Exhibit (10)(c)
================================================================================
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
Among
FRANCE TELECOM S.A.,
DEUTSCHE TELEKOM AG
and
SPRINT CORPORATION
Dated as of November 23, 1998
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................. 2
ARTICLE II RESTRICTIONS ON TRANSFER OF SHARES....................................................... 32
Section 2.1. General Transfer Restrictions...................................................... 32
Section 2.2. Transfers to Qualified Subsidiaries................................................ 32
Section 2.3. Other Transfers Prior to January 31, 2001.......................................... 33
Section 2.4. Other Transfers.................................................................... 33
Section 2.5. Company Rights to Purchase......................................................... 34
Section 2.6. Termination of Transfer Restrictions............................................... 40
Section 2.7. Notice of Certain Actions.......................................................... 42
Section 2.8. Restrictive Legends................................................................ 42
Section 2.9. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Shares.......................................................... 44
Section 2.10. Strategic Mergers; Business Combinations; Company Tender for Shares................ 44
Section 2.11. Effect of Proposed Redemption...................................................... 44
ARTICLE III PROVISIONS CONCERNING DISPOSITION OF LONG DISTANCE ASSETS................................ 45
Section 3.1. Offers to FT and DT................................................................ 45
Section 3.2. Assignment of Rights............................................................... 47
Section 3.3. Timing of Disposition.............................................................. 48
Section 3.4. Method of Purchase................................................................. 48
Section 3.5. Termination of Rights.............................................................. 49
ARTICLE IV PROVISIONS CONCERNING CHANGE OF CONTROL.................................................. 49
Section 4.1. Sale of Assets or Control.......................................................... 49
Section 4.2. Required Share Purchases........................................................... 50
ARTICLE V EQUITY PURCHASE RIGHTS................................................................... 51
Section 5.1. Right to Purchase.................................................................. 51
Section 5.2. Notice............................................................................. 53
Section 5.3. Manner of Exercise; Manner of Payment.............................................. 54
Section 5.4. Adjustments........................................................................ 54
Section 5.5. Closing of Purchases............................................................... 54
Section 5.6. Terms of Payment................................................................... 55
Section 5.7. Suspension of Equity Purchase Rights............................................... 56
-i-
Page
Section 5.8. Record Date Blackout Purchases..................................................... 56
ARTICLE VI HOLDINGS BY MAJOR COMPETITORS............................................................ 58
ARTICLE VII COVENANTS................................................................................ 58
Section 7.1. Reservation and Availability of Capital Stock...................................... 58
Section 7.2. Assignee Purchasers................................................................ 59
Section 7.3. Automatic Exercise of Rights with Respect to Option Shares; Method
of Purchase....................................................................... 59
Section 7.4. Procedures for Redemption.......................................................... 61
Section 7.5. Joint Action by FT and DT.......................................................... 63
Section 7.6. Compliance with Tax Laws........................................................... 63
Section 7.7. Compliance with Security Requirements.............................................. 63
Section 7.8. Major Issuances.................................................................... 64
Section 7.9. Participation by Class A Directors in Certain Circumstances........................ 64
Section 7.10. Spin-offs.......................................................................... 65
Section 7.11. FCC Licenses....................................................................... 66
Section 7.12. Issuance of Class A Stock.......................................................... 66
Section 7.13. Defeasance of Fifth Series......................................................... 66
Section 7.14. Continuing Directors............................................................... 66
Section 7.15. Long Distance Business............................................................. 66
Section 7.16. Intellectual Property.............................................................. 66
Section 7.17. Automatic Exercise of Rights with Respect to CP Conversion Shares,
etc.; Method of Purchase.......................................................... 66
Section 7.18. Notice of Record Dates............................................................. 68
ARTICLE VIII TERMINATION OF CERTAIN RIGHTS............................................................ 68
ARTICLE IX TAX INDEMNIFICATION...................................................................... 69
Section 9.1. Indemnification for Company Purchase............................................... 69
Section 9.2. Indemnification for Supplementary Payments......................................... 70
Section 9.3. Rebate of Indemnity................................................................ 70
Section 9.4. Exclusions from Indemnity.......................................................... 71
Section 9.5. Consequences of Assignment......................................................... 72
Section 9.6. Verification....................................................................... 72
Section 9.7. Contest Rights..................................................................... 73
ARTICLE X U.S. REAL PROPERTY TAX MATTERS........................................................... 74
Section 10.1. Notification....................................................................... 74
-ii-
Page
Section 10.2. Control of FIRPTA Determination.................................................... 74
Section 10.3. Issuance of Certification; Related Matters......................................... 74
Section 10.4. Advisory Costs..................................................................... 75
Section 10.5. Indemnity.......................................................................... 75
Section 10.6. Contest Rights..................................................................... 75
ARTICLE XI MISCELLANEOUS............................................................................ 76
Section 11.1. Notices............................................................................ 76
Section 11.2. Waiver, Amendment, etc............................................................. 78
Section 11.3. No Partnership..................................................................... 78
Section 11.4. Binding Agreement; Assignment; No Third Party Beneficiaries........................ 78
Section 11.5. GOVERNING LAW; DISPUTE RESOLUTION; EQUITABLE RELIEF................................ 78
Section 11.6. Severability....................................................................... 80
Section 11.7. Translation........................................................................ 80
Section 11.8. Table of Contents; Headings; Counterparts.......................................... 80
Section 11.9. Entire Agreement................................................................... 81
Section 11.10.Waiver of Immunity................................................................. 81
Section 11.11.Acquisitions by FT and DT of Stock from Third Parties.............................. 81
Section 11.12.Effect of Conversion............................................................... 81
Section 11.13.Continuing Director Approval....................................................... 82
-iii-
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of November 23,
1998 (this "Agreement"), by and among SPRINT CORPORATION, a corporation formed
under the laws of Kansas (the "Company"), FRANCE TELECOM S.A., a societe anonyme
formed under the laws of France ("FT"), and DEUTSCHE TELEKOM AG, an
Aktiengesellschaft formed under the laws of Germany ("DT");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, FT and DT entered into an Investment Agreement dated
as of July 31, 1995, as amended (the "Investment Agreement") pursuant to which
FT and DT purchased shares of capital stock of the Company;
WHEREAS, in connection with the transactions contemplated by the Investment
Agreement, the Company, FT and DT entered into a Stockholders' Agreement dated
as of January 31, 1996, which agreement was amended on June 24, 1997 (the "1996
Stockholders' Agreement");
WHEREAS, the Company, FT and DT entered into a Master Restructuring and
Investment Agreement dated as of May 26, 1998 (the "FT/DT Restructuring
Agreement"), which contemplates, among other things, the purchase by FT and DT
of shares of Series 3 PCS Stock;
WHEREAS, as a condition precedent to and in consideration of the
transactions contemplated in the FT/DT Restructuring Agreement, the Company, FT
and DT are required to enter into this Agreement and in reliance thereon the
Company, FT and DT have has entered into the FT/DT Restructuring Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the FT/DT
Restructuring Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of FT, DT and the
Company (each a "Party and collectively the "Parties"), intending to be legally
bound, hereby agrees that the 1996 Stockholders' Agreement is hereby amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
-----------
The following capitalized terms used in this Agreement will have the
following 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 party hereto unless (i) FT, DT
and Atlas own a majority of the Voting Power of such JV Entity and the Company
does not have the Tie-Breaking Vote, or (ii) FT, DT or Atlas has the Tie-
Breaking Vote; (b) FT, DT and the Company shall not be deemed Affiliates of each
other; (c) Atlas shall be deemed an Affiliate of FT and DT; and (d) the term
"Affiliate" shall not include any Governmental Authority of France or Germany or
any other Person Controlled, directly or indirectly, by any such Governmental
Authority, in each case except for FT, DT, Atlas and any other Person directly,
or indirectly through one or more intermediaries, Controlled by FT, DT or Atlas.
"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.
"Amended and Restated Confidentiality Agreements" means the Amended
and Restated DT Investor Confidentiality Agreement and the Amended and Restated
FT Investor Confidentiality Agreement.
"Amended and Restated DT Investor Confidentiality Agreement" means the
Amended and Restated Investor Confidentiality Agreement between the Company and
DT dated as of the date hereof.
"Amended and Restated FT Investor Confidentiality Agreement" means the
Amended and Restated Investor Confidentiality Agreement between the Company and
FT dated as of the date hereof.
"Amended and Restated Registration Rights Agreement" means the Amended
and Restated Registration Rights Agreement among the Company, FT and DT, dated
as of the date hereof, as it may be amended or supplemented from time to time.
"Amended and Restated Standstill Agreement" means the Amended and
Restated Standstill Agreement among the Company, FT and DT, dated as of the date
hereof, as it may be amended or supplemented from time to time.
-2-
"Applicable Law" means all applicable provisions of all (a)
constitutions, treaties, statutes, laws (including common law), rules,
regulations, ordinances or codes of any Governmental Authority, and (b) orders,
decisions, injunctions, judgments, awards and decrees of any Governmental
Authority.
"Applicable CP Period" means a period beginning on the fifth day prior
to a record date relating to a vote of the stockholders of the Company or the
payment of dividends to the stockholders of the Company and ending on the day
following such record date.
"Applicable FON Ratio" shall have the meaning set forth in Section
7.5(b) hereof.
"Applicable Overall Ratio" shall have the meaning set forth in Section
7.5(a) hereof.
"Applicable PCS Ratio" shall have the meaning set forth in Section
7.5(b) hereof.
"Articles" means the Articles of Incorporation of the Company, as
amended or supplemented from time to time.
"Assignment Notice" shall have the meaning set forth in Section 3.2
hereof.
"Associate" has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act, provided that when used to indicate a relationship with FT or
DT or their respective Subsidiaries or Affiliates, the term "Associate" shall
mean (a) in the case of FT, any Person occupying any of the positions listed on
Schedule A hereto, and (b) in the case of DT, any Person occupying any of the
positions listed on Schedule B hereto, provided, further, that, in each case, no
Person occupying any such position described in clause (a) or (b) hereof shall
be deemed an "Associate" of FT or DT, as the case may be, unless the Persons
occupying all such positions described in clauses (a) and (b) hereof
Beneficially Own, in the aggregate, more than 0.2% of the Voting Power of the
Company.
"Atlas" means the company 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.
"Available Record Date Blackout Shares," with respect to any Record
Date Blackout Period, means a number of shares of Series 3 FON Stock and/or
Series 3 PCS Stock, the allocation of which is determined by Section 5.8, which
after giving effect to the issuance of such shares represents Votes in an amount
equal to the lesser of (i) 20% of the Voting Power of the Company minus the sum
of (x) the Percentage Ownership Interest of the Class A Holders as of the
beginning of such Record Date Blackout Period, and (y) the Percentage Ownership
Interest which would be represented by shares with respect to which the Class A
Holders have Equity Purchase Rights, after giving effect to the issuance of such
shares, (ii) 0.75% of the outstanding
-3-
Voting Power of Sprint as of the first day of the Record Date Blackout Period,
and (iii) 1.25% of the outstanding Voting Power of Sprint as of the first day of
the Record Date Blackout Period, less the Percentage Ownership Interest
represented by the number of Shares purchased pursuant to Section 5.8 during the
preceding 12 months.
"Basis Windfall" shall have the meaning set forth in Section 9.3
hereof.
"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 Investment Agreement, the
FT/DT Restructuring Agreement and this 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 Common Stock, Sprint FON Stock and Sprint PCS Stock
- --------
held by one of FT or DT or its Affiliates or Associates shall not also be deemed
to be Beneficially Owned by the other of FT or DT or its Affiliates or
Associates; (ii) Sprint FON Stock and Sprint PCS Stock shall not be deemed to be
Beneficially Owned by FT, DT or their Affiliates or Associates by virtue of the
top up rights and standby commitments granted under the Purchase Rights
Agreement except to the extent that FT, DT or their Affiliates or Associates
have (A) acquired shares of Sprint FON Stock or Sprint PCS Stock pursuant to the
Purchase Rights Agreement, or (B) become irrevocably committed to acquire, and
the Cable Partners have become irrevocably committed to sell, shares of Sprint
FON Stock or Sprint PCS Stock pursuant to the Purchase Rights Agreement (with
such Beneficial Ownership being determined on a full-voting basis), subject only
to customary closing conditions, if any; and (iii) FT, DT and their Affiliates
and Associates shall not be deemed to Beneficially Own any incremental Voting
Power resulting
-4-
solely from the increase in Voting Power provided for by the application of
Section 7.5(d) of the Articles.
"Board of Directors" means the board of directors of the Company.
