 3 PCS Stock as were
represented by the shares of Series 1 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 1 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other
19
distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 3 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(k) No reclassification, subdivision or combination of the outstanding
shares of Series 1 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 2 PCS Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 2 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 1 PCS Stock as were
represented by the shares of Series 2 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 2 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 1 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(l) No reclassification, subdivision or combination of the outstanding
shares of Series 3 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 2 PCS Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 2 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 3 PCS Stock as were
represented by the shares of Series 2 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 2 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 3 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(m) No reclassification, subdivision or combination of the outstanding
shares of Series 1 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 3 PCS Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 3 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 1 PCS Stock as were
represented by the shares of Series 3 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 3 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 1 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(n) No reclassification, subdivision or combination of the outstanding
shares of Series 2 PCS Stock shall be effected directly or indirectly
(including, without limitation, any reclassification, subdivision or combination
effected pursuant to a consolidation, merger or liquidation) unless at the same
time the Series 3 PCS Stock is reclassified, subdivided or combined on an equal
per share basis so that the holders of the Series 3 PCS Stock (i) are entitled,
in the aggregate, to a number of Votes representing the same percentage of the
Voting Power of this Corporation relative to the Series 2 PCS Stock as were
represented by the shares of Series 3 PCS Stock outstanding immediately prior to
such reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Series 3 PCS Stock set forth in these Articles of
Incorporation, including without limitation the right to receive dividends and
other distributions (including liquidating and other distributions) that are
equivalent to those payable per share in respect of shares of Series 2 PCS
Stock, subject to the limitations, restrictions and conditions on such rights
contained herein.
(o) Without limiting the generality of the foregoing paragraphs (a) through
(n), in the case of any consolidation or merger of this Corporation with or into
any other entity (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of the Non-Class A Common
Stock) or any reclassification of the Non-Class A Common Stock into any other
form of capital stock of this Corporation, whether in whole or in part, each
Class A Holder shall, after such consolidation, merger or reclassification, have
the right (but not the obligation), by notice delivered to this Corporation or
any successor thereto within 90 days after the consummation of such
consolidation, merger or reclassification, to convert each share of Series 3 FON
Stock, Series 3 PCS Stock and Class A Common Stock held by it into the kind and
amount of shares of stock and other securities and property which such Class A
Holder would have been entitled to receive upon such consolidation, merger, or
reclassification if such Class A Holder had (I) converted its shares of Series 3
FON Stock or Series 3 PCS Stock into Series 1 FON Stock or Series 1
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PCS Stock, respectively, or (II) received shares of Series 3 FON Stock or Series
3 PCS Stock in respect of the Shares Issuable With Respect To The Class A Equity
Interest In The FON Group or the Shares Issuable With Respect To The Class A
Equity Interest In The PCS Group, respectively, represented by such Class A
Common Stock immediately prior to such merger, consolidation or reclassification
and converted such shares in accordance with clause (I). This Corporation shall
not effect, directly or indirectly, any such reclassification, subdivision or
combination of outstanding shares of Non-Class A Common Stock unless it delivers
to the Class A Holders written notice of its intent to take such action at least
ten Business Days before taking such action.
(p) Without limiting the generality of the foregoing, in the case of any
consolidation or merger of this Corporation with or into any other entity (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of the Series 1 FON Stock or Series 1 PCS Stock) or any
reclassification of the Series 1 FON Stock or Series 1 PCS Stock into any other
form of capital stock of this Corporation, whether in whole or in part, each
holder of Series 2 FON Stock or Series 2 PCS Stock, as the case may be, shall,
after such consolidation, merger or reclassification, have the right (but not
the obligation), by notice delivered to this Corporation or any successor
thereto within 90 days after the consummation of such consolidation, merger or
reclassification, to convert each share of Series 2 FON Stock or Series 2 PCS
Stock, as the case may be, held by such holder into the kind and amount of
shares of stock and other securities and property which such holder would have
been entitled to receive upon such consolidation, merger, or reclassification if
such holder had converted its shares of Series 2 FON Stock or Series 2 PCS Stock
into Series 1 FON Stock or Series 1 PCS Stock, respectively, immediately prior
to such merger, consolidation or reclassification. This Corporation shall not
effect, directly or indirectly, any such reclassification, subdivision or
combination of outstanding shares of Series 1 FON Stock or Series 1 PCS Stock
unless it delivers to the holders of Series 2 FON Stock and Series 2 PCS Stock
written notice of its intent to take such action at least ten Business Days
before taking such action.
(q) Exclusionary Tender Offers. If the Board of Directors shall determine
not to oppose a tender offer by a Person other than a Cable Holder for Voting
Securities of this Corporation representing not less than 35 percent of the
Voting Power of this Corporation, and the terms of such tender offer do not
permit the holders of Series 2 PCS Stock to sell an equal or greater percentage
of their shares as the holders of Series 1 PCS Stock are permitted to sell
taking into account any proration, then each holder of Series 2 PCS Stock shall
have the right (but not the obligation) to deliver to this Corporation a written
notice requesting conversion of certain shares of Series 2 PCS Stock designated
by such holder of Series 2 PCS Stock into Series 1 PCS Stock, upon which
delivery each share of Series 2 PCS Stock so designated in such notice shall
automatically convert (without the payment of any consideration) into one duly
issued, fully paid and nonassessable share of Series 1 PCS Stock, provided that
(i) unless the Series 2 PCS Stock shall have otherwise been converted into
Series 1 PCS Stock pursuant to ARTICLE SIXTH, Section 7.5 upon or prior to the
consummation or abandonment of the transaction contemplated by such tender
offer, immediately following the consummation of such transaction or the
delivery by this Corporation to each holder of Series 2 PCS Stock of a notice
that such transaction has been abandoned, each share of Series 1 PCS Stock held
by a holder of Series 2 PCS Stock shall automatically reconvert (without the
payment of any consideration) into one duly issued, fully paid and nonassessable
share of Series 2 PCS Stock, and (ii) only those shares of Series 2 PCS Stock
related to shares of Series 1 PCS Stock that were not so reconverted shall be
deemed for any purpose under these Articles of Incorporation to have been
converted into Series 1 PCS Stock, pursuant to this subparagraph (q) and the
Series 2 PCS Stock so reconverted shall be deemed to have been at all times
outstanding shares of Series 2 PCS Stock, provided, that if the Series 2 PCS
Stock has been converted into or redeemed for Series 2 FON Stock pursuant to
ARTICLE SIXTH, Section 7, then the terms "Series 2 FON Stock" and "Series 1 FON
Stock" shall be deemed to replace the terms "Series 2 PCS Stock" and "Series 1
PCS Stock," respectively, in this subparagraph (q).
(r) Issuer Tender Offers. The Corporation shall not conduct an issuer
tender offer (as defined on November 23, 1998 in Rule 13e-4 under the Exchange
Act) with respect to the Series 1 PCS Stock or the Series 1 FON Stock unless (i)
such tender offer provides for the participation of the holders of Series 2 PCS
Stock, Series 3 PCS Stock and Class A Common Stock (with respect to the Shares
Issuable With Respect To The Class A Equity Interest In The PCS Group), on the
one hand, or Series 2 FON Stock, Series 3 FON Stock and Class A Common Stock
(with respect to the Shares Issuable With Respect To The Class A Equity Interest
In The FON Group), on the other hand, on an equal basis with the Series 1 PCS
Stock or the Series 1 FON Stock, respectively, and (ii) the Corporation accepts
for repurchase the number of shares tendered by the holders of Series 1 PCS
Stock, Series 2 PCS Stock, Series 3 PCS Stock and Class A Common Stock (with
respect to the Shares Issuable With Respect To The Class A Equity Interest In
The PCS Group), on the one hand, or Series 1 FON Stock, Series 2 FON Stock,
Series 3 FON Stock and Class A Common Stock (with respect to the Shares Issuable
With Respect To The Class A Equity Interest In The FON Group), on the other, in
21
proportion to the number of shares of each such class and series tendered;
provided that the terms of this subparagraph (r) shall not prevent the
Corporation from administering in good faith an "odd-lot" program in connection
with such issuer tender offer and shall not apply to customary acquisitions of
Corporation Common Stock made by the Corporation on the open market for purposes
of maintaining stock option plans of the Corporation.
Section 7. Conversion or Redemption of PCS Stock. Except as otherwise
provided in Sections 2.2, 6(q) and 8.5, shares of PCS Stock are (i) subject to
conversion or redemption, as the case may be, upon the terms provided in this
Section 7 with respect to each class and (ii) otherwise not subject to
conversion or redemption.
7.1. Conversion or Redemption of PCS Stock.
(A) If the Corporation and/or its subsidiaries makes a Disposition, in one
transaction or a series of related transactions, of all or substantially all of
the properties and assets attributed to the PCS Group to one or more persons or
entities (other than (w) the Disposition by the Corporation of all or
substantially all of its properties and assets in one transaction or a series of
related transactions in connection with the dissolution or the liquidation and
winding up of the Corporation and the distribution of assets to stockholders
pursuant to Section 4, (x) the redemption of the PCS Stock for the stock of the
PCS Group Subsidiary pursuant to Section 7.2, (y) to any person or entity
controlled (as determined by the Board of Directors) by the Corporation or (z)
pursuant to a Related Business Transaction), then the Corporation shall, on or
prior to the 85th Trading Day after the date of consummation of such Disposition
(the "PCS Group Disposition Date"), either (I) pay a dividend on the PCS Stock
or (II) redeem some or all of the PCS Stock or convert PCS Stock into Series 1
FON Stock, Series 2 FON Stock and Series 3 FON Stock, as applicable (or another
class or series of common stock of the Corporation), in accordance with the
following subparagraphs (1) and (2) of this paragraph (A) and, to the extent
applicable, in accordance with Section 7.4, as the Board of Directors shall have
selected among such alternatives:
(1) provided that there are funds of the Corporation legally available
therefor:
(a) pay to the holders of the shares of PCS Stock a dividend, as
the Board of Directors shall have declared in accordance with Section
5.1 of ARTICLE SIXTH, in cash and/or in securities (other than a
dividend of Corporation Common Stock or other common equity securities
of the Corporation) or other property having a Fair Value as of the
PCS Group Disposition Date in the aggregate equal to the product of
the Outstanding PCS Fraction as of the record date for determining
holders entitled to receive such dividend multiplied by the Fair Value
of the Net Proceeds of such Disposition; or
(b) (i) subject to the last sentence of this paragraph (A), if
such Disposition involves all (not merely substantially all) of the
properties and assets attributed to the PCS Group, redeem as of the
Redemption Date provided by Section 7.4(C) all outstanding shares of
PCS Stock in exchange for cash and/or securities (other than
Corporation Common Stock or other common equity securities of the
Corporation) or other property having a Fair Value as of the PCS Group
Disposition Date in the aggregate equal to the product of the
Outstanding PCS Fraction as of such Redemption Date multiplied by the
Fair Value of the Net Proceeds of such Disposition (such aggregate
amount to be allocated to shares of Series 1 PCS Stock, Series 2 PCS
Stock and Series 3 PCS Stock in the ratio of the number of shares of
each such series outstanding to the other series (so that the amount
of consideration paid for the redemption of each share of Series 1 PCS
Stock, Series 2 PCS Stock and Series 3 PCS Stock is the same)); or
(ii) subject to the last sentence of this paragraph (A), if
such Disposition involves substantially all (but not all) of the
properties and assets attributed to the PCS Group, redeem as of the
Redemption Date provided by Section 7.4(D) the number of whole shares
of PCS Stock (which may be all of such shares outstanding) as have in
the aggregate an average Market Value during the period of ten
consecutive Trading Days beginning on the sixteenth Trading Day
immediately succeeding the PCS Group Disposition Date closest to the
product of the Outstanding PCS Fraction as of the date such shares are
selected for redemption multiplied by the Fair Value as of the PCS
Group Disposition Date of the Net Proceeds of such Disposition, in
exchange for cash and/or securities (other than Corporation Common
Stock or other common equity securities of the Corporation) or other
property having a Fair Value in the aggregate equal to such product
(such aggregate amount to be allocated to shares of Series 1 PCS
Stock, Series 2 PCS Stock and Series 3
22
PCS Stock in the ratio of the number of shares of each such series
outstanding to the other series (so that the amount of consideration
paid for the redemption of each share of Series 1 PCS Stock, Series 2
PCS Stock and Series 3 PCS Stock is the same)); or
(2) convert each outstanding share of Series 1 PCS Stock, Series 2 PCS
Stock and Series 3 PCS Stock as of the Conversion Date provided by Section
7.4(E) into a number of fully paid and nonassessable shares of Series 1 FON
Stock, Series 2 FON Stock and Series 3 FON Stock, respectively (or, if the
Series 1 FON Stock is not Publicly Traded at such time and shares of
another class or series of common stock of the Corporation (other than PCS
Stock) are then Publicly Traded, of such other class or series of common
stock as has the largest Total Market Capitalization as of the close of
business on the Trading Day immediately preceding the date of the notice of
such conversion required by Section 7.4(E)) equal to 110% of the ratio,
expressed as a decimal fraction rounded to the nearest five decimal places,
of the average Market Value of one share of Series 1 PCS Stock over the
period of ten consecutive Trading Days beginning on the sixteenth Trading
Day following the PCS Group Disposition Date to the average Market Value of
one share of Series 1 FON Stock (or such other class or series of common
stock) over the same ten Trading Day period.
Notwithstanding the foregoing provisions of this paragraph (A), the Corporation
may redeem PCS Stock as provided by subparagraph (1)(b)(i) or (1)(b)(ii) of this
paragraph (A) only if the amount to be paid in redemption of such stock (and the
Shares Issuable With Respect To The Class A Equity Interest In The PCS Group in
accordance with ARTICLE SIXTH, Section 7.1(B)) is less than or equal to the sum
of (i) the amount available for the payment of dividends on such shares to be
redeemed in accordance with Section 5 of ARTICLE SIXTH measured as of the
Redemption Date and (ii) the amount determined to be capital in respect of the
shares to be redeemed in accordance with applicable corporation law as of the
Redemption Date.
(B) For purposes of this Section 7.1:
(1) as of any date, "substantially all of the properties and assets"
attributed to the PCS Group means a portion of such properties and assets
that represents at least 80% of the Fair Value of the properties and assets
attributed to the PCS Group as of such date;
(2) in the case of a Disposition of the properties and assets
attributed to the PCS Group in a series of related transactions, such
Disposition shall not be deemed to have been consummated until the
consummation of the last of such transactions;
(3) the Board of Directors may pay any dividend or redemption price
referred to in Section 7.1(A) in cash, securities (other than Corporation
Common Stock or other common equity securities of the Corporation) or other
property, regardless of the form or nature of the proceeds of the
Disposition; provided that if such payment is made in Voting Securities
(other than Corporation Common Stock or other common equity securities of
the Corporation) of the Corporation or another entity, holders of Series 2
PCS Stock shall receive Voting Securities with Voting Power equivalent on a
per share basis to such shares received by holders of Series 1 PCS Stock;
(4) if the Corporation pays a dividend to the holders of shares of PCS
Stock in accordance with Section 7.1(A)(1)(a), then the Corporation will
pay a dividend equivalent on a Per Class A PCS Share Basis to the holders
of Class A Common Stock;
(5) if the Corporation redeems all outstanding shares of PCS Stock in
accordance with Section 7.1(A)(1)(b)(i), then the Corporation will pay an
aggregate amount to the holders of Old Class A Common Stock equivalent on a
Per Class A PCS Share Basis to the per share redemption amount paid in
accordance with Section 7.1(A)(1)(b)(i) in respect of the total Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The PCS
Group;
(6) if the Corporation redeems shares of PCS Stock in accordance with
Section 7.1(A)(1)(b)(ii), then the Corporation will pay to the holders of
Old Class A Common Stock an amount in accordance with subparagraph (5)
immediately above but only in respect of the same proportion of the Number
Of Shares Issuable With Respect To The Old Class A Equity Interest In The
PCS Group as the PCS Stock redeemed in accordance with Section
7.1(A)(7)(b)(ii); and
23
(7) if the Corporation converts shares of PCS Stock in accordance with
Section 7.1(A)(2), then the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The PCS Group will convert into a Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The FON
Group, such conversion to be on the same basis as set forth in Section
7.1(A)(2).
(C) If the payment of the dividend or the redemption price with respect to
the PCS Stock provided for by Section 7.1(A)(1) occurs prior to November 23,
2001, then the Board of Directors may convert each share of Series 1 PCS Stock,
Series 2 PCS Stock and Series 3 PCS Stock remaining outstanding, but only as of
a Conversion Date (determined as provided by Section 7.4(E) hereof) prior to the
first anniversary of the payment of such dividend or redemption price, into a
number of fully paid and nonassessable shares of Series 1 FON Stock, Series 2
FON Stock and Series 3 FON Stock, respectively (or, if the Series 1 FON Stock is
not Publicly Traded at such time and shares of any other class or series of
common stock of the Corporation (other than PCS Stock) are then Publicly Traded,
of such other class or series of common stock as has the largest Total Market
Capitalization as of the close of business on the Trading Day immediately
preceding the date of the notice of such conversion required by Section 7.4(E))
equal to 110% of the Optional Conversion Ratio as of the fifth Trading Day prior
to the date of the notice of such conversion required by Section 7.4(E);
provided, that upon such conversion, the Number Of Shares Issuable With Respect
To The Old Class A Equity Interest In The PCS Group will convert, on the same
basis, into a Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The FON Group.
(D) At any time following November 23, 2001, the Board of Directors may
convert each outstanding share of Series 1 PCS Stock, Series 2 PCS Stock and
Series 3 PCS Stock, as of the Conversion Date provided by Section 7.4(E), into
the number of fully paid and nonassessable shares of Series 1 FON Stock, Series
2 FON Stock and Series 3 FON Stock, respectively (or, if the Series 1 FON Stock
is not Publicly Traded at such time and shares of any other class or series of
common stock of the Corporation (other than PCS Stock) are then Publicly Traded,
of such other class or series of common stock as has the largest Total Market
Capitalization as of the close of business on the Trading Day immediately
preceding the date of the notice of conversion required by Section 7.4(E)) equal
to, on the Conversion Date, (i) if following November 23, 2001 but prior to
November 23, 2002, 110% of the Optional Conversion Ratio as of the fifth Trading
Day prior to the date of the notice of such conversion required by Section
7.4(E), or (ii) if on or after November 23, 2002, at such conversion ratio (if
any) as the Board of Directors determines to be fair to holders of the PCS
Stock, taken as a separate class, and holders of FON Stock, taken as a separate
class, provided, that upon such conversion, the Number Of Shares Issuable With
Respect To The Old Class A Equity Interest In The PCS Group will convert, on the
same basis, into a Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The FON Group.
7.2. Redemption of PCS Stock for Subsidiary Stock. At any time the Board of
Directors may redeem all of the outstanding shares of PCS Stock, on a Redemption
Date of which notice is delivered in accordance with Section 7.4(F), in exchange
for the number of shares of common stock of one or more wholly-owned
subsidiaries of the Corporation (collectively, the "PCS Group Subsidiary") that
collectively hold directly or indirectly all of the assets and liabilities
attributed to the PCS Group (and no other assets or liabilities of the
Corporation or any subsidiary thereof) equal to the product of the Outstanding
PCS Fraction and the number of shares of common stock of such PCS Group
Subsidiary to be outstanding immediately following such exchange of shares
(including any shares of such PCS Group Subsidiary which will be retained by the
Corporation in respect of the FON Group Intergroup Interest Fraction), such PCS
Group Subsidiary shares to be delivered to the holders of shares of PCS Stock on
the Redemption Date and to be divided among the holders of PCS Stock pro rata in
accordance with the number of shares of PCS Stock held by each on such
Redemption Date, each of which shares of common stock of such PCS Group
Subsidiary shall be, upon such delivery, fully paid and nonassessable; provided,
however, that
(i) no such redemption pursuant to this Section 7.2 may occur prior to
November 23, 2000 unless such redemption is approved by the affirmative
vote of the holders of a majority of shares of PCS Stock and Class A Common
Stock, voting together as a single class in accordance with ARTICLE SIXTH,
Section 3.2(d),
(ii) holders of shares of Series 2 PCS Stock and Series 3 PCS Stock
outstanding immediately prior to the Redemption Date shall receive on a per
share basis, pursuant to such redemption, shares of common stock of such
PCS Group Subsidiary with Voting Power equivalent on a per share basis to
such shares received by holders of Series 1 PCS Stock and
24
(iii) on such Redemption Date, the holders of Old Class A Common Stock
will receive the number of shares of the PCS Group Subsidiary equal to the
product of (A) the Old Class A PCS Interest Fraction, and (B) the number of
shares of common stock of such PCS Group Subsidiary to be outstanding
immediately following such issuance of shares;
and provided further, that no such redemption pursuant to this Section 7.2 may
occur unless (i) the redemption is tax-free to the holders of PCS Stock or (ii)
such other arrangement exists for the benefit of the holders of PCS Stock
redeemed such that, net of all taxes related to such redemption and to such
other arrangement itself which are realized by such stockholders, such
stockholders will be in a position that is substantially equivalent economically
to the position such stockholders would be in after a tax-free distribution
described in the immediately preceding clause (i).
7.3. Treatment of Convertible Securities. After any Conversion Date or
Redemption Date on which all outstanding shares of any class or series of PCS
Stock are converted or redeemed, any share of such class or series of PCS Stock
that is issued on conversion, exchange or exercise of any Convertible Securities
shall, immediately upon issuance pursuant to such conversion, exchange or
exercise and without any notice from or to, or any other action on the part of,
the Corporation or its Board of Directors or the holder of such Convertible
Security:
(A) if the shares of such class or series of PCS Stock outstanding on such
Conversion Date were converted into shares of another class or series of
Corporation Common Stock (or another class or series of common stock of the
Corporation) pursuant to subparagraph (A)(2) or paragraph (C) or (D) of Section
7.1, be converted into the amount of cash and/or the number of shares of the
kind of capital stock and/or other securities or property of the Corporation
that the number of shares of such class or series of PCS Stock issued upon such
conversion, exchange or exercise would have received had such shares been
outstanding on such Conversion Date; or
(B) if the shares of such class or series of PCS Stock outstanding on such
Redemption Date were redeemed pursuant to Section 7.1(A)(1)(b) or Section 7.2,
be redeemed, to the extent of funds of the Corporation legally available
therefor, for $.01 per share in cash for each share of such class or series of
PCS Stock issued upon such conversion, exchange or exercise.
The provisions of this Section 7.3 shall not apply to the extent that other
adjustments in respect of such conversion, exchange or redemption of a class or
series of PCS Stock are otherwise made pursuant to the provisions of such
Convertible Securities.
7.4. Notice and Other Provisions.
(A) Not later than the tenth Trading Day following the consummation of a
Disposition referred to in Section 7.1(A), the Corporation shall announce
publicly by press release (1) the Net Proceeds of such Disposition, (2) the
number of shares outstanding of the PCS Stock, (3) the number of shares of PCS
Stock into or for which Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (4) the Outstanding PCS Fraction and the Old Class A PCS Interest
Fraction on the date of such notice. Not earlier than the 26th Trading Day and
not later than the 30th Trading Day following the consummation of such
Disposition, the Corporation shall announce publicly by press release which of
the actions specified in Section 7.1(A) it has irrevocably determined to take in
respect of such Disposition.
(B) If the Corporation determines to pay a dividend on shares of PCS Stock
pursuant to Section 7.1(A)(1)(a), the Corporation shall, not later than the 30th
Trading Day following the consummation of the Disposition referred to in such
Section, cause notice to be given to each holder of PCS Stock, Class A Common
Stock and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of PCS Stock (unless alternate provision
for such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities), setting forth (1) the record date
for determining holders entitled to receive such dividend, which shall be not
earlier than the 40th Trading Day and not later than the 50th Trading Day
following the consummation of such Disposition, (2) the anticipated payment date
of such dividend (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (3) the kind of shares of capital stock, cash
and/or other securities or property to be paid as such dividend in respect of
the outstanding shares of PCS Stock, (4) the Net Proceeds of such Disposition,
(5) the Outstanding PCS Fraction and the Old Class A PCS Interest Fraction on
the date of such notice, (6) the number of outstanding shares of PCS Stock and
the number of shares of PCS Stock into or for which outstanding
25
Convertible Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof and (7) in the case of notice to
be given to holders of Convertible Securities, a statement to the effect that a
holder of such Convertible Securities shall be entitled to receive such dividend
only if such holder properly converts, exchanges or exercises such Convertible
Securities on or prior to the record date referred to in clause (1) of this
sentence. Such notice shall be sent by first-class mail, postage prepaid, to
each such holder at such holder's address as the same appears on the transfer
books of the Corporation.
(C) If the Corporation determines to redeem PCS Stock pursuant to Section
7.1(A)(1)(b)(i), the Corporation shall, not earlier than the 45th Trading Day
and not later than the 35th Trading Day prior to the Redemption Date, cause
notice to be given to each holder of shares of PCS Stock, Class A Common Stock
and to each holder of Convertible Securities convertible into or exchangeable or
exercisable for shares of PCS Stock (unless alternate provision for such notice
to the holders of such Convertible Securities is made pursuant to the terms of
such Convertible Securities), setting forth (1) a statement that all shares of
PCS Stock outstanding on the Redemption Date shall be redeemed, (2) the
Redemption Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (3) the kind of shares of capital stock, cash
and/or other securities or property in which the redemption price for the shares
to be redeemed is to be paid, (4) the Net Proceeds of such Disposition, (5) the
Outstanding PCS Fraction and the Old Class A PCS Interest Fraction on the date
of such notice, (6) the place or places where certificates for shares of PCS
Stock, properly endorsed or assigned for transfer (unless the Corporation waives
such requirement), are to be surrendered for delivery of cash and/or securities
or other property, (7) the number of outstanding shares of PCS Stock and the
number of shares of PCS Stock into or for which such outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof, (8) in the case of notice to be given to
holders of Convertible Securities, a statement to the effect that a holder of
such Convertible Securities shall be entitled to participate in such redemption
only if such holder properly converts, exchanges or exercises such Convertible
Securities on or prior to the Redemption Date referred to in clause (2) of this
sentence and a statement as to what, if anything, such holder will be entitled
to receive pursuant to the terms of such Convertible Securities or, if
applicable, this Section 7 if such holder thereafter converts, exchanges or
exercises such Convertible Securities and (9) a statement to the effect that,
except as otherwise provided by paragraph (I) of this Section 7.4, dividends on
such shares of PCS Stock shall cease to be paid as of such Redemption Date. Such
notice shall be sent by first-class mail, postage prepaid, to each such holder
at such holder's address as the same appears on the transfer books of the
Corporation.