"Brokers' Transactions" means brokers' transactions within the meaning
of Rule 144 of the Securities Act, or any successor rule.
"Business Day" means any day other than a day on which commercial
banks in The City of New York, Paris, France, or Frankfurt am Main, Germany, are
required or authorized by law to be closed.
"Buyers" shall have the meaning set forth in the FT/DT Restructuring
Agreement.
"Buy Notice" shall have the meaning set forth in Section 2.5(b)
hereof.
"Bylaws" means the Bylaws of the Company, as amended or supplemented
from time to time.
"Cable Partners" means Tele-Communications, Inc., Comcast Corporation
and Cox Communications, Inc. and any of their respective successors (by merger,
consolidation, transfer or otherwise) to all or substantially all of their
respective businesses or assets.
"Cellular and Wireless Division" means the former Cellular and
Wireless Communications Services Division of the Company.
"Change in Law" shall have the meaning set forth in Section 10.2(b)
hereof.
"Change of Control" means a:
(a) decision by the Board of Directors to sell Control of the Company
or not to oppose a third party tender offer for Voting Securities of the
Company representing more than 35% of the Voting Power of the Company; or
(b) change in the identity of a majority of the Directors due to (i)
a proxy contest (or the threat to engage in a proxy contest) or the
election of Directors by the holders of Preferred Stock; or (ii) any
unsolicited tender, exchange or other purchase offer which has not been
approved by a majority of the Independent Directors, provided that a
Strategic Merger shall not be deemed to be a Change of Control and,
provided, further, that any transaction between the Company and FT and DT
or otherwise involving FT and DT and any of their direct or indirect
Subsidiaries which are parties to a Contract therefor shall not be deemed
to be a Change of Control.
-5-
"Class A Common Stock" means the Class A Common Stock of the Company,
including the Old Class A Common Stock and the Class A Common Stock -- Series DT
(each as described in the Articles).
"Class A Director" means any Director elected by the Class A Holders
pursuant to Section 2(a) of ARTICLE FIFTH of the Articles or appointed by Class
A Directors pursuant to Section 4(b) of ARTICLE FIFTH of the Articles.
"Class A FON Shares" means shares of Series 3 FON Stock and Shares
Issuable With Respect To The Class A Equity Interest In The FON Group.
"Class A Holder Eligible Notes" means notes of a Class A Holder issued
pursuant to Section 5.6, substantially in the form of Exhibit A attached hereto,
made payable to the Company which, in the written opinion of an investment
banking firm of recognized international standing addressed to the Company and
reasonably satisfactory to the Company, would sell, at the date of their
issuance, at a price equal to their principal amount (taking into account the
likely manner and timing of resale by the Company), provided that no note of any
Class A Holder shall be deemed to be a Class A Holder Eligible Note (a) if such
Class A Holder's debt instruments are at that time rated by Moody's Investors
Service, Inc., Standard and Poor's Corporation or Duff & Phelps Credit Rating
Co., and if it is to be issued at a time when such Class A Holder's debt
instruments comparable to the note proposed to be a Class A Holder Eligible Note
(or, if rated, such note itself) do not possess at least two of the three
following ratings: Baa3 or better (or a comparable rating if the rating system
is changed) by Moody's Investors Service, Inc.; BBB- or better (or a comparable
rating if the rating system is changed) by Standard and Poor's Corporation; and
BBB- or better (or a comparable rating if the rating system is changed) by Duff
& Phelps Credit Rating Co., and (b) unless nationally-recognized counsel shall
have delivered an opinion in form and substance reasonably satisfactory to each
payee that such notes are enforceable obligations of such Class A Holder in
accordance with the terms thereof, and provided, further, that no note issued by
any Qualified Subsidiary shall be deemed to be a Class A Holder Eligible Note
unless FT or DT, as the case may be, shall have executed a guarantee with
respect to the obligations of such Qualified Subsidiary thereunder, satisfactory
in form and substance to the Company.
"Class A Holders" means FT, DT and any Qualified Subsidiary to which
shares of Class A Stock or Non-Class A Common Stock have been transferred in
accordance with Section 2.2 hereof, and any Qualified Stock Purchaser that
acquires shares of Class A Stock or Non-Class A Common Stock pursuant to Article
VI or Section 5.1 of this Agreement or pursuant to Section 2.2(b) of the Amended
and Restated Standstill Agreement (and shall include such Persons even after all
of the shares of Class A Stock have been converted into Non-Class A Common Stock
of the Company).
"Class A PCS Shares" means shares of Series 3 PCS Stock and Shares
Issuable With Respect To The Class A Equity Interest In The PCS Group.
-6-
"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 of the Company's Articles of
Incorporation, as amended from time to time.
"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 NASDAQ or such other system then in
use, or, if on any such date such security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the security selected in good faith
by the Board of Directors. If the security is not publicly held or so listed or
publicly traded, "Closing Price" means the Fair Market Value of such security.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"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 the Company (a) owned of record by such
Class A Holder or by its nominees, and (b) which such Class A Holder has
committed to the Company to purchase pursuant to Sections 7.3 and 7.8 or
Articles V and VI hereof (but not pursuant to the FT/DT Restructuring Agreement
until such shares are acquired pursuant to such agreement), by the sum of (i)
the Voting Power of the Company and (ii) the Votes to be represented by any
Voting Securities of the Company such Class A Holder has committed to the
Company to purchase from the Company pursuant to Article V or VI or Section 7.3
hereof (but not pursuant to the FT/DT Restructuring Agreement until such shares
are acquired pursuant to such agreement).
"Company" shall have the meaning set forth in the preamble.
"Company Eligible Notes" means notes of the Company (or its permitted
assignee pursuant to Section 2.5), satisfactory in form and substance to the
Company, FT and DT, made payable to the Transferring Stockholder, or Class A
Holder as provided in Section 2.6(b)(ii) hereof, which, in the written opinion
of an investment banking firm of recognized international
-7-
standing addressed to the Transferring Stockholder, or Class A Holder as
provided in Section 2.6(b)(ii) hereof, and reasonably satisfactory to such
Transferring Stockholder or Class A Holder, as the case may be, would sell, at
the date of their issuance, at a price equal to their principal amount (taking
into account the likely manner and timing of resale by such Transferring
Stockholder or Class A Holder, as the case may be), provided that no note of the
Company (or its permitted assignee pursuant to Section 2.5) shall be deemed to
be a Company Eligible Note (a) if it is to be issued at a time when the
Company's (or such assignee's) debt instruments comparable to the notes proposed
to be a Company Eligible Note (or such note itself) do not possess at least two
of the three following ratings: Baa3 or better (or a comparable rating if the
rating system is changed) by Moody's Investors Service, Inc.; BBB- or better (or
a comparable rating if the rating system is changed) by Standard and Poor's
Corporation; and BBB- or better (or a comparable rating if the rating system is
changed) by Duff & Phelps Credit Rating Co., and (b) unless nationally-
recognized counsel shall have delivered an opinion in form and substance
reasonably satisfactory to each payee that such notes are enforceable
obligations of the Company (or such assignee) in accordance with the terms
thereof.
"Company Purchase" shall have the meaning set forth in Section 9.1
hereof.
"Company Stock Payment Notes" shall have the meaning set forth in
Section 7.3 hereof.
"Company Tax Payment" shall have the meaning set forth in Section 9.3
hereof.
"Continuing Director" means any Director who is unaffiliated with the
Buyers and their "affiliates" and "associates" (as each such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as in effect on October 1,
1982) and was a Director prior to the time that any Buyer or any such affiliate
or associate became an Interested Stockholder (as such term is defined in the
Fair Price Provisions), and any successor of a Continuing Director if such
successor is not affiliated with any such Interested Stockholder and is
recommended or elected to succeed a Continuing Director by a majority of
Continuing Directors, provided that such recommendation or election shall only
be effective if made at a meeting of Directors at which at least seven
Continuing Directors are present.
"Contract" means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, franchise, contract, or other agreement,
obligation, instrument or binding commitment of any nature.
"Control" means, with respect to a Person or Group, any of the
following:
(a) ownership by such Person or Group of Votes entitling it to
exercise in the aggregate more than 35 percent of the Voting Power of the
entity in question; or
-8-
(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.
"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.
"CP Closing" shall have the meaning set forth in Article VIII of the
FT/DT Restructuring Agreement.
"CP Conversion Shares" shall mean shares of Series 1 PCS Stock issued
upon the conversion of shares of Series 2 PCS Stock.
"Director" means a member of the Board of Directors.
"DT" shall have the meaning specified in the preamble.
"Eligible Purchaser" shall have the meaning set forth in Section
2.5(c)(i) hereof.
"Equity Purchase Price" shall have the meaning set forth in Section
5.5(b) hereof.
"Equity Purchase Right" shall have the meaning set forth in Section
5.1 hereof.
"ESMR" means any commercial mobile radio service, and the resale of
such service, of the type authorized under the rules for Specialized Mobile
Radio Services designated under Subpart S of Part 90 of the FCC's rules or
similar Applicable Laws of any other country in effect on the date hereof,
including the networking, marketing, distribution, sales, customer interface and
operations functions relating thereto.
"Europe" means the current geographic area covered by the following
countries and territories located on the European continent, plus in the case of
France, its territories and possessions located outside the European continent:
Albania, Andorra, Austria, Belgium, Bosnia-Hercegovina, Bulgaria, Croatia,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar,
Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania,
Luxembourg, Macedonia, Malta, Monaco, Montenegro, Netherlands, Norway, Poland,
-9-
Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, Ukraine, United Kingdom, and Vatican City.
"Excess Taxes" shall have the meaning set forth in Section 9.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC from time to time promulgated
thereunder.
"Exempt Asset Divestitures" mean, with respect to the Company and its
Subsidiaries:
(a) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) to joint ventures approved by FT and DT prior to
January 31, 1996;
(b) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) to (i) any entity in exchange for equity interests in
such entity if, after such transaction, the Company owns at least 51
percent of both the Voting Power and equity interests in such entity or
(ii) any joint venture that is an operating joint venture not controlled by
any of its principals and in which (x) the Company has the right, acting
alone, to disapprove (and thereby prohibit) decisions relating to
acquisitions and divestitures involving more than 20 percent of the Fair
Market Value of such entity's assets, mergers, consolidations and
dissolution or liquidation of such entity and the adoption of such entity's
business plan and (y) Major Competitors of the Joint Venture do not in the
aggregate own more than 20% of the equity interests or Voting Power;
(c) Transactions in which the Company exchanges one or more (i) local
exchange telephone businesses for one or more such businesses or (ii)
public cellular or wireless radio telecommunications service systems for
one or more such systems, provided that the Company shall not, directly or
indirectly, receive cash in any such transaction in an amount greater than
20 percent of the Fair Market Value of the property or properties
Transferred by it;
(d) Transfers of assets, shares or other equity interests (other than
Long Distance Assets) by the Company to any of its Subsidiaries, or by any
of its Subsidiaries to the Company or any other Subsidiary of the Company;
(e) any Spin-off of equity interests of a wholly-owned Subsidiary
that is not a Subsidiary which, directly or indirectly, owns Long Distance
Assets (for purposes of this definition, the "Spun-off Entity"), provided
that the Class A Holders receive securities in the Spun-off Entity of a
separate class with rights no less favorable to the Class A Holders than
those applicable to the Class A Stock set forth in the Articles and the
Bylaws;
-10-
(f) Transfers of assets (other than Long Distance Assets) of the
Company or any of its Subsidiaries that are primarily or exclusively used
in connection with providing information technology or data processing
functions or services (collectively, for purposes of this definition, the
"IT Assets"), to any Person that regularly provides information technology
or data processing functions or services on a commercial basis, in
connection with a contractual arrangement (for purposes of this definition,
an "IT Service Contract") pursuant to which such Person undertakes to
provide information technology or data processing functions or services to
the Company or any of its Subsidiaries of substantially the same nature as
the services associated with the use of such assets prior to such Transfer
and upon commercially reasonable terms to the Company as determined in good
faith by the Company, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted average
useful life of such assets, or the Company or such Subsidiary shall have
the right to cause such IT Service Contract to be renewed or extended for a
period at least as long as such weighted average useful life upon
commercially reasonable terms to the Company as determined in good faith by
the Company, and (ii) the Transfer of such assets will not materially and
adversely affect the operation of the Company; or
(g) Transfers of assets (other than Long Distance Assets or IT
Assets) of the Company or any of its Subsidiaries to any Person in
connection with any contractual arrangement (for purposes of this
definition, a "Non-IT Service Contract") pursuant to which such Person
undertakes to provide services to the Company or any of its Subsidiaries of
substantially the same nature as the services associated with the use of
such assets prior to such Transfer and upon commercially reasonable terms
to the Company as determined in good faith by the Company, provided, that
(i) the Fair Market Value of such assets, together with the Fair Market
Value of assets of the Company Transferred to such Person or other Persons
in related transactions, do not represent more than five percent of the
Fair Market Value of the assets of the Company, (ii) the Transfer of such
assets will not materially and adversely affect the operation of the
Company, and (iii) the term of such Non-IT Service Contract shall be for a
period at least as long as the weighted average useful life of the assets
so Transferred or the Company or such Subsidiary has the right to cause
such Non-IT Service Contract to be renewed or extended for a period at
least as long as such weighted average useful life upon commercially
reasonable terms to the Company as determined in good faith by the Company.