(D) If the Corporation determines to redeem PCS Stock pursuant to Section
7.1(A)(1)(b)(ii), the Corporation shall, not later than the 30th Trading Day
following the consummation of the Disposition referred to in such subparagraph,
cause notice to be given to each holder of shares of PCS Stock, Class A Common
Stock and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of PCS Stock (unless alternate provision
for such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities) setting forth (1) a date, not
earlier than the 40th Trading Day and not later than the 50th Trading Day
following the consummation of the Disposition in respect of which such
redemption is to be made, on which shares of PCS Stock shall be selected for
redemption, (2) the anticipated Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (3) the kind of
shares of capital stock, cash and/or other securities or property in which the
redemption price for the shares to be redeemed is to be paid, (4) the Net
Proceeds of such Disposition, (5) the Outstanding PCS Fraction and the Old Class
A PCS Interest Fraction on the date of such notice, (6) the number of shares of
PCS Stock outstanding and the number of shares of PCS Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof, (7) in the
case of notice to be given to holders of Convertible Securities, a statement to
the effect that a holder of such Convertible Securities shall be eligible to
participate in such selection for redemption only if such holder properly
converts, exchanges or exercises such Convertible Securities on or prior to the
record date referred to in clause (1) of this sentence, and a statement as to
what, if anything, such holder will be entitled to receive pursuant to the terms
of such Convertible Securities or, if applicable, this Section 7 if such holder
thereafter converts, exchanges or exercises such Convertible Securities and (8)
a statement that the Corporation will not be required to register a transfer of
any shares of PCS Stock for a period of 15 Trading Days next preceding the date
referred to in clause (1) of this sentence. Promptly following the date referred
to in clause (1) of the preceding sentence, but not earlier than 40 Trading Days
nor later than 50 Trading Days following the consummation of such Disposition,
the Corporation shall cause a notice to be given to each holder of record of
shares of PCS Stock to be redeemed setting forth (1) the number of shares of PCS
Stock held by such holder to be redeemed, (2) a statement that such shares of
PCS Stock shall be redeemed, (3) the Redemption Date, (4) the kind and per share
amount of cash and/or securities or other property to be received by such holder
with respect to each share of PCS Stock to be redeemed, including details as to
the calculation thereof, (5) the place or places where certificates for shares
of PCS Stock, properly endorsed or assigned
26
for transfer (unless the Corporation shall waive such requirement), are to be
surrendered for delivery of such cash and/or securities or other property, (6)
if applicable, a statement to the effect that the shares being redeemed may no
longer be transferred on the transfer books of the Corporation after the
Redemption Date and (7) a statement to the effect that, subject to paragraph (I)
of this Section 7.4, dividends on such shares of PCS Stock shall cease to be
paid as of the Redemption Date. Such notices shall be sent by first-class mail,
postage prepaid, to each such holder at such holder's address as the same
appears on the transfer books of the Corporation.
(E) If the Corporation determines to convert the PCS Stock pursuant to
Section 7.1(A)(2), Section 7.1(C) or Section 7.1(D), as the case may be, the
Corporation shall, not earlier than the 45th Trading Day and not later than the
35th Trading Day prior to the Conversion Date, cause notice to be given to each
holder of shares of PCS Stock, Class A Common Stock and to each holder of
Convertible Securities that are convertible into or exchangeable or exercisable
for shares of PCS Stock (unless alternate provision for such notice to the
holders of such Convertible Securities is made pursuant to the terms of such
Convertible Securities) setting forth (1) a statement that all outstanding
shares of PCS Stock shall be converted, (2) the Conversion Date (which, in the
case of a conversion after a Disposition, shall not be more than 85 Trading Days
following the consummation of such Disposition), (3) the per share number of
shares of Series 1 FON Stock (or Series 2 FON Stock or Series 3 FON Stock, if
applicable) or another class or series of common stock of the Corporation, as
the case may be, to be received with respect to each share of PCS Stock,
including details as to the calculation thereof, (4) the place or places where
certificates for shares of PCS Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered for
delivery of certificates for shares of Series 1 FON Stock (or Series 2 FON Stock
or Series 3 FON Stock, if applicable) or another class or series of common stock
of the Corporation, as the case may be, (5) the number of outstanding shares of
PCS Stock and the number of shares of PCS Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof, (6) a statement to the effect
that, subject to paragraph (I) of this Section 7.4, dividends on such shares of
PCS Stock shall cease to be paid as of such Conversion Date and (7) in the case
of notice to holders of such Convertible Securities, a statement to the effect
that a holder of such Convertible Securities shall be entitled to receive shares
of common stock upon such conversion only if such holder properly converts,
exchanges or exercises such Convertible Securities on or prior to such
Conversion Date and a statement as to what, if anything, such holder will be
entitled to receive pursuant to the terms of such Convertible Securities or, if
applicable, this Section 7.4 if such holder thereafter converts, exchanges or
exercises such Convertible Securities. Such notice shall be sent by first-class
mail, postage prepaid, to each such holder at such holder's address as the same
appears on the transfer books of the Corporation.
(F) If the Corporation determines to redeem shares of PCS Stock pursuant to
Section 7.2, the Corporation shall cause notice to be given to each holder of
shares of PCS Stock to be redeemed, and to each holder of Class A Common Stock
and Convertible Securities that are convertible into or exchangeable or
exercisable for shares of such class of PCS Stock (unless alternate provision
for such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities), setting forth (1) a statement that
all shares of PCS Stock outstanding on the Redemption Date shall be redeemed in
exchange for shares of common stock of the PCS Group Subsidiary, (2) the
Redemption Date, (3) the Outstanding PCS Fraction and the Old Class A PCS
Interest Fraction on the date of such notice, (4) the place or places where
certificates for shares of PCS Stock to be redeemed, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement), are
to be surrendered for delivery of certificates for shares of the PCS Group
Subsidiaries, (5) a statement to the effect that, subject to paragraph (I) of
this Section 7.4, dividends on such shares of PCS Stock shall cease to be paid
as of such Redemption Date, (6) the number of shares of PCS Stock outstanding
and the number of shares of PCS Stock into or for which outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof and (7) in the case of notice to holders of
Convertible Securities, a statement to the effect that a holder of Convertible
Securities shall be entitled to receive shares of common stock of the PCS Group
Subsidiary upon redemption only if such holder properly converts, exchanges or
exercises such Convertible Securities on or prior to the Redemption Date and a
statement as to what, if anything, such holder will be entitled to receive
pursuant to the terms of such Convertible Securities or, if applicable, this
Section 7 if such holder thereafter converts, exchanges or exercises such
Convertible Securities. Such notice shall be sent by first-class mail, postage
prepaid, not less than 30 Trading Days nor more than 45 Trading Days prior to
the Redemption Date to each such holder at such holder's address as the same
appears on the transfer books of the Corporation. If any shares of Series 2 PCS
Stock or Series 3 PCS Stock are outstanding immediately prior to the Redemption
Date, then the notice provided to each holder of Series 2 PCS Stock or Series 3
PCS Stock, as the case may be, pursuant to this Section 7.4(F) will also
indicate that such holders of shares of Series 2 PCS Stock and Series 3 PCS
Stock outstanding immediately prior to the Redemption Date shall receive on a
27
per share basis, pursuant to such redemption, shares of common stock of such PCS
Group Subsidiary with Voting Power equivalent to such shares received by holders
of Series 1 PCS Stock.
(G) If less than all of the outstanding shares of PCS Stock are to be
redeemed pursuant to Section 7.1(A)(1), then the shares to be redeemed by the
Corporation shall be selected from among the holders of shares of PCS Stock
outstanding at the close of business on the record date for such redemption on a
pro rata basis among each class or series of PCS Stock (including pro rata among
all holders of Series 2 PCS Stock and Series 3 PCS Stock) or, if Series 2 PCS
Stock is no longer outstanding, by lot or such other method as may be determined
by the Board of Directors of the Corporation to be equitable.
(H) The Corporation shall not be required to issue or deliver fractional
shares of any capital stock or of any other securities to any holder of PCS
Stock upon any conversion, redemption, dividend or other distribution pursuant
to this Section 7. If more than one share of PCS Stock shall be held at the same
time by the same holder, the Corporation may aggregate the number of shares of
any capital stock that shall be issuable or any other securities or property
that shall be distributable to such holder upon any conversion, redemption,
dividend or other distribution (including any fractional shares). If there are
fractional shares of any capital stock or of any other securities remaining to
be issued or distributed to the holders of PCS Stock, the Corporation shall, if
such fractional shares are not issued or distributed to the holder, pay cash in
respect of such fractional shares in an amount equal to the Fair Value thereof
on the fifth Trading Day prior to the date such payment is to be made (without
interest). For purposes of the preceding sentence only, "Fair Value" of any
fractional share means (A) in the case of any fraction of a share of capital
stock of the Corporation, the product of such fraction and the Market Value of
one share of such capital stock and (B) in the case of any other fractional
security, such value as is determined by the Board of Directors.
(I) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of PCS Stock; provided, however, that if
the Conversion Date or Redemption Date, as the case may be, with respect to any
shares of PCS Stock shall be subsequent to the record date for the payment of a
dividend or other distribution thereon or with respect thereto, the holders of
such shares of PCS Stock at the close of business on such record date shall be
entitled to receive the dividend or other distribution payable on or with
respect to such shares on the date set for payment of such dividend or other
distribution, in each case without interest, notwithstanding the subsequent
conversion or redemption of such shares.
(J) Before any holder of PCS Stock shall be entitled to receive any cash
payment and/or certificates or instruments representing shares of any capital
stock and/or other securities or property to be distributed to such holder with
respect to such shares of PCS Stock pursuant to this Section 7, such holder
shall surrender at such place as the Corporation shall specify certificates for
such shares of PCS Stock, properly endorsed or assigned for transfer (unless the
Corporation shall waive such requirement). The Corporation shall as soon as
practicable after receipt of certificates representing such shares of PCS Stock
deliver to the person for whose account such shares of PCS Stock were so
surrendered, or to such person's nominee or nominees, the cash and/or the
certificates or instruments representing the number of whole shares of the kind
of capital stock and/or other securities or property to which such person shall
be entitled as aforesaid, together with any payment in respect of fractional
shares contemplated by Section 7.4(H), in each case without interest. If less
than all of the shares of PCS Stock represented by any one certificate are to be
redeemed or converted, then the Corporation shall issue and deliver a new
certificate for the shares of PCS Stock not redeemed.
(K) From and after any applicable Conversion Date or Redemption Date, as
the case may be, all rights of a holder of shares of PCS Stock that were
converted or redeemed shall cease except for the right, upon surrender of the
certificates representing such shares of PCS Stock as required by Section
7.4(J), to receive the cash and/or the certificates or instruments representing
shares of the kind of capital stock and/or other securities or property for
which such shares were converted or redeemed, together with any payment in
respect of fractional shares contemplated by Section 7.4(H) and rights to
dividends as provided in Section 7.4(I), in each case without interest. Subject
to the next sentence, any holder of a certificate that immediately prior to the
applicable Conversion Date or Redemption Date represented shares of PCS Stock
shall not be entitled to receive any dividend or other distribution or interest
payment with respect to shares of any kind of capital stock or other security or
instrument for which PCS Stock was converted or redeemed until the surrender as
required by this Section 7 of such certificate in exchange for a certificate or
certificates or instrument or instruments representing such capital stock or
other security. Upon such surrender, there shall be paid to the holder the
amount of any dividends or other distributions (without interest) which
theretofore became payable on any class of capital stock of the Corporation as
of a record date after the Conversion Date or Redemption Date, but that were not
paid by reason of the foregoing, with respect to the number of whole shares of
the kind of capital stock
28
represented by the certificate or certificates issued upon such surrender. From
and after a Conversion Date or Redemption Date, the Corporation shall, however,
be entitled to treat the certificates for PCS Stock that have not yet been
surrendered for conversion or redemption as evidencing the ownership of the
number of whole shares of the kind or kinds of capital stock of the Corporation
for which the shares of PCS Stock represented by such certificates shall have
been converted or redeemed, notwithstanding the failure to surrender such
certificates.
(L) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issuance or
delivery of any shares of capital stock and/or other securities upon conversion
or redemption of shares of PCS Stock pursuant to this Section 7. The Corporation
shall not, however, be required to pay any tax that may be payable in respect of
any transfer involved in the issuance or delivery of any shares of capital stock
and/or other securities in a name other than that in which the shares of PCS
Stock so converted or redeemed were registered, and no such issuance or delivery
shall be made unless and until the person requesting such issuance or delivery
has paid to the Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid.
(M) Neither the failure to mail any notice required by this Section 7.4 to
any particular holder of PCS Stock or of Convertible Securities nor any defect
therein shall affect the sufficiency of any notice given to any other holder of
outstanding shares of PCS Stock or of Convertible Securities or the validity of
any such conversion or redemption.
(N) The Board of Directors may establish such rules and requirements to
facilitate the effectuation of the transactions contemplated by this Section 7
as the Board of Directors shall determine to be appropriate.
(O) If notices to Class A Holders are made pursuant to this Section 7, then
the Corporation will make such notices in compliance with the provisions of
Section 11 of ARTICLE SIXTH as well as with the provisions of this Section 7.
7.5 Automatic Conversion of Series 2 PCS Stock and Series 2 FON Stock.
(a) Below One Percent Voting Power. If the total number of Converted Votes
represented by the aggregate number of issued and outstanding shares of Series 2
PCS Stock or Series 2 FON Stock, as the case may be, is below one percent of the
outstanding Voting Power of the Corporation for more than 90 consecutive days,
then (i) the Corporation shall notify FT and DT, in accordance with ARTICLE
SIXTH, Section 11, of the date on which such conversion will occur as soon as
practicable following the date on which such 90-day period ends (the "Conversion
Trigger Date") but in no event later than ten Business Days after the Conversion
Trigger Date and (ii) each outstanding share of Series 2 PCS Stock or Series 2
FON Stock will automatically convert (without the payment of any consideration)
into one duly issued, fully paid and nonassessable share of Series 1 PCS Stock
or Series 1 FON Stock, respectively, such conversion to take place on the 90th
day following the Conversion Trigger Date.
(b) Certain Transfers. Upon any Transfer of shares of Series 2 PCS Stock or
Series 2 FON Stock, as the case may be (other than a Transfer to a Cable Holder)
each such share so Transferred shall automatically convert (without the payment
of any consideration) into one duly issued, fully paid and nonassessable share
of Series 1 PCS Stock or Series 1 FON Stock, respectively, as of the date of
such Transfer.
(c) Notice of Automatic Conversion; Exchange of Stock Certificates; Effect
of Automatic Conversion of All Series 2 PCS Stock, etc.
(i) In addition to the notice required in Section 7.5(a), as soon as
practicable after a conversion of shares of Series 2 PCS Stock (or, if
applicable, Series 2 FON Stock) into shares of Series 1 PCS Stock (or, if
applicable, Series 1 FON Stock), pursuant to this Section 7, the
Corporation shall notify FT and DT, in accordance with ARTICLE SIXTH,
Section 11, of the number of shares so converted and the date on which such
conversion occurred.
(ii) Immediately upon the conversion of shares of Series 2 PCS Stock
(or, if applicable, Series 2 FON Stock) into shares of Series 1 PCS Stock
(or, if applicable, Series 1 FON Stock), pursuant to this Section 7 (such
shares so converted hereinafter referred to as the "Converted Series
Shares"), the rights of the holders of such Converted Series Shares, as
such, shall cease and the holders thereof shall be treated for all purposes
as having become the record owners of the shares of Series 1 PCS Stock or
Series 1 FON Stock, as the case may
29
be, issuable upon such conversion (the "Newly Issued Shares"), provided
that such Persons shall be entitled to receive when paid any dividends
declared on the Converted Series Shares as of a record date preceding the
time the Converted Series Shares were converted (the "Series Conversion
Time") and unpaid as of the Series Conversion Time. If the stock transfer
books of this Corporation shall be closed at the Series Conversion Time,
such Person or Persons shall be deemed to have become such holder or
holders of record of the Newly Issued Shares at the opening of business on
the next succeeding day on which such stock transfer books are open.
(iii) As promptly as practicable after the Series Conversion Time,
upon the delivery to this Corporation of the certificates formerly
representing Converted Series Shares, this Corporation shall deliver or
cause to be delivered, to or upon the written order of the record holder of
such certificates, a certificate or certificates representing the number of
duly issued, fully paid and nonassessable Newly Issued Shares into which
the Converted Series Shares formerly represented by such certificates have
been converted in accordance with the provisions of this Section 7.5.
(iv) This Corporation shall pay all United States federal, state or
local documentary, stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of Newly Issued Shares upon the conversion
of Converted Series Shares pursuant to this Section 7.5, provided that this
Corporation shall not be required to pay any tax which may be payable in
respect of any registration of Transfer involved in the issue or delivery
of Newly Issued Shares in a name other than that of the registered holder
of shares converted or to be converted, and no such issue or delivery shall
be made unless and until the person requesting such issue has paid to this
Corporation the amount of any such tax or has established, to the
satisfaction of this Corporation, that such tax has been paid.
(v) This Corporation shall at all times reserve and keep available,
out of the aggregate of its authorized but unissued Series 1 PCS Stock,
authorized but unissued Series 1 FON Stock, issued Series 1 PCS Stock held
in its treasury and issued Series 1 FON Stock held in its treasury, for the
purpose of effecting the conversion of the Series 2 PCS Stock or Series 2
FON Stock, as the case may be, contemplated hereby, the full number of
shares of Series 1 PCS Stock and Series 1 FON Stock then deliverable upon
the conversion of all outstanding shares of Series 2 PCS Stock or Series 2
FON Stock, as the case may be, and the full number of shares of Series 2
PCS Stock the Cable Holders are permitted to acquire under the
Restructuring Agreement and the Cable Holder Standstill Agreements.
(d) Temporary Voting Power Adjustment for Class A Holders. If any
conversions of shares of Series 2 PCS Stock or Series 2 FON Stock into shares of
Series 1 PCS Stock or Series 1 FON Stock, respectively, pursuant to this Section
7.5, or any increases in the per share vote of other Voting Securities of the
Corporation upon a Transfer of such Voting Securities, occur on or after the
tenth Trading Day preceding a record date for purposes of determining the
stockholders entitled to vote or to receive the payment of a dividend, then the
per share vote of the Class A Stock determined in accordance with ARTICLE SIXTH,
Section 3.2 shall be increased such that the aggregate Percentage Ownership
Interest of each Class A Holder, including with respect to Series 3 FON Stock
and Series 3 PCS Stock (or stock converting into Series 3 FON Stock and Series 3
PCS Stock pursuant to ARTICLE SIXTH, Section 8.3(c)) acquired prior to such
record date, shall not be diluted as a result of such conversions until 12:01
a.m. on the day immediately following the date of such stockholder meeting or
the dividend payment date, respectively.
Section 8. Provisions Relating to Class A Stock.
8.1. Rights and Privileges. Except as otherwise set forth in these Articles
of Incorporation, at all times (i) the holders of Series 3 FON Stock shall be
entitled to all of the rights and privileges pertaining to the ownership of
Series 1 FON Stock, (ii) the holders of Series 3 PCS Stock shall be entitled to
all of the rights and privileges pertaining to the ownership of Series 1 PCS
Stock, and (iii) the holders of Class A Common Stock shall be entitled to all of
the rights and privileges pertaining to the ownership of Series 1 FON Stock and
Series 1 PCS Stock to the extent such Class A Common Stock represents, at such
time, Shares Issuable With Respect To The Class A Equity Interest In The FON
Group and Shares Issuable With Respect To The Class A Equity Interest In The PCS
Group, in all such cases without any limitations, prohibitions, restrictions or
qualifications whatsoever, and such holders shall be entitled to such other
rights and privileges as are expressly set forth in these Articles of
Incorporation; provided that a holder of shares of Class A Common Stock shall
not have any rights or privileges under these Articles of Incorporation or the
General Corporation Code of Kansas, as amended, or otherwise (whether in
connection with the voluntary or involuntary liquidation, dissolution or winding
up of this Corporation, in connection with the declaration and/or payment of
30
dividends, with respect to redemptions of such shares or in connection with any
other distributions by the Corporation of any character on the Corporation
Common Stock or otherwise) in respect of such shares except such rights and
privileges that such holder would have had if all Shares Issuable With Respect
To The Class A Equity Interest In The FON Group and all Shares Issuable With
Respect To The Class A Equity Interest In The PCS Group had been issued and all
shares of Class A Common Stock had been redeemed pursuant to ARTICLE SIXTH,
Section 1.2(c).
8.2. Certain Agreements. Except as otherwise provided in Section 8.3 of
ARTICLE SIXTH, for so long as any shares of Class A Stock are outstanding:
(i) if any merger or other business combination involving this
Corporation results directly or indirectly in a Change of Control, then
unless this Corporation survives as the parent entity, the surviving
corporation will expressly assume all of this Corporation's obligations in
respect of the Registration Rights Agreement and this Section 8.2; and
(ii) if any merger or other business combination involving this
Corporation occurs that does not result directly or indirectly in a Change
of Control, then unless this Corporation survives as the parent entity, the
surviving corporation will expressly assume all of this Corporation's
obligations in respect of the rights of the Class A Holders granted
pursuant to these Articles of Incorporation, the Stockholders' Agreement,
the FT/DT Restructuring Agreement and the Registration Rights Agreement.
8.3. Conversion of Shares. (a) Unauthorized Transfers; Automatic
Conversions. Upon any Transfer of shares of Class A Stock (other than a Transfer
to a Qualified Subsidiary, to a Qualified Stock Purchaser or to FT or DT, in
each case which Transfer is effected in accordance with the provisions of
Article II of the Stockholders' Agreement), or upon delivery of a written
notice, provided by a Class A Holder with respect to such holder's shares of
Class A Stock, to Sprint in accordance with the notice delivery requirements as
set forth in ARTICLE SIXTH, Section 11,
(A) each share of Series 3 FON Stock and Series 3 PCS Stock, as the
case may be, so Transferred, or identified in such notice, shall
automatically convert (without the payment of any consideration) into one
duly issued, fully paid and nonassessable share of Series 1 FON Stock and
Series 1 PCS Stock, respectively, and
(B) the Old Class A Common Stock, to the extent so Transferred, or
identified in such notice, shall be adjusted as provided in, and with the
same effect as provided in, ARTICLE SIXTH, Sections 1.2(c) and 1.2(e),
except that in such case only Series 1 PCS Stock and Series 1 FON Stock
shall be issued;
as of the date of such Transfer or delivery of such notice, provided that no
conversion of Class A Stock pursuant to this Section 8.3(a) shall be considered
to be an acquisition of Series 1 FON Stock or Series 1 PCS Stock for purposes of
Section 8.3(c) of ARTICLE SIXTH.
(b) Material Breach of Investment Documents. (i) (A) Each outstanding share
of Series 3 FON Stock and Series 3 PCS Stock Beneficially Owned by a Breaching
Holder shall automatically convert (without the payment of any consideration)
into one duly issued, fully paid and nonassessable share of Series 1 FON Stock
and Series 1 PCS Stock, respectively, and (B) all outstanding shares of Old
Class A Common Stock Beneficially Owned by a Breaching Holder shall
automatically convert (without the payment of any consideration) into the number
of duly issued, fully paid and nonassessable shares of Series 1 FON Stock and
Series 1 PCS Stock equal to the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The FON Group and the Number Of Shares Issuable
With Respect To The Old Class A Equity Interest In The PCS Group, respectively,
represented by such shares of Old Class A Common Stock, if:
(v) FT or DT or any Qualified Subsidiary breaches in any material
respect its obligations under Section 2.4 of the Stockholders' Agreement;
(w) deleted;
(x) FT, DT or any Qualified Subsidiary breaches any of the provisions
of Article 2 (other than Section 2.1(b)) of the Standstill Agreement or any
corresponding provision of any Qualified Subsidiary Standstill Agreement;
31
(y) FT, DT or any Qualified Subsidiary breaches any of the provisions
of Sections 3.1 or 3.2 of the Standstill Agreement or any corresponding
provisions of any Qualified Subsidiary Standstill Agreement, in each case
in a Control Context, or otherwise breaches Sections 3.1(a)(ii), (iii) or
(iv) or Section 3.1(g) of the Standstill Agreement or any corresponding
provision of any Qualified Subsidiary Standstill Agreement; or
(z) FT, DT or any Qualified Subsidiary breaches any of the provisions
of Sections 3.1 (except Section 3.1(a)(ii), (iii) or (iv), or Section
3.1(g)) or 3.2 of the Standstill Agreement or any corresponding provisions
of any Qualified Subsidiary Standstill Agreement, in each case other than
in a Control Context;
provided that, with respect to an alleged breach of the type described in
clauses (v), (x), (y) or (z) above, the Class A Holder(s) alleged to have taken
the actions causing such breach (the "Breaching Holders") shall deliver a notice
(I) except with respect to a breach of the type described in
clause (y) above, in accordance with clauses (ii)(x) or (iii)(x)
below, in which case no conversion of the Class A Stock shall take
place unless such breach fails to be cured within the time provided
for cure in such clause (ii) or (iii), as the case may be;
(II) in accordance with clauses (ii)(y), (iii)(y) or (iv) below,
in which case no conversion of the Class A Stock shall take place
until there is issued a final nonappealable decision or order of a
court of competent jurisdiction finding that such breach has occurred
and, if applicable, was not cured within the time provided for cure in
clauses (ii) or (iii) below, as the case may be; or
(III) admitting that such a breach has occurred, and (if
applicable) cannot be cured within the time periods provided for cure
in clauses (ii) or (iii) below, in which case
(A) each outstanding share of Series 3 FON Stock and Series
3 PCS Stock, as the case may be, Beneficially Owned by a
Breaching Holder shall automatically convert (without the payment
of any consideration) into one duly issued, fully paid and
nonassessable share of Series 1 FON Stock and Series 1 PCS Stock,
respectively, and
(B) all outstanding shares of Old Class A Common Stock
Beneficially Owned by a Breaching Holder shall automatically
convert (without the payment of any consideration) into the
number of duly issued, fully paid and nonassessable shares of
Series 1 FON Stock and Series 1 PCS Stock equal to the number of
shares issuable with respect to the Old Class A Equity Interest
In The FON Group and the number of shares issuable with respect
to the Old Class A Equity Interest in the PCS Group,
respectively, represented by such shares of Old Class A Common
Stock,
upon delivery of such notice; and provided, further, that if the
Breaching Holders fail to perform the actions described in clauses (I)
or (II) above within the time periods provided for performing such
actions in clauses (ii), (iii) or (iv) below, they shall be deemed to
have taken the action described in clause (III) above.
(ii) For any alleged breach of the type described in clauses (x) or (z) of
clause (i) above, the Breaching Holders shall have the right, within five
Business Days after the date (for purposes of this clause (ii), the "Breach
Notice Date") that notice of such breach is delivered to each Breaching Holder
by this Corporation, to deliver to this Corporation a notice either:
(x) committing to effect a cure as soon as practical, in which case
the Breaching Holders shall effect such cure as soon as practical, but in
no event later than the 20th Business Day from the Breach Notice Date (or,
with respect to an alleged breach of clause (x), if such cure cannot be
effected within such time period due to the anti-fraud rules of the U.S.
securities laws, such longer period as is reasonably necessary to cure such
breach in a manner consistent with such rules), provided that
(I) the Breaching Holders shall have no right to cure unless such
breach is susceptible to cure;
32
(II) such cure period shall continue only for so long as each
Breaching Holder shall be undertaking to effect such a cure in a
diligent manner;
(III) with respect to an alleged breach of clause (i)(x) above,
this Corporation shall have the right at any time after the end of
such 20-day period to purchase such number of shares of Non-Class A
Common Stock or Class A Stock, as the case may be, as is necessary to
return the Breaching Holder to the ownership level permitted by the
Standstill Agreement or a Qualified Subsidiary Standstill Agreement,
as the case may be, at a price equal to the lower of (A) the Market
Price for such shares at the time of such redemption and (B) the price
paid by the Breaching Holders for such shares, provided that this
Corporation may only exercise such right if a majority of the
Continuing Directors shall have first approved, at a meeting at which
at least seven Continuing Directors are present, such a purchase of
Shares, unless a Fair Price Condition has been satisfied; and
(IV) withdrawal of the action alleged to have caused such breach
shall not, in and of itself, give rise to a presumption that such
breach has been cured; or
(y) disputing that such a breach has occurred, provided that during
such time as the most recent decision or order of a court of competent
jurisdiction is to the effect that such breach has occurred and was not
cured within the time provided for cure in clause (x) of this clause (ii),
the rights provided to the Class A Holders under this Section 8.3 shall,
with respect to the Breaching Holder only, be suspended and may not be
exercised by the Breaching Holder.
(iii) For any alleged breach of the type described in clause (i)(v) above,
the Breaching Holders shall have the right, within five Business Days after the
date (for purposes of this clause (iii), the "Breach Notice Date") that notice
of such breach is delivered to each Breaching Holder by this Corporation, to
deliver to this Corporation a notice either:
(x) committing to effect a cure as soon as practical, in which case
the Breaching Holders shall effect such cure as soon as practical, but in
no event later than the 20th Business Day from the Breach Notice Date (or,
if such cure cannot be effected within such time period due to the
anti-fraud rules of the U.S. securities laws, such longer period as is
reasonably necessary to cure such breach in a manner consistent with such
rules), provided that
(I) the Breaching Holders shall have no right to cure unless such
breach is susceptible to cure;
(II) such cure period shall continue only for so long as each
Breaching Holder shall be undertaking to effect such a cure in a
diligent manner; and
(III) withdrawal of the action alleged to have caused such breach
shall not, in and of itself, give rise to a presumption that such
breach has been cured; or
(y) disputing that such a breach has occurred;
provided that, in each case, from the Breach Notice Date until the earlier to
occur of the cure of such breach and the issuance of a decision or order of a
court of competent jurisdiction finding that such breach has not occurred or was
cured within the time provided for cure in clause (x) of this clause (iii), the
rights provided to the Class A Holders under this Section 8.3 shall, with
respect to the Breaching Holder only, be suspended and may not be exercised by
the Breaching Holder; and provided, further, that following such decision or
order, such rights shall be suspended during such time as the most recent
decision or order of a court of competent jurisdiction is to the effect that
such breach has occurred and was not cured within the time provided for cure in
clause (x) of this clause (iii).
(iv) For any alleged breach of the type described in clause (i)(y) above,
the Breaching Holders shall have the right, within five Business Days after the
date (for purposes of this clause (iv), the "Breach Notice Date") that notice of
such breach is delivered to each Breaching Holder by this Corporation, to
deliver to this Corporation a notice disputing that such a breach has occurred,
provided that from the Breach Notice Date until the issuance of a decision or
order of a court of competent jurisdiction finding that such breach has not
occurred, the rights provided to the Class A Holders under this Section 8.3
shall, with respect to the Breaching Holder only, be suspended and may not be
exercised
33
by the Breaching Holder; and provided, further, that following such
decision or order, such rights shall be suspended during such time as the most
recent decision or order of a court of competent jurisdiction is to the effect
that such breach has occurred.
(v) For purposes of this Section 8.3(b), an alleged breach shall be deemed
to have occurred in a "Control Context" if the action or actions alleged to have
given rise to such breach were taken in the context of efforts by any Class A
Holder or any other Person having the purpose or effect of changing or
influencing the control of this Corporation.
(vi) No conversion pursuant to this Section 8.3(b) shall be considered an
acquisition for purposes of Section 8.3(c) of ARTICLE SIXTH.
(c) Conversion into Class A Stock. Until the conversion of all of the
shares of Class A Stock pursuant to this Section 8.3, (x) each share of Series 1
FON Stock or Series 2 FON Stock, as the case may be, acquired by a Class A
Holder shall automatically convert (without the payment of any consideration)
into one duly issued, fully paid and nonassessable share of Series 3 FON Stock
at the date of such acquisition and (y) each share of Series 1 PCS Stock or
Series 2 PCS Stock, as the case may be, acquired by a Class A Holder shall
automatically convert (without the payment of any consideration) into one duly
issued, fully paid and nonassessable share of Series 3 PCS Stock at the date of
such acquisition.
(d) Notice of Conversion; Exchange of Stock Certificates; Effect of
Conversion of all Class A Stock.
(i) Immediately upon the conversion of shares of Series 3 FON Stock, Series
3 PCS Stock and Class A Common Stock into shares of Series 1 FON Stock, Series 1
PCS Stock and, as applicable, shares of both Series 1 FON Stock and Series 1 PCS
Stock, respectively, or upon the conversion of shares of Series 1 FON Stock and
Series 2 FON Stock or Series 2 PCS Stock and Series 1 PCS Stock into shares of
Series 3 FON Stock or Series 3 PCS Stock, respectively, and in each case
pursuant to this Section 8.3 (the shares of Class A Common Stock, Series 3 FON
Stock, Series 3 PCS Stock, Series 1 FON Stock, Series 2 FON Stock, Series 2 PCS
Stock or Series 1 PCS Stock so converted hereinafter referred to as the
"Converted Shares"), the rights of the holders of such Converted Shares, as
such, shall cease and the holders thereof shall be treated for all purposes as
having become the record owners of the shares of Series 1 FON Stock, Series 3
FON Stock, Series 1 PCS Stock or Series 3 PCS Stock, as the case may be,
issuable upon such conversion (the "New Shares"), provided that such Persons
shall be entitled to receive when paid any dividends declared on the Converted
Shares as of a record date preceding the time the Converted Shares were
converted (the "Conversion Time") and unpaid as of the Conversion Time, if such
Persons were the record holders of the Converted Shares on such record date. If
the stock transfer books of this Corporation shall be closed at the Conversion
Time, such Person or Persons shall be deemed to have become such holder or
holders of record of the New Shares at the opening of business on the next
succeeding day on which such stock transfer books are open.
(ii) As promptly as practicable after the Conversion Time, upon the
delivery to this Corporation of the certificates formerly representing Converted
Shares, this Corporation shall deliver or cause to be delivered, to or upon the
written order of the record holder of such certificates, a certificate or
certificates representing the number of duly issued, fully paid and
nonassessable New Shares into which the Converted Shares formerly represented by
such certificates have been converted in accordance with the provisions of this
Section 8.3.
(iii) This Corporation shall pay all United States federal, state or local
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of New Shares upon the conversion of Converted Shares pursuant
to this Section 8.3, provided that this Corporation shall not be required to pay
any tax which may be payable in respect of any registration of Transfer involved
in the issue or delivery of New Shares in a name other than that of the
registered holder of shares converted or to be converted, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to this Corporation the amount of any such tax or has established, to the
satisfaction of this Corporation, that such tax has been paid.
(iv) This Corporation shall at all times reserve and keep available, out of
the aggregate of its authorized but unissued Series 3 FON Stock, Series 3 PCS
Stock, Series 1 PCS Stock and Series 1 FON Stock and its issued Series 1 FON
Stock or Series 1 PCS Stock held in its treasury, for the purpose of effecting
the conversion of the Series 3 FON Stock, Series 1 FON Stock, Series 2 FON
Stock, Series 3 PCS Stock, Series 2 PCS Stock, Series 1 PCS Stock and Class A
Common Stock contemplated hereby, the full number of shares of Series 1 FON
Stock or Series 1 PCS Stock then
34
deliverable upon the conversion of all outstanding shares of Series 3 FON Stock,
Series 3 PCS Stock and Class A Common Stock, and the full number of shares of
Series 3 FON Stock and Series 3 PCS Stock that would be deliverable upon
conversion of all of the shares of Series 1 FON Stock, Series 1 PCS Stock,
Series 2 FON Stock and Series 2 PCS Stock the Class A Holders are permitted to
acquire hereunder and under the Investment Agreement, the FT/DT Restructuring
Agreement, the Stockholders' Agreement and the Standstill Agreement.
(v) Following conversion of all outstanding shares of Class A Stock into
shares of Series 1 FON Stock or Series 1 PCS Stock, as the case may be, pursuant
to this Section 8.3, this Corporation shall not, directly or indirectly, issue,
or sell from the treasury, any shares of Class A Stock.
(e) Class A Stock Held by Qualified Stock Purchasers. (i) (A) Each
outstanding share of Series 3 FON Stock and Series 3 PCS Stock, as the case may
be, owned by a Qualified Stock Purchaser shall automatically convert (without
the payment of any consideration) into one duly issued, fully paid and
nonassessable share of Series 1 FON Stock and Series 1 PCS Stock, respectively,
if:
(v) such Qualified Stock Purchaser breaches in any material respect
its obligations under Section 2.4 of the Stockholders' Agreement;
(w) Deleted;
(x) such Qualified Stock Purchaser breaches any of the provisions of
Article 2 of the Qualified Stock Purchaser Standstill Agreement;
(y) such Qualified Stock Purchaser breaches any of the provisions of
Section 3.1 or 3.2 of the Qualified Stock Purchaser Standstill Agreement in
a Control Context, or such Qualified Stock Purchaser otherwise breaches
Sections 3.1(a)(ii), (iii) or (iv) or Section 3.1(g) of the Qualified Stock
Purchaser Standstill Agreement; or
(z) such Qualified Stock Purchaser breaches any of the provisions of
Sections 3.1 (except Section 3.1(a)(ii), (iii) or (iv), or Section 3.1(g))
or 3.2 of the Qualified Stock Purchaser Standstill Agreement, in each case
other than in a Control Context;
provided, that such Qualified Stock Purchaser shall deliver a notice
(I) except with respect to a breach of the type described in clause
(y) above, in accordance with clauses (ii)(x) or (iii)(x) below, in which
case no conversion of the Class A Stock owned by such Qualified Stock
Purchaser shall take place unless such breach fails to be cured within the
time provided for cure in such clause (ii) or (iii), as the case may be;
(II) in accordance with clauses (ii)(y), (iii)(y) or (iv) below, in
which case no conversion of the Class A Stock owned by such Qualified Stock
Purchaser shall take place until there is issued a final nonappealable
decision or order of a court of competent jurisdiction finding that such
breach has occurred and, if applicable, was not cured within the time
provided for cure in clauses (ii) or (iii) below, as the case may be; or
(III) admitting that such a breach has occurred, and (if applicable)
cannot be cured within the time periods provided for cure in clauses (ii)
or (iii) below, in which case each outstanding share of Series 3 FON Stock
and Series 3 PCS Stock, as the case may be, owned by such Qualified Stock
Purchaser shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share of
Series 1 FON Stock and Series 1 PCS Stock, respectively upon delivery of
such notice; and
provided, further, that if such Qualified Stock Purchaser fails to perform the
actions described in clauses (I) or (II) above within the time periods provided
for performing such actions in clauses (ii), (iii) or (iv) below, it shall be
deemed to have taken the action described in clause (III) above.
(ii) For any alleged breach of the type described in clauses (x) or (z) of
clause (i) above, such Qualified Stock Purchaser shall have the right, within
five Business Days after the date (for purposes of this clause (iii), the
35
"Breach Notice Date") that notice of such breach is delivered to such Qualified
Stock Purchaser by this Corporation, to deliver to this Corporation a notice
either:
(x) committing to effect a cure as soon as practical, in which case
such Qualified Stock Purchaser shall effect such cure as soon as practical,
but in no event later than the 20th Business Day from the Breach Notice
Date (or, with respect to an alleged breach of clause (x), if such cure
cannot be effected within such time period due to the anti-fraud rules of
the U.S. securities laws, such longer period as is reasonably necessary to
cure such breach in a manner consistent with such rules), provided that
(I) such Qualified Stock Purchaser shall have no right to cure unless
such breach is susceptible to cure;
(II) such cure period shall continue only for so long as such
Qualified Stock Purchaser shall be undertaking to effect such a cure in a
diligent manner;
(III) with respect to an alleged breach of clause (i)(x) above, this
Corporation shall have the right at any time after the end of such 20-day
period to purchase such number of shares of Class A Stock as is necessary
to return such Qualified Stock Purchaser to the ownership level permitted
by the Qualified Stock Purchaser Standstill Agreement, at a price equal to
the lower of (A) the Market Price for such Shares at the time of such
redemption and (B) the price paid by such Qualified Stock Purchaser for
such Shares, provided that this Corporation may only exercise such right if
a majority of the Continuing Directors shall have first approved, at a
meeting at which at least seven Continuing Directors are present, such a
purchase of Shares, unless a Fair Price Condition has been satisfied; and
(IV) withdrawal of the action alleged to have caused such breach shall
not, in and of itself, give rise to a presumption that such breach has been
cured; or
(y) disputing that such a breach has occurred, provided that during
such time as the most recent decision or order of a court of competent
jurisdiction is to the effect that such breach has occurred and was not
cured within the time provided for cure in clause (x) of this clause (ii),
the rights provided to such Qualified Stock Purchaser under this Section
8.3 shall be suspended and may not be exercised by such Qualified Stock
Purchaser.
(iii) For any alleged breach of the type described in clause (i)(v) above,
such Qualified Stock Purchaser shall have the right, within five Business Days
after the date (for purposes of this clause (iii), the "Breach Notice Date")
that notice of such breach is delivered to such Qualified Stock Purchaser by
this Corporation, to deliver to this Corporation a notice either:
(x) committing to effect a cure as soon as practical, in which case
such Qualified Stock Purchaser shall effect such cure as soon as practical,
but in no event later than the 20th Business Day from the Breach Notice
Date (or, if such cure cannot be effected within such time period due to
the anti-fraud rules of the U.S. securities laws, such longer period as is
reasonably necessary to cure such breach in a manner consistent with such
rules), provided that
(I) such Qualified Stock Purchaser shall have no right to cure unless
such breach is susceptible to cure;
(II) such cure period shall continue only for so long as such
Qualified Stock Purchaser shall be undertaking to effect such a cure in a
diligent manner; and
(III) withdrawal of the action alleged to have caused such breach
shall not, in and of itself, give rise to a presumption that such breach
has been cured; or
(y) disputing that such a breach has occurred;
provided that, in each case, from the Breach Notice Date until the earlier to
occur of the cure of such breach and the issuance of a decision or order of a
court of competent jurisdiction finding that such breach has not occurred or was
36
cured within the time provided for cure in clause (x) of this clause (iii), the
rights provided to such Qualified Stock Purchaser under this Section 8.3 shall
be suspended and may not be exercised by such Qualified Stock Purchaser; and
provided, further, that following such decision or order, such rights shall be
suspended during such time as the most recent decision or order of a court of
competent jurisdiction is to the effect that such breach has occurred and was
not cured within the time provided for cure in clause (x) of this clause (iii).
(iv) For any alleged breach of the type described in clause (i)(y) above,
such Qualified Stock Purchaser shall have the right, within five Business Days
after the date (for purposes of this clause (iv), the "Breach Notice Date") that
notice of such breach is delivered to such Qualified Stock Purchaser by this
Corporation, to deliver to this Corporation a notice disputing that such a
breach has occurred, provided that from the Breach Notice Date until the
issuance of a decision or order of a court of competent jurisdiction finding
that such breach has not occurred, the rights provided to such Qualified Stock
Purchaser under this Section 8.3 shall be suspended and may not be exercised by
such Qualified Stock Purchaser and provided, further, that following such
decision or order, such rights shall be suspended during such time as the most
recent decision or order of a court of competent jurisdiction is to the effect
that such breach has occurred.
(v) For purposes of this Section 8.3(e), an alleged breach shall be deemed
to have occurred in a Control Context if the action or actions alleged to have
given rise to such breach were taken in the context of efforts by such Qualified
Stock Purchaser or any other Person having the purpose or effect of changing or
influencing the control of this Corporation.
(vi) No conversion pursuant to this Section 8.3(e) shall be considered an
acquisition for purposes of Section 8.3(c) of ARTICLE SIXTH.
(f) Effect of Conversion. Upon the conversion of all of the shares of Class
A Stock pursuant to this Section 8.3,
(A) each share of Series 3 FON Stock and Series 3 PCS Stock, as the
case may be, issued by this Corporation pursuant to the Investment
Agreement, the FT/DT Restructuring Agreement, the Stockholders' Agreement
or these Articles of Incorporation shall automatically convert (without the
payment of any consideration) into one duly issued, fully paid and
nonassessable share of Series 1 FON Stock and Series 1 PCS Stock,
respectively, and
(B) all outstanding shares of Old Class A Common Stock shall
automatically convert (without the payment of any consideration) into the
number of duly issued, fully paid and nonassessable shares of Series 1 FON
Stock and Series 1 PCS Stock equal to the Number Of Shares Issuable With
Respect To The Old Class A Equity Interest In The FON Group and the Number
Of Shares Issuable With Respect To The Old Class A Equity Interest In The
PCS Group, respectively, represented by such shares of Old Class A Common
Stock;
provided that such conversion shall not be considered an acquisition of Series 1
FON Stock or Series 1 PCS Stock, as the case may be, for purposes of Section
8.3(c) of ARTICLE SIXTH.
8.4. Class Voting. Except as otherwise provided by law, the Class A Holders
shall not have, nor be entitled to, a class vote with respect to any matter to
be voted on by the stockholders of this Corporation.
8.5. Amendment of Class A Provisions; The Master Transfer Agreement. The
Class A Provisions may be amended in any manner which would not materially alter
or change the powers, preferences or rights of the holders of shares of
Non-Class A Common Stock or Preferred Stock so as to affect such powers,
preferences or rights adversely, by the Board of Directors of this Corporation
with the affirmative vote of only the holders of at least two-thirds of the
votes represented by the outstanding shares of Class A Stock, voting together as
a single class, and without the affirmative vote of the holders of shares of the
Non- Class A Common Stock or the Preferred Stock. Upon the retirement of shares
of Class A Common Stock, (i) such shares shall not resume the status of
authorized and unissued shares of that class, (ii) such shares shall not be
reissued, and (iii) upon the execution, acknowledgment and filing of a
certificate in accordance with Kan. Stat. Ann. ss. 17-6003 and ss. 17-6603 (or
any successor provisions) stating that the reissuance of such shares is
prohibited, identifying the shares and reciting their retirement, then the
filing of such certificate shall have the effect of amending these Articles of
Incorporation so as to reduce accordingly the number of authorized shares of
Class A Common Stock or if such retired shares constitute all of the authorized
shares of such
37
class, then the filing of such certificate shall have the effect of amending
these Articles of Incorporation automatically so as to eliminate all references
to such class of stock therefrom. Notwithstanding any other provision in these
Articles of Incorporation, the transactions contemplated by the Master Transfer
Agreement shall not constitute a Corporation Joint Venture Termination or an
FT/DT Joint Venture Termination.
Section 9. Application of the Provisions of ARTICLE SIXTH.
9.1. Certain Determinations of the Board of Directors. In addition to the
determinations regarding Preferred Stock to be made by the Board of Directors as
provided by Section 13.6, the Board of Directors shall make such determinations
(i) with respect to the assets and liabilities to be attributed to the Business
Groups (in accordance with the definitions of "PCS Group" and "Sprint FON Group"
set forth in ARTICLE SIXTH, Section 10), (ii) with respect to the application of
the provisions of this ARTICLE SIXTH to transactions to be engaged in by the
Corporation and (iii) as may be or become necessary or appropriate to the
exercise of the powers, preferences and relative, participating, optional and
other special rights of the classes or series of Corporation Common Stock,
including, without limiting the foregoing, the determinations referred to in the
following paragraphs (A), (B), (C) and (D) of this Section 9.1. A record of any
such determination shall be filed with the Secretary of the Corporation to be
kept with the records of the actions of the Board of Directors.
(A) Upon any acquisition by the Corporation or its subsidiaries of any
assets or business, or any assumption of liabilities, outside of the
ordinary course of business of the Sprint FON Group or the PCS Group, as
the case may be, the Board of Directors shall determine whether such
assets, business and liabilities (or an interest therein) shall be for the
benefit of the Sprint FON Group or the PCS Group or that an interest
therein shall be partly for the benefit of the Sprint FON Group and partly
for the benefit of the PCS Group and, accordingly, shall be attributed to
the Sprint FON Group or the PCS Group, or partly to each, in accordance
with the definitions of "PCS Group," "Sprint FON Group," and "Number Of
Shares Issuable With Respect To The FON Group Intergroup Interest" set
forth in Section 10 of ARTICLE SIXTH.
(B) Upon any issuance of any shares of PCS Stock at a time when the
Number Of Shares Issuable With Respect To The FON Group Intergroup Interest
is more than zero, the Board of Directors shall determine, based on the use
of the proceeds of such issuance and any other relevant factors, whether
all or any part of the shares of PCS Stock so issued should reduce the
Number Of Shares Issuable With Respect To The FON Group Intergroup Interest
and the Number Of Shares Issuable With Respect To The FON Group Intergroup
Interest shall be adjusted accordingly.
(C) Upon any issuance by the Corporation or any subsidiary thereof of
any Convertible Securities that are convertible into or exchangeable or
exercisable for shares of PCS Stock, if at the time such Convertible
Securities are issued the Number Of Shares Issuable With Respect To The FON
Group Intergroup Interest is greater than zero, the Board of Directors
shall determine whether, upon conversion, exchange or exercise thereof, the
issuance of shares of PCS Stock pursuant thereto shall, in whole or in
part, reduce the Number Of Shares Issuable With Respect To The FON Group
Intergroup Interest, taking into consideration the use of the proceeds of
such issuance of Convertible Securities in the business of the Sprint FON
Group or the PCS Group and any other relevant factors.
(D) Upon any redemption or repurchase by the Corporation or any
subsidiary thereof of shares of any Preferred Stock of any class or series
or of other securities or debt obligations of the Corporation, if some of
such shares, other securities or debt obligations were attributed to the
Sprint FON Group and some of such shares, other securities or debt
obligations were attributed to the PCS Group, the Board of Directors shall
determine which, if any, of such shares, other securities or debt
obligations redeemed or repurchased shall be attributed to the Sprint FON
Group and which, if any, of such shares, other securities or debt
obligations shall be attributed to the PCS Group and, accordingly, how many
of the shares of such series of Preferred Stock or of such other
securities, or how much of such debt obligations, that remain outstanding,
if any, continue to be attributed to the Sprint FON Group or to the PCS
Group.
9.2. Sources of Dividends and Distributions; Uses of Proceeds of Share
Issuances. Notwithstanding the attribution of properties or assets of the
Corporation to the Sprint FON Group or the PCS Group as provided in the
definitions of such terms in Section 10 of ARTICLE SIXTH, the Board of Directors
(i) may cause dividends or distributions or other payments to the holders of any
class of Corporation Common Stock or any class or series of
38
Preferred Stock to be made out of the properties or assets attributed to any
Business Group, subject, however, to any contrary term of any series of
Preferred Stock fixed in accordance with Section 13 of ARTICLE SIXTH, and (ii)
may cause the proceeds of issuance of any shares of Non-Class A Stock or Class A
Stock or any class or series of Preferred Stock, to whichever Business Group
attributed in accordance with Section 13 of ARTICLE SIXTH, to be used in the
business of, and to be attributed to, either the Sprint FON Group or the PCS
Group in accordance with the definitions of "PCS Group," "Sprint FON Group," and
"Number Of Shares Issuable With Respect To The FON Group Intergroup Interest" in
Section 10 of ARTICLE SIXTH.
9.3. Certain Determinations Not Required. Notwithstanding the foregoing
provisions of this Section 9, the provisions of Section 10 of ARTICLE SIXTH or
any other provision of this ARTICLE SIXTH, at any time when there are not
outstanding both (i) one or more shares of FON Stock (or Shares Issuable With
Respect To The Class A Equity Interest In The FON Group) or Convertible
Securities convertible into or exchangeable or exercisable for FON Stock and
(ii) one or more shares of PCS Stock (or Shares Issuable With Respect To The
Class A Equity Interest In The PCS Group) or Convertible Securities convertible
into or exchangeable or exercisable for PCS Stock, the Board of Directors need
not (A) attribute any of the assets or liabilities of the Corporation or any of
its subsidiaries to the Sprint FON Group or the PCS Group, (B) make any
determination required in connection therewith, or (C) make any of the
determinations otherwise required by this ARTICLE SIXTH, and in such
circumstances the holders of the shares of FON Stock or PCS Stock outstanding,
as the case may be, shall (unless otherwise specifically provided by the
Articles of Incorporation of the Corporation) be entitled to all the voting
powers, preferences, optional or other special rights of such classes of
Corporation Common Stock without differentiation between the FON Stock and the
PCS Stock and any provision of this ARTICLE SIXTH to the contrary shall no
longer be in effect or operative and the Board of Directors may cause the
Articles of Incorporation of the Corporation to be amended as permitted by law
to delete such provisions as are no longer operative or of further effect.
9.4. Emergency Use of Business Group Assets. Notwithstanding the foregoing
provisions of this Section 9 or any other provision of ARTICLE SIXTH, the Board
of Directors may transfer assets or properties from one Business Group to
another on such other basis as the Board of Directors shall determine,
consistent with its fiduciary duties to the Corporation and the holders of all
classes and series of the Corporation's common stock, provided that the Board of
Directors determines (i) that such transfer on such basis should be made to
prevent or mitigate material adverse consequences that would fundamentally
affect the transferee Business Group, (ii) that the benefit of such transfer on
such basis to the transferee Business Group is to materially exceed any adverse
effect of such transfer to the transferor Business Group, and (iii) that such
transfer on such basis is in the best interest of the Corporation as a whole
after giving fair consideration to the potentially divergent interests of the
holders of the separate classes of Corporation Common Stock.
9.5. Board Determinations Binding. Subject to applicable law, any
determinations made in good faith by the Board of Directors of the Corporation
under any provision of this Section 9 or otherwise in furtherance of the
application of this ARTICLE SIXTH shall be final and binding on all
stockholders.
Section 10. Definitions. For purposes of ARTICLE FIFTH and ARTICLE SIXTH of
these Articles of Incorporation, the following terms have the following meanings
(with terms defined in the singular having comparable meaning when used in the
plural and vice versa), unless the context otherwise requires. As used in this
Section 10, a "contribution" or "transfer" of assets or properties from one
Business Group to another refers to the reattribution of such assets or
properties from the contributing or transferring Business Group to the other
Business Group and correlative phrases have correlative meanings.
"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 Class A Holder or this
Corporation unless (i) FT, DT and Atlas own a majority of the Voting Power of
such JV Entity and this Corporation 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 this Corporation 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.
39
"Alien" means "aliens," "their representatives," "a foreign government or
representatives thereof" or "any corporation organized under the laws of a
foreign country" as such terms are used in Section 310(b)(4) of the
Communications Act of 1934, as amended, or as hereafter may be amended, or any
successor provision of law.
"Applicable Law" has the meaning set forth in the Stockholders' Agreement.
"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" means (a)
in the case of FT, any Person occupying any of the positions listed on Schedule
A to the Stockholders' Agreement and (b) in the case of DT, any Person occupying
any of the positions listed on Schedule B to the Stockholders' Agreement,
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 Corporation.