"Exempt Long Distance Asset Divestitures" mean, with respect to the
Company and its Subsidiaries:
(a) Transfers of Long Distance Assets to a Qualified Joint Venture;
(b) Transfers of Long Distance Assets to any entity if the Company
and its Subsidiaries after such transaction own at least 70 percent of both
the Voting Power and equity interests of such entity, provided that if a
Major Competitor of FT or DT or the
-11-
Joint Venture holds equity interests in such entity, such Major
Competitor's equity interests and Votes in such entity as a percentage of
the Voting Power of such entity shall not, directly or indirectly, exceed
20 percent;
(c) Transfers of Long Distance Assets pursuant to an underwritten,
widely-distributed public offering at the conclusion of which the Company
and its Subsidiaries shall own at least 51 percent of both the Voting Power
and equity interests in the entity that owns such Long Distance Assets;
(d) Transfers in the ordinary course of business of Long Distance
Assets determined by the Company to be unnecessary for the orderly
operation of the Company's business, and sale-leasebacks of Long Distance
Assets and similar financing transactions after which the Company and its
Subsidiaries continue in possession and control of the Long Distance Assets
involved in such transaction;
(e) Transfers of Long Distance Assets by the Company to any of its
Subsidiaries, or by any of its Subsidiaries to the Company or any other
Subsidiary of the Company;
(f) Transfers of Long Distance Assets to FT or DT or any assignee
thereof pursuant to this Agreement;
(g) any Spin-off of equity interests of a wholly-owned Subsidiary
which, directly or indirectly, owns Long Distance Assets (for purposes of
this definition, the "Spun-off Entity"), provided that the Class A Holders
receive securities in the Spun-off Entity of a separate class with rights
no less favorable to the Class A Holders than those applicable to the Class
A Stock set forth in the Articles and the Bylaws;
(h) Transfers of Long Distance Assets of the Company or any of its
Subsidiaries that are primarily or exclusively used in connection with
providing information technology or data processing functions or services
(collectively, for purposes of this definition, the "IT Assets"), to any
Person that regularly provides information technology or data processing
functions or services on a commercial basis, in connection with a
contractual arrangement (for purposes of this definition, an "IT Service
Contract") pursuant to which such Person undertakes to provide information
technology or data processing functions or services to the Company or any
of its Subsidiaries of substantially the same nature as the services
associated with the use of such Long Distance Assets prior to such Transfer
and upon commercially reasonable terms to the Company as determined in good
faith by the Company, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted average
useful life of such Long Distance Assets, or the Company or such Subsidiary
shall have the right to cause such IT Service Contract to be renewed or
extended for a period at least as long as such weighted average useful life
upon commercially reasonable terms to the
-12-
Company as determined in good faith by the Company, and (ii) the Transfer
of such Long Distance Assets will not materially and adversely affect the
operation of the Long Distance Business. Any such IT Service Contract
involving Transfers of Long Distance Assets, including any renewal or
extension thereof, shall be deemed to be a Long Distance Asset; or
(i) Transfers of Long Distance Assets (other than IT Assets) of the
Company or any of its Subsidiaries to any Person in connection with any
contractual arrangement (for purposes of this definition "Non-IT Service
Contract") pursuant to which such Person undertakes to provide services to
the Company or any of its Subsidiaries of substantially the same nature as
the services associated with the use of such Long Distance Assets prior to
such Transfer and upon commercially reasonable terms to the Company as
determined in good faith by the Company, provided, that (i) the Fair Market
Value of such Long Distance Assets, together with the Fair Market Value of
Long Distance Assets Transferred to such Person or other Persons in related
transactions, do not represent more than three percent of the Fair Market
Value of the Long Distance Assets of the Company, (ii) the Transfer of such
Long Distance Assets will not materially and adversely affect the operation
of the Long Distance Business, and (iii) the term of such Non-IT Service
Contract shall be for a period at least as long as the weighted average
useful life of the Long Distance Assets so Transferred or the Company or
such Subsidiary has the right to cause such Service Contract to be renewed
or extended for a period at least as long as such weighted average useful
life upon commercially reasonable terms to the Company as determined in
good faith by the Company. Any such Non-IT Service Contract involving
Transfers of Long Distance Assets, including any renewal or extension
thereof, shall be deemed to be a Long Distance Asset.
"Exercise Amount" shall have the meaning set forth in Section 7.3
hereof.
"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 arms-length
negotiated transaction without undue time restraints, as determined in good
faith by a majority of the Independent Directors as certified in a resolution
delivered to all of the Class A Holders.
"Fair Price Provisions" means ARTICLE SEVENTH of the Articles, and any
successor provision thereto.
"FCC" means the Federal Communications Commission.
"FCC Order" means, with respect to any proposed Transfer of Long
Distance Assets by the Company, either:
-13-
(a) an effective written order or other final action from the FCC
(either in the first instance or upon review or reconsideration) either
declaring that FT and DT are not prohibited by Section 310 from owning such
Long Distance Assets or stating that no such declaration is required, and
as to which no Proceeding shall be pending or threatened that presents a
substantial possibility of resulting in a reversal thereof; or
(b) an effective written order from, or other final action taken by,
the FCC pursuant to delegated authority (either in the first instance or
upon review or reconsideration) either declaring that FT and DT are not
prohibited by Section 310 from owning such Long Distance Assets, or stating
that no such declaration is required, which order or final action shall no
longer be subject to further administrative review, and as to which no
Proceeding shall be pending or threatened that presents a substantial
possibility of resulting in a reversal thereof;
For purposes of clause (b) of this definition, an order from, or other final
action taken by, the FCC pursuant to delegated authority shall be deemed no
longer subject to further administrative review:
(x) if no petition for reconsideration or application for review by
the FCC of such order or final action has been filed within
thirty days after the date of public notice of such order or
final action, as such 30-day period is computed and as such date
is defined in Sections 1.104 and 1.4 (or any successor
provisions), as applicable, of the FCC's rules, and the FCC has
not initiated review of such order or final action on its own
motion within forty days after the date of public notice of the
order or final action, as such 40-day period is computed and such
date is defined in Sections 1.117 and 1.4 (or any successor
provisions) of the FCC's rules; or
(y) if any such petition for reconsideration or application for
review has been filed, or, if the FCC has initiated review of
such order or final action on its own motion, the FCC has issued
an effective written order or taken final action to the effect
set forth in clause (a) above.
"FIRPTA Determination" means with respect to any sale, exchange
(including a deemed exchange) or other disposition by a Class A Holder of
Shares, a determination as to whether the Company is a "United States Real
Property Holding Corporation" within the meaning of Section 897 of the Code and
the regulations thereunder (or any successor provision).
"FIRPTA Tax" shall have the meaning set forth in Section 10.5 hereof.
"First Notice Period" shall have the meaning set forth in Section
2.5(a) hereof.
"First Offer Price" shall have the meaning set forth in Section 2.5(a)
hereof.
-14-
"FON Trading Average" means (i) the Volume Weighted Trading Average of
the Series 1 FON Stock for the ten consecutive Trading Days following the date
of the Recapitalization, divided by (ii) a fraction, the numerator of which is
the number of shares of Sprint FON Common Stock which are outstanding
immediately prior to the Recapitalization and the denominator of which is the
number of shares of Series 1 FON Stock issued in the Recapitalization.
"Formula Price" means (i) prior to the Recapitalization, as to a share
of Class A Common Stock, a per share price equal to the greater of (a) the
Market Price of a share of Sprint FON Common Stock on the date of the sale of
such share of Class A Common Stock, and (b) an amount equal to the Weighted
Average Price paid by the Class A Holders for the share of Class A Common Stock,
together with a stock appreciation factor thereon (calculated on the basis of a
365-day year) at the rate of 3.88% through and including the date of such
redemption, such stock appreciation factor to be calculated, on an annual
compounding basis, from the date of the purchase of such share of Class A Common
Stock until the date of redemption, (ii) after the Recapitalization, as to a
Class A FON Share, a per share price equal to the greater of (a) the Market
Price of a share of Series 1 FON Stock on the date of the sale of such Class A
FON Share, and (b) an amount equal to the Weighted Average Price paid by the
Class A Holders for the Class A FON Share, together with a stock appreciation
factor thereon (calculated on the basis of a 365-day year) at the rate of 3.88%
through and including the date of such redemption, such stock appreciation
factor to be calculated, on an annual compounding basis, from the date of the
purchase of such Class A FON Share until the date of redemption, and (iii) as to
a Class A PCS Share, a per share price equal to the greater of (a) the Market
Price of a share of Series 1 PCS Stock on the date of the sale of such Class A
PCS Share, and (b) an amount equal to the Weighted Average Price paid by the
Class A Holders for the Class A PCS Share, together with a stock appreciation
factor thereon (calculated on the basis of a 365-day year) at the rate of 3.88%
through and including the date of such redemption, such stock appreciation
factor to be calculated, on an annual compounding basis, from the date of
purchase of such Class A PCS Share until the date of redemption. In determining
the Weighted Average Price paid by the Class A Holders for purposes of this
definition following the Recapitalization, the original purchase price paid by
the Class A Holders for shares of Class A Common Stock acquired by the Class A
Holders prior to the Recapitalization shall be allocated among the Class A FON
Shares and the Class A PCS Shares as follows: (i) the amount allocated to the
Class A FON Shares shall be equal to the aggregate amount paid by the Class A
Holders for Class A Common Stock prior to the Recapitalization, multiplied by
(A) the FON Trading Average, divided by (B) the sum of the FON Trading Average
and the PCS Trading Average, and (ii) the amount allocated to the Class A PCS
Shares shall be equal to the aggregate amount paid by the Class A Holders for
Class A Common Stock prior to the Recapitalization, multiplied by (A) the PCS
Trading Average, divided by (B) the sum of the FON Trading Average and the PCS
Trading Average.
"France" means the Republic of France, including French Guiana,
Guadeloupe, Martinique and Reunion, and its territories and possessions.
-15-
"FT" shall have the meaning specified in the preamble.
"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" shall have the meaning set forth in the Joint Venture
Agreement.
"FT/DT Restructuring Agreement" shall have the meaning set forth in
the Recitals.
"FT/DT Stock Payment Notes" means notes of FT and DT in substantially
the form of Exhibit E.
"FT/DT Weighted Purchase Price" means the Weighted Average Price paid
by FT, DT, their respective Qualified Subsidiaries and any Qualified Stock
Purchasers for Class A Common Stock, Class A FON Shares or Class A PCS Shares,
as the case may be, calculated solely with respect to Class A Common Stock,
Class A FON Shares or Class A PCS Shares, as the case may be, purchased from the
Company pursuant to this Agreement, the Investment Agreement or the FT/DT
Restructuring Agreement. In determining the FT/DT Weighted Purchase Price paid
by the Class A Holders for purposes of this definition following the
Recapitalization, the original purchase price paid by the Class A Holders for
shares of Class A Common Stock prior to the Recapitalization shall be allocated
among the Class A FON Shares and the Class A PCS Shares as follows: (i) the
amount allocated to the Class A FON Shares shall be equal to the aggregate
amount paid by the Class A Holders for Class A Common Stock purchased from the
Company prior to the Recapitalization, multiplied by (A) the FON Trading
Average, divided by (B) the sum of the FON Trading Average and the PCS Trading
Average, and (ii) the amount allocated to the Class A PCS Shares shall be equal
to the aggregate amount paid by the Class A Holders for Class A Common Stock
purchased from the Company prior to the Recapitalization, multiplied by (A) the
PCS Trading Average, divided by (B) the sum of FON Trading Average and the PCS
Trading Average.
"Germany" means the Federal Republic of Germany.
"Governmental Approval" means any consent, waiver, grant, concession
or License of, registration or filing with, or declaration, report or notice to,
any Governmental Authority.
-16-
"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.
"Indemnitee" shall have the meaning set forth in Section 9.1 hereof.
"Independent Director" means any member of the Board of Directors who
(a) is not an officer or employee of the Company, or any Class A Holder, or any
of their respective Subsidiaries, (b) is not a former officer of the Company, or
any Class A Holder, or any of their respective Subsidiaries, (c) does not, in
addition to such person's role as a Director, act on a regular basis, either
individually or as a member or representative of an organization, serving as a
professional adviser, legal counsel or consultant to the Company, or any Class A
Holder, or their respective Subsidiaries, if, in the opinion of the Nominating
Committee of the Board of Directors of the Company (the "Nominating Committee")
or the Board of Directors if a Nominating Committee is not in existence, such
relationship is material to the Company, any Class A Holder, or the organization
so represented or such person, and (d) does not represent, and is not a member
of the immediate family of, a person who would not satisfy the requirements of
the preceding clauses (a), (b) and (c) of this sentence. A person who has been
or is a partner, officer or director of an organization that has customary
commercial, industrial, banking or underwriting relationships with the Company,
any Class A Holder, or any of their respective Subsidiaries, that are carried on
in the ordinary course of business on an arms-length basis and who otherwise
satisfies the requirements set forth in clauses (a), (b), (c) and (d) of the
first sentence of this definition, may qualify as an Independent Director,
unless, in the opinion of the Nominating Committee or the Board of Directors if
a Nominating Committee is not in existence, such person is not independent of
the management of the Company, or any Class A Holder, or any of their respective
Subsidiaries, or the relationship would interfere with the exercise of
independent judgment as a member of the Board of Directors. A person who
otherwise satisfies the requirements set forth in clauses (a), (b), (c) and (d)
of the first sentence of this definition and who, in addition to fulfilling the
customary director's role, also provides additional services directly for the
Board of Directors and is separately compensated therefor, would nonetheless
qualify as an Independent Director. Notwithstanding anything to the contrary
contained in this definition, each Director as of July 31, 1995 who was not an
executive officer of the Company shall be deemed to be an Independent Director
hereunder.
-17-
"Initial Charter Amendment" means the Amended and Restated Articles of
Incorporation of Sprint filed with the Secretary of State of the State of Kansas
on November 23, 1998 effecting the creation of the PCS Stock, among other
things.
"Investment Agreement" shall have the meaning set forth in the
Recitals.
"Joint Venture" means the joint venture formed by FT, DT, Sprint Sub
and the Company as provided in the Joint Venture Agreement.
"Joint Venture Agreement" means the Joint Venture Agreement dated as
of June 22, 1995, as amended on January 31, 1996, and on June 30, 1997, by and
among the Company, Sprint Sub, FT, DT and Atlas.
"Joint Venture Documents" shall have the meaning set forth in the
Joint Venture Agreement.
"JV Entity" shall have the meaning set forth in the Joint Venture
Agreement.
"LD Disapproval Notice" shall have the meaning set forth in Section
3.1(d) hereof.
"LD Option Period" shall have the meaning set forth in Section 3.1(d)
hereof.
"LD Sale Notice" shall have the meaning set forth in Section 3.1(c)
hereof.
"License" means any license, ordinance, authorization, permit,
certificate, variance, exemption, order, franchise or approval, domestic or
foreign.
"Lien" means any mortgage, pledge, security interest, adverse claim,
encumbrance, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
similar Applicable Law of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"Lien Transfer" shall mean the granting of any Lien on any Long
Distance Asset, other than:
(a) a Lien securing purchase money indebtedness that does not have a
term longer than the estimated useful life of the Long Distance Asset
subject to such Lien;
-18-
(b) Liens or other comparable arrangements relating to the financing
of accounts receivable; and
(c) Liens securing any other indebtedness for borrowed money,
provided that (i) the amount of such indebtedness, when added to the
aggregate amount of purchase money indebtedness referred to in clause (a)
above, does not exceed 30% of the total book value of the Long Distance
Assets as at the date of the most recently published balance sheet of the
Company, (ii) the indebtedness secured by such Liens is secured only by
Liens on Long Distance Assets, (iii) the face amount of such indebtedness
does not exceed the book value of the Long Distance Assets subject to such
Liens, and (iv) such indebtedness is for a term no longer than the
estimated useful life of the Long Distance Assets subject to such Liens.
"Local Exchange Division" means the Local Division of the Company.
"Long Distance Assets" means:
(a) the assets reflected in the Company's balance sheet for the year
ended December 31, 1994 as included in the Long Distance Division;
(b) any assets acquired by the Company or any of its Subsidiaries
following December 31, 1994 that are reflected in the Company's balance
sheet as included in the Long Distance Division;
(c) any assets of the Company or any of its Subsidiaries that are not
reflected in the Company's balance sheet for the year ended December 31,
1994 as included in the Long Distance Division, which after December 31,
1994 are transferred by the Company or any of its Subsidiaries to, or
reclassified by the Company or any of its Subsidiaries as part of, the Long
Distance Division;
(d) any assets acquired by the Company after December 31, 1994 that
are used or held for use primarily for the benefit of the Long Distance
Business; and
(e) any assets referred to in clauses (a) through (c) above that are
used or held for use primarily for the benefit of the Long Distance
Business which are transferred or reclassified by the Company or any of its
Subsidiaries outside of the Long Distance Division, but which continue to
be owned by the Company or any of its Subsidiaries;
provided that the term "Long Distance Assets" shall not include (i) any assets
- --------
that are used or held for use primarily for the benefit of any Non-Long Distance
Business, or (ii) any other assets reflected in the Company's balance sheet for
the year ended December 31, 1994 as included in the Cellular and Wireless
Division or the Local Exchange Division (other than as such assets in
-19-
the Cellular and Wireless Division or the Local Exchange Division may be
transferred or reclassified in accordance with paragraph (c) of this
definition).
"Long Distance Business" means all long distance telecommunications
activities and services of the Company and its Subsidiaries at the relevant
time, including (but not limited to) all long distance transport services,
switching and value-added services for voice, data, video and multimedia
transmission, migration paths and intelligent overlapping architectures,
provided that the term "Long Distance Business" shall not include any activities
or services primarily related to any Non-Long Distance Business.
"Long Distance Division" means the Long Distance Division of the
Company.
"Major Competitor" means (a) with respect to FT or DT, a Person that
materially competes with a major portion of the telecommunications services
business of FT or DT in Europe, or a Person that has taken substantial steps to
become such a Major Competitor and which FT or DT has reasonably concluded, in
its good faith judgment, will be such a competitor in the near future in France
or Germany, provided that FT and/or DT furnish in writing to the Company
reasonable evidence of the occurrence of such steps; (b) with respect to the
Company, a Person that materially competes with a major portion of the
telecommunications services business of the Company in North America, or a
Person that has taken substantial steps to become such a Major Competitor and
which the Company has reasonably concluded, in its good faith judgment, will be
such a competitor in the near future in the United States of America, provided
that the Company furnish in writing to each Class A Holder reasonable evidence
of the occurrence of such steps; and (c) with respect to the Joint Venture, a
Person that materially competes with a major portion of the telecommunications
services business of the Joint Venture, or a Person that has taken substantial
steps to become such a Major Competitor and which FT, DT or the Company has
reasonably concluded, in its good faith judgment, will be such a competitor in
the near future, provided that FT, DT or the Company furnish in writing to each
other party hereto 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 the Company with a number of Votes equal to or greater than the
Major Issuance Threshold, as measured on the date of such issuance or sale.
"Major Issuance Threshold" means, with respect to an issuance of
Voting Securities, 30 percent of the Voting Power of the Company immediately
prior to such issuance.
"Mandatory Payment Amount" shall have the meaning set forth in Section
7.3(c)(ii) hereof.
-20-
"Market Price" means, with respect to a security on any date, the
Closing Price of such security on the Trading Day immediately prior to such
date. The Market Price shall be deemed to be equal to (a) in the case of a Class
A FON Share, the Market Price of a share of Series 1 FON Stock; and (b) in the
case of a Class A PCS Share, the Market Price of a share of Series 1 PCS Stock.
The Market Price of any options, warrants, rights or other securities
convertible into or exercisable for a Class A FON Share or a Class A PCS Share,
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 FON
Stock or Series 1 PCS Stock, respectively, upon the same terms and otherwise
containing the same terms as such options, warrants, rights or other securities
convertible into or exercisable for a Class A FON Share or a Class PCS Share, as
the case may be.
"Material Adverse Effect" means, with respect to any Person, the
effect of any event, occurrence, fact, condition or change that is materially
adverse to the business, operations, results of operations, financial condition,
assets or liabilities of such Person.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotations System.
"1996 Stockholders' Agreement" shall have the meaning set forth in the
Recitals.
"Non-Class A Common Stock" means the Sprint FON Common Stock and the
Sprint PCS Common 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 the Company or any
Subsidiary of the Company pursuant to the Joint Venture Agreement; or any
activities or services of the Joint Venture or any of the JV Entities; (b) the
interests, assets, properties and businesses attributed to the PCS Group (as
defined in the Articles) in accordance with ARTICLE SIXTH, Section 10 of the
Articles; (c) any activities or services primarily related to the provision of
subscriber connections to a local exchange or switch providing access to the
public switched telephone network; (d) any activities or services primarily
related to the provision of exchange access services for the purpose of
originating or terminating long distance telecommunications services; (e) any
activities or services primarily related to the resale by the Local Exchange
Division of long distance telecommunications services of the Company or other
carriers; (f) any activities or services primarily related to the provision of
inter-LATA long distance telecommunications services that are incidental to the
local exchange services business of the Local Exchange Division; (g) any
activities or services primarily related to the provision of intra-LATA long
distance telecommunications services; (h) any activities or services (whether
local, intra-LATA or inter-LATA) primarily related to the provision of cellular,
PCS, ESMR or paging services, mobile telecommunications services or any other
voice, data or voice/data wireless services, whether fixed or mobile, or related
to telecommunications services provided through communications satellite systems
(whether low,
-21-
medium or high orbit systems); and (i) the use of the "Sprint" brand name or any
other brand names, trade names or trademarks owned or licensed by the Company or
any of its Subsidiaries.
"North America" means the current geographic area covered by the
following countries: Canada, Mexico and the United States of America.
"Notifying Class A Holder" shall have the meaning set forth in Section
10.2 hereof.
"Offered Shares" shall have the meaning set forth in Section 2.5(a)
hereof.
"Option Shares" shall have the meaning set forth in Section 5.2
hereof.
"Other Investment Documents" means the Investment Agreement, the FT/DT
Restructuring Agreement, the Amended and Restated Standstill Agreement, the
Amended and Restated Confidentiality Agreements, any Qualified Subsidiary
Standstill Agreement, the Amended and Restated Registration Rights Agreement,
any Qualified Subsidiary Confidentiality Agreement, any standstill agreement
entered into by a holder of equity interests of a Qualified Subsidiary pursuant
to the Amended and Restated Standstill Agreement or any confidentiality
agreement entered into by a holder of equity interests of a Qualified Subsidiary
pursuant to the Amended and Restated Confidentiality Agreements.
"Other Purchaser" shall have the meaning set forth in Section 2.5(c)
(ii) hereof.
"Passive Financial Institution" means a bank (or comparable financial
institution), insurance company, pension or retirement fund that acquires Voting
Securities or other equity interests in a Qualified Subsidiary without the
purpose or effect of changing or influencing the control of the Qualified
Subsidiary or the Company, nor in connection with or as a participant in any
transaction having such purpose or effect, provided that the term "Passive
Financial Institution" shall not include any Major Competitor of the Company or
the Joint Venture.
"PCS" means a radio communications system of the type authorized under
the rules for broadband personal communications services designated as Subpart E
of Part 24 of the FCC's rules or similar Applicable Laws of any other country,
including the network, marketing, distribution, sales, customer interface and
operations functions relating thereto.
"PCS Preferred Stock" means the Preferred Stock -- Seventh Series,
Convertible, no par value, of Sprint, which is to be created prior to the CP
Closing.
"PCS Trading Average" means (i) the Volume Weighted Trading Average of
the Series 1 PCS Stock for the ten consecutive Trading Days following the date
of the Recapitalization, divided by (ii) a fraction, the numerator of which is
the number of shares of Sprint FON Common Stock which are outstanding
immediately prior to the Recapitalization and
-22-
the denominator of which is the number of shares of Series 1 PCS Stock issued in
the Recapitalization.