"Atlas" means the company 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 Trading Price" of a share of any class or series of capital stock
of the Corporation on any day means the average Closing Price of such capital
stock determined over the 20 Trading Days immediately preceding the date of such
determination; provided that for purposes of this definition only, in
determining the "Closing Price" of a share of any class or series of capital
stock for such 20 Trading Day period, (i) the "Closing Price" of a share of
capital stock on any day prior to any "ex-dividend" date or any similar date
occurring during such period for any dividend or distribution (other than any
dividend or distribution contemplated by clause (ii)(B) of this definition) paid
or to be paid with respect to such capital stock shall be reduced by the Fair
Value of the per share amount of such dividend or distribution and (ii) the
"Closing Price" of any share of capital stock on any day prior to (A) the
effective date of any subdivision (by stock split or otherwise) or combination
(by reverse stock split or otherwise) of outstanding shares of such class of
capital stock occurring during such period or (B) any "ex-dividend" date or any
similar date occurring during such period for any dividend or distribution with
respect to such capital stock to be made in shares of such class or series of
capital stock or Convertible Securities that are convertible, exchangeable or
exercisable for such class or series of capital stock, shall be appropriately
adjusted, as determined by the Board of Directors, to reflect such subdivision,
combination, dividend or distribution.
"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 the FT/DT Restructuring 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 has "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
(c) has, or any of whose Affiliates or Associates has, any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities which are Beneficially
Owned, directly or indirectly, by any other Person (or any Affiliate thereof),
provided that (i) Class A Stock, Non-Class A Common Stock and Preferred Stock
held by one of FT or DT or its Affiliates or Associates shall not also be deemed
to be Beneficially Owned by the other of FT or DT or its Affiliates or
Associates, (ii) FON Stock and PCS Stock shall not be deemed to be Beneficially
Owned by FT, DT or their Affiliates or Associates by virtue of the top up rights
and standby commitments granted under the Purchase Rights Agreement (as
40
defined in the FT/DT Restructuring Agreement) except to the extent that FT, DT
or their Affiliates or Associates have (A) acquired shares of FON Stock or PCS
Stock pursuant to the Purchase Rights Agreement, or (B) become irrevocably
committed to acquire, and the Cable Holders have become irrevocably committed to
sell, shares of FON Stock or PCS Stock pursuant to the Purchase Rights Agreement
(with such Beneficial Ownership being determined on a full-voting basis),
subject only to customary closing conditions, if any; (iii) FT, DT and their
Affiliates and Associates shall not be deemed to Beneficially Own any
incremental Voting Power resulting solely from the increase in Voting Power
provided for by the application of ARTICLE SIXTH, Section 7.5(d) and (iv) prior
to the conversion thereof (other than during the 90-day period following the
Conversion Trigger Date set forth in ARTICLE SIXTH, Section 7.5(a)), a holder of
Series 2 PCS Stock or Series 2 FON Stock shall not be deemed to beneficially own
the shares of Series 1 PCS Stock or Series 1 FON Stock issuable upon conversion
thereof.
"Board of Directors" means the board of directors of this Corporation.
"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.
"Business Group" means, as of any date, the Sprint FON Group or the PCS
Group, as the case may be.
"Bylaws" means the Bylaws of this Corporation as amended or supplemented
from time to time.
"Cable Holder" means any of:
(i) Tele-Communications, Inc., a Delaware corporation, Comcast Corporation,
a Pennsylvania corporation, or Cox Communications, Inc., a Delaware corporation,
(ii) any Affiliate of an entity identified in clause (i) of this
definition,
(iii) any successor (by operation of law or otherwise) of an entity
identified in clauses (i) or (ii) of this definition so long as such successor
remains an Affiliate of an entity identified in clause (i) or (ii),
(iv) any entity controlled by two or more entities identified in clauses
(i) through (iii) of this definition or this clause (iv) even if such entity is
not considered an Affiliate of any individual entity so identified and
(v) for purposes of ARTICLE SIXTH, Section 7.5(b) only, with respect to any
Transfer of shares of Series 2 PCS Stock, the transferee of such shares if (A)
at the time of such Transfer, the transferor was a Cable Holder under any of the
clauses (i) through (iv) of this definition, (B) after giving effect to such
Transfer, the transferee was an Associate of the transferor, (C) immediately
prior to such Transfer, the transferee was identified in writing by the
transferor as a "Cable Holder" under this clause (v), and (D) the transferor and
transferee satisfied the conditions set forth in Section 2.4 of the applicable
Cable Holder Standstill Agreements.
"Cable Holder Standstill Agreements" means the Standstill Agreements, dated
as of May 26, 1998, entered into between this Corporation and each of certain
Cable Holders, and any Standstill Agreements in the form thereof entered into
from time to time between this Corporation and certain transferee Affiliates and
Associates of such Cable Holders.
"Cellular and Wireless Division" means the former Cellular and Wireless
Communications Services Division of this Corporation.
"Change of Control" means a:
(a) decision by the Board of Directors to sell Control of this Corporation
or not to oppose a third party tender offer for Voting Securities of this
Corporation representing more than 35% of the Voting Power of this Corporation;
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,
41
provided that a Strategic Merger shall not be deemed to be a Change of Control
and provided, further, that any transaction between this Corporation 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 Action" means action by the holders of a majority of the Votes
represented by the Class A Stock taken by a vote at either a regular or special
meeting of the stockholders of this Corporation or of the holders of the Class A
Stock or by written consent delivered to the Secretary of this Corporation.
"Class A Common Stock" means the Old Class A Common Stock.
"Class A FON Shares" means shares of Series 3 FON Stock and the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The FON
Group.
"Class A Holders" means (a) the holders of the Class A Stock, and (b) any
Qualified Stock Purchaser who has executed with this Corporation a Qualified
Stock Purchaser Assumption Agreement (as such term is defined in the
Stockholders' Agreement), for so long as such Person holds Class A Stock.
"Class A PCS Shares" means shares of Series 3 PCS Stock and the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The PCS
Group.
"Class A Provisions" means Section 5 (but only with respect to those
provisions addressing the Class A Stock), Section 6 (but only with respect to
those provisions addressing the Class A Stock), Section 8, Section 9 (but only
with respect to those provisions addressing the Class A Stock), Section 10,
Section 11 and Section 12 of ARTICLE SIXTH.
"Class A Stock" means the Class A Common Stock, the Series 3 FON Stock and
the Series 3 PCS Stock.
"Closing Price" means, with respect to a security on any day, the last sale
price, regular way, or in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on The New York Stock Exchange, Inc.
or, if such 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 the National Association of
Securities Dealers, Inc. Automated Quotations System 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.
"Committed Percentage" means, as to any Class A Holder, the percentage
obtained by dividing the aggregate number of Votes represented or to be
represented by the Voting Securities of this Corporation (a) owned of record by
such Class A Holder or by its nominees; and (b) which such Class A Holder has
committed to this Corporation to purchase pursuant to Article V of the
Stockholders Agreement, by the sum of (i) the Voting Power of this Corporation,
and (ii) the Votes to be represented by any Voting Securities of this
Corporation such Class A Holder has committed to this Corporation to purchase
from this Corporation pursuant to Article V of the Stockholders' Agreement.
"Continuing Director" has the meaning set forth in the Fair Price
Provisions.
"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
42
(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.
"Conversion Date" means the date fixed by the Board of Directors as the
effective date for the conversion of shares of PCS Stock into shares of FON
Stock (and Shares Issuable With Respect To The Class A Equity Interest In The
PCS Group into Shares Issuable With Respect To The Class A Equity Interest In
The FON Group) as shall be set forth in the notice to holders of shares of PCS
Stock and to holders of any Convertible Securities that are convertible into or
exchangeable or exercisable for shares of PCS Stock required pursuant to Section
7.4(E).
"Conversion Time" has the meaning set forth in Section 8.3(d) of ARTICLE
SIXTH.
"Converted Series Shares" has the meaning set forth in Section 7.5(c) of
ARTICLE SIXTH.
"Converted Shares" has the meaning set forth in Section 8.3(d) of ARTICLE
SIXTH.
"Converted Votes" means, on any particular day, (i) in the case of a share
of Series 2 PCS Stock, the applicable PCS Per Share Vote a share of Series 1 PCS
Stock would have had if the computation described in Section 3.2(a)(iii) had
occurred on such day and (ii) in the case of a share of Series 2 FON Stock, one
vote per share.
"Convertible Securities" at any time means any securities of the
Corporation or of any subsidiary thereof (other than shares of Corporation
Common Stock), including warrants and options, outstanding at such time that by
their terms are convertible into or exchangeable or exercisable for or evidence
the right to acquire any shares of any class or series of Corporation Common
Stock, whether convertible, exchangeable or exercisable at such time or a later
time or only upon the occurrence of certain events, pursuant to antidilution
provisions of such securities or otherwise.
"Corporation Common Stock" means the Series 1 FON Stock, the Series 2 FON
Stock, the Series 3 FON Stock, the Class A Common Stock, the Series 1 PCS Stock,
the Series 2 PCS Stock and the Series 3 PCS Stock.
"Corporation Joint Venture Termination" means any of the following:
(a) the sale of Venture Interests by a Sprint Party pursuant to Section
20.5(a) of the Joint Venture Agreement; or
(b) the receipt by the FT/DT Parties of the Tie-Breaking Vote due to a
Funding Default, Material Non-Funding Default or Bankruptcy (as such terms are
defined in the Joint Venture Agreement) on the part of any of the Sprint
Parties.
"Director" means a member of the Board of Directors.
"Disposition" means a sale, transfer, assignment or other disposition
(whether by merger, consolidation, sale or contribution of assets or stock or
otherwise) of properties or assets.
"DT" means Deutsche Telekom AG, an Aktiengesellschaft formed under the laws
of Germany.
"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-Herzegovina, 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.
43
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the United States Securities and Exchange
Commission promulgated thereunder.
"Fair Market Value" means, with respect to any asset, shares or other
property, the cash price at which a willing seller would sell and a willing
buyer would buy such asset, shares or other property in an arm's-length
negotiated transaction without undue time restraints, as determined in good
faith by a majority of the Independent Directors.
"Fair Price Condition" has the meaning set forth in Section 2.2 of ARTICLE
SIXTH.
"Fair Price Provisions" means ARTICLE SEVENTH of these Articles of
Incorporation, and any successor provision thereto.
"Fair Value" means, in the case of equity securities or debt securities of
a class that has previously been Publicly Traded for a period of at least 15
months, the Market Value thereof (if such value, as so defined, can be
determined) or, in the case of an equity security or debt security that has not
been Publicly Traded for at least such period, means the fair value per share of
stock or per other unit of such other security, on a fully distributed basis, as
determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of Directors;
provided, however, that in the case of property other than securities, the "Fair
Value" thereof shall be determined in good faith by the Board of Directors based
upon such appraisals or valuation reports of such independent experts as the
Board of Directors shall in good faith determine to be appropriate in accordance
with good business practice. Any such determination of Fair Value shall be
described in a statement filed with the records of the actions of the Board of
Directors.
"FCC" means the Federal Communications Commission.
"FON Group Intergroup Interest Fraction" as of any date means a fraction
the numerator of which is the Number Of Shares Issuable With Respect To The FON
Group Intergroup Interest on such date and the denominator of which is the sum
of (A) such Number Of Shares Issuable With Respect To The FON Group Intergroup
Interest, (B) the aggregate number of shares of PCS Stock outstanding on such
date, and (iii) the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The PCS Group on such date. A statement setting forth the FON
Group Intergroup Interest Fraction as of the record date for any dividend or
distribution on the PCS Stock, as of the end of each fiscal quarter of the
Corporation and as of any date otherwise required under these Articles of
Incorporation or by the Board of Directors shall be filed by the Secretary of
the Corporation in the records of the Board of Directors of the Corporation not
later than fifteen Business Days after such date.
"FON Preferred Stock" means Preferred Stock to the extent attributed to the
Sprint FON Group in accordance with ARTICLE SIXTH, Section 13.
"FON Stock" means the Series 1 FON Stock, the Series 2 FON Stock and the
Series 3 FON Stock.
"France" means the Republic of France, including French Guiana, Guadeloupe,
Martinique and Reunion, and its territories and possessions.
"FT" means France Telecom SA, a societe anonyme formed under the laws of
France.
"FT/DT Joint Venture Termination" means any of the following:
(a) the sale of Venture Interests by an FT/DT Party pursuant to Section
20.5(b), 20.5(c) or 20.5(d) of the Joint Venture Agreement; or
(b) the receipt by the Sprint Parties of the Tie-Breaking Vote due to a
Funding Default, Material Non-Funding Default or Bankruptcy (as such terms are
defined in the Joint Venture Agreement) on the part of any of the FT/DT Parties.
"FT/DT Party" has the meaning set forth in the Joint Venture Agreement.
44
"FT/DT Restructuring Agreement" means the Master Restructuring and
Investment Agreement, dated as of May 26, 1998, among FT, DT and this
Corporation, as amended or supplemented from time to time.
"Germany" means the Federal Republic of Germany.
"Governmental Authority" means any federation, nation, state, sovereign, or
government, any federal, supranational, regional, state or local political
subdivision, any governmental or administrative body, 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.
"Independent Director" means any member of the Board of Directors who (a)
is not an officer or employee of this Corporation, or any Class A Holder, or any
of their respective Subsidiaries, (b) is not a former officer of this
Corporation, 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 this
Corporation, or any Class A Holder, or their respective Subsidiaries, if, in the
opinion of the Nominating Committee of the Board of Directors of this
Corporation (the "Nominating Committee") or the Board of Directors if a
Nominating Committee is not in existence, such relationship is material to this
Corporation, 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 this Corporation, 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 this Corporation, 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 of the filing of
these Articles of Incorporation who is not an executive officer of this
Corporation shall be deemed to be an Independent Director hereunder.
"Investment Agreement" means the Investment Agreement, dated as of July 31,
1995, among FT, DT and this Corporation (and all exhibits and schedules
thereto), as amended or supplemented from time to time.
"Investment Documents" means the FT/DT Restructuring Agreement and the
Stockholders' Agreement.
"Joint Venture" means the joint venture formed by FT, DT, this Corporation
and Sprint Sub, as provided in the Joint Venture Agreement.
"Joint Venture Agreement" means the Joint Venture Agreement, dated as of
June 22, 1995 among FT, DT, Sprint Sub, and this Corporation, as amended or
supplemented from time to time.
"JV Entity" has the meaning set forth in the Joint Venture Agreement.
"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
45
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" means 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 such Long Distance Asset;
(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 this Corporation, (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.
"Local Exchange Division" means the Local Communications Services Division
of this Corporation.
"Long Distance Assets" means:
(a) the assets reflected in this Corporation's balance sheet for the year
ended December 31, 1994 as included in the Long Distance Division;
(b) any assets acquired by this Corporation or any of its Subsidiaries
following December 31, 1994 that are reflected in this Corporation's balance
sheet as included in the Long Distance Division;
(c) any assets of this Corporation or any of its Subsidiaries that are not
reflected in this Corporation'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 this Corporation or any of its Subsidiaries to, or
reclassified by this Corporation or any of its Subsidiaries as part of, the Long
Distance Division;
(d) any assets acquired by this Corporation 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 this Corporation or any of its Subsidiaries
outside of the Long Distance Division, but which continue to be owned by this
Corporation 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 this Corporation'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 this Corporation 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.
"Long Distance Division" means the Long Distance Communications Services
Division of this Corporation.
"Major Competitor" means (a) with respect to this Corporation, a Person
that materially competes with a major portion of the telecommunications services
business of this Corporation in North America, or a Person that has taken
substantial steps to become such a Major Competitor and which this Corporation
has reasonably concluded, in its good
46
faith judgment, will be such a competitor in the near future in the United
States of America provided that this Corporation furnish in writing to each
Class A Holder reasonable evidence of the occurrence of such steps; and (b) 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 this Corporation has reasonably concluded, in its good faith
judgment, will be such a competitor in the near future, provided that FT, DT or
this Corporation furnish in writing to the other two of them reasonable evidence
of the occurrence of such steps.
"Major Issuance" means any transaction, including, but not limited to, a
merger or business combination, resulting, directly or indirectly, in the
issuance (or sale from treasury) in connection with such transaction of Voting
Securities of this Corporation with a number of Votes equal to or greater than
30 percent of the Voting Power of this Corporation immediately prior to such
issuance.
"Market Capitalization" means, with respect to this Corporation at any
date, the sum of the average Market Price over the immediately preceding 20
Business Days of each share of outstanding capital stock of this Corporation,
securities convertible into such capital stock and options, warrants or other
rights to acquire such capital stock.
"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, (i) in the case of a share of
Series 3 FON Stock or Series 2 FON Stock, as the case may be, the Market Price
of a share of Series 1 FON Stock and (ii) in the case of a share of Series 3 PCS
Stock or Series 2 PCS Stock, as the case may be, the Market Price of a share of
Series 1 PCS Stock. The Market Price of (x) any options, warrants, rights or
other securities convertible into or exercisable for Series 3 FON Stock or
Series 2 FON Stock shall be equal to the Market Price of options, warrants,
rights or other securities convertible into or exercisable for Series 1 FON
Stock upon the same terms and otherwise containing the same terms as such
options, warrants, rights or other securities convertible into or exercisable
for Series 3 FON Stock or Series 2 FON Stock, as the case may be, and (y) any
options, warrants, rights or other securities convertible into or exercisable
for Series 3 PCS Stock or Series 2 PCS Stock, as the case may be, shall be equal
to the Market Price of options, warrants, rights or other securities convertible
into or exercisable for Series 1 PCS Stock upon the same terms and otherwise
containing the same terms as such options, warrants, rights or other securities
convertible into or exercisable for Series 3 PCS Stock or Series 2 PCS Stock, as
the case may be.
"Market Value" of a share of any class or series of capital stock of the
Corporation on any day means the average of the high and low reported sales
prices regular way of a share of such class or series on such day (if such day
is a Trading Day, and if such day is not a Trading Day, on the Trading Day
immediately preceding such day) or, in case no such reported sale takes place on
such Trading Day, the average of the reported closing bid and asked prices
regular way of a share of such class or series on such Trading Day, in either
case as reported on the New York Stock Exchange Composite Tape or, if the shares
of such class or series are not listed or admitted to trading on such Exchange
on such Trading Day, on the principal national securities exchange in the United
States on which the shares of such class or series are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange on such Trading Day, on the National Market tier of The Nasdaq Stock
Market or, if the shares of such class or series are not listed or admitted to
trading on any national securities exchange or quoted on such National Market
System on such Trading Day, the average of the closing bid and asked prices of a
share of such class or series in the over-the-counter market on such Trading Day
as furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors or, if such closing bid and asked prices are not
made available by any such New York Stock Exchange member firm on such Trading
Day, the Fair Value of a share of such class or series; provided that, for
purposes of determining the Market Value of a share of any class or series of
capital stock for any period,
(i) the "Market Value" of a share of capital stock on any day prior to any
"ex-dividend" date or any similar date occurring during such period for any
dividend or distribution (other than any dividend or distribution contemplated
by clause (ii)(B) of this definition) paid or to be paid with respect to such
capital stock shall be reduced by the Fair Value of the per share amount of such
dividend or distribution and
(ii) the "Market Value" of any share of capital stock on any day prior to
(A) the effective date of any subdivision (by stock split or otherwise) or
combination (by reverse stock split or otherwise) of outstanding shares of such
class of capital stock occurring during such period or (B) any "ex-dividend"
date or any similar date occurring during such period for any dividend or
distribution with respect to such capital stock to be made in shares of such
class or
47
series of capital stock or Convertible Securities that are convertible,
exchangeable or exercisable for such class or series of capital stock shall be
appropriately adjusted, as determined by the Board of Directors, to reflect such
subdivision, combination, dividend or distribution.
"Master Transfer Agreement" means the Master Transfer Agreement, dated as
of January 21, 2000, between and among the Corporation, FT, DT and the other
parties named therein.
"Net Proceeds" means, as of any date with respect to any Disposition of any
of the properties and assets attributed to the PCS Group, an amount, if any,
equal to what remains of the gross proceeds of such Disposition after payment
of, or reasonable provision is made as determined by the Board of Directors for,
(A) any taxes payable by the Corporation (or which would have been payable but
for the utilization of tax benefits attributable to the Sprint FON Group) in
respect of such Disposition or in respect of any resulting dividend or
redemption pursuant to ARTICLE SIXTH, Section 7.1(A)(1)(a) or (b), (B) any
transaction costs, including, without limitation, any legal, investment banking
and accounting fees and expenses and (C) any liabilities (contingent or
otherwise) of or attributed to the PCS Group, including, without limitation, any
liabilities for deferred taxes or any indemnity or guarantee obligations of the
Corporation incurred in connection with the Disposition or otherwise, and any
liabilities for future purchase price adjustments and any preferential amounts
plus any accumulated and unpaid dividends in respect of Preferred Stock
attributed to the PCS Group. For purposes of this definition, any properties and
assets attributed to the PCS Group remaining after such Disposition shall
constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as the Board of Directors determines can
be expected to be supported by such properties and assets.
"Non-Class A Common Stock" means the Series 1 FON Stock, the Series 2 FON
Stock, the Series 1 PCS Stock and the Series 2 PCS Stock.
"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 this Corporation or any
Subsidiary of this Corporation pursuant to the Joint Venture Agreement; or any
activities or services of the Joint Venture or any of the JV Entities; (b) the
interests, assets, properties and businesses attributed to the PCS Group in
accordance with this Section 10; (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 this
Corporation 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 this Corporation or any of its Subsidiaries.
"North America" means the current geographic area covered by the following
countries: Canada, Mexico and the United States of America.
"Number Of Shares Issuable With Respect To The FON Group Intergroup
Interest" means, as of November 23, 1998, a number equal to 220,000,000 less the
sum of (i) the Number Of Shares Issuable With Respect To The Old Class A Common
Equity Interest In The PCS Group, (ii) 21,559,009, (iii) one-half of the number
of shares of Common Stock, par value $2.50 per share, outstanding immediately
prior to November 23, 1998, and (iv) one-half of the number of shares of Common
Stock, par value $2.50 per share, held as treasury shares by the Corporation
immediately prior to November 23, 1998; provided, however, that such number
shall from time to time thereafter be:
(A) adjusted, as determined by the Board of Directors to be appropriate to
reflect equitably any subdivision (by stock split or otherwise) or combination
(by reverse stock split or otherwise) of the PCS Stock or any dividend or other
distribution of shares of PCS Stock to holders of shares of PCS Stock or any
reclassification of PCS Stock;
48
(B) decreased (but to not less than zero), if before such decrease such
number is greater than zero, by action of the Board of Directors by (1) the
number of shares of PCS Stock issued or sold by the Corporation that,
immediately prior to such issuance or sale, were included (as determined by the
Board of Directors pursuant to paragraph (C) of this definition) in the Number
Of Shares Issuable With Respect To The FON Group Intergroup Interest, (2) the
number of shares of PCS Stock issued upon conversion, exchange or exercise of
Convertible Securities that, immediately prior to the issuance or sale of such
Convertible Securities, were included in the Number Of Shares Issuable With
Respect To The FON Group Intergroup Interest, (3) the number of shares of PCS
Stock issued by the Corporation as a dividend or other distribution (including
in connection with any reclassification or exchange of shares) to holders of FON
Stock and Class A Common Stock (but only with respect to any Shares Issuable
With Respect To The Class A Equity Interest In The FON Group) or shares of FON
Preferred Stock, as the case may be, (4) the number of shares of PCS Stock
issued upon the conversion, exchange or exercise of any Convertible Securities
issued by the Corporation as a dividend or other distribution (including in
connection with any reclassification or exchange of shares) to holders of FON
Stock or Class A Common Stock (but only with respect to any Shares Issuable With
Respect To The Class A Equity Interest In The FON Group) or shares of FON
Preferred Stock, as the case may be, (5) the quotient of (a) the aggregate Fair
Value of any PCS Preferred Stock (or Convertible Securities convertible into or
exchangeable or exercisable for shares of PCS Preferred Stock) issued by the
Corporation as a dividend or other distribution (including in connection with
any classification or exchange of shares) to holders of FON Stock, Class A
Common Stock (but only with respect to any Shares Issuable With Respect To The
Class A Equity Interest In The FON Group), or shares of FON Preferred Stock, as
the case may be, divided by (b) the Market Value of one share of PCS Stock as of
the date of issuance of such PCS Preferred Stock (or Convertible Securities), or
(6) the number (rounded, if necessary, to the nearest whole number) equal to the
quotient of (a) the aggregate Fair Value as of the date of contribution of
properties or assets (including cash) transferred from the PCS Group to the
Sprint FON Group in consideration for a reduction in the Number Of Shares
Issuable With Respect To The FON Group Intergroup Interest divided by (b) the
Market Value of one share of PCS Stock as of the date of such transfer; and
(C) increased by (1) the number of outstanding shares of PCS Stock
repurchased by the Corporation for consideration that had been attributed to the
Sprint FON Group, (2) the number (rounded, if necessary, to the nearest whole
number) equal to the quotient of (a) the Fair Value of properties or assets
(including cash) theretofore attributed to the Sprint FON Group that are
contributed, by action of the Board of Directors, to the PCS Group in
consideration of an increase in the Number Of Shares Issuable With Respect To
The FON Group Intergroup Interest, divided by (b) the Market Value of one share
of PCS Stock as of the date of such contribution and (3) the number of shares of
PCS Stock into or for which Convertible Securities are deemed converted,
exchanged or exercised pursuant to the penultimate sentence of the definition of
"Sprint FON Group";
provided, further, that the Board of Directors may make such subsequent changes
to the calculations made pursuant to subparagraphs (A), (B) and (C) immediately
above as may be required for purposes of accurately determining such number.
"Number Of Shares Issuable With Respect To The Old Class A Equity Interest
In The FON Group" means, as of November 23, 1998, a number equal to the
aggregate number of outstanding shares of Old Class A Common Stock as of
November 23, 1998; provided, however, that such number shall from time to time
thereafter be:
(A) adjusted, on an equivalent Per Class A FON Share Basis, to reflect any
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) of the FON Stock or any reclassification of FON Stock; and
(B) decreased (but to not less than zero), if before such decrease such
number is greater than zero, by the number of Shares of Series 1 FON Stock or
Series 3 FON Stock issued in accordance with ARTICLE SIXTH, Section 1.2(c) or
ARTICLE SIXTH, Section 8.3(a) (by virtue of reference to ARTICLE SIXTH, Section
1.2(c)) and any reduction required to reflect the redemption of Shares Issuable
With Respect To The Class A Equity Interest In The FON Group pursuant to Section
2.2 to the extent allocated to shares of Old Class A Common Stock; and
(C) adjusted by the Board of Directors to properly reflect any other
necessary changes on an equivalent Per Class A FON Share Basis.
"Number Of Shares Issuable With Respect To The Old Class A Equity Interest
In The PCS Group" means, as of November 23, 1998, a number (rounded up to the
nearest whole share) equal to one-half of the aggregate number of
49
outstanding shares of Old Class A Common Stock as of November 23, 1998;
provided, however, that such number shall from time to time thereafter be:
(A) adjusted, on an equivalent Per Class A PCS Share Basis, to reflect any
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) of the PCS Stock or any reclassification of PCS Stock; and
(B) decreased (but to not less than zero), if before such decrease such
number is greater than zero, by action of the Board of Directors by (1) the
amount of any payment made to the holders of Old Class A Common Stock pursuant
to Section 7.1(B)(5) or Section 7.1(B)(6) divided by the corresponding
redemption price per share of PCS Stock pursuant to Section 7.1(A)(1)(b)(i) or
Section 7.1(A)(1)(b)(ii), (2) any reduction required to reflect the redemption
of Shares Issuable With Respect To The Class A Equity Interest In The PCS Group
pursuant to Section 2.2 to the extent allocated to shares of Old Class A Common
Stock, (3) the amount necessary to reflect the conversion of some or all of this
number into a Number Of Shares Issuable With Respect To The Old Class A Equity
Interest In The FON Group in accordance with Sections 7.1(B)(7), 7.1(C) and
7.1(D), and (4) the amount necessary to reflect the redemption thereof in
exchange for the issuance of shares of common stock of the PCS Group Subsidiary
in accordance with Section 7.2; and
(C) decreased (but to not less than zero), if before such decrease such
number is greater than zero, by the number of shares of Series 1 PCS Stock or
Series 3 PCS Stock issued by the Corporation in accordance with ARTICLE SIXTH,
Section 1.2(c) or ARTICLE SIXTH, Section 8.3(a) (by virtue of reference to
ARTICLE SIXTH, Section 1.2(c)); and
(D) adjusted by the Board of Directors to properly reflect any other
necessary changes on an equivalent Per Class A PCS Share Basis.