"Percentage Ownership Interest" means, with respect to any Person,
that percentage of the Voting Power of the Company represented by Votes
associated with the Voting Securities of the Company owned of record by such
Person or by its nominees.
"Person" means an individual, a partnership, an association, a joint
venture, a corporation, a business, a trust, any entity organized or existing
under Applicable Law, an unincorporated organization or any Governmental
Authority.
"Planned Date" means the planned date for the initial filing of a
registration statement with the SEC relating to a proposed Public Offering or
the first date on which it is proposed that a Class A Holder consummate Brokers'
Transactions as to any securities.
"Post-Restructuring Series 3 PCS Shares" shall mean (i) the shares of
Series 3 PCS Stock issued or to be issued to FT and DT under the FT/DT
Restructuring Agreement in respect of the CP/FT-DT Top Up Purchase, the CP/IPO
Top Up Purchase and the CP/Greenshoe Top Up Purchase (each as defined in the
FT/DT Restructuring Agreement), (ii) the shares of Series 3 PCS Stock to be
issued to FT and DT after the date of this Agreement pursuant to the Equity
Purchase Rights to be exercised by FT and DT under Article V of this Agreement,
(iii) shares of Series 3 PCS Stock issued to FT or DT upon conversion of Sprint
PCS Common Stock acquired in purchases by FT and DT from third parties and not
in violation of the Amended and Restated Standstill Agreement, and (iv) shares
into which such shares described in clauses (i), (ii) and (iii) are converted
pursuant to any recapitalization, it being understood that such term shall not
include any Sprint PCS Stock acquired by FT or DT in the Recapitalization or
pursuant to the FT/DT Restructuring Agreement other than shares acquired in
respect of the CP/FT- DT Top Up Purchase, the CP/IPO Top Up Purchase and the
CP/Greenshoe Top Up Purchase.
"Preferred Stock" means any series of Preferred Stock of the Company.
"Principal Investment Documents" shall have the meaning set forth in
Section 7.10 hereof.
"Private Offer Notice Period" shall have the meaning set forth in
Section 2.5(c)(i) hereof.
"Private Sale Notice" shall have the meaning set forth in Section
2.5(c)(i) hereof.
"Proceeding" means any action, litigation, suit, proceeding or formal
investigation or review of any nature, civil, criminal, regulatory or otherwise,
before any Governmental Authority.
-23-
"Proposed Price" shall have the meaning set forth in Section 2.5(c)
(i) hereof.
"Proposed Terms" shall have the meaning set forth in Section 2.5(c)
(i) hereof.
"Public Offering" means an underwritten public offering of securities
of the Company pursuant to an effective registration statement under the
Securities Act.
"Public Sale Notice" shall have the meaning set forth in Section
2.5(a) hereof.
"Purchase Rights Agreement" means the Top Up Right Agreement dated as
of May 26, 1998 among FT, DT and the Cable Partners as in effect on such date.
"Qualified Joint Venture" means any operating joint venture of which
not more than 20% in the aggregate of the Voting Power or outstanding equity
interests thereof are owned by Major Competitors of FT or DT or of the Joint
Venture, and that
(a) has received contributions of assets by the other participants
therein which are predominately of a nature similar or complementary to the
Long Distance Assets contributed by the Company;
(b) owns assets that are available for use by the Company on a basis
which is no less favorable than that which is afforded to other
participants in such joint venture;
(c) would treat the Joint Venture, as a customer of the joint
venture, no less favorably than other similarly situated customers;
(d) is operated in a manner not inconsistent with the policies of the
Joint Venture; and
(e) as to which the Company undertakes to use commercially reasonable
efforts to align the activities of such joint venture with those of the
Joint Venture, including, without limitation, to use commercially
reasonable efforts to cause such joint venture to become a distributor of
the services falling within the scope of the Joint Venture (if so selected
by the Joint Venture), to align the joint venture's network technology with
the network technology of the Joint Venture, and to use the Joint Venture's
services to the maximum extent practicable,
provided that, in addition to the requirements set forth above, a joint venture
- --------
shall not be deemed to be a Qualified Joint Venture if the predominant
contribution of the Company to such joint venture is Long Distance Assets
comprising the transport media, associated switching, electronic transmissions
equipment, systems and operating software comprising the Company's long distance
telecommunications network ("Critical Long Distance Assets"), unless the Company
owns a majority of the equity interests and the Voting Power of such joint
venture; and
-24-
provided, further, that with respect to a joint venture in which the predominant
- -------- -------
contribution of the Company is Long Distance Assets that are not Critical Long
Distance Assets, such joint venture shall not be deemed to be a Qualified Joint
Venture unless such joint venture is either (i) Controlled by the Company or
(ii) not Controlled by any of its participants, but in which the Company has the
contractual or other legal right, acting alone, to disapprove (and thereby
prohibit) decisions relating to acquisitions and divestitures involving more
than 20 percent of the Fair Market Value of such joint venture's assets,
mergers, consolidations and dissolution or liquidation of such joint venture,
and the adoption of such joint venture's business plan.
"Qualified LD Purchaser" means, for any Transfer of Long Distance
Assets, a purchaser that (a) has the legal and financial ability to buy such
-
Long Distance Assets proposed to be sold and (b) would not be a Major Competitor
-
of the Company based on the businesses to be retained by the Company following
the Transfer of such Long Distance Assets.
"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 the Company in accordance with Article VI of this Agreement
or to purchase shares in accordance with Section 2.2 of the Amended and Restated
Standstill Agreement and (b) would not be a Major Competitor of the Company or
-
of the Joint Venture immediately following such purchase.
"Qualified Stock Purchaser Standstill Agreement" shall mean a
standstill agreement between the Company, the Qualified Stock Purchaser and the
Person or Persons, if any, which, directly or indirectly, ultimately Control a
Qualified Stock Purchaser, satisfactory in form and substance to each party
hereto.
"Qualified Subsidiary" means any Person which
(a) is a Subsidiary of either FT or DT or an entity that would be
such a Subsidiary if FT's and DT's aggregate ownership in such entity were
held individually by one of FT or DT, provided that no Major Competitor or
--------
Major Competitors of the Company or of the Joint Venture may, individually
or in the aggregate, Beneficially Own Voting Securities representing ten
percent or more of the Voting Power of such entity, and provided, further,
-------- -------
that if the Voting Securities of such entity owned directly by FT and DT or
indirectly through Wholly-Owned Subsidiaries of either of them are entitled
to a number of Votes representing in the aggregate less than 80 percent of
the Voting Power of such entity, then:
(i) the Voting Securities owned by FT and DT and Wholly-Owned
Subsidiaries, plus Voting Securities, if any, owned by Passive
Financial Institutions must in the aggregate be entitled to a number
of Votes representing at least 80 percent of the Voting Power of such
entity; and
-25-
(ii) FT and DT and Wholly-Owned Subsidiaries must in the
aggregate own Voting Securities entitled to a number of Votes
representing more than 50 percent of the Voting Power of, and more
than 50 percent of the outstanding equity interests in, such entity;
and
(b) has (i) entered into a Qualified Subsidiary Standstill Agreement
and a confidentiality agreement satisfactory in form and substance to each
party hereto and (ii) (x) caused all holders of any of its equity interests
-
(other than FT, DT and Passive Financial Institutions) (each such other
holder being a "Strategic Investor") to enter into a Strategic Investor
Standstill Agreement and (y) caused all holders of any of its equity
-
interests (other than FT and DT) to enter into a confidentiality agreement
satisfactory in form and substance to each party hereto.
"Qualified Subsidiary Standstill Agreement" shall have the meaning set
forth in the Investment Agreement.
"Recapitalization" shall have the meaning set forth in Article VIII of
the FT/DT Restructuring Agreement.
"Record Date Blackout Period" means a period of ten Trading Days
beginning on the ninth Trading Day before a record date for a meeting of the
Company's stockholders or for the payment of dividends with respect to Class A
Stock and ending on (and including) such record date (which shall be a Trading
Day), if during such period the Class A Holders are prohibited from purchasing
shares of Sprint FON Stock and Sprint PCS Stock from third parties in the open
market due to applicable anti-fraud rules.
"Redemption Securities" means any debt or equity securities of the
Company, 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 the Company's Articles, 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 the Company), have a Market Price, at the time
notice of redemption is given pursuant to Section 2.2(d) of the Company's
Articles, at least equal to the redemption price required to be paid by such
Section 2.2.
"Refusal Notice" shall have the meaning set forth in Section 2.5(c)
(ii) hereof.
"Refusal Price" shall have the meaning set forth in Section 2.5(c)
(ii) hereof.
"Refusal Shares" shall have the meaning set forth in Section 2.5(c)
(ii ) hereof.
"Refusal Terms" shall have the meaning set forth in Section 2.5(c)
(ii) hereof.
-26-
"Required Sale Notice" shall have the meaning set forth in Section
7.4(d)(i) hereof.
"Restricted Period" shall have the meaning set forth in Section 3.1(a)
hereof.
"Rights" shall have the meaning set forth in Section 5.1(c) hereof.
"Rights Agreement" means the Rights Agreement, dated as of the date
hereof, between the Company and UMB Bank, N.A., as it may be further amended or
supplemented from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Second Notice Period" shall have the meaning set forth in Section
2.5(b) hereof.
"Second Offer" shall have the meaning set forth in Section 2.5(b)
hereof.
"Second Offer Price" shall have the meaning set forth in Section
2.5(b) hereof.
"Section 310" means Section 310(b) of the Communications Act of 1934,
as amended (or any successor provision of law).
"Section 9.2 Excess Taxes" shall have the meaning set forth in Section
9.2 hereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series 1 FON Stock" means the FON Common Stock -- Series 1, par value
U.S. $2.00 per share, of Sprint to be created in the Subsequent Charter
Amendment.
"Series 1 PCS Stock" means the PCS Common Stock -- Series 1, par value
U.S. $1.00 per share, of Sprint to be created by the Initial Charter Amendment.
"Series 2 FON Stock" means the FON Common Stock -- Series 2, par value
U.S. $2.00 per share, of Sprint to be created by the Subsequent Charter
Amendment.
"Series 2 PCS Stock" means the PCS Common Stock -- Series 2, par value
U.S. $1.00 per share, of Sprint to be created by the Initial Charter Amendment.
"Series 3 FON Stock" means the FON Common Stock -- Series 3, par value
U.S. $2.00 per share, of Sprint to be created by the Subsequent Charter
Amendment.
-27-
"Series 3 PCS Stock" means the PCS Common Stock -- Series 3, par value
U.S. $1.00 per share, of Sprint to be created by the Initial Charter Amendment.
"Shares" means (a) shares of Class A Stock, Non-Class A Common Stock,
PCS Preferred Stock or any other Voting Securities of the Company, (b)
securities of the Company convertible into Voting Securities of the Company and
(c) options, warrants or other rights to acquire such Voting Securities, but in
the case of this clause (c) excluding any rights of the Class A Holders or FT
and DT to acquire Voting Securities of the Company pursuant to the FT/DT
Restructuring Agreement, the Purchase Rights Agreement and this 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" shall have the meaning set forth in ARTICLE SIXTH, Section 10 of the
Articles.
"Shares Issuable With Respect To The Class A Equity Interest In The
PCS Group" shall have the meaning set forth in ARTICLE SIXTH, Section 10 of the
Articles.
"Sprint FON Common Stock" means (i) prior to the Recapitalization, the
Common Stock, par value U.S. $2.50 per share, of the Company, and (ii) following
the Recapitalization, the Series 1 FON Stock and the Series 2 FON Stock.
"Sprint FON Stock" means the Sprint FON Common Stock and the Series 3
FON Stock.
"Sprint PCS Common Stock" means the Series 1 PCS Stock and the Series
2 PCS Stock.
"Sprint PCS Stock" shall mean the Sprint PCS Common Stock and the
Series 3 PCS Stock.
"Specified Long Distance Assets" shall have the meaning set forth in
Section 3.1(c) hereof.
"Spin-off" means any spin-off or other pro rata distribution of equity
interests of a wholly-owned direct or indirect Subsidiary of the Company to the
stockholders of the Company.
"Sprint Party" shall have the meaning set forth in the Joint Venture
Agreement.
"Sprint Sub" shall have the meaning set forth in the Joint Venture
Agreement.
"Strategic Investor Standstill Agreement" shall have the meaning set
forth in the Investment Agreement.