"Old Class A Common Stock" has the meaning set forth in the "Designation"
column in Section 1 of ARTICLE SIXTH.
"Old Class A FON Vote Per Share" means, on any date, a number equal to X/Y,
where "X" equals the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The FON Group and "Y" equals the aggregate number of
outstanding shares of Old Class A Common Stock.
"Old Class A PCS Interest Fraction," as of any date, means the fraction the
numerator of which shall be the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The PCS Group on such date and the denominator of
which shall be the sum of (i) the number of shares of PCS Stock outstanding on
such date, (ii) the Number Of Shares Issuable With Respect To The FON Group
Intergroup Interest on such date, and (iii) the Number Of Shares Issuable With
Respect To The Old Class A Equity Interest In The PCS Group on such date.
"Old Class A PCS Vote Per Share" means, on any date, a number equal to
(X/Y) x Z, where "X" equals the Number Of Shares Issuable With Respect To The
Old Class A Equity Interest In The PCS Group, "Y" equals the aggregate number of
outstanding shares of Old Class A Common Stock and "Z" equals, in the case of
ARTICLE SIXTH, Section 3.2(d), one, and in all other cases, the applicable PCS
Per Share Vote on such date.
"Optional Conversion Ratio" as of any date means the ratio of the Average
Trading Price of a share of Series 1 PCS Stock to the Average Trading Price of a
share of Series 1 FON Stock; provided, that such ratio would be determined over
a 60-Trading Day period if the 20-Trading Day period normally used to determine
the Average Trading Price is less than 90% of such ratio as determined over a
60-Trading Day period.
"Outstanding PCS Fraction," as of any date, means the fraction the
numerator of which shall be the number of shares of PCS Stock outstanding on
such date and the denominator of which shall be the sum of (i) the number of
shares of PCS Stock outstanding on such date, (ii) the Number Of Shares Issuable
With Respect To The FON Group Intergroup Interest on such date, and (iii) the
Number Of Shares Issuable With Respect To The Old Class A Equity Interest In The
PCS Group on such date. A statement setting forth the Outstanding PCS Fraction
as of the record date for the payment of any dividend or distribution on PCS
Stock and as of the end of each fiscal quarter of the Corporation shall be filed
by the Secretary of the Corporation in the records of the actions of the Board
of Directors not later than fifteen Business Days after such date.
50
"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.
"PCS Group" means, as of any date from and after November 23, 1998:
(A) the interest on such date of the Corporation and any of its
subsidiaries in any of the following Persons or any of their respective
subsidiaries (including any successor thereto by merger, consolidation or sale
of all or substantially all of its assets, whether or not in connection with a
Related Business Transaction) (the "PCS Group Companies") and the corresponding
interests in their respective assets and liabilities and the businessesconducted
by such entities: SWV Six, Inc.; SWV One, Inc.; SWV Two, Inc.; SWV Three, Inc.;
SWV Four, Inc.; SWV Seven, Inc.; SWV Eight, Inc.; SWV One Telephony Partnership;
SWV Two Telephony Partnership; SWV Three Telephony Partnership; Sprint
Enterprises, L.P.; MinorCo, L.P.; Sprint Spectrum Holding Company, L.P.;
American PCS, L.P.; Cox Communications PCS, L.P.; NewTelco, L.P.; Sprint
Spectrum L.P.; American Personal Communications Holdings, Inc.; American PCS
Communications, LLC; APC PCS, LLC; APC Realty and Equipment Company, LLC; Sprint
Spectrum Finance Corporation; Sprint Spectrum Equipment Company, L.P.; Sprint
Spectrum Realty Company, L.P.; WirelessCo, L.P.; SWV Five, Inc.; PhillieCo
Partners I, L.P.; PhillieCo Partners II, L.P.; PhillieCo Sub, L.P.; PhillieCo.,
L.P.; PhillieCo Equipment & Realty Company, L.P.; SprintCom, Inc.; SprintCom
Equipment Company L.P.; PCS Leasing Co., L.P.; Cox PCS Assets, L.L.C.; and Cox
PCS License, L.L.C.;
(B) all assets and liabilities of the Corporation and its subsidiaries
attributed by the Board of Directors to the PCS Group, whether or not such
assets or liabilities are or were also assets or liabilities of any of the PCS
Group Companies;
(C) all properties and assets transferred to the PCS Group from the Sprint
FON Group (other than a transaction pursuant to paragraph (D) of this
definition) after November 23, 1998 pursuant to transactions in the ordinary
course of business of both the Sprint FON Group and the PCS Group or otherwise
as the Board of Directors may have directed as permitted by this ARTICLE SIXTH;
(D) all properties and assets transferred to the PCS Group from the Sprint
FON Group in connection with an increase in the Number Of Shares Issuable With
Respect To The FON Group Intergroup Interest; and
(E) the interest of the Corporation or any of its subsidiaries in any
business or asset acquired and any liabilities assumed by the Corporation or any
of its subsidiaries outside of the ordinary course of business and attributed to
the PCS Group, as determined by the Board of Directors as contemplated by
Section 9.1(A) of ARTICLE SIXTH; provided that
(1) from and after the payment date of any dividend or other
distribution with respect to shares of PCS Stock (other than a dividend or
other distribution payable in shares of PCS Stock, with respect to which
adjustment shall be made as provided in the definition of "Number Of Shares
Issuable In Respect Of The FON Group Intergroup Interest," or in securities
of the Corporation attributed to the PCS Group, for which provision shall
be made as set forth in clause (2) of this proviso), the PCS Group shall no
longer include an amount of assets or properties previously attributed to
the PCS Group of the same kind as so paid in such dividend or other
distribution with respect of shares of PCS Stock as have a Fair Value on
the record date for such dividend or distribution equal to the product of
(a) the Fair Value on such record date of the aggregate of such dividend or
distribution to holders of shares of PCS Stock declared multiplied by (b) a
fraction the numerator of which is equal to the FON Group Intergroup
Interest Fraction in effect on the record date for such dividend or
distribution and the denominator of which is equal to the Outstanding PCS
Fraction in effect on the record date for such dividend or distribution
(and in such eventuality such assets as are no longer included in the PCS
Group shall be attributed to the Sprint FON Group in accordance with the
definition of "Sprint FON Group"), and
(2) if the Corporation shall pay a dividend or make some other
distribution with respect to shares of PCS Stock payable in securities of
the Corporation that are attributed to the PCS Group for purposes of this
ARTICLE SIXTH (other than PCS Stock), there shall be excluded from the PCS
Group an interest in the PCS
51
Group equivalent to the number or amount of such securities that is equal
to the product of the number or amount of securities so distributed to
holders of PCS Stock multiplied by the fraction specified in clause 1(b) of
this proviso (determined as of the record date for such distribution) (and
such interest in the PCS Group shall be attributed to the Sprint FON Group)
and, to the extent interest is or dividends are paid on the securities so
distributed, the PCS Group shall no longer include a corresponding ratable
amount of the kind of assets paid as such interest or dividends as would
have been paid in respect of the securities equivalent to such interest in
the PCS Group deemed held by the Sprint FON Group if the securities
equivalent to such interest were outstanding (and in such eventuality such
assets as are no longer included in the PCS Group shall be attributed to
the Sprint FON Group in accordance with the definition of "Sprint FON
Group").
The Corporation may also, to the extent a dividend or distribution on the PCS
Stock has been paid in Convertible Securities that are convertible into or
exchangeable or exercisable for PCS Stock, cause such Convertible Securities as
are deemed to be held by the Sprint FON Group in accordance with the
third-to-last sentence of the definition of "Sprint FON Group" and clause (2) of
the proviso to the immediately preceding sentence to be deemed to be converted,
exchanged or exercised as provided in the penultimate sentence of the definition
of "Sprint FON Group," in which case such Convertible Securities shall no longer
be deemed to be held by the Sprint FON Group.
"PCS Group Disposition Date" has the meaning set forth in Section 7.1(A) of
ARTICLE SIXTH.
"PCS Group Subsidiary" has the meaning set forth in Section 7.2 of ARTICLE
SIXTH.
"PCS Per Share Vote" has the meaning set forth in Section 3.2 of ARTICLE
SIXTH.
"PCS Preferred Stock" means Preferred Stock to the extent attributed to the
PCS Group in accordance with ARTICLE SIXTH, Section 13.
"PCS Ratio" means the ratio of the Average Trading Price of one share of
Series 1 PCS Stock to the Average Trading Price of one share of Series 1 FON
Stock determined, in each such case, as of the 21st Trading Day following the
commencement of regular way trading of both the Series 1 PCS Stock and the
Series 1 FON Stock.
"PCS Stock" means the Series 1 PCS Stock, the Series 2 PCS Stock and the
Series 3 PCS Stock.
"Per Class A FON Share Basis" means, with respect to Old Class A Common
Stock, an amount per share equal to (X/Y) x Z, where "X" equals the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The FON
Group, "Y"equals the number of shares outstanding of Old Class A Common Stock,
and "Z" equals the per share number of votes or dividend amount, redemption
amount or other payment paid to the class or series of FON Stock to which the
Old Class A Common Stock is being compared.
"Per Class A PCS Share Basis" means, with respect to Old Class A Common
Stock, an amount per share equal to (X/Y) x Z, where "X" equals the Number Of
Shares Issuable With Respect To The Old Class A Equity Interest In The PCS
Group, "Y" equals the number of shares outstanding of Old Class A Common Stock,
and "Z" equals the per share number of votes or dividend amount, redemption
amount or other payment paid to the class or series of PCS Stock to which the
Old Class A Common Stock is being compared.
"Percentage Ownership Interest" means, with respect to any Person, that
percentage of the Voting Power of this Corporation represented by Votes
associated with the Voting Securities of this Corporation 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.
"Preferred Stock" has the meaning set forth in Section 1 of ARTICLE SIXTH.
"Proceeding" means any action, litigation, suit, proceeding or formal
investigation or review of any nature, civil, criminal, regulatory or otherwise,
before any Governmental Authority.
52
"Publicly Traded" with respect to any security means (i) registered under
Section 12 of the Securities Exchange Act of 1934, as amended (or any successor
provision of law), and (ii) listed for trading on the New York Stock Exchange or
the American Stock Exchange (or any national securities exchange registered
under Section 7 of the Securities Exchange Act of 1934, as amended (or any
successor provision of law), that is the successor to either such exchange) or
quoted in the National Association of Securities Dealers Automation Quotation
System (or any successor system).
"Qualified Joint Venture" has the meaning set forth in Article I of the
Investment Agreement.
"Qualified Stock Purchaser" means a Person that (a) FT and DT reasonably
believe has the legal and financial ability to purchase shares of Class A Stock
from this Corporation in accordance with Article VI of the Stockholders'
Agreement and (b) would not be a Major Competitor of this Corporation or of the
Joint Venture immediately following such purchase.
"Qualified Stock Purchaser Standstill Agreement" has the meaning set forth
in the Standstill Agreement.
"Qualified Subsidiary" has the meaning set forth in the Investment
Agreement.
"Qualified Subsidiary Standstill Agreement" has the meaning set forth in
the Investment Agreement.
"Recapitalization" means the reclassification of, among other things,
certain outstanding shares of Sprint capital stock to be effected pursuant to
the terms set forth in the Restructuring Agreement and the FT/DT Restructuring
Agreement.
"Redemption Date" means the date fixed by the Board of Directors for the
redemption of (i) any shares of capital stock of this Corporation pursuant to
ARTICLE SIXTH, Section 2.2 or (ii) shares of PCS Stock as shall be set forth in
the notice to holders of shares of PCS Stock and to holders of any Convertible
Securities that are convertible into or exchangeable or exercisable for shares
of PCS Stock required pursuant to ARTICLE SIXTH, Section 7.4.
"Redemption Securities" means any debt or equity securities of this
Corporation, any of its Subsidiaries, or any combination thereof having such
terms and conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price pursuant to
Section 2.2(b) of ARTICLE SIXTH of these Articles of Incorporation, in the
opinion of an investment banking firm of recognized national standing selected
by the Board of Directors (which may be a firm which provides other investment
banking, brokerage or other services to this Corporation), have a Market Price,
at the time notice of redemption is given pursuant to Section 2.2(d) of ARTICLE
SIXTH of these Articles of Incorporation, at least equal to the redemption price
required to be paid by such Section 2.2(a).
"Reduced Par Value Amount" means, at any time and only with respect to the
Old Class A Common Stock following an issuance of FON Stock and/or PCS Stock in
accordance with ARTICLE SIXTH, Sections 1.2(c) or 8.3(a) the amount resulting
from (X-Y)/Z, where
"X" equals Z times the par value per share of the Old Class A Common Stock
immediately prior to an issuance of shares of FON Stock and/or PCS Stock in
accordance with ARTICLE SIXTH, Sections 1.2(c) or 8.3(a),
"Y" equals the number of shares of FON Stock and/or PCS Stock issued in
accordance with ARTICLE SIXTH, Sections 1.2(c) or 8.3(a) times the par value of
such shares so issued, and
"Z" equals the aggregate outstanding shares of Old Class A Common Stock.
"Registration Rights Agreement" means the Amended and Restated Registration
Rights Agreement, dated as of November 23, 1998, among FT, DT and this
Corporation, as amended from time to time and any replacement registration
rights agreement or agreements entered into pursuant to Section 5.16 of the
Master Transfer Agreement.
"Related Business Transaction" means any Disposition of all or
substantially all the properties and assets attributed to the PCS Group in a
transaction or series of related transactions that result in the Corporation
receiving in consideration of such properties and assets primarily equity
securities (including, without limitation, capital stock, debt
53
securities convertible into or exchangeable for equity securities or interests
in a general or limited partnership or limited liability company, without regard
to the voting power or other management or governance rights associated
therewith) of any entity which (i) acquires such properties or assets or
succeeds (by merger, formation of a joint venture or otherwise) to the business
conducted with such properties or assets or controls such acquiror or successor
and (ii) which the Board of Directors determines is primarily engaged or
proposes to engage primarily in one or more businesses similar or complementary
to the businesses conducted by such Business Group prior to such Disposition.
"Restructuring Agreement" means the Restructuring and Merger Agreement
dated as of May 26, 1998, by and among certain Cable Holders, this Corporation
and the other parties listed therein, as amended or supplemented from time to
time.
"Rights Agreement" means the Rights Agreement, dated as of November 23,
1998, between this Corporation and UMB Bank, N.A., as amended or supplemented
from time to time.
"Section 310" means Section 310 of the Communications Act of 1934, as
amended (or any successor provision of law).
"Series 1 FON Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Series 1 PCS Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Series 2 FON Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Series 2 PCS Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Series 3 FON Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Series 3 PCS Stock" has the meaning set forth in the "Designation" column
in Section 1 of ARTICLE SIXTH.
"Shares" means (a) shares of Class A Stock, Non-Class A Common Stock,
Preferred Stock or any other Voting Securities of this Corporation, (b)
securities of this Corporation convertible into Voting Securities of this
Corporation and (c) options, warrants or other rights to acquire such Voting
Securities, but in the case of clause (c) excluding any rights of the Class A
Holders or FT and DT to acquire Voting Securities of this Corporation pursuant
to the FT/DT Restructuring Agreement, the Purchase Rights Agreement (as defined
in the FT/DT Restructuring Agreement) and the Stockholders' Agreement (but not
excluding any Voting Securities received upon the exercise of such rights).
"Shares Issuable With Respect To The Class A Equity Interest In The FON
Group" means, at any time, the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The FON Group.
"Shares Issuable With Respect To The Class A Equity Interest In The PCS
Group" means, at any time, the Number Of Shares Issuable With Respect To The Old
Class A Equity Interest In The PCS Group.
"Sprint FON Group" means, as of any date from and after November 23, 1998:
(A) the interest of the Corporation or any of its subsidiaries on such date
in all of the assets, liabilities and businesses of the Corporation or any of
its subsidiaries (and any successor companies), other than any assets,
liabilities and businesses attributed in accordance with this Section 10 to the
PCS Group;
(B) a proportionate undivided interest in each and every business, asset
and liability attributed to the PCS Group equal to the FON Group Intergroup
Interest Fraction as of such date;
(C) all properties and assets transferred to the Sprint FON Group from the
PCS Group (other than pursuant to paragraph (D) or (F) of this definition) after
November 23, 1998 pursuant to transactions in the ordinary course of
54
business of both the Sprint FON Group and the PCS Group or otherwise as the
Board of Directors may have directed as permitted by this ARTICLE SIXTH;
(D) all properties and assets transferred to the Sprint FON Group from the
PCS Group in connection with a reduction of the Number Of Shares Issuable With
Respect To The FON Group Intergroup Interest;
(E) the interest of the Corporation or any of its subsidiaries in any
business or asset acquired and any liabilities assumed by the Corporation or any
of its subsidiaries outside the ordinary course of business and attributed to
the Sprint FON Group, as determined by the Board of Directors as contemplated by
Section 9.1(A) of ARTICLE SIXTH; and
(F) from and after the payment date of any dividend or other distribution
with respect to shares of PCS Stock (other than a dividend or other distribution
payable in shares of PCS Stock, with respect to which adjustment shall be made
as provided in the definition of "Number Of Shares Issuable With Respect Of The
FON Group Intergroup Interest," or in securities of the Corporation attributed
to the PCS Group, for which provision shall be made as set forth in the third to
last sentence of this definition), an amount of assets or properties previously
attributed to the PCS Group of the same kind as were paid in such dividend or
other distribution with respect to shares of PCS Stock and Class A Common Stock
(with respect to Shares Issuable With Respect To The Class A Equity Interest In
The PCS Group) as have a Fair Value on the record date for such dividend or
distribution equal to the product of (1) the Fair Value on such record date of
such dividend or distribution to holders of shares of PCS Stock declared on a
per share basis multiplied by (2) the Number Of Shares Issuable With Respect To
The FON Group Intergroup Interest (determined as of the record date for such
dividend or distribution);
provided that from and after any transfer of any assets or properties from the
Sprint FON Group to the PCS Group, the Sprint FON Group shall no longer include
such assets or properties so transferred (other than as reflected in respect of
such a transfer by the FON Group Intergroup Interest Fraction, as provided by
paragraph (B) of this definition).
If the Corporation shall pay a dividend or make some other distribution
with respect to shares of PCS Stock payable in securities of the Corporation
that are attributed to the PCS Group for purposes of this ARTICLE SIXTH (other
than PCS Stock), the Sprint FON Group shall be deemed to hold an interest in the
PCS Group equivalent to the number or amount of such securities that is equal to
the product of the number or amount of securities so distributed to holders of
PCS Stock on a per share basis multiplied by the Number Of Shares Issuable With
Respect To The FON Group Intergroup Interest (determined as of the record date
for such distribution) and, to the extent interest is or dividends are paid on
the securities so distributed, the Sprint FON Group shall include, and there
shall be transferred thereto out of the PCS Group, a corresponding ratable
amount of the kind of assets paid as such interest or dividends as would have
been paid in respect of such securities so deemed to be held by the Sprint FON
Group if such securities were outstanding.
The Corporation may also, to the extent the securities so paid as a
dividend or other distribution to the holders of PCS Stock are Convertible
Securities and at the time are convertible into or exchangeable or exercisable
for shares of PCS Stock, treat such Convertible Securities as are so deemed to
be held by the Sprint FON Group to be deemed to be converted, exchanged or
exercised, and shall do so to the extent such Convertible Securities are
mandatorily converted, exchanged or exercised (and to the extent the terms of
such Convertible Securities require payment of consideration for such
conversion, exchange or exercise, the Sprint FON Group shall then no longer
include an amount of the kind of properties or assets required to be paid as
such consideration for the amount of Convertible Securities deemed converted,
exchanged or exercised (and such properties or assets shall be attributed to the
PCS Group)), in which case, from and after such time, the securities into or for
which such Convertible Securities so deemed to be held by the Sprint FON Group
were so considered converted, exchanged or exercised shall be deemed held by the
Sprint FON Group (as provided in clause (3) of paragraph (C) of the definition
of "Number Of Shares Issuable With Respect To The FON Group Intergroup
Interest") and such Convertible Securities shall no longer be deemed to be held
by the Sprint FON Group. A statement setting forth the election to effectuate
any such deemed conversion, exchange or exercise of Convertible Securities so
deemed to be held by the Sprint FON Group and the properties or assets, if any,
to be attributed to the PCS Group in consideration of such conversion, exchange
or exercise (if any) shall be filed in the records of the actions of the Board
of Directors and, upon such filing, such deemed conversion, exchange or exercise
shall be effectuated.
"Sprint Party" has the meaning set forth in the Joint Venture Agreement.
55
"Sprint Sub" means Sprint Global Venture, Inc.
"Standstill Agreement" means the Amended and Restated Standstill Agreement,
dated as of November 23, 1998, among FT, DT and this Corporation, as amended or
supplemented from time to time, and any replacement standstill agreement or
agreements entered into pursuant to Section 5.17 of the Master Transfer
Agreement.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
Agreement, dated as of November 23, 1998, among FT, DT and this Corporation (and
all exhibits thereto), as amended or supplemented from time to time.
"Strategic Investor" has the meaning set forth in the Investment Agreement.
"Strategic Merger" means a merger or other business combination involving
this Corporation (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 this Corporation 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 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.
"Tie-Breaking Vote" has the meaning set forth in Section 18.1(a) of the
Joint Venture Agreement, and shall include any successor provision thereto.
"Total Market Capitalization" of any class or series of common stock on any
date means the product of (i) the Market Value of one share of such class or
series of common stock on such date and (ii) the number of shares of such class
or series of common stock outstanding on such date.
"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 The Nasdaq Stock Market, if such security is listed or
admitted to trading thereon, is open for the transaction of business (unless
such trading shall have been suspended for the entire day) or, if such security
is not listed or admitted to trading on any national securities exchange or The
Nasdaq Stock Market, 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 this Corporation
pursuant to a merger or other business combination involving this Corporation,
(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 this Corporation or any of its Subsidiaries other than
foreclosures resulting from Lien Transfers.
"Venture Interests" has the meaning set forth in the Joint Venture
Agreement.
"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 this Corporation, the
56
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
this ARTICLE SIXTH) with respect to matters other than the election of directors
at a meeting of the stockholders of this Corporation.
"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
this Corporation, shall include, without limitation, the Non-Class A 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 this
Corporation; provided, that (i) the price paid by the purchasers of Series 2 PCS
Stock and Series 3 PCS Stock acquired on November 23, 1998 is the Average
Trading Price of a share of Series 1 PCS Stock as of the 21st Trading Day
following the commencement of regular way trading in connection with the
Recapitalization, and (ii) the original purchase price paid by the purchasers of
Old Class A Common Stock shall be allocated as of November 23, 1998 among the
Number Of Shares Issuable With Respect To The Old Class A Equity Interest In The
FON Group and the Number Of Shares Issuable With Respect To The Old Class A
Equity Interest In The PCS Group represented by such Old Class A Common Stock in
the same proportion per share of Old Class A Common Stock as the per share
reclassification and exchange of a share of Common Stock, par value $2.50 per
share, outstanding immediately prior to the Recapitalization, into one share of
Series 1 FON Stock and one-half of a share of Series 1 PCS Stock . In
determining the price of shares of Non-Class A Common Stock or Class A 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
Non-Class A Common Stock are issued together with other shares or securities or
other assets of this Corporation 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 or holders of Series 2 PCS Stock or
Series 2 FON Stock, as the case may be.
Section 11. Notices. Notwithstanding the provisions of Section 7.4, all
notices to Class A Holders made by this Corporation pursuant to this ARTICLE
SIXTH shall be made in writing and any such notice shall be deemed delivered
when the same has been delivered in person to, or transmitted by telex or
telefacsimile communication to, or seven days after it has been sent by air mail
to the addresses of, all of the Class A Holders as indicated on the stock
transfer books of this Corporation. Communications by telex or telefacsimile
communication also shall be sent concurrently by air mail, but shall in any
event be effective as stated above.
Section 12. No Other Beneficiaries. The Class A Provisions are intended for
the benefit of the Class A Holders only, and nothing in the Class A Provisions
is intended or will be construed to confer upon or to give any third party or
other stockholder of this Corporation any rights or remedies by virtue hereof.
Any term of the Class A Provisions may be waived by the holders of at least
two-thirds of the votes represented by the outstanding shares of Class A Stock,
voting together as a single class.
Section 13. General Provisions Relating to Preferred Stock.
13.1. The Preferred Stock may be issued from time to time in one or more
series, each of such series to have such voting powers (full or limited or
without voting powers) designation, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof as are stated and expressed herein, or in a resolution or resolutions
providing for the issue of such series adopted by the Board of Directors as
hereinafter provided.
57
13.2. Authority is hereby granted to the Board of Directors, subject to the
provisions of this ARTICLE SIXTH, to create one or more series of Preferred
Stock and, with respect to each series, to fix or alter as permitted by law, by
resolution or resolutions providing for the issue of such series:
(a) the number of shares to constitute such series and the distinctive
designation thereof;
(b) the dividend rate on the shares of such series, the dividend
payment dates, the periods in respect of which dividends are payable
("dividend periods") whether such dividends shall be cumulative, and if
cumulative, the date or dates from which dividends shall accumulate;
(c) whether or not the shares of such series shall be redeemable, and,
if redeemable, on what terms, including the redemption prices which the
shares of such series shall be entitled to receive upon the redemption
thereof;
(d) whether or not the shares of such series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement and, if such retirement or sinking
fund or funds be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(e) whether or not the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or of any
other series of the same or any other class or classes of stock of the
Corporation and the conversion price or prices or rate or rates, or the
rate or rates at which such exchange may be made, with such adjustments, if
any, as shall be stated and expressed or provided in such resolution or
resolutions;
(f) the voting power, if any, of the shares of such series; and
(g) such other terms, conditions, special rights and protective
provisions as the Board of Directors may deem advisable.
13.3. No dividend shall be declared and set apart for payment on any series
of Preferred Stock in respect of any dividend period unless there shall likewise
be or have been paid, or declared and set apart for payment, on all shares of
Preferred Stock of each other series entitled to cumulative dividends at the
time outstanding which rank equally as to dividends with the series in question,
dividends ratably in accordance with the sums which would be payable on the said
shares through the end of the last preceding dividend period if all dividends
were declared and paid in full.
13.4. If upon any dissolution of the Corporation, the assets of the
Corporation distributable among the holders of any one or more series of
Preferred Stock which are (i) entitled to a preference over the holders of the
Corporation Common Stock upon such dissolution, and (ii) rank equally in
connection with any such distribution, shall be insufficient to pay in full the
preferential amount to which the holders of such shares shall be entitled, then
such assets, or the proceeds thereof, shall be distributed among the holders of
each such series of the Preferred Stock ratably in accordance with the sums
which would be payable on such distribution if all sums payable were discharged
in full.
13.5. In the event that the Preferred Stock of any series shall be
redeemable, then, at the option of the Board of Directors, the Corporation may
at such time or times as may be specified by the Board of Directors as provided
in Section 13.2(c) of this ARTICLE SIXTH redeem all, or any number less than
all, of the outstanding shares of such series at the redemption price thereof
and on the other terms fixed herein or by the Board of Directors as provided in
said Section 13.2(c) (the sum so payable upon any redemption of Preferred Stock
being herein referred to as the "redemption price").
13.6. Attribution of Preferred Stock to Groups. As of November 23, 1998,
the outstanding shares of Preferred Stock- First Series, Preferred Stock-Second
Series, and Preferred Stock- Fifth Series shall be attributed entirely to the
Sprint FON Group. Upon any issuance of any shares of Preferred Stock of any
series after November 23, 1998, the Board of Directors shall attribute for
purposes of this ARTICLE SIXTH the shares so issued entirely to the Sprint FON
Group or entirely to the PCS Group or partly to the Sprint FON Group and partly
to the PCS Group in such proportion as the Board of Directors shall determine
and, further, in case of the issuance of shares of Preferred Stock that are
exchangeable or exercisable for PCS Stock, if at the time such shares of
Preferred Stock are issued the Number Of
58
Shares Issuable With Respect To The FON Group Intergroup Interest shall be
greater than zero, then the Board of Directors shall also determine what portion
(which may be some, all or none) of such shares of Preferred Stock shall reduce
the Number Of Shares Issuable With Respect To The FON Group Intergroup Interest,
taking into consideration the use of the proceeds of such issuance of shares of
Preferred Stock in the business of the Sprint FON Group or the PCS Group and any
other relevant factors. Upon any redemption or repurchase of shares of Preferred
Stock, the Board of Directors shall determine the proper attribution thereof in
accordance with Section 9.1(D) of ARTICLE SIXTH. Notwithstanding any such
attribution of shares of Preferred Stock to the Sprint FON Group or the PCS
Group, any dividends or distributions or other payments which are made by the
Corporation on such shares of Preferred Stock may be made, and as required by
the preferences and relative, participating, optional or other special rights
thereof shall be made, out of any of the properties or assets of the
Corporation, regardless of the Business Group to which such properties or assets
are attributed in accordance with the definitions of "Sprint FON Group" and "PCS
Group" set forth in Section 10, except as otherwise provided by the resolution
of the Board of Directors fixing the preferences and relative, participating,
optional or other special rights of a series of Preferred Stock.
13.7. Intentionally Omitted.
13.8. Intentionally Omitted.
13.9. Preferred Stock--Fifth Series.
13.9.1. Designation; Number of Shares; Stated Value. The Series shall
be designated as Preferred Stock--Fifth Series (the "Fifth Series") and
shall consist of ninety-five (95) shares. The shares of such series are
hereinafter sometimes called the "Fifth Series Shares." The stated value of
the Fifth Series Shares shall be One Hundred Thousand Dollars ($100,000)
per share.
13.9.2. Dividends. The rate of dividends upon the Fifth Series Shares
(which shall be cumulative from the date of issue) and the time of payment
thereof shall be 6.00% of the stated value per share per annum, payable
quarterly on the last days of January, April, July and October in each
year.
13.9.3. Rank. The Fifth Series Shares shall rank on a parity with
shares of the First Series and Second Series of the Preferred Stock as to
dividends and upon liquidation.
13.9.4. Voting Rights. Holders of Fifth Series Shares will be entitled
to one vote for each share held and will be entitled to exercise such
voting rights together with the holders of Corporation Common Stock of the
Corporation, without distinction as to class. If no dividends or less than
full cumulative dividends on the Fifth Series Shares shall have been paid
for each of four consecutive dividend periods, or if arrearages in the
payment of dividends on the Fifth Series Shares shall have cumulated to an
amount equal to full cumulative dividends on the Fifth Series Shares for
six quarterly dividend periods, the holders of the Fifth Series Shares
shall, at all meetings held for the election of Directors until full
cumulative dividends for all past quarterly dividend periods and the
current quarterly dividend period on the Fifth Series Shares shall have
been paid or declared and set apart for payment, possess voting power,
acting alone, to elect the smallest number constituting a majority of the
Directors then to be elected. The Corporation will promptly take all such
action as shall be necessary to permit such election to occur promptly
after such arrearage occurs.
13.9.5. Non-Convertible. The Fifth Series Shares shall not be
convertible into or exchangeable for stock of any other class or classes of
the Corporation.
13.9.6. Repurchase by the Corporation. Upon six months' prior written
notice, the holders of the Fifth Series Shares may tender all and not less
than all of the Fifth Series Shares to the Corporation for purchase at a
price per share equal to the stated value of One Hundred Thousand Dollars
($100,000) per share plus accrued dividends to the date of repurchase by
the Corporation (the Purchase Price). Upon such proper tender of all shares
of the Fifth Series Shares by the holders, the Corporation shall purchase
the Fifth Series Shares at the Purchase Price.
13.9.7. Tender Procedures. The Fifth Series Shares will not be deemed
tendered unless and until the certificate or certificates therefor have
been received by the Corporation or the bank or trust company designated
for the purpose and, if payment upon acceptance of tender thereof is to be
made other than to the
59
record holders, such certificate or certificates have been duly endorsed
and are in proper form for transfer, with all transfer taxes due in respect
thereof paid or provided for.
13.9.8. Redemption. If the holders have not theretofore tendered the
Fifth Series Shares to the Corporation for purchase pursuant to paragraphs
6 and 7 hereof by March 14, 2003, then the Corporation shall redeem all of
the outstanding Fifth Series Shares at the Purchase Price on a date set
forth in written notice to the holders as the redemption date (the
Redemption Date). The Corporation shall give notice of such redemption not
less than thirty (30) days prior to the Redemption Date, by mail to the
holders of record of the outstanding shares at their respective addresses
then appearing on the books of the Corporation. At any time before the
Redemption Date, the Corporation may deposit in trust the funds necessary
for such redemption with a bank or trust company to be designated in the
notice of redemption, doing business in the City of Chicago and State of
Illinois or in the City and State of New York, and having capital, surplus
and undivided profits aggregating $25,000,000. In the event such deposit is
made so that the deposited funds shall be forthwith available to the
holders of the shares to be redeemed upon surrender of the certificates
evidencing such shares, then, upon the giving of the notice of such
redemption, as hereinabove provided, or upon the earlier delivery to such
bank or trust company of irrevocable authorization and direction so to give
such notice, all shares with respect to the redemption of which such
deposit shall have been made and the giving of such notice effected shall,
whether or not the certificates for such shares shall be surrendered for
cancellation, be deemed to be no longer outstanding for any purpose and all
rights with respect to such shares shall thereupon cease and terminate,
except only the right of the holders of the certificates for such shares to
receive, out of the funds so deposited in trust, from and after the time of
such deposit, the amount payable upon the redemption thereof, without
interest.
13.9.9. Cancelled Shares. The Fifth Series Shares, purchased upon
tender or redeemed as herein provided, shall be cancelled and upon such
cancellation shall be deemed to be authorized and unissued shares of
Preferred Stock, without par value, of the Corporation but shall not be
reissued as shares of the same or any theretofore outstanding series.
13.9.10. Default. Default by the Corporation in complying with the
provisions of paragraph 6 or 8 hereof shall preclude the declaration or the
payment of dividends or the making of any other distribution whatsoever
upon the Corporation Common Stock (other than a distribution in shares of
its Corporation Common Stock) until the Corporation shall have cured such
default by depositing the funds necessary therefor in the manner and upon
the terms herein provided. The holders of the Fifth Series Shares shall not
be entitled to apply to any court of law or equity for a money judgment or
remedy on account of any such default other than to restrain the
Corporation from the actions specified above upon the Corporation Common
Stock until such default shall have been cured.
13.9.11. Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation the holders of the Fifth
Series will be entitled to receive out of the assets of the Corporation
available for distribution to stockholders, before any distribution of the
assets shall be made to the holders of Corporation Common Stock, the sum of
$100,000 per share, plus an amount equal to cumulative dividends accrued
and unpaid thereon to the date of distribution to holders of the Fifth
Series. If upon any liquidation, dissolution or winding up of the
Corporation the amounts payable with respect to the Fifth Series and any
other series of Preferred Stock which ranks on a parity with the Fifth
Series are not paid in full, the holders of the Fifth Series and such
parity Preferred Stock will share ratably in any distribution of assets in
proportion to the full preferential amounts to which they are entitled.
PREFERRED STOCK - SIXTH SERIES
(1) Designation and Amount. The shares of such Series shall be designated
as "Preferred Stock-Sixth Series, Junior Participating" (hereafter "Sixth
Series") and the number of shares constituting such series shall be one million
five hundred thousand (1,500,000).
(2) Dividends.
(A) Subject to the prior and superior rights of the holders of any
shares of any other series of Preferred Stock of the Corporation
("Preferred Stock"), or any similar stock ranking prior and superior to the
shares of
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the Sixth Series with respect to dividends, the holders of shares of the
Sixth Series, in preference to the holders of Common Stock and any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the shares of the Sixth Series (collectively
with such Common Stock, "Junior Stock"), shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash, on January
1, April 1, July 1 and October 1 in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date") in an amount
(rounded to the nearest cent) equal to the greater of (a) $100.00 or (b)
the product of the FON Group Multiple (as defined below) times the
aggregate per share amount of all cash dividends, plus the product of the
FON Group Multiple times the aggregate per share amount (payable in cash,
based upon the fair market value at the time the non-cash dividend or other
distribution is declared as determined in good faith by the Board of
Directors) of all non-cash dividends or other distributions other than a
dividend payable in shares of FON Group Common Stock, or a subdivision of
the outstanding shares of FON Group Common Stock (by reclassification or
otherwise), declared (but not withdrawn) on the FON Group Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of the Sixth Series.
(B) As used herein, the FON Group Multiple shall initially be 2,000.
In the event the Corporation shall (i) declare any dividend on FON Group
Common Stock payable in shares of such stock, (ii) subdivide the
outstanding FON Group Common Stock, or (iii) combine the outstanding FON
Group Common Stock into a smaller number of shares, then in each such case
the FON Group Multiple shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of FON Group Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of FON Group Common Stock that were outstanding
immediately prior to such event.
(C) The Corporation shall declare a dividend or distribution on the
Sixth Series as provided above in paragraph (A) of this Section (2)
immediately after it declares a dividend or distribution on the FON Group
Common Stock (other than a dividend payable in shares of FON Group Common
Stock); provided, however, that in the event no dividend or distribution
shall have been declared on the FON Group Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, the minimum quarterly dividend of $100.00
on the Sixth Series shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(D) Dividends shall begin to accrue and be cumulative on outstanding
shares of Sixth Series from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Sixth Series, unless the date
of issue of such shares of Sixth Series is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Sixth
Series entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which cases such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall cumulate but shall not bear interest.
Dividends paid on the shares of Sixth Series in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(3) Voting Rights. Except as prescribed by law and in addition to the
rights provided for in ARTICLE SIXTH of the Articles of Incorporation of the
Corporation, as amended, the holders of the shares of the Sixth Series shall be
entitled to vote at any annual or special meeting of the stockholders of the
Corporation, for each share of Sixth Series, a number of votes equal to the
product of the FON Group Multiple then in effect times the highest number of
votes that any share of FON Group Common Stock entitles its holder to vote at
such meeting of stockholders of the Corporation. The holders of the shares of
the Sixth Series shall be entitled to exercise such voting rights with the
holders of Series 1 FON Stock, without distinction as to class, at any annual or
special meeting of stockholders for the election of directors and on any other
matter submitted to a vote of the stockholders of the Corporation at such
meeting. Except as otherwise provided herein, in the Articles of Incorporation
of the Corporation, in any other Certificate of Designation establishing a
series of Preferred Stock or any similar stock or otherwise required by law, the
holders of the shares of the Sixth Series and the holders of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
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(4) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the shares of the Sixth Series as provided in Section (2) are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of the Sixth Series
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends (except a dividend payable in FON
Group Common Stock and/or any other Junior Stock) on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of Junior Stock;
(ii) declare or pay dividends on or make any other distribution
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the shares of the
Sixth Series, except dividends paid ratably on the shares of the Sixth
Series and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
any shares ranking on a parity (either as to dividends or upon
dissolution, liquidation or winding up) with the shares of the Sixth
Series, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of such parity stock in exchange for
shares of Junior Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of the Sixth Series, or any shares of stock ranking on a parity with
the shares of the Sixth Series, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section (4), purchase or otherwise acquire such shares at such time and in
such manner.
(5) Reacquired Shares. Any shares of the Sixth Series purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Articles of Incorporation,
in any other Certificate of Designation establishing a series of Preferred Stock
or any similar stock or as otherwise required by law.
(6) Liquidation, Dissolution or Winding Up.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the shares of
the Sixth Series shall be entitled to receive, in preference to the holders
of Junior Stock, the greater of (a) $1,000.00 per share, plus accrued and
unpaid dividends to the date of distribution, whether or not earned or
declared, or (b) an amount per share equal to the product of the FON Group
Multiple then in effect times the aggregate amount to be distributed per
share to holders of FON Group Common Stock.
(B) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Sixth Series shall not receive any distributions
except for distributions made ratably on the Sixth Series and all other
such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or
winding up.
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(7) Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of the Sixth
Series shall at the same time be similarly exchanged or changed in an amount per
share equal to the product of the FON Group Multiple then in effect times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of FON Group
Common Stock is changed or exchanged.
(8) Ranking. The shares of the Sixth Series shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise. The shares of the Sixth Series shall rank on a parity with the
Corporation's Preferred Stock-Series Eighth, Junior Participating, as to the
payment of dividends and the distribution of assets. Nothing herein shall
preclude the Board of Directors of the Corporation from creating any additional
series of Preferred Stock or any similar stock ranking on a parity with or prior
to the shares of the Sixth Series as to the payment of dividends or distribution
of assets.
(9) Fractional Shares. Shares of the Sixth Series may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of the Sixth Series.
(10) Definitions. For purposes of this amended and restated Certificate of
Designation, Preferences and Rights of Sixth Series, unless the context
otherwise requires:
(A) Deleted.
(B) "Common Stock" shall mean Series 1 FON Stock, and/or Series 2 FON
Stock, and/or Series 3 FON Stock, and/or Old Class A Common Stock, and/or
Series 1 PCS Stock, and/or Series 2 PCS Stock, and/or Series 3 PCS Stock,
in each case as the context requires.
(C) "FON Group Common Stock" shall mean Series 1 FON Stock, and/or
Series 2 FON Stock, and/or Series 3 FON Stock, in each case as the context
requires.
(D) "FON Group Multiple" shall have the meaning set forth in Section
2(B).
(E) "Initial Charter Amendment" shall have the meaning set forth in
the Restructuring and Merger Agreement.
(F) "Old Class A Common Stock" shall have the meaning set forth in the
Subsequent Charter Amendment.
(G) "Recapitalization" shall mean the reclassification of each
outstanding share of Sprint Common Stock into one share of Series 1 FON
Stock and one-half of a share of Series 1 PCS Stock effected by filing of
the Subsequent Charter Amendment.
(H) "Restructuring and Merger Agreement" shall mean that certain
agreement, dated as of May 26, 1998, by and among the Corporation,
TeleCommunications, Inc., a Delaware corporation, Comcast Corporation, a
Pennsylvania corporation, Cox Communications, Inc., a Delaware corporation,
TCI Spectrum Holdings, Inc., a Colorado corporation, Comcast Telephony
Services, a Delaware general partnership, Cox Telephony Partnership, a
Delaware general partnership, Sprint Enterprises, L.P., a Delaware limited
partnership, TCI Philadelphia Holdings, Inc., a Delaware corporation, Com
Telephony Services, Inc., a Delaware corporation, Comcast Telephony
Services, Inc., a Delaware corporation, Cox Telephony Partners, Inc., a
Delaware corporation, Cox Communications Wireless, Inc., a Delaware
corporation, SWV One, Inc., a Delaware corporation, SWV Two, Inc., a
Delaware corporation, SWV Three, Inc., a Delaware corporation, SWV Four,
Inc., a Delaware corporation, SWV Five, Inc., a Delaware corporation, and
SWV Six, Inc., a Colorado corporation.
(I) "Series 2 Common Stock" shall mean the Common Stock - Series 2,
par value $2.50 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
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(J) "Series 1 FON Stock" shall mean the FON Common Stock - Series 1,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(K) "Series 2 FON Stock" shall mean the FON Common Stock - Series 2,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(L) "Series 3 FON Stock" shall mean the FON Common Stock - Series 3,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(M) "Series 1 PCS Stock" shall mean the PCS Common Stock - Series 1,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(N) "Series 2 PCS Stock" shall mean the PCS Common Stock - Series 2,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(O) "Series 3 PCS Stock" shall mean the PCS Common Stock - Series 3,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(P) "Sprint Common Stock" shall mean Common Stock, par value $2.50 per
share, of the Corporation, as provided for in the Initial Charter
Amendment.
(Q) "Subsequent Charter Amendment" shall have the meaning set forth in
the Restructuring and Merger Agreement.
13.0 Preferred Stock--Seventh Series Convertible.
13.10.1 Amount, Rank and Designation. The amount of shares to
constitute the Seventh Series of Preferred Stock shall be 300,000 shares.
The designation thereof shall be "Preferred Stock--Seventh Series,
Convertible" (hereinafter "Seventh Series"). Shares of the Seventh Series
shall rank junior as to dividends and upon liquidation to shares of the
Fifth Series of the Preferred Stock and any other Preferred Stock
designated as senior to the Seventh Series as to dividends or upon
liquidation, dissolution or winding up ("Senior Stock"), and shall have a
preference over the shares of the Corporation Common Stock and any other
class or series of Junior Stock.
13.10.2. Dividends. Holders of record of shares of the Seventh Series
will be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation, out of funds legally available for the
payment of dividends, cumulative cash dividends ("Preferred Dividends")
payable at the rate of $6.73 per share quarterly in arrears on each
September 30, December 31, March 31 and June 30 (each a "Dividend Payment
Date") or, if any such date is not a business day (as defined herein), the
Preferred Dividends due on such Dividend Payment Date shall be paid on the
next succeeding business day. Preferred Dividends on the Seventh Series
shall be cumulative and shall accumulate from the date of original issuance
of the Seventh Series. Preferred Dividends shall be payable to holders of
record as they appear on the stock register of the Corporation, net of any
amounts required to be withheld for or with respect to taxes, on such
record dates, not more than 60 days preceding the payment date thereof, as
shall be fixed by the Board of Directors. Preferred Dividends payable on
the Seventh Series for any period less than a full quarterly dividend
period shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in any period less than one
month. Preferred Dividends shall accrue on a daily basis whether or not
there are funds of the Corporation legally available for the payment of
such dividends and whether or not such Preferred Dividends are declared.
Accrued but unpaid Preferred Dividends shall accumulate as of the Dividend
Payment Date on which they first become payable, but no interest shall
accrue on accumulated but unpaid Preferred Dividends. Before any dividends
on the Corporation Common Stock or any other class or series of stock of
the Corporation ranking junior to the Seventh Series as to dividends shall
be paid or declared and set apart for payment, the holders of shares of the
Seventh Series shall be entitled to receive the full accumulated cash
dividends for all quarterly dividend periods ending on or before the date
on which any dividend on any such class or series of stock ranking junior
to the Seventh Series as to dividends is declared or is to be paid.
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13.10.3. Conversion.
(a) Each holder of shares of Seventh Series may at such holder's
option at any time convert any or all of such holder's shares of
Seventh Series into (i) if such holder is a Cable Holder, shares of
Series 2 PCS Stock, and (ii) if such holder is not a Cable Holder,
shares of Series 1 PCS Stock. All references herein to shares of
Series 2 PCS Stock issuable upon conversion of shares of Seventh
Series shall be deemed to refer to shares of Series 1 PCS Stock if the
holder of such Seventh Series is not a Cable Holder. Such shares of
Seventh Series shall be convertible into a number of fully paid and
nonassessable whole shares of Series 2 PCS Stock as is equal to the
aggregate Liquidation Preference of the shares of Seventh Series
surrendered for conversion divided by the Initial Conversion Price (as
adjusted from time to time, the "Conversion Price"). In case of the
redemption of any shares of the Seventh Series, such right of
conversion shall cease and terminate as to the shares duly called for
redemption at the close of business on the date fixed for redemption,
unless the Corporation defaults in the payment of the redemption price
plus all accrued and unpaid dividends. If the Corporation defaults
with respect to such payment, the right to convert the shares
designated for redemption shall terminate at the close of business on
the business day next preceding the date that such default is cured.
Upon conversion the Corporation shall make no payment or adjustment on
account of dividends accrued or in arrears on the Seventh Series
surrendered for conversion.
(b) Holders of shares of Seventh Series at the close of business
on a record date for any payment of declared Preferred Dividends shall
be entitled to receive the Preferred Dividends payable on those shares
of Seventh Series on the corresponding Dividend Payment Date
notwithstanding the conversion pursuant to this section of those
shares of Seventh Series following such record date and before the
close of business on such Dividend Payment Date. Except as provided in
the preceding sentence, upon any conversion of shares of Seventh
Series, the Corporation shall make no payment of or allowance of
unpaid Preferred Dividends, whether or not in arrears, on such shares
of Seventh Series, or for previously declared dividends or
distributions on the shares of Series 2 PCS Stock issued upon
conversion.
(c) Conversion of shares of Seventh Series may be effected by
delivering certificates evidencing such shares of Seventh Series,
together with written notice of conversion stating the number of
shares to be converted and a proper assignment of such certificates to
the Corporation or in blank, to the office of the transfer agent for
the Seventh Series or to any other office or agency maintained by the
Corporation for that purpose and otherwise in accordance with
conversion procedures established by the Corporation. Each conversion
shall be deemed to have been effected immediately before the close of
business on the date on which the foregoing requirements shall have
been satisfied. The Corporation shall as promptly as practicable after
any conversion pursuant to this section issue and deliver to the
converting holder a certificate or certificates representing the
number of whole shares of Series 2 PCS Stock into which such shares of
Seventh Series were converted. Upon conversion of less than the entire
number of the shares of Seventh Series represented by any certificate,
the Corporation shall issue and deliver to the converting holder a new
certificate representing the number of shares of Seventh Series not
converted. The Corporation shall effect such conversion as soon as
practicable; provided that the Corporation shall not be required to
convert shares of Seventh Series, and no surrender of shares of
Seventh Series shall be effective for that purpose, while the stock
transfer books of the Corporation for the Series 2 PCS Stock are
closed for any reason, but the surrender of shares of Seventh Series
for conversion during any period while such books are so closed shall
become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such shares of
Seventh Series were surrendered, and at the Conversion Price in effect
on the date of such surrender.
(d) No fraction of a share of Series 2 PCS Stock shall be issued
upon any conversion. In lieu of the fraction of a share to which the
holder of shares of the Seventh Series surrendered for conversion
would otherwise be entitled, such holder shall receive, as soon as
practicable after the date of conversion, an amount in cash equal to
the same fraction of the market value of a full share of Series 1 PCS
Stock. For the purposes of this subparagraph, the market value of a
share of Series 1 PCS Stock shall be the Closing Price of such a share
on the day immediately preceding the date upon which such shares of
Seventh Series are surrendered for conversion.
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(e) The Conversion Price in effect at any time shall be subject
to adjustment as follows:
(i) If the Corporation shall at any time after the filing of
these Articles of Incorporation: (A) pay a dividend on the PCS
Stock in shares of PCS Stock, (B) subdivide the outstanding
shares of PCS Stock into a greater number of shares, (C) combine
the outstanding shares of PCS Stock into a smaller number of
shares, (D) pay a dividend on the PCS Stock in shares of its
capital stock (other than PCS Stock), or (E) issue any shares of
its capital stock by reclassification of the shares of PCS Stock
(other than any reclassification by way of merger or binding
share exchange that is subject to Section 13.10.3(e)(viii)), then
the Conversion Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that if the holder elects to convert shares of Seventh Series
after such time, the holder thereof shall be entitled to receive
the aggregate number of shares of PCS Stock which, if such
conversion had occurred immediately prior to such time, he would
have owned upon such conversion and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur. Subject to Section
13.10.3(e)(vi) for a dividend or distribution, the adjustment
shall become effective immediately after the record date for the
dividend or distribution, and for a subdivision, combination or
reclassification, the adjustment shall become effective
immediately after the effective date of the subdivision,
combination or reclassification.
(ii) If the Corporation shall issue rights or warrants to
the holders of the PCS Stock entitling them (for a period
expiring within 45 days after the record date for the
determination of stockholders entitled to receive such rights or
warrants) to subscribe for or purchase shares of PCS Stock (or
Convertible Securities) at a price per share (or having a
conversion price per share, after adding thereto an allocable
portion of the Conversion Price of the right or warrant to
purchase such Convertible Securities, computed on the basis of
the maximum number of shares of PCS Stock issuable upon
conversion of such Convertible Securities) less than the Current
Market Price per share on the Determination Date, the Conversion
Price shall be adjusted by multiplying the conversion price in
effect immediately prior to such record date by a fraction, of
which the numerator shall be the number of shares of PCS Stock
outstanding on such record date plus the number of shares which
the aggregate offering price of the total number of shares of PCS
Stock so offered (or the aggregate initial conversion price of
the Convertible Securities so offered, after adding thereto the
aggregate conversion price of the rights or warrants to purchase
such Convertible Securities) to holders of PCS Stock (and to
holders of Convertible Securities referred to in the following
paragraph if the distribution to which this paragraph (ii)
applies is also being made to such holders) would purchase at
such Current Market Price, and of which the denominator shall be
the number of shares of PCS Stock outstanding on such record date
plus the number of additional shares of PCS Stock so offered for
subscription or purchase (or into which the Convertible
Securities so offered are initially convertible). The adjustment
contemplated by this paragraph (ii) shall be made successively
whenever any such rights or warrants are issued and shall become
effective immediately after the close of business on such record
date; however, to the extent that shares of PCS Stock (or
Convertible Securities) have not been issued when such rights or
warrants expire (or, in the case of rights or warrants to
purchase Convertible Securities which have been exercised, if all
of the shares of PCS Stock issuable upon conversion of such
Convertible Securities have not been issued prior to the
expiration of the conversion right thereof), the Conversion Price
shall be readjusted to the Conversion Price which would then be
in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only
the number of shares (or Convertible Securities) actually issued
upon the exercise of such rights or warrants (or the conversion
of such Convertible Securities).
For purposes of this paragraph (ii) the number of shares of
PCS Stock outstanding on any record date shall be deemed to
include the maximum number of shares of PCS Stock
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the issuance of which would be necessary to effect the full
exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable,
exchangeable or convertible at a price (before giving effect to
any adjustment to such price for the distribution to which this
paragraph (ii) is being applied) equal to or less than the
Current Market Price per share of PCS Stock on the applicable
Determination Date, if all of such Convertible Securities were
deemed to have been exercised, exchanged or converted immediately
prior to the opening of business on such record date. In case any
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined by the Board of Directors of
the Corporation.