-28-
"Strategic Merger" means a merger or other business combination
involving the Company (a) in which the Class A Holders are entitled to retain or
receive, as the case may be, voting equity securities of the surviving parent
entity in exchange for or in respect of (by conversion or otherwise) such Class
A Stock, with an aggregate Fair Market Value equal to at least 75% of the sum of
(i) the Fair Market Value of all consideration which such Class A Holders have a
right to receive with respect to such merger or other business combination, and
(ii) if the Company is the surviving parent entity, the Fair Market Value of the
equity securities of the surviving parent entity which the Class A Holders are
entitled to retain, (b) immediately after which the surviving parent entity is
an entity whose voting equity securities are registered pursuant to Section
12(b) or Section 12(g) of the Exchange Act or which otherwise has any class or
series of its voting equity securities held by at least 500 holders and (c)
immediately after which no Person or Group (other than the Class A Holders) owns
Voting Securities of such surviving parent entity with Votes equal to more than
35 percent of the Voting Power of such surviving parent entity.
"Subject Shares" shall have the meaning set forth in Section 2.5(c)(I)
hereof.
"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.
"Supervisory Board" means, as the case may be, the board of directors
of FT, the Aufsichtsrat of DT, or an analogous body in the case of a Qualified
------------
Stock Purchaser or Qualified LD Purchaser.
"Supplementary Payment" shall have the meaning set forth in Section
7.4(d)(iii) hereof.
"Surplus Shares" shall have the meaning set forth in Section
7.4(d)(i) hereof.
"Surplus Shares Sale" shall have the meaning set forth in Section
7.4(d)(i) hereof.
"Third Party Approval" means any consent, waiver, grant, concession,
license, authorization, permit, certificate, exemption, franchise or approval
of, registration or filing with, or declaration, report or notice to any Person
other than a Governmental Authority.
"Tie-Breaking Vote" shall have the meaning set forth in Section
18.1(a) of the Joint Venture Agreement and shall include any successor provision
thereto.
-29-
"Total Realized Amount" shall have the meaning set forth in Section
7.4(d)(iii) hereof.
"Trading Day" means, with respect to any security, a day on which the
principal national securities exchange on which such security is listed or
admitted to trading, or NASDAQ, if such security is listed or admitted to
trading thereon, is open for the transaction of business (unless such trading
shall have been suspended for the entire day) or, if such security is not listed
or admitted to trading on any national securities exchange or NASDAQ, any day
other than a Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
"Transfer" means any act pursuant to which, directly or indirectly,
the ownership of the assets or securities in question is sold, transferred,
conveyed, delivered or otherwise disposed, but shall not include (a) any grant
of Liens, (b) any conversion or exchange of any security of the Company pursuant
to a merger or other business combination involving the Company, (c) any
transfer of ownership of assets to the surviving entity in a Strategic Merger,
or pursuant to any other merger or other business combination not prohibited by
the Class A Provisions, or (d) any foreclosure or other execution upon any of
the assets of the Company or any of its Subsidiaries other than foreclosures
resulting from Lien Transfers.
"Transfer Restrictions" means those restrictions on Transfer of Shares
set forth in Sections 2.2, 2.3 and 2.5 hereof.
"Transferring Stockholder" shall have the meaning set forth in
Section 2.4 hereof.
"Treaty Benefit" means:
(a) the 5% rate of dividend withholding (or any successor rate
applicable to non-portfolio investments);
(b) the exemption from income tax with respect to dividends paid or
profits distributed by the Company;
(c) the exemption from income tax with respect to gains or profits
derived from the sale, exchange, or disposal of stock in the Company; or
(d) the exemption from taxes on capital with respect to stock in the
Company;
under, in the case of (a), (b), (c) and (d) above, either (i) the
relevant income tax treaty between the United States and France, in
the case of FT, and the United States and Germany, in the case of DT,
or (ii) any provisions of French statutory law, in the case of FT, or
German statutory law, in the case of DT, which refers to, or is based
on or derived from, any provision of such treaty, or
-30-
(e) any favorable treaty benefit or statutory benefit, that
specifically requires the ownership of a certain amount of voting
power or voting interest in the Company, under a provision of the
relevant income tax treaty between the United States and France or the
statutory laws of France, in the case of FT, or the relevant income
tax treaty between the United States and Germany or the statutory laws
of Germany, in the case of DT, provided that the chief tax officer of
FT or DT certifies that such benefit is reasonably expected to provide
to FT or DT, as the case may be, combined tax savings in the year such
certification is made and in future years of at least U.S. $15
million.
"Unrelated Party Sale" shall have the meaning set forth in Section 9.1
hereof.
"Venture Interests" shall have the meaning set forth in the Joint
Venture Agreement.
"Volume Weighted Trading Average" means, with respect to any share of
capital stock as of a specific date, the volume-weighted average Closing Prices
of such security for the relevant trading period.
"Vote" means, with respect to any entity, the ability to cast a vote
at a stockholders', members' or comparable meeting of such entity with respect
to the election of directors, managers or other members of such entity's
governing body, or the ability to cast a general partnership or comparable vote,
provided that with respect to the Company only, the term "Vote" means the
ability to exercise general voting power (as opposed to the exercise of special
voting or disapproval rights such as those set forth in the Class A Provisions)
with respect to matters other than the election of directors at a meeting of the
stockholders of the Company.
"Voting Power" means, with respect to any entity as at any date, the
aggregate number of Votes outstanding as at such date in respect of such entity.
"Voting Securities" means, with respect to an entity, any capital
stock or debt securities of such entity if the holders thereof are ordinarily,
in the absence of contingencies, entitled to a Vote, even though the right to
such Vote has been suspended by the happening of such a contingency, and in the
case of the Company, shall include, without limitation, the Non-Class A Common
Stock, the Class A Stock and the PCS Preferred Stock, but shall not include any
shares issued pursuant to the Rights Agreement to the extent such issuance is
caused by action of a Class A Holder.
"Weighted Average Price" means the weighted average per unit price
paid by the purchasers of any capital stock, debt instrument or security of the
Company. In determining the price of shares of 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
-31-
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
distributions of other assets of the Company for consideration which covers both
the new shares and such other shares, securities or other assets, the portion of
such consideration allocable to such new shares shall be determined in good
faith by the Independent Directors (acting by majority vote), in each case as
certified in a resolution sent to all Class A Holders.
"Wholly-Owned Subsidiaries" means companies or other business
organizations all of the outstanding Voting Securities of which are owned,
directly or indirectly, by either or both of FT and DT, other than any de
minimis ownership required by Applicable Law.
"Windfall Benefit" shall have the meaning set forth in Section 9.2
hereof.
ARTICLE II
RESTRICTIONS ON TRANSFER OF SHARES
----------------------------------
Section 2.1. General Transfer Restrictions. The right of Class A Holders to
-----------------------------
Transfer any Shares is restricted as provided in Article II of this Agreement,
and no Transfer of Shares by any Class A Holder may be effected except in
compliance with this Article II. Any attempted or actual Transfer by a Class A
Holder of Shares in violation of this Agreement shall be of no effect and null
and void and shall not be recorded on the stock transfer books of the Company.
Section 2.2. Transfers to Qualified Subsidiaries. Subject in each case to
-----------------------------------
compliance with Applicable Law and the receipt of any necessary material
Governmental Approvals, a Class A Holder may without restriction Transfer Shares
to Qualified Subsidiaries or FT or DT (each, for the purposes of this Section
2.2, a "Transferee") in accordance with this Section 2.2, provided that, in the
case of each Transfer to a Qualified Subsidiary, each Class A Holder having an
equity interest in such Qualified Subsidiary shall (a) be liable for the
performance by such Qualified Subsidiary of its obligations under this Agreement
and any Other Investment Documents to which such Qualified Subsidiary is or
becomes a party, (b) act as agent for such Qualified Subsidiary in connection
with the receipt or giving of any and all notices or approvals under this
Agreement and any such Other Investment Documents and (c) not cause or permit
any such Subsidiary to lose its status as a Qualified Subsidiary at any time
when such Subsidiary owns Shares. At least ten days prior to any proposed
Transfer to a Transferee, the transferring Class A Holder shall notify the
Company of its intent to make such Transfer, such notice to state the name and
address of the Transferee (and the identity of the shareholders of such
Transferee and the relationship of the Transferee to the transferring Class A
Holder), the proposed date of such Transfer, the number and class of Shares to
be Transferred and the proposed terms of such Transfer. Any Transfer made
pursuant to this Section 2.2 shall be effective only if the Transferee
-32-
shall agree in writing to be bound by the terms and conditions of this Agreement
pursuant to an instrument of assumption substantially in the form of Exhibit B
hereto and such Transferee thereby shall become a party to this Agreement.
Section 2.3. Other Transfers Prior to January 31, 2001. Until January 31,
-----------------------------------------
2001, Shares shall not be Transferred by a Class A Holder except as provided in
Section 2.2, provided that Post-Restructuring Series 3 PCS Shares shall not be
subject to the restriction set forth in this Section 2.3, but shall be subject
to the restrictions and limitations set forth in Sections 2.4 and 2.8.
Section 2.4. Other Transfers. If Section 2.3 hereof does not apply or is
---------------
terminated pursuant to Section 2.6, but subject to the Company's rights under
Section 2.5, each Class A Holder may Transfer Shares (each such Class A Holder
being a "Transferring Stockholder") without restriction, provided that, with
respect to any such Transfer (including any Transfer of Post-Restructuring
Series 3 PCS Shares):
(a) a Transfer in a single transaction or a series of related
transactions of Shares may be made to a Person or Group (other than a
Qualified Subsidiary or Subsidiaries or FT or DT) that Beneficially Owns
Voting Securities with a number of Votes representing greater than five
percent of the Voting Power of the Company immediately following such
Transfer or Transfers only in connection with a Public Offering in which:
(i) the Transferring Stockholder does not, to the best of its
knowledge, Transfer a number of Shares representing more than two
percent of the Voting Power of the Company to a Person or Group that,
prior to such Transfer, Beneficially Owned Voting Securities entitled
to a number of Votes representing three percent or more of the Voting
Power of the Company;
(ii) the Transferring Stockholder does not, to the best of its
knowledge, Transfer in a single transaction or a series of related
transactions to a Person or Group a number of Shares representing more
than five percent of the Voting Power of the Company; and
(iii) the Transferring Stockholder does not, to the best of its
knowledge, Transfer in a single transaction or series of related
transactions Shares to a Person or Group that is required under
Section 13(d) of the Exchange Act to file a Schedule 13D with respect
to the Company (a "Schedule 13D Filer") or, as a result of such
Transfer, will become a Schedule 13D Filer,
provided that such Transferring Stockholder shall have notified the managing or
- --------
coordinating underwriter or underwriters participating in such Public Offering
of the restrictions set forth in clauses (i), (ii) and (iii) and provided,
further, that, in determining the best knowledge of a
-33-
Transferring Stockholder, such holder may rely on written certification received
from such managing or coordinating underwriters or from purchasers of shares in
such Public Offering, unless such holder has actual knowledge to the contrary;
(b) the restrictions contained in Section 2.4(a) shall continue until
such time as the sum of (A) the aggregate Committed Percentage of the Class
A Holders, and (B) the percentage of Voting Power of the Company
represented by Voting Securities which the Class A Holders have the right
to commit to purchase pursuant to Sections 7.3 and 7.8 and Articles V and
VI of this Agreement, falls below three and one-half percent for more than
150 consecutive days after the rights to commit to purchase provided in
Article V have expired; and
(c) For so long as the sum of (i) the aggregate Committed Percentage
of the Class A Holders, and (ii) the percentage of Voting Power of the
Company which the Class A Holders have the right to commit to purchase
pursuant to Sections 7.3 and 7.8 and Articles V and VI of this Agreement is
greater than five percent, but less than nine percent (if the events
described in clause (2) of Section 2.6(a)(v) shall have occurred) or ten
percent (if the events described in clause (1) of Section 2.6(a)(v) shall
have occurred), no Class A Holder or Holders may Transfer Shares
representing in excess of one percent of the outstanding Voting Power of
the Company to any one Person or Group (other than a Qualified Subsidiary
or Subsidiaries or FT or DT) in any transaction or series of related
transactions, except in connection with a Public Offering as provided in
Section 2.4(a), or Transfer Shares other than in a Public Offering to any
Major Competitor of the Company.
Section 2.5. Company Rights to Purchase. (a) If a Transferring Stockholder
-------------------------- -
proposes to Transfer Shares (other than any Post-Restructuring Series 3 PCS
Shares) in a Public Offering or in Brokers Transactions, such Transferring
Stockholder shall first deliver written notice (the "Public Sale Notice") to the
Company of such Transferring Stockholder's desire to effect such Transfer
setting forth in reasonable detail (i) the number and class of Shares to be sold
-
(the "Offered Shares"), (ii) the Market Price per share on the date of the
--
Public Sale Notice (the "First Offer Price"), (iii) the Planned Date of such
---
Transfer, and (iv) any other material proposed terms of the Transfer. Upon
--
receipt of the Public Sale Notice, the Company shall have the right to purchase
all, but not less than all, of the Offered Shares at the First Offer Price, as
adjusted to comply with the requirements of Article IX, such right to be
exercised within ten Business Days following delivery of the Public Sale Notice
to the Company (the "First Notice Period"). The Public Sale Notice shall
constitute an offer to the Company (or its assignee, as provided below), which
shall be irrevocable during the First Notice Period, to sell to the Company or
its assignee the Offered Shares upon the terms provided in this Section 2.5(a)
and the Public Sale Notice. The Company shall exercise such right to purchase by
delivering written notice to such Transferring Stockholder at any time during
the First Notice Period setting forth its irrevocable commitment to purchase
such Offered Shares subject to receipt of any required material Third Party
Approvals or Governmental Approvals (the same to be specified in reasonable
detail in such notice), compliance with Applicable Law and the absence of any
injunction or similar legal
-34-
order preventing such transaction, provided that the Company shall not be
--------
permitted to deliver such notice (and accordingly may not purchase the Offered
Shares) unless a majority of the Continuing Directors shall have first approved
(unless such approval is not required under Section 11.13), at a meeting of
Directors at which at least seven Continuing Directors are present, such
purchase of the Offered Shares. The Company may assign its rights to purchase
the Offered Shares under this Section 2.5(a) to any Person who is not a Major
Competitor of FT or DT or of the Joint Venture. If the Company does not exercise
such right, or the Company or its assignee does not close the purchase of the
Offered Shares within the time periods provided in Section 2.5(d), such
Transferring Stockholder may, to the extent not otherwise prohibited under this
Article II, sell the Offered Shares, subject to compliance with Applicable Law
and receipt of any required material Third Party Approvals or Governmental
Approvals (x) in the case of a Public Offering, subject to subsection (b) of
this Section 2.5, or (y) in the case of Brokers' Transactions within 45 days
after the end of the First Notice Period or 45 days after the applicable date
provided in Section 2.5(d) if the Company has exercised its rights under this
Section 2.5(a) and the Company or its assignee has failed to close the purchase
of the Offered Shares within the time periods provided in Section 2.5(d). Any
Offered Shares to have been sold in Brokers' Transactions that continue to be
held by the Transferring Stockholder following the expiration of such period
shall again be subject to the provisions of this Article II.
(b) If a Transferring Stockholder proposes to Transfer Shares (other than
any Post-Restructuring Series 3 PCS Shares) in a Public Offering, on the seventh
Business Day prior to the Planned Date, such Transferring Stockholder shall
deliver to the Company a written offer (the "Second Offer") to sell to the
Company the Offered Shares at the Market Price per share, as adjusted to comply
with the requirements of Article IX, of the Series 1 FON Stock or Series 1 PCS
Stock, as the case may be, on the Business Day immediately preceding such
seventh Business Day (such Market Price, the "Second Offer Price"), provided
--------
that no Second Offer need be made if the Second Offer Price would be more than
90 percent of the First Offer Price and provided, further, that, prior to making
-------- -------
a Second Offer, any Transferring Stockholder may, in its complete discretion,
change the Planned Date to a date not later than 120 days after the original
Planned Date. The Company shall have 24 hours (the "Second Notice Period") in
which to deliver to such Transferring Stockholder written notice of its decision
to accept the Second Offer (a "Buy Notice"), provided that the Company shall not
--------
be permitted to deliver such Buy Notice (and accordingly may not purchase the
Offered Shares) unless a majority of the Continuing Directors shall have first
approved (unless such approval is not required under Section 11.13), at a
meeting of Directors at which at least seven Continuing Directors are present,
such purchase of the Offered Shares. The Second Offer shall constitute an offer
to the Company or its assignee, as provided below, which shall be irrevocable
during such Second Notice Period, to sell to the Company or its assignee such
Offered Shares upon the terms set forth in this Section 2.5(b) and the Second
Offer. Delivery of a Buy Notice to such Transferring Stockholder shall
constitute an irrevocable commitment on the part of the Company to purchase such
Offered Shares upon the terms set forth in this Section 2.5(b) (subject to the
receipt of any required material Third Party Approvals or Governmental Approvals
(the same to be specified in reasonable detail in such Buy Notice), compliance
with Applicable Law and the absence of any injunction or similar legal
-35-
order preventing such transaction), and to reimburse such Transferring
Stockholder for all of its reasonable out-of-pocket expenses incurred in
connection with such Transfer, including the reasonable fees and expenses of its
advisors and legal counsel, upon receipt of a certificate of such Transferring
Stockholder setting forth in reasonable detail such out-of-pocket expenses. The
Company may assign its rights to purchase the Offered Shares under this Section
2.5(b) to any Person who is not a Major Competitor of FT or DT or the Joint
Venture. If a Buy Notice is not timely delivered to such Transferring
Stockholder, or the Company or its assignee does not close the purchase of the
Offered Shares within the applicable time period provided in Section 2.5(d),
such Transferring Stockholder shall have no obligation to sell the Offered
Shares to the Company, and subject to compliance with Applicable Law and the
receipt of any required material Third Party Approvals or Governmental
Approvals, may, to the extent not otherwise prohibited under this Article II,
Transfer the Offered Shares at any time prior to 45 days after the Planned Date
or the applicable date provided in Section 2.5(d) if the Company has accepted
the Second Offer and the Company or its assignee has failed to close the
purchase of the Offered Shares within the time period provided in Section
2.5(d), provided that the Transferring Stockholder may delay for a reasonable
--------
period its offering beyond such 45th date if it determines in good faith that
such a delay is advisable because of marketing considerations or because the
registration statement pursuant to which such Offered Shares are registered has
not yet been declared effective, provided, further, that, if such offering is
-------- -------
delayed for longer than ten Business Days after such 45th date, the Offered
Shares shall again be subject to the Company's purchase rights under this
paragraph (b) and the obligations of the Class A Holders to make a Second Offer.
Any Offered Shares which continue to be held by the Transferring Stockholder
following the applicable period shall again be subject to the provisions of this
Article II.
(c) If a Transferring Stockholder proposes to Transfer Shares (other than
any Post-Restructuring Series 3 PCS Shares) in a transaction not covered by
Section 2.2, 2.5(a) or 2.5(b) and otherwise permitted by this Article II,
(i) such Transferring Stockholder shall first deliver written notice
(a "Private Sale Notice") to the Company stating that such Transferring
Stockholder proposes to effect such Transfer, such notice to describe in
reasonable detail (x) the number and class of Shares to be Transferred (the
-
"Subject Shares"), (y) a price per share (the "Proposed Price") and (z)
-
other material terms of such Transfer determined by such Transferring
Stockholder in its sole discretion (the "Proposed Terms"). Upon receipt of
the Private Sale Notice, the Company shall have the right to purchase all,
but not less than all, of the Subject Shares at the Proposed Price, as
adjusted to comply with the requirements of Article IX, and in accordance
with the Proposed Terms for a period of ten Business Days (the "Private
Offer Notice Period"). The Private Sale Notice shall constitute an offer to
the Company or its assignee, as provided below, which is irrevocable during
such Private Offer Notice Period, to sell to the Company or its assignee
such Subject Shares upon the terms set forth in this Section 2.5(c)(i) and
the Private Sale Notice. The Company may exercise such right by delivering
written notice to such Transferring Stockholder at any time during the
Private Offer Notice Period setting forth its irrevocable commitment to
-36-
purchase such Subject Shares at the Proposed Price, as adjusted to comply
with the requirements of Article IX, in accordance with the Proposed Terms
subject to receipt of any required material Third Party Approvals or
Governmental Approvals (the same to be specified in reasonable detail in
such notice), compliance with Applicable Law and the absence of any
injunction or similar order preventing such transaction, provided that the
--------
Company shall not be permitted to deliver such notice (and accordingly may
not purchase the Subject Shares) unless a majority of the Continuing
Directors shall have first approved (unless such approval is not required
under Section 11.13), at a meeting of Directors at which at least seven
Continuing Directors are present, such purchase of the Subject Shares. The
Company may assign its rights to purchase the Subject Shares under this
Section 2.5(c)(i) to any Person who is not a Major Competitor of FT or DT
or of the Joint Venture. If the Company fails to exercise such right, or
the Company or its assignee does not close the purchase of the Subject
Shares within the applicable time period provided in Section 2.5(d), then
such Transferring Stockholder, subject to compliance with Applicable Law
and receipt of any required material Third Party Approvals or Governmental
Approvals, may, to the extent not otherwise prohibited under this Article
II, sell all of the Subject Shares to any one or more Eligible Purchasers
at the Proposed Price (taking into account any adjustments thereto which
may have been made to comply with the requirements of Article IX) and in
accordance with the Proposed Terms (or at a better price and on terms more
favorable to such Transferring Stockholder) within 180 days after delivery
of the Private Sale Notice to the Company or 180 days after the applicable
date provided in Section 2.5(d) if the Company has exercised its rights
under this Section 2.5(c)(i) and the Company or its assignee has failed to
close the purchase of the Subject Shares within the time period provided in
Section 2.5(d). Any Subject Shares which continue to be held by the
Transferring Stockholder following such periods shall again be subject to
the provisions of this Article II. For purposes of this Section 2.5, the
term "Eligible Purchaser" shall mean a Person or Group that would be
eligible pursuant to Rule 13d-1(b) under the Exchange Act to file a
Schedule 13G with respect to the Company if such Person or Group
Beneficially Owned Voting Securities representing five percent or more of
the Voting Power of the Company; and
(ii) if a Transferring Stockholder proposes to Transfer Shares (other
than any Post-Restructuring Series 3 PCS Shares) pursuant to a bona fide
---- ----
offer to purchase Shares from a purchaser that is not an Eligible Purchaser
(an "Other Purchaser"), prior to such Transferring Stockholder's accepting
such offer, such Transferring Stockholder shall first deliver notice
thereof (a "Refusal Notice") to the Company and to each other Class A
Holder, setting forth in reasonable detail, (w) the number and class of
-
Shares to be Transferred (the "Refusal Shares"), (x) the price per share of
-
such bona fide offer (the "Refusal Price"), (y) the other material terms of
---- ---- -
such bona fide offer (the "Refusal Terms"), and (z) the identity of the
---- ---- -
offeror. Upon receipt of such notice, the Company shall have the right to
purchase all, but not less than all, of the Refusal Shares upon the Refusal
Terms, subject to receipt of any required material Third Party Approvals or
Governmental Approvals (the same to be specified in reasonable detail in
the Company's
-37-
notice described in this paragraph), compliance with Applicable Law and the
absence of any injunction or similar legal order preventing such
transaction, at the Refusal Price, as adjusted to comply with the
requirements of Article IX. The Refusal Notice shall constitute an offer to
the Company or its assignee, as provided below, which is irrevocable during
the period described in the next sentence, to sell to the Company or its
assignee the Refusal Shares upon the terms set forth in this Section
2.5(c)(ii) and the Refusal Notice. The Company shall have ten Business Days
after receipt of such notice in which to exercise such right by delivering
written notice stating its irrevocable commitment to so exercise to the
Transferring Stockholder, provided that the Company shall not be permitted
--------
to deliver such notice (and accordingly may not purchase the Refusal
Shares) unless a majority of the Continuing Directors shall have first
approved (unless such approval is not required under Section 11.13), at a
meeting of Directors at which at least seven Continuing Directors are
present, such purchase of the Refusal Shares. The Company may assign its
rights to purchase the Refusal Shares under this Section 2.5(c)(ii) to any
Person who is not a Major Competitor of FT or DT or of the Joint Venture.
If the Company fails to exercise such right, or the Company or its assignee
does not close the purchase of the Refusal Shares within the applicable
time period provided in Section 2.5(d), then such Transferring Stockholder,
subject to compliance with Applicable Law and receipt of any required
material Third Party Approvals or Governmental Approvals, may, to the
extent not otherwise prohibited under this Article II, sell all of the
Refusal Shares to the Other Purchaser at the Refusal Price (taking into
account any adjustments thereto which may have been made to comply with the
requirements of Article IX) and in accordance with the Refusal Terms (or at
a better price and upon terms more favorable to such Transferring
Stockholder) within 180 days following delivery of such notice to the
Company or 180 days after the date provided in Section 2.5(d) if the
Company has exercised its rights under this Section 2.5(c)(ii) and the
Company or its assignee has failed to close the purchase of the Refusal
Shares within the applicable time period provided in Section 2.5(d). Any
Refusal Shares which continue to be held by the Transferring Stockholder
following such period shall again be subject to the provisions of this
Article II.
(d) The closing of purchases of Shares pursuant to this Section 2.5 shall
take place within (i) 45 days in the case of purchases by the Company or an
-
assignee, or (ii) 180 days in the case of purchases by an assignee if all
--
required Governmental Approvals necessary to permit such closing by such
assignee have not been obtained within such 45-day period, after the exercise of
the Company's right to purchase at the offices of King & Spalding, 1185 Avenue
of the Americas, New York, New York, or at such other date, time or place as the
Company and the Transferring Stockholder may otherwise agree.
(i) At such closing,
(x) the Transferring Stockholder shall (A) sell, transfer and
-
deliver to the Company or its assignee all of its right, title and
interest in and to the Shares
-38-
to be purchased by the Company or its assignee free and clear of
Liens, (B) deliver to the Company or its assignee a certificate or
-
certificates representing such Shares duly endorsed in blank or
accompanied by stock transfer powers duly endorsed in blank together
with evidence of payment of any applicable stock transfer taxes and
(C) deliver to the Company or its assignee an executed written
-
representation of such Transferring Stockholder, in form and substance
reasonably satisfactory to the Company or its assignee, representing
that (1) such Transferring Stockholder is validly existing and has
-
validly authorized such Transfer, (2) such Transfer does not violate
-
or otherwise conflict with the organizational documents of such
Transferring Stockholder or require any material Third Party Approval
or Governmental Approval on the part of such Transferring Stockholder
which has not yet been obtained and (3) the Transferring Stockholder
-
shall Transfer the Shares to be purchased free and clear of all Liens
arising due to the action or inaction of such Transferring
Stockholder; and
(y) the Company or its assignee shall deliver to such
Transferring Stockholder an amount (the "Purchase Price") in cash or
in cash and securities of the Company, as hereinafter provided, equal
to the product of (A) the First Offer Price, the Second Offer Price,
-
the Proposed Price or the Refusal Price, as the case may be, in each
case as adjusted to comply with the requirements of Article IX; and
(B) the number of Shares to be acquired by the Company or its
-
assignee.
(ii) Payment of the Purchase Price shall be made as follows:
(x) If the Purchase Price is less than $200 million, payment of
the entire Purchase Price shall be made by wire transfer of
immediately available funds to such bank and account as such
Transferring Stockholder shall designate.
(y) If the Purchase Price is $200 million or greater, but less
than or equal to $500 million, payment of $200 million of the Purchase
Price shall be made by wire transfer of immediately available funds to
such bank and account as such Transferring Stockholder shall
designate, an amount equal to one-half of the difference between the
Purchase Price and $200 million (for purposes of this Section 2.5, the
"One-Half Quantity") shall be paid in Company Eligible Notes maturing
one year from the date of such closing; and an amount equal to the
One-Half Quantity shall be paid in Company Eligible Notes maturing two
years from the date of such closing. The principal of any such Company
Eligible Notes shall be adjusted to comply with the requirements of
Article IX such that the Transferring Stockholder receives principal
in an amount equal to the One-Half Quantity on each of the first and
second anniversaries of such closing.
(z) If the Purchase Price exceeds $500 million, payment of $200
million of the Purchase Price shall be made by wire transfer of
immediately
-39-
available funds to such bank and account as such Transferring
Stockholder shall designate, an amount equal to one-third of the
difference between the Purchase Price and $200 million (for purposes
of this Section 2.5, the "One-Third Quantity") shall be paid in
Company Eligible Notes maturing one year from the date of such
closing; an amount equal to the One-Third Quantity shall be paid in
Company Eligible Notes maturing two years from the date of such
closing; and an amount equal to the One-Third Quantity shall be paid
in Company Eligible Notes maturing three years from the date of such
closing. The principal of any such Company Eligible Notes shall be
adjusted to comply with the requirements of Article IX such that the
Transferring Stockholder receives principal in an amount equal to the
One-Third Quantity on each of the first, second and third
anniversaries of such closing.
Section 2.6. Termination of Transfer Restrictions. (a) The Transfer
------------------------------------
Restrictions shall terminate and cease to be of further force and effect
hereunder (but the provisions of Section 2.4 shall continue):
(i) if there is a Corporation Joint Venture Termination;
(ii) upon the first anniversary of a sale of all of the
Venture Interests of the Sprint Parties or the FT/DT Parties pursuant
to Section 17.2, 17.3, 17.4, 19.3, 20.6 or 20.11 of the Joint Venture
Agreement or upon the first anniversary of the date on which the Joint
Venture is otherwise terminated, in each case, other than pursuant to
(x) an FT/DT Joint Venture Termination or (y) a Corporation Joint
Venture Termination;
(iii) if the Company has breached in any material respect
its obligations under Article III, IV, V and VI, Section 7.1, 7.4,
7.8, 7.10 or 7.11 of this Agreement; Article FIFTH of the Articles (to
the extent such Article relates to the rights of the holders of Class
A Stock); or the Class A Provisions, provided, that, if the Company so
--------
breaches any of these obligations, and such breach is capable of being
cured without adversely affecting in any material respect the Class A
Holders or their rights hereunder or under the Other Investment
Documents, the Articles or the Bylaws, (x) the date of termination of
the Transfer Restrictions shall be delayed for a period of not more
than 180 days from the date of such breach, or, in the case of a
dispute as to whether such a breach has occurred, for 90 days
following the rendering of an order of a court of competent
jurisdiction in connection therewith, in either case if during such
time the Company is attempting in a diligent manner to cause such
breach to be cured and (y) the Transfer Restrictions shall not
terminate if such breach is cured within the applicable period;
-40-
(iv) if the Company shall have determined to proceed with a
transaction described in Section 4.1 hereof;
(v) if the sum of (x) the aggregate Committed Percentage of
the Class A Holders, and (y) the percentage of Voting Power of the
Company represented by Voting Securities which the Class A Holders
have the right to commit to purchase pursuant to Sections 7.3 and 7.8
and Articles V and VI of this Agreement falls below (1) ten percent
for more than 150 consecutive days, immediately after the issuance of
additional Voting Securities of the Company other than pursuant to a
Major Issuance; or (2) nine percent, immediately after a Transfer of
Shares by Class A Holders, provided that the rights of the Company
--------
contained in Sections 2.5(a) and 2.5(b) hereof shall, in either case,
continue until the sum of (I) the aggregate Committed Percentage of
the Class A Holders, and (II) the percentage of Voting Power of the
Company represented by Voting Securities which the Class A Holders
have the right to commit to purchase pursuant to Sections 7.3 and 7.8
and Articles V and VI of this Agreement, falls below five percent;
(vi) if the sum of (x) the aggregate Committed Percentage of
the Class A Holders, and (y) the percentage of Voting Power of the
Company represented by Voting Securities which the Class A Holders
have the right to commit to purchase pursuant to Sections 7.3 and 7.8
and Articles V and VI of this Agreement falls below ten percent as a
result of a Major Issuance and the Class A Holders (1) furnish in
writing to the Company a written binding election not to exercise
their rights to purchase Class A Stock from the Company pursuant to
Section 7.8 with respect to such transaction and, for 180 days
following the date of such Major Issuance, not to make open market
purchases pursuant to Section 7.8 that would result in the Class A
Holders having an aggregate Committed Percentage of ten percent or
more, or (2) fail to exercise their rights to purchase Class A Stock
from the Company pursuant to Section 7.8 with respect to such
transaction and to exercise their rights to commit to make open market
purchases pursuant to Section 7.8, within the prescribed time periods;
(vii) if a Person other than a Class A Holder shall acquire a
Percentage Ownership Interest greater than 20 percent or there is a
Change of Control within the meaning of clause (b) of such definition;
(viii) unless all of the outstanding shares of Class A Stock have
been converted into shares of Non-Class A Common Stock or the rights
of the Class A Holders under Section 8.2 of ARTICLE SIXTH of the
Articles are suspended pursuant to clauses (ii) or (iii) of Section
8.5(b) of ARTICLE SIXTH of the Articles, if, between January 31, 1998
and January 31, 2001, the Company or any of its Subsidiaries, as the
case may be, shall take or engage in, directly or
-41-
indirectly, any of the actions described in Section 8.2(a)(i),
8.2(a)(ii), 8.2(a)(iii) or 8.2(a)(iv) of ARTICLE SIXTH of the
Articles, notwithstanding a written notice signed by FT and DT
expressing disapproval thereof delivered to the Company within 30 days
of delivery of the notice from the Company relating thereto as
provided in Section 2.7; or
(ix) if the Class A Holders elect to be released from the
Transfer Restrictions pursuant to Section 7.8(a) hereof.
(b) [Reserved]
Section 2.7. Notice of Certain Actions. Unless all of the outstanding
-------------------------
shares of Class A Stock have been converted into shares of Non-Class A Common
Stock or the rights of the Class A Holders under Section 8.2 of ARTICLE SIXTH of
the Articles are suspended pursuant to clause (ii) or (iii) of Section 8.5(b) of
ARTICLE SIXTH of the Articles, until January 31, 2001, at least 40 days prior to
(a) the Company or any of its Subsidiaries taking or engaging in, directly or
indirectly, any of the actions described in Sections 8.2(a)(i) and 8.2(a)(ii) of
ARTICLE SIXTH of the Articles, or (b) the Company taking or engaging in,
directly or indirectly, any of the transactions described in Sections
8.2(a)(iii) and 8.2(a)(iv) of ARTICLE SIXTH of the Articles, the Company shall
provide each Class A Holder with notice of such proposed transaction.
Section 2.8 Restrictive Legends. (a) A copy of this Agreement shall be
-------------------
filed with the Secretary of the Company and kept with the records of the
Company. Upon original issuance thereof and until such time as the same is no
longer required hereunder or under Applicable Law, any certificate issued
representing any of the shares of Class A Stock or any other Shares held by the
Class A Holders (including, without limitation, all certificates issued upon
Transfer or in exchange thereof or substitution therefor) shall bear the
following restrictive legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF ("TRANSFERRED") UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS SUCH TRANSFER IS EXEMPT
FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE
ACT.
THE TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO THE RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE
STOCKHOLDERS' AGREEMENT, DATED JANUARY 31, 1996, AMONG SPRINT
-42-
CORPORATION, FRANCE TELECOM AND DEUTSCHE TELEKOM AG, AS FROM
TIME TO TIME IN EFFECT, A COPY OF WHICH IS ON FILE AT THE
EXECUTIVE OFFICES OF SPRINT CORPORATION AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST TO SPRINT CORPORATION. NO SUCH TRANSFER WILL
BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF
SUCH STOCKHOLDERS' AGREEMENT HAVE BEEN COMPLIED WITH IN FULL
AND NO PERSON MAY REQUEST SPRINT CORPORATION TO RECORD THE
TRANSFER OF ANY SHARES IF SUCH TRANSFER IS IN VIOLATION OF
SUCH STOCKHOLDERS' AGREEMENT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON VOTING PROVIDED FOR IN THE STOCKHOLDERS'
AGREEMENT AND NO VOTE OF SUCH SHARES THAT CONTRAVENES SUCH
AGREEMENT SHALL BE EFFECTIVE.
(b) The certificates representing Shares owned by the Class A Holders
(including, without limitation, all certificates issued upon Transfer or in
exchange thereof or substitution therefor) shall also bear any legend required
under any other Applicable Laws, including state securities or blue sky laws.
(c) The Company may make a notation on its records or give
instructions to any transfer agents or registrars for the Shares owned by the
Class A Holders in order to implement the restrictions on Transfer set forth in
this Article II .
(d) FT and DT shall submit all certificates representing Shares held
by FT, DT or any of their respective Affiliates, and shall use commercially
reasonable efforts to cause all other Class A Holders to submit all such
certificates, to the Company so that the legend or legends required by this
Section 2.8 may be placed thereon.
(e) The Company shall not incur any liability for any delay in
recognizing any Transfer of Shares if the Company in good faith reasonably
believes that such Transfer may have been or would be in violation of the
provisions of Applicable Law or this Agreement.
(f) After such time any of the legends described in this Section 2.8
are no longer required on any certificate or certificates representing Shares
owned by the Class A Holders, upon the request of FT or DT or such other Class A
Holder the Company will cause such certificate or certificates to be exchanged
for a certificate or certificates that do not bear such legend.
-43-
(g) No