(iii) If the Corporation shall distribute to the holders of
PCS Stock evidences of its indebtedness or assets or subscription
rights or warrants (excluding (x) dividends or distributions
referred to in Section 13.10.3(e)(i) and distributions of rights
or warrants referred to in Section 13.10.3(e)(ii) and (y) cash
dividends or other cash distributions, unless such cash dividends
or cash distributions are Extraordinary Cash Dividends), the
Conversion Price shall be adjusted by multiplying the Conversion
Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such
distribution by a fraction, of which the numerator shall be the
number of shares of PCS Stock outstanding on such record date
multiplied by the Current Market Price on the Determination Date,
less the fair market value (as determined by the Board of
Directors of the Corporation) on such record date of the
evidences of indebtedness, assets (including Extraordinary Cash
Dividends), subscription rights or warrants to be distributed to
the holders of PCS Stock (and to the holders of Convertible
Securities referred to below if the distribution to which this
paragraph (iii) applies is also being made to such holders), and
of which the denominator shall be the number of shares of PCS
Stock outstanding on such record date multiplied by such Current
Market Price. For purposes of this paragraph (iii), the number of
shares of PCS Stock outstanding on any record date shall be
deemed to include the maximum number of shares of PCS Stock the
issuance of which would be necessary to effect the full exercise,
exchange or conversion of all Convertible Securities outstanding
on such record date which are then exercisable, exchangeable or
convertible at a price (before giving effect to any adjustment to
such price for the distribution to which this paragraph (iii) is
being applied) equal to or less than the Current Market Price per
share of PCS Stock on the applicable Determination Date, if all
of such Convertible Securities were deemed to have been
exercised, exchanged or converted immediately prior to the
opening of business on such record date.
For purposes of this paragraph (iii), the term
"Extraordinary Cash Dividend" shall mean any cash dividend with
respect to the PCS Stock the amount of which, together with the
aggregate amount of cash dividends on the PCS Stock to be
aggregated with such cash dividend in accordance with the
following provisions of this paragraph, equals or exceeds the
threshold percentage set forth below in the following sentence.
If, upon the date prior to the Ex-Dividend Date with respect to a
cash dividend on the PCS Stock, the aggregate of the amount of
such cash dividend together with the amounts of all cash
dividends on the PCS Stock with Ex-Dividend Dates occurring in
the 365 consecutive day period ending on the date prior to the
Ex- Dividend Date with respect to the cash dividend to which this
provision is being applied (other than any such other cash
dividends with Ex-Dividend Dates occurring in such period for
which a prior adjustment to the Conversion Price was previously
made under this paragraph (iii)) equals or exceeds on a per share
basis 5% of the average of the Closing Prices during the period
beginning on the date after the first such Ex-Dividend Date in
such period and ending on the date prior to the Ex-Dividend Date
with respect to the cash dividend to which this provision is
being applied (except that if no other cash dividend has had an
Ex- Dividend Date occurring in such period, the period for
calculating the average of the Closing Prices shall be the period
commencing 365 days prior to the date immediately prior to the
Ex- Dividend Date with respect to the cash dividend to which this
provision is being applied), such cash dividend together with
each other cash dividend with an Ex-
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Dividend Date occurring in such 365-day period that is aggregated
with such cash dividend in accordance with this paragraph shall
be deemed to be an Extraordinary Cash Dividend.
The adjustment pursuant to the foregoing provisions of this
paragraph (iii) shall be made successively whenever any
distribution to which this paragraph (iii) applies is made, and
shall become effective immediately after the record date for the
determination of stockholders entitled to receive the
distribution.
(iv) If this Section 13.10.3(e) requires adjustments to the
Conversion Price under more than one of clause (D) of the first
sentence of paragraph (i), paragraph (ii) or paragraph (iii), and
the record dates for the distribution giving rise to such
adjustments shall occur on the same date, then such adjustments
shall be made by applying, first, the provisions of paragraph
(i), second the provisions of paragraph (iii) and, third, the
provisions of paragraph (ii).
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this paragraph (v) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 13.10.3(e) shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(vi) In any case in which this Section 13.10.3(e) shall
require that an adjustment in the Conversion Price be made
effective as of the record date for a specified event, the
Corporation may elect to defer until the occurrence of such event
(x) issuing to the holder of the Seventh Series the Shares, if
any, issuable upon such conversion over and above the Shares, if
any, issuable upon such conversion on the basis of the Conversion
Price in effect prior to such adjustment, if the Seventh Series
is converted after such record date, and (y) paying to the holder
cash or its check in lieu of any fractional interest to which the
holder would be entitled pursuant to Section 13.10.3(d);
provided, however, that the Corporation shall deliver to the
holder a due bill or other appropriate instrument evidencing the
holder's right to receive such additional Shares and such cash
upon the occurrence of the event requiring such adjustment.
(vii) If the Corporation consolidates with or merges into,
or transfers (other than by mortgage or pledge) its properties
and assets substantially as an entirety to, another Person or the
Corporation is a party to a merger or binding share exchange
which reclassifies or changes its outstanding PCS Stock, or the
PCS Stock is converted into another class or series of capital
stock of the Corporation, the Corporation (or its successor in
such transaction) or the transferee of such properties and assets
shall make appropriate provision so that the holder's certificate
representing shares of Seventh Series shall thereafter be
convertible, upon the terms and conditions specified in the
certificates, for the kind and amount of securities, cash or
other assets receivable upon such transaction by a holder of the
number of shares of PCS Stock purchasable upon conversion of the
holder's Seventh Series immediately before the effective date of
such transaction (assuming, to the extent applicable, that such
holder of PCS Stock failed to exercise any rights of election
with respect thereto, and received per Share the kind and amount
of securities, cash or other assets received per share of PCS
Stock by a plurality of the nonelecting shares of PCS Stock); and
in any such case, if necessary, the provisions set forth in this
Section 13.10.3(e) with respect to the rights and interests
thereafter of the holder of the Seventh Series shall be
appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any such other securities or assets thereafter
deliverable on the conversion of the holder's Seventh Series. The
subdivision or combination of the PCS Stock at any time
outstanding into a greater or lesser number of shares of PCS
Stock shall not be deemed to be a reclassification of the PCS
Stock for the purposes of this subsection. The Corporation shall
not effect any such consolidation, merger, transfer or binding
share exchange unless prior to or simultaneously with the
consummation thereof the successor (if other than the
Corporation) resulting from such consolidation or
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merger or the Person purchasing such assets or other appropriate
Person shall assume, by written instrument, the obligation to
deliver to the holders of the Seventh Series such securities,
cash or other assets as, in accordance with the foregoing
provisions, the holder may be entitled to purchase and the other
obligations in this Section 13.10.
The Corporation may make such reductions in the Conversion Price,
in addition to those required by paragraphs (i), (ii) and (iii) of
this Section 13.10.3(e), as it shall in its sole discretion determine
to be advisable.
(viii) Subject to Section 13.10.3(e)(v) and to the remaining
provisions of this Section 13.10.3(e)(viii), in the event that a
holder of Seventh Series would be entitled to receive upon
conversion thereof pursuant to this Section 13.10.3(e) any
Redeemable Capital Stock and the Corporation redeems, exchanges
or otherwise acquires all of the outstanding shares or other
units of such Redeemable Capital Stock (such event being a
"Redemption Event"), then, from and after the effective date of
such Redemption Event, the holders of shares of Seventh Series
then outstanding shall be entitled to receive upon conversion of
such shares, in lieu of shares or units of such Redeemable
Capital Stock, the kind and amount of shares of stock and other
securities and property receivable upon the Redemption Event by a
holder of the number of shares or units of such Redeemable
Capital Stock into which such shares of Seventh Series could have
been converted immediately prior to the effective date of such
Redemption Event (assuming, to the extent applicable, that such
holder failed to exercise any rights of election with respect
thereto and received per share or unit of such Redeemable Capital
Stock the kind and amount of stock and other securities and
property received per share or unit by a plurality of the
non-electing shares or units of such Redeemable Capital Stock),
and (from and after the effective date of such Redemption Event)
the holders of the Seventh Series shall have no other conversion
rights under these provisions with respect to such Redeemable
Capital Stock.
Notwithstanding the foregoing, if the redemption price for
the shares of such Redeemable Capital Stock is paid in whole or
in part in Redemption Securities, and the Mirror Preferred Stock
Condition is met, the Seventh Series shall not be convertible
into such Redemption Securities and, from and after the
applicable redemption date, the holders of any shares of Seventh
Series that have not been exchanged for Mirror Preferred Stock
and Exchange Preferred Stock shall have no conversion rights
under these provisions except for any conversion right that may
have existed immediately prior to the effective date of the
Redemption Event with respect to any shares of stock (including
the PCS Stock) or other securities or property other than the
Redeemable Capital Stock so redeemed. The Corporation shall use
all commercially reasonable efforts to ensure that the Mirror
Preferred Stock Condition is satisfied. The "Mirror Preferred
Stock Condition" will be satisfied in connection with a
redemption of any Redeemable Capital Stock into which the Seventh
Series is then convertible if appropriate provision is made so
that the holders of the Seventh Series have the right to exchange
their shares of Seventh Series on the effective date of the
Redemption Event for Exchange Preferred Stock of the Corporation
and Mirror Preferred Stock of the issuer of the Redemption
Securities. The sum of the initial liquidation preferences of the
shares of Exchange Preferred and Mirror Preferred Stock delivered
in exchange for a share of Seventh Series will equal the
Liquidation Preference of a share of Seventh Series on the
effective date of the Redemption Event. The Mirror Preferred
Stock will have an aggregate initial liquidation preference equal
to the product of the aggregate Liquidation Preference of the
shares of Seventh Series exchanged therefor and the quotient of
(x) the product of the amount of shares of the Redeemable Capital
Stock for which each share of Seventh Series is then convertible
to be redeemed (determined immediately prior to the effective
date of the Redemption Event) and the average of the daily
Closing Prices of the Redeemable Capital Stock for the period of
ten consecutive trading days ending on the third trading day
prior to the effective date of the Redemption Event, divided by
(y) the sum of the amount determined pursuant to clause (x), plus
the fair value of the shares of stock or other securities or
property (other than the Redeemable Capital Stock being redeemed)
that would have been receivable by a holder of Seventh Series
upon conversion thereof immediately
69
prior to the effective date of the Redemption Event (such fair
value to be determined in the case of stock or other securities
with a Closing Price in the same manner as provided in clause (x)
and otherwise by the Board of Directors in the exercise of its
judgment). The shares of Exchange Preferred Stock will have an
aggregate initial liquidation preference equal to the difference
between the aggregate Liquidation Preference of the shares of
Seventh Series exchanged therefor and the aggregate initial
liquidation preference of the Mirror Preferred Stock. No shares
of Exchange Preferred Stock will be issued in exchange for the
Seventh Series if the shares of Exchange Preferred Stock would
have no Liquidation Preference as a result of the above formula.
(ix) If the Corporation effects a Spin Off, the Corporation
shall make appropriate provision so that the holders of the
Seventh Series have the right to exchange their shares of Seventh
Series on the effective date of the Spin Off for Exchange
Preferred Stock of the Corporation and Mirror Preferred Stock of
the issuer of the Spin Off Securities. The sum of the initial
liquidation preference of the shares of Exchange Preferred Stock
and Mirror Preferred Stock delivered in exchange for a share of
Seventh Series will equal the Liquidation Preference of a share
of Seventh Series on the effective date of the Spin Off. The
Mirror Preferred Stock will have an aggregate liquidation
preference equal to the product of the aggregate Liquidation
Preference of the shares of Seventh Series exchanged therefor and
the quotient of (x) the product of the number (or fraction) of
Spin Off Securities that would have been receivable upon such
Spin Off by a holder of the number of shares of PCS Stock
issuable upon conversion of a share of Seventh Series immediately
prior to the effective date of the Spin Off and the average of
the daily Closing Prices of the Spin Off Securities for the
period of ten consecutive trading days commencing on the tenth
trading day following the effective date of the Spin Off, divided
by (y) the sum of the amount determined pursuant to clause (x),
plus the fair value of the shares of PCS Stock and other
securities or property (other than Spin Off Securities) that
would have been receivable by a holder of a share of Seventh
Series in the Spin Off following conversion thereof immediately
prior to the effective date of the Spin Off (such fair value to
be determined in the case of PCS Stock or other securities with a
Closing Price in the same manner as provided in clause (x) and
otherwise by the Board of Directors in the exercise of its
judgment). The shares of Exchange Preferred Stock will have an
aggregate initial liquidation preference equal to the difference
between the aggregate Liquidation Preference of the shares of
Seventh Series exchanged therefor and the aggregate initial
liquidation preference of the Mirror Preferred Stock. No shares
of Exchange Preferred Stock will be issued in exchange for the
Seventh Series if the shares of Exchange Preferred Stock would
have no Liquidation Preference as a result of the above formula.
From and after the effective date of such Spin Off, the holders
of any shares of Seventh Series that have not been exchanged for
Mirror Preferred Stock and Exchange Preferred Stock as provided
above shall have no conversion rights under these provisions with
respect to such Spin Off Securities.
(f) The Corporation shall pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of PCS Stock on the conversion of Seventh Series;
provided, however, that the Corporation shall not be required to pay
any tax that may be payable in respect of any registration of transfer
involved in the issue or delivery of shares of PCS Stock in a name
other than that of the registered holder of Seventh Series converted
or to be converted, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.
13.10.4. Liquidation Rights. Subject to prior payment of preferred
amounts to which any Senior Stock is entitled, in the event of any
liquidation, dissolution or winding up of the Corporation the holders of
the Seventh Series will be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, before any
distribution of the assets shall be made to the holders of the Corporation
Common Stock or any other class or series of stock ranking junior to the
Seventh Series upon liquidation, the sum of U.S. $1,000 per share (the
"Liquidation Preference"), plus in each case any accumulated unpaid
dividends (whether or not declared), to the date of final distribution. If
upon any liquidation, dissolution or winding up of
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the Corporation the amounts payable with respect to the Seventh Series and
any other Parity Stock are not paid in full, the holders of the Seventh
Series and such Parity Stock will share ratably in any distribution of
assets in proportion to the full preferential amounts to which they are
entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of Seventh Series shall not be
entitled to any further participation in any distribution of assets by the
Corporation. A consolidation or merger of the Corporation with or into one
or more other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger), or a sale, lease or
exchange of all or substantially all of the assets of the Corporation shall
not be deemed to be a voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation. Notice of a liquidation, dissolution or
winding up of the Corporation shall be filed at each office or agency
maintained for the purpose of conversion of the Seventh Series, and shall
be mailed to the holders of Seventh Series at their last addresses as they
shall appear on the stock register of the Corporation, at least 20 business
days before any such action, stating the date on which any such action is
expected to become effective. The failure to give or receive the notice
required by this Section or any defect therein shall not affect the
legality or validity of any such action.
13.10.5. Redemption.
(a) General. Except as provided below and in Section 13.10.5(h), the
Seventh Series shall not be redeemed by the Corporation prior to November
23, 2001. The Corporation may at its option redeem the Seventh Series in
whole or in part after November 23, 2001, at any time or from time to time,
upon at least thirty days' prior notice, at a redemption price equal to the
Liquidation Preference per share of Seventh Series, plus any accumulated
unpaid dividends (whether or not declared) up to but excluding such
redemption date. In connection with a Spin Off or a Redemption Event, the
Corporation may, at its option, redeem the Seventh Series in whole after
November 23, 2000, and before November 23, 2001, upon at least thirty days
prior notice, at a redemption price equal to the Premium Price per share of
Seventh Series, plus any accumulated unpaid dividends (whether or not
declared) up to but excluding such redemption date, which redemption shall
be deemed effective immediately prior to the consummation of the Spin Off
or the Redemption Event. If less than all the outstanding Seventh Series is
to be redeemed, the shares to be redeemed shall be selected pro rata as
nearly as practicable or by lot, or by such other method as may be
determined by the Board of Directors to be equitable, without regard to
whether the shares to be redeemed are convertible into Series 1 PCS Stock
or Series 2 PCS Stock. Shares so redeemed shall be cancelled and upon such
cancellation shall be deemed to be authorized and unissued shares of
Preferred Stock, without par value, of the Corporation but shall not be
reissued as shares of the same series.
(b) Mandatory Redemption. To the extent permitted by law, the
Corporation shall redeem, on November 23, 2008 (or, if such day is not a
business day, on the first business day thereafter) (subject to extension
as provided in the last sentence of this Section 13.10.5(b), the "Mandatory
Redemption Date"), all remaining shares of Seventh Series then outstanding,
at the redemption price of $1,000 for each share outstanding, plus an
amount in cash equal to all accrued but unpaid dividends thereon to the
Mandatory Redemption Date. Prior to authorizing or making such redemption
with respect to the Seventh Series, the Corporation, by resolution of the
Board of Directors shall, to the extent of funds legally available
therefor, declare a dividend on the Seventh Series payable on the Mandatory
Redemption Date in an amount equal to any accrued and unpaid dividends on
the Seventh Series as of such date and, if the Corporation does not have
sufficient legally available funds to declare and pay all dividends accrued
at the time of such redemption, any remaining accrued and unpaid dividends
shall be added to the redemption price. After paying any accrued and unpaid
dividends pursuant to the foregoing sentence, if the funds of the
Corporation legally available for redemption of shares of the Seventh
Series then required to be redeemed are insufficient to redeem the total
number of such shares then outstanding, those funds which are legally
available shall be used to redeem the maximum possible number of shares of
the Seventh Series. At any time and from time to time thereafter, when
additional funds of the Corporation are legally available to discharge its
obligation to redeem all of the outstanding shares of Seventh Series
required to be redeemed pursuant to this section (the "Mandatory Redemption
Obligation"), such funds shall be immediately used to discharge such
Mandatory Redemption Obligation until the balance of such shares have been
redeemed. If and so long as the Mandatory Redemption Obligation shall not
be fully discharged, (x) dividends on any remaining outstanding shares of
Seventh Series shall continue to accrue and be added to the dividend
payable pursuant to the second preceding sentence and (y) the Corporation
shall not declare or pay any dividend or make any distribution on any
Parity Stock or Junior Stock. With respect to any Exchange Preferred Stock
or Mirror Preferred Stock, the Mandatory
71
Redemption Date shall be the later to occur of (i) November 23, 2008, and
(ii) the fifth anniversary of the date of issuance of such Exchange
Preferred Stock or Mirror Preferred Stock.
(c) Notice. The Corporation will provide notice of any redemption of
shares of Seventh Series to holders of record of the Seventh Series to be
redeemed not less than 30 nor more than 60 days prior to the date fixed for
such redemption. Such notice shall be provided by first-class mail postage
prepaid, to each holder of record of the Seventh Series to be redeemed, at
such holder's address as it appears on the stock transfer books of the
Corporation. Each such mailed notice shall state, as appropriate, the
following:
(i) the redemption date;
(ii) the number of shares of Seventh Series to be redeemed and,
if fewer than all the shares held by any holder are to be redeemed,
the number of such shares to be redeemed from such holder;
(iii) the Redemption Price;
(iv) the place or places where certificates for such shares are
to be surrendered for redemption;
(v) the amount of full cumulative dividends per share of
Seventh Series to be redeemed accrued and unpaid up to but excluding
such redemption date, and that dividends on shares of Seventh Series
to be redeemed will cease to accrue on such redemption date unless the
Corporation shall default in payment of the Redemption Price plus such
full cumulative dividends accrued and unpaid thereon;
(vi) the name and location of any bank or trust company with
which the Corporation will deposit redemption funds pursuant to
subsection (e) below;
(vii) the then effective Conversion Price (as determined under
Section 13.10.3); and
(viii) that the right of holders to convert shares of Seventh
Series to be redeemed will terminate at the close of business on the
business day next preceding the date fixed for redemption (unless the
Corporation shall default in the payment of the Redemption Price and
such full cumulative dividends accrued and unpaid thereon).
Any notice that is mailed as set forth above shall be conclusively presumed
to have been duly given, whether or not the holder of shares of Seventh
Series receives such notice, and failure to give such notice by mail, or
any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Seventh Series.
(d) Mechanics of Redemption. Upon surrender in accordance with the
aforesaid notice of the certificate for any shares so redeemed (duly
endorsed or accompanied by appropriate instruments of transfer if so
required by the Corporation), the holders of record of such shares shall be
entitled to receive the redemption price, without interest, plus full
cumulative dividends thereon accrued and unpaid up to but excluding such
redemption date out of funds legally available therefor. If fewer than all
the shares represented by any such certificate are redeemed, a new
certificate representing the unredeemed shares shall be issued without cost
to the holder thereof.
(e) Redemption Funds. On the date of any redemption being made
pursuant to this Section, the Corporation shall, and at any time after
notice of such redemption shall have been mailed and before the date of
redemption the Corporation may, deposit for the benefit of the holders of
shares of Seventh Series to be redeemed the funds necessary for such
redemption with a bank or trust company in the City of New York having a
capital and surplus of at least $1 billion, with instructions to such bank
or trust company to pay the full redemption amounts as provided herein to
the holders of shares of Seventh Series upon surrender of certificates for
such shares; provided, however, that the making of such deposit shall not
release the Corporation from any of its obligations hereunder. Any moneys
so deposited by the Corporation and unclaimed at the end of two years from
the date designated for such redemption shall revert to the general
72
funds of the Corporation and, upon demand, such bank or trust company shall
pay over to the Corporation such unclaimed amounts and thereupon such bank
or trust company shall be relieved of all responsibility in respect thereof
and any holder of shares of Seventh Series so redeemed shall look only to
the Corporation for the payment of the full redemption amounts, as provided
herein.
(f) Rights After Redemption. Notice of redemption having been given as
aforesaid, upon the deposit pursuant to subsection (e) of the full
redemption amounts as provided herein in respect of all shares of Seventh
Series then to be redeemed, notwithstanding that any certificates for such
shares shall not have been surrendered in accordance with subsection (d),
from and after the date of redemption designated in the notice of
redemption: (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to
accrue, and (iii) all rights of the holders of such shares of Seventh
Series shall cease and terminate, excepting only the right to receive the
full redemption amounts as provided herein without interest thereon. If the
funds deposited are not sufficient for redemption of the shares of the
Seventh Series that were to be redeemed, then no certificates evidencing
such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Seventh Series shall
continue to be those of holders of shares of the Seventh Series.
(g) Restrictions on Redemption and Purchase. Any provision of this
Section to the contrary notwithstanding, in the event that any quarterly
dividend payable on the Seventh Series shall be in arrears and until all
such dividends in arrears shall have been paid or declared and set apart
for payment, the Corporation shall not redeem any shares of Parity Stock or
Junior Stock unless all outstanding shares of Seventh Series are
simultaneously redeemed and shall not purchase or otherwise acquire any
shares of Seventh Series or any Parity Stock or Junior Stock except (i) by
conversion into or exchange for stock ranking junior as to dividends or
(ii) in accordance with a purchase or exchange offer made by the
Corporation to all holders of record of Seventh Series and such Parity
Stock upon the same terms as to holders of any series and, in the case of
offers relating to more than one series, upon such terms as between such
series as the Board of Directors or, to the extent permitted by applicable
law, any authorized committee thereof, after consideration of the
respective annual dividend rates and other relative rights and preferences
of the respective series of stock, will result in fair and equitable
treatment as between such series, which determination shall be conclusive.
(h) The Corporation shall redeem the Seventh Series in whole or in
part in accordance with and to the extent required by Section 6.6 of the
Restructuring Agreement. With respect to any such redemption, (i) the
provisions of Section 13.10.5(c) and Section 13.10.5(e) shall not apply and
(ii) the restriction on rights in Section 13.10.5(f) shall apply from the
time of the closing of the IPO or other primary offering contemplated by
Section 6.6 of the Restructuring Agreement.
13.10.6. Advance Notice of Certain Transactions. If the Corporation: (i)
takes any action which would require any adjustment to the Conversion Price or
the number of shares issuable upon a Conversion; (ii) is a party to a
consolidation, merger or binding share exchange, or transfers all or
substantially all of its assets to another person or entity, and any
stockholders of the Corporation must approve the transaction; or (iii)
voluntarily or involuntarily dissolves, liquidates or winds up, then, in any
such event, the Corporation shall give to the holders of the Seventh Series, at
least 10 days prior to any record date or other date set for definitive action
if there shall be no record date, a notice stating the record date for, the
anticipated effective date of such action or event and, if applicable, whether
the Corporation will adjust the Conversion Price or the number of shares
issuable upon a Conversion. Notwithstanding the foregoing, notice shall be given
no later than the time any required notice of such action or event is given to
the holders of PCS Stock.
13.10.7. Reservation of Shares. The Corporation shall at all times keep
available and reserved for the purpose of issuance upon conversion of shares of
Seventh Series the number of shares of its Series 1 PCS Stock and the number of
shares of its Series 2 PCS Stock required for conversion of the outstanding and
any reserved shares of the Seventh Series. The Corporation shall take all
corporate and other actions necessary to ensure that all shares of PCS Stock
issuable on conversion of Seventh Series will upon issuance be duly and validly
authorized and issued, fully paid and nonassessable.
13.10.8. Certain Protective Provisions. If at any time the full cumulative
dividends on shares of the Seventh Series have not been paid or declared and set
aside for payment for the current and all past quarterly dividend periods, the
Corporation (a) will not declare, or pay, or set apart for payment any dividends
or make any distribution, on
73
any class or series of Parity Stock or Junior Stock; (b) will not redeem,
purchase or otherwise acquire, or permit any subsidiary to purchase or otherwise
acquire, any shares of any class or series of Parity Stock or Junior Stock;
provided that notwithstanding the foregoing, the Corporation may at any time
redeem, purchase or otherwise acquire shares of Junior Stock in exchange for, or
out of the net cash proceeds from the substantially simultaneous sale of, other
shares of Junior Stock; and (c) will not redeem pursuant to redemption rights in
the terms of such stock any Parity Stock unless at the same time it redeems all
the shares of the Seventh Series.
13.10.9. Voting Rights. Except as otherwise required by law, each
outstanding share of the Seventh Series shall be entitled to vote on all matters
in respect of which the holders of the common stock of the Corporation are
entitled to vote, and the holders of the Seventh Series shall vote together with
the holders of all other classes or series of capital stock that have general
voting power on all such matters as a single class; provided, however, that the
affirmative vote or consent of two-thirds of the votes to which the holders of
the outstanding shares of the Seventh Series are entitled shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of any
or the provisions of the Articles of Incorporation or of any amendment thereto
(including any certificate of designation or any similar document relating to
any series of preferred stock) of the Corporation, which would materially and
adversely affect the voting powers, preferences, rights, powers or privileges,
qualifications, limitations and restrictions of the Seventh Series; provided,
however, that neither (i) the creation, issuance, or increase in the amount of
authorized shares of, any series of preferred stock nor (ii) the consummation of
any transaction described in Section 13.10.3 in which the voting powers,
preferences, rights, powers or privileges, qualifications, limitations and
restrictions of the Seventh Series are addressed as contemplated by such Section
will (in either such case) be deemed to materially and adversely affect such
voting powers, preferences, rights, powers or privileges, qualifications,
limitations and restrictions of the Seventh Series.
On each matter to be voted on by the holders of the Seventh Series, each
outstanding share of the Seventh Series is entitled to a number of votes equal
to the number of votes that could be cast with respect to such matter by the
holder of that number of the series of PCS Stock into which such share of
Seventh Series could be converted if the requirements for conversion under
Section 13.10.3(c) had been satisfied by such voting party on the record date
for determining the shareholders of the Corporation who are entitled to vote
with respect to such matter.
13.10.10. Definitions. As used in this Section 13.10 only:
(a) the term "Affiliate" has the meaning given to such term in the
Restructuring Agreement;
(b) the term "business day" shall mean 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;
(c) the term "Cable Holder" means any of (i) TeleCommunications, Inc.,
a Delaware corporation, Comcast Corporation, a Pennsylvania corporation, or
Cox Communications, Inc., a Delaware corporation, (ii) any Affiliate of an
entity identified in clause (i) of this definition, (iii) any successor by
operation of law of an entity identified in clauses (i) or (ii) of this
definition, or (iv) any entity controlled by two or more entities
identified in clauses (i) through (iii) of this definition or this clause
(iv) even if such entity is not considered an Affiliate of any individual
entity so identified;
(d) the term "close of business" means 5:00 p.m. local New York City
time on a business day;
(e) the term "Closing Price" for a security, on any day, means the
last sale price, regular way, per share of such security as reported on the
New York Stock Exchange on such day, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way,
of such security on the New York Stock Exchange, in either case as reported
on the New York Stock Exchange Composite Transactions Tape, or if such
security is not then listed or admitted to trading on such exchange, on the
principal national securities exchange on which such security is then
listed or admitted to trading, or if such security is not then listed or
admitted to trading on any national securities exchange, as quoted through
the National Market tier of The Nasdaq Stock Market;
(f) "Convertible Securities" means any or all options, warrants,
securities and rights which are convertible into or exercisable or
exchangeable for PCS Stock at the option of the holder thereof, or which
otherwise entitle the holder thereof to subscribe for, purchase or
otherwise acquire PCS Stock.
74
(g) "Current Market Price", on the Determination Date for any issuance
of rights or warrants or any distribution in respect of which the Current
Market Price is being calculated, means the average of the daily Closing
Prices of the Series 1 PCS Group Common Stock for the shortest of:
(i) the period of 30 consecutive Trading Days commencing 45
Trading Days before such Determination Date;
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights or warrants or the
distribution in respect of which the Current Market price is being
calculated and ending on the last full Trading Day before such
Determination Date; and
(iii) the period, if any, commencing on the date next succeeding
the Ex-Dividend Date with respect to the next preceding issuance of
rights or warrants or distribution for which an adjustment is required
by the provisions of clause (D) of the first sentence of Section
13.10.3(e)(i), Section 13.10.3(e)(ii) or Section 13.10.3(e)(iii), and
ending on the last full Trading Day before such Determination Date.
If the record date for an issuance of rights or warrants or a
distribution for which an adjustment is required by the provisions of
clause (D) of the first sentence of Section 13.10.3(e)(i), Section
13.10.3(e)(ii) or Section 13.10.3(e)(iii) (the "preceding adjustment
event") precedes the record date for the issuance or distribution in
respect of which the Current Market Price is being calculated and the
Ex-Dividend Date for such preceding adjustment event is on or after the
Determination Date for the issuance or distribution in respect of which the
Current Market Price is being calculated, then the Current Market Price
shall be adjusted by deducting therefrom the fair market value (on the
record date for the issuance or distribution in respect of which the
Current Market Price is being calculated), as determined in good faith by
the Board of Directors, of the capital stock, rights, warrants, assets or
evidences of indebtedness issued or distributed in respect of each share of
Series 1 PCS Group Common Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case of a
subdivision, combination or reclassification, the effective date with
respect thereto) with respect to a dividend, subdivision, combination or
reclassification to which clauses (A), (B), (C) or (D) of the first
sentence of Section 13.10.3(e)(i) applies occurs during the period
applicable for calculating the Current Market Price, then the Current
Market Price shall be calculated for such period in a manner determined in
good faith by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the Closing
Prices of the Series 1 PCS Group Common Stock during such period.
For purposes of this Section 13.10, the Current Market Price of a
share of Series 2 PCS Group Common Stock as of any Determination Date shall
be the Current Market Price of a share of Series 1 PCS Group Common Stock
as of such Determination Date;
(h) "Determination Date" for any issuance of rights or warrants or any
distribution to which Section 13.10.3(e)(i) or 13.10.3(e)(ii) applies means
the earlier of (i) the record date for the determination of stockholders
entitled to receive the rights or warrants or the distribution to which
such Section applies and (ii) the Ex-Dividend Date for such right, warrants
or distribution;
(i) "Exchange Preferred Stock" means a series of convertible preferred
stock of the Corporation having terms, conditions, designations, dividend
rights, voting powers, rights on liquidation and other preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof that are identical, or
as nearly so as is practicable in the judgment of the Board of Directors,
to those of the Seventh Series for which such Exchange Preferred Stock is
exchanged, except that (i) the liquidation preference will be determined as
provided in Section 13.10.3(e)(vii) or Section 13.10.3(e)(viii), as
applicable, (ii) the running of any time periods pursuant to the terms of
the Seventh Series shall be tacked to the corresponding time periods in the
Exchange Preferred Stock and (iii) the Exchange Preferred Stock will not be
convertible into, and the holders will have no conversion rights thereunder
with respect to, (x) in the case of a redemption of Redeemable Capital
Stock, the Redeemable Capital Stock redeemed, or the Redemption Securities
issued, in the Redemption Event, and (y) in the case of a Spin Off, the
Spin Off Securities;
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(j) "Ex-Dividend Date" shall mean the date on which "ex-dividend"
trading commences for a dividend, an issuance of rights or warrants or a
distribution to which any of Section 13.10.3(e)(i), Section 13.10.3(e)(ii)
or Section 13.10.3(e)(iii) applies in the over-the-counter market or on the
principal exchange on which the Series 1 PCS Stock is then quoted or
listed;
(k) the term "Initial Conversion Price" shall be an amount equal to
$15.3733.
(l) "IPO" has the meaning given to such term in the Restructuring
Agreement;
(m) the term "IPO Price" means the price per share of Series 1 PCS
Stock in the IPO;
(n) the term "Junior Stock" means any stock ranking junior as to
dividends or upon liquidation, dissolution or winding up to the Seventh
Series;
(o) the term "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;
(p) the term "Mirror Preferred Stock" means convertible preferred
stock issued by (i) in the case of a redemption of Redeemable Capital
Stock, the issuer of the applicable Redemption Securities, and (b) in the
case of a Spin Off, the issuer of the applicable Spin Off Securities and
having terms, designations, conditions, dividend rights, voting powers,
rights on liquidation and other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof that are identical, or as nearly so as is practicable
in the judgment of the Board of Directors, to those of the Seventh Series
for which such Mirror Preferred Stock is exchanged, except that (i) the
liquidation preference will be determined as provided in Section
13.10.3(e)(vii) or Section 13.10.3(e)(viii), as applicable, (ii) the
running of any time periods pursuant to the terms of the Seventh Series
shall be tacked to the corresponding time periods in the Mirror Preferred
Stock and (iii) the Mirror Preferred Stock shall be convertible into the
kind and amount of Redemption Securities or Spin Off Securities, as
applicable, and other securities and property that the holder of a share of
Seventh Series in respect of which such Mirror Preferred Stock is issued
pursuant to the terms hereof would have received (x) in the case of the
redemption of Redeemable Capital Stock, upon such redemption had such share
of Seventh Series been converted immediately prior to the effective date of
the Redemption Event and (y) in the case of a Spin Off, in such Spin Off
had such share of Seventh Series been converted immediately prior to the
record date for such Spin Off;
(q) the term "Parity Stock" means any stock ranking on a parity as to
dividends or upon liquidation, dissolution or winding up with the Seventh
Series;
(r) the term "PCS Stock" means the Series 1 PCS Stock, the Series 2
PCS Stock and the Series 3 PCS Stock;
(s) the term "Premium Price," which shall be measured as of the
effective date of the redemption referred to in Section 13.10.5(a), means
the greater of (i) 110% of the Liquidation Preference and (ii) 110% of the
product of (A) the number of shares of PCS Stock (or other securities) into
which a share of Seventh Series is convertible as of such redemption date
multiplied by (B) the average of the Closing Prices for the Series 1 PCS
Stock (or, if the Seventh Series is then convertible into a different
publicly traded security of the Corporation, then the average of the
Closing Prices of such publicly traded security) for the 30 consecutive
Trading Days ending on the 5th Trading Day prior to such redemption date.
(t) the term "record date" means such date as from time to time fixed
by the Board of Directors with respect to the receipt of dividends, the
receipt of a redemption price upon redemption or the taking of any action
or exercise of any voting rights;
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(u) the term "Redeemable Capital Stock" means a class or series of
capital stock of the Corporation that provides by its terms a right in
favor of the Corporation to call, redeem, exchange or otherwise acquire all
of the outstanding shares or units of such class or series;
(v) the term "Redemption Securities" means, with respect to the
redemption of any Redeemable Capital Stock, stock of a Subsidiary of the
Corporation that is distributed by the Corporation in payment, in whole or
in part, of the redemption price of such Redeemable Capital Stock;
(w) the term "Restructuring Agreement" means that Restructuring and
Merger Agreement, dated as of May 26, 1998, among the Corporation,
Tele-Communications, Inc., Comcast Corporation, Cox Communications, Inc.
and certain of their respective Affiliates;
(x) the term "Series 1 PCS Stock" means the PCS Common Stock--Series
1, par value $1.00 per share, of the Corporation;
(y) the term "Series 2 PCS Stock" means the PCS Common Stock--Series
2, par value $1.00 per share, of the Corporation;
(z) the term "Series 3 PCS Stock" means the PCS Common Stock--Series
3, par value $1.00 per share, of the Corporation;
(aa) the term "Spin Off" means the distribution of stock of a
Subsidiary of the Corporation as a dividend to all holders of PCS Stock.
(bb) the term "Spin Off Securities" means stock of a Subsidiary of the
Corporation that is distributed to holders of PCS Stock in a Spin Off.
(cc) the term "Subsidiary" means, with respect to any person, any
corporation, limited liability company, partnership or other legal entity
more than 50% of whose outstanding voting securities or membership,
partnership or other ownership interests, as the case may be, are directly
or indirectly owned by such person.
(dd) the term "Trading Day" means a day on which the principal
national securities exchange on which the Series 1 PCS Stock is listed or
admitted to trading, or The Nasdaq Stock Market, as applicable, if the
Series 1 PCS Stock is not listed or admitted to trading on any national
securities exchange, is open for the transaction of business (unless such
trading shall have been suspended for the entire day) or, if the Series 1
PCS Stock is not listed or admitted to trading on any national securities
exchange or The Nasdaq Stock Market, any Business Day; and
(ee) the term "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 or (b) any conversion or exchange of any
security of this Corporation pursuant to a merger or other business
combination involving this Corporation.
PREFERRED STOCK-EIGHTH SERIES
(1) Designation and Amount. The shares of such Series shall be designated
as "Preferred Stock-Eighth Series, Junior Participating" (hereafter "Eighth
Series") and the number of shares constituting such series shall be one million
two hundred fifty thousand (1,250,000).
(2) Dividends.
(A) Subject to the prior and superior rights of the holders of any
shares of any other series of Preferred Stock of the Corporation
("Preferred Stock"), or any similar stock ranking prior and superior to the
shares of the Eighth Series with respect to dividends, the holders of
shares of the Eighth Series, in preference to the holders of Common Stock
and any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of the Eighth Series
(collectively with such Common Stock, "Junior
77
Stock"), shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash, on January 1, April 1, July 1 and
October 1 in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date") in an amount (rounded to the nearest
cent) equal to the greater of (a) $100.00 or (b) the product of the PCS
Group Multiple (as defined below) times the aggregate per share amount of
all cash dividends, plus the product of the PCS Group Multiple times the
aggregate per share amount (payable in cash, based upon the fair market
value at the time the non-cash dividend or other distribution is declared
as determined in good faith by the Board of Directors) of all non-cash
dividends or other distributions other than a dividend payable in shares of
PCS Group Common Stock, or a subdivision of the outstanding shares of PCS
Group Common Stock (by reclassification or otherwise), declared (but not
withdrawn) on the PCS Group Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of the Eighth Series.
(B) As used herein, the PCS Group Multiple shall initially be 2,000.
In the event the Corporation shall (i) declare any dividend on PCS Group
Common Stock payable in shares of PCS Group Common Stock, (ii) subdivide
the outstanding PCS Group Common Stock, or (iii) combine the outstanding
PCS Group Common Stock into a smaller number of shares, then in each such
case the PCS Group Multiple shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of PCS Group
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of PCS Group Common Stock that were
outstanding immediately prior to such event.
(C) The Corporation shall declare a dividend or distribution on the
Eighth Series as provided above in paragraph (A) of this Section (2)
immediately after it declares a dividend or distribution on the PCS Group
Common Stock (other than a dividend payable in shares of PCS Group Common
Stock); provided, however, that in the event no dividend or distribution
shall have been declared on the PCS Group Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, the minimum quarterly dividend of $100.00
on the Eighth Series shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(D) Dividends shall begin to accrue and be cumulative on outstanding
shares of Eighth Series from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Eighth Series, unless the
date of issue of such shares of Eighth Series is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Eighth
Series entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which cases such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall cumulate but shall not bear interest.
Dividends paid on the shares of Eighth Series in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(3) Voting Rights. Except as prescribed by law and in addition to the
rights provided for in ARTICLE SIXTH of the Articles of Incorporation of the
Corporation, as amended, the holders of the shares of the Eighth Series shall be
entitled to vote at any annual or special meeting of the stockholders of the
Corporation, for each share of Eighth Series, a number of votes equal to the
product of the PCS Group Multiple then in effect times the highest number of
votes that each share of PCS Group Common Stock entitles its holder to vote at
such meeting of stockholders of the Corporation. The holders of the shares of
the Eighth Series shall be entitled to exercise such voting rights with the
holders of Series 1 PCS Stock, without distinction as to class, at any annual or
special meeting of stockholders for the election of directors and on any other
matter submitted to a vote of the stockholders of the Corporation at such
meeting. Except as otherwise provided herein, in the Articles of Incorporation
of the Corporation, in any other Certificate of Designation establishing a
series of Preferred Stock or any similar stock or otherwise required by law, the
holders of the shares of the Eighth Series and the holders of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
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(4) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the shares of the Eighth Series as provided in Section (2) are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of the Eighth Series
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends (except a dividend payable in PCS
Group Common Stock and/or any other Junior Stock) on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of Junior Stock;
(ii) declare or pay dividends on or make any other distribution
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the shares of the
Eighth Series, except dividends paid ratably on the shares of the
Eighth Series and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the shares of the
Eighth Series, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of such parity stock in exchange
for shares of Junior Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of the Eighth Series, or any shares of stock ranking on a parity with
the shares of the Eighth Series, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section (4), purchase or otherwise acquire such shares at such time and in
such manner.
(5) Reacquired Shares. Any shares of the Eighth Series purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Articles of Incorporation,
in any other Certificate of Designation establishing a series of Preferred Stock
or any similar stock or as otherwise required by law.
(6) Liquidation, Dissolution or Winding Up.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the shares of
the Eighth Series shall be entitled to receive, in preference to the
holders of Junior Stock, the greater of (a) $1,000.00 per share, plus
accrued dividends to the date of distribution, whether or not earned or
declared, or (b) an amount per share equal to the product of the PCS Group
Multiple then in effect times the aggregate amount to be distributed per
share to holders of PCS Group Common Stock.
(B) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Eighth Series shall not receive any distributions
except for distributions made ratably on the Eighth Series and all other
such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or
winding up.
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(7) Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of PCS Group Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
the Eighth Series shall at the same time be similarly exchanged or changed in an
amount per share equal to the product of the PCS Group Multiple then in effect
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of PCS
Group Common Stock is changed or exchanged.
(8) Ranking. The shares of the Eighth Series shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise. The shares of the Eighth Series shall rank on a parity with the
Corporation's Preferred Stock-Series Sixth, Junior Participating, as to the
payment of dividends and the distribution of assets. Nothing herein shall
preclude the Board of Directors of the Corporation from creating any additional
series of Preferred Stock or any similar stock ranking on a parity with or prior
to the shares of the Eighth Series as to the payment of dividends or
distribution of assets.
(9) Fractional Shares. Shares of the Eighth Series may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of the Eighth Series.
(10) Definitions. For purposes of this Certificate of Designation,
Preferences and Rights of Eighth Series, unless the context otherwise requires:
(A) Deleted.
(B) "Common Stock" shall mean Series 1 FON Stock, and/or Series 2 FON
Stock, and/or Series 3 FON Stock, and/or Old Class A Common Stock, and/or
Series 1 PCS Stock, and/or Series 2 PCS Stock, and/or Series 3 PCS Stock,
in each case as the context requires.
(C) "Initial Charter Amendment" shall have the meaning set forth in
the Restructuring and Merger Agreement.
(D) "Old Class A Common Stock" shall have the meaning set forth in the
Subsequent Charter Amendment.
(E) "PCS Group Common Stock" shall mean Series 1 PCS Stock, and/or
Series 2 PCS Stock, and/or Series 3 PCS Stock, in each case as the context
requires.
(F) "PCS Group Multiple" shall have the meaning set forth in Section
2(B).
(G) "Recapitalization" shall mean the reclassification of each
outstanding share of Sprint Common Stock into one share of Series 1 FON
Stock and one-half of a share of Series 1 PCS Stock effected by filing of
the Subsequent Charter Amendment.
(H) "Restructuring and Merger Agreement" shall mean that certain
agreement, dated as of May 26, 1998, by and among the Corporation,
TeleCommunications, Inc., a Delaware corporation, Comcast Corporation, a
Pennsylvania corporation, Cox Communications, Inc., a Delaware corporation,
TCI Spectrum Holdings, Inc., a Colorado corporation, Comcast Telephony
Services, a Delaware general partnership, Cox Telephony Partnership, a
Delaware general partnership, Sprint Enterprises, L.P., a Delaware limited
partnership, TCI Philadelphia Holdings, Inc., a Delaware corporation, Com
Telephony Services, Inc., a Delaware corporation, Comcast Telephony
Services, Inc., a Delaware corporation, Cox Telephony Partners, Inc., a
Delaware corporation, Cox Communications Wireless, Inc., a Delaware
corporation, SWV One, Inc., a Delaware corporation, SWV Two, Inc., a
Delaware corporation, SWV Three, Inc., a Delaware corporation, SWV Four,
Inc., a Delaware corporation, SWV Five, Inc., a Delaware corporation, and
SWV Six, Inc., a Colorado corporation.
(I) "Series 2 Common Stock" shall mean the Common Stock - Series 2,
par value $2.50 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
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(J) "Series 1 FON Stock" shall mean the FON Common Stock - Series 1,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(K) "Series 2 FON Stock" shall mean the FON Common Stock - Series 2,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(L) "Series 3 FON Stock" shall mean the FON Common Stock - Series 3,
par value $2.00 per share, of the Corporation, created by the filing of the
Subsequent Charter Amendment.
(M) "Series 1 PCS Stock" shall mean the PCS Common Stock - Series 1,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(N) "Series 2 PCS Stock" shall mean the PCS Common Stock - Series 2,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(O) "Series 3 PCS Stock" shall mean the PCS Common Stock - Series 3,
par value $1.00 per share, of the Corporation, created by the filing of the
Initial Charter Amendment.
(P) "Sprint Common Stock" shall mean Common Stock, par value $2.50 per
share, of the Corporation, as provided for in the Initial Charter
Amendment.
(Q) "Subsequent Charter Amendment" shall have the meaning set forth in
the Restructuring and Merger Agreement.
Seventh
1. In addition to any affirmative vote required by law or these Articles of
Incorporation, and except as expressly provided in Section 2 of this ARTICLE
SEVENTH, the affirmative vote of the holders of eighty (80) percent of the
outstanding shares of the Corporation entitled to vote in an election of
Directors shall be required for the approval or authorization of any Business
Combination (as hereinafter defined).
2. The provisions of Section 1 of this ARTICLE SEVENTH shall not be
applicable if:
A. The Business Combination shall have been approved by a majority of
the Continuing Directors (as hereinafter defined); provided, however, that
such approval shall only be effective if obtained at a meeting of Directors
at which at least seven Continuing Directors are present; or
B. The Business Combination is a merger or consolidation and the cash
or Fair Market Value (as hereinafter defined) of the property, securities
or other consideration to be received per share by the stockholders of each
class of stock of the Corporation in the Business Combination, if
applicable, is not less than the highest per share price paid by the
Interested Stockholder (as hereinafter defined), with appropriate
adjustments for stock splits, stock dividends and like distributions, in
the acquisition by the Interested Stockholder of any of its holdings of
each class of the Corporation's capital stock.
3. For purposes of this ARTICLE SEVENTH:
A. The term "Business Combination" means:
(i) any merger or consolidation of the Corporation or any
subsidiary of the Corporation with (a) any Interested Stockholder or
(b) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation would be,
an Affiliate (as defined on October 1, 1982 in Rule 12b- 2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
an Interested Stockholder;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder or any Affiliate of any
81
Interested Stockholder of any assets of the Corporation or any
subsidiary of the Corporation that have an aggregate Fair Market Value
of $1,000,000 or more;
(iii) the issuance or transfer by the Corporation or any
subsidiary of the Corporation (in one transaction or a series of
transactions) of any securities of the Corporation or any subsidiary
of the Corporation to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate Fair Market
Value of $1,000,000 or more;
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of any Interested Stockholder;
or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its subsidiaries or any
other transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate of any Interested
Stockholder.
B. The term "Continuing Director" means any member of the Board of
Directors of the Corporation who is unaffiliated with the Interested
Stockholder and was a member of the Board of Directors prior to the time
that the Interested Stockholder became an Interested Stockholder, and any
successor of a Continuing Director if the successor is unaffiliated with
the 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.
C. The term "Fair Market Value" means:
(i) in the case of stock, the highest closing sale price during
the 30-day period immediately preceding the date in question of a
share of such stock on the Composite Tape for New York Stock
Exchange-listed stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States securities
exchange registered under the Exchange Act on which such stock is
listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock
during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of
such stock as determined in good faith by a majority of Continuing
Directors, provided that such determination shall only be effective if
made at a meeting of Directors at which at least seven Continuing
Directors are present; or
(ii) in the case of property or securities other than cash or
stock, the fair market value of such property or securities on the
date in question as determined in good faith by a majority of
Continuing Directors, provided that such determination shall only be
effective if made at a meeting of Directors at which at least seven
Continuing Directors are present.
D. The term "Interested Stockholder" means and includes, as of the
date of any proposed Business Combination, any individual, corporation,
partnership or other person or entity which, together with its "Affiliates"
and "Associates" (as defined on October 1, 1982 in Rule 12b-2 under the
Exchange Act), "Beneficially Owns" (as defined on October 1, 1982 in Rule
13d- 3 under the Exchange Act) in the aggregate ten percent or more of the
outstanding shares of the Corporation entitled to vote in an election of
Directors, and any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity.
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Eighth
1. Prevention of "Greenmail." Any direct or indirect purchase or other
acquisition by this Corporation of any Equity Security (as hereinafter defined)
of any class at a price above Market Price (as hereinafter defined) from any
Interested Securityholder (as hereinafter defined) who has beneficially owned
any Equity Security of the class to be purchased for less than two years prior
to the date of such purchase or any agreement in respect thereof shall, except
as hereinafter expressly provided, require the affirmative vote of the holders
of at least a majority of the voting power of the then outstanding shares of
capital stock of this Corporation entitled to vote generally in the election of
directors (the "Voting Stock"), excluding Voting Stock beneficially owned by
such Interested Securityholder, voting together as a single class (it being
understood that for the purposes of this ARTICLE EIGHTH, each share of the
Voting Stock shall have the number of votes granted to it pursuant to ARTICLE
SIXTH of these Articles of Incorporation). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or any agreement with any national
securities exchange, or otherwise, but (i) no such affirmative vote shall be
required with respect to any purchase, redemption or other acquisition by this
Corporation of capital stock from FT, DT, any Qualified Subsidiary or any
Qualified Stock Purchaser pursuant to the provisions of the Investment Documents
(as such term is defined in Section 10 of ARTICLE SIXTH of these Articles of
Incorporation) or these Articles of Incorporation, (ii) no such affirmative vote
shall be required with respect to any purchase or other acquisition of
securities made as part of a tender or exchange offer by this Corporation to
purchase securities of the same class made on the same terms to all holders of
such securities and complying with the applicable requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations), and (iii) no such
affirmative vote shall be required with respect to any purchase, redemption,
conversion or other acquisition by this Corporation of Series 2 FON Stock or PCS
Stock (as defined in ARTICLE SIXTH) from a holder thereof pursuant to the
provisions of these Articles of Incorporation.
2. Certain Definitions. For the purposes of this ARTICLE EIGHTH:
A. A "person" means any individual, firm, corporation or other entity.
B. "Interested Securityholder" means any person (other than the
Corporation or any corporation of which a majority of any class of Equity
Security is owned, directly or indirectly, by the Corporation) who or
which:
(i) is the beneficial owner, directly or indirectly, of 5% or
more of the class of securities to be acquired; or
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 5% or more of the class
of securities to be acquired; or
(iii) is an assignee or has otherwise succeeded to any shares of
the class of securities to be acquired which were at any time within
the two-year period immediately prior to the date in question
beneficially owned by an Interested Securityholder, if such assignment
or succession shall have occurred in the course of a transaction or
transactions not involving a public offering within the meaning of the
Securities Act of 1933, as amended.
C. A person shall be a "beneficial owner" of any security of any class
of the Corporation:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (b) any right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding
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for the purpose of acquiring, holding, voting or disposing of any
security of any class of the Corporation.
D. For the purposes of determining whether a person is an Interested
Securityholder pursuant to paragraph B of this Section 2, the relevant
class of securities outstanding shall be deemed to comprise all such
securities deemed owned through application of paragraph C of this Section
2, but shall not include other securities of such class which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on October 1, 1982.
F. "Equity Security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
January 1, 1985.
G. "Market Price" means the highest closing sale price during the
thirty-day period immediately preceding the date in question, of a share of
any Equity Security on the Composite Tape for New York Stock Exchange
issues or, if such Equity Security is not quoted on the Composite Tape or
is not listed on such Exchange, on the principal United States security
exchange registered under the Securities Exchange Act of 1934, as amended,
on which such Equity Security is listed, or, if such Equity Security is not
listed on any such exchange, the highest closing bid quotation with respect
to a share of such Equity Security during the thirty-day period preceding
the date in question on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or, if no such
quotations are available, the fair market value on the date in question of
a share of such Equity Security.
3. Compliance. The Board of Directors of the Corporation shall have the
power to determine the application of, or compliance with, this ARTICLE EIGHTH,
including, without limitation: (i) whether a person is an Interested
Securityholder; (ii) whether a person is a beneficial owner of any Equity
Security; and (iii) the Market Price of any Equity Security. Any decision or
action taken by the Board of Directors arising out of or in connection with the
construction, interpretation and effect of this ARTICLE EIGHTH shall lie within
its absolute discretion and shall be conclusive and binding, except in
circumstances involving bad faith.
Ninth
No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such Director as a Director; provided, however, that this ARTICLE NINTH
shall not eliminate or limit the liability of a Director to the extent provided
by applicable law (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 51 of the General Corporation Code of the State of Kansas, or (iv) for
any transaction from which the Director derived an improper personal benefit. No
amendment to or repeal of this ARTICLE NINTH shall apply to or have any effect
on the liability or alleged liability of any Director of the Corporation for or
with respect to any acts or omissions of such Director occurring prior to such
amendment or repeal.
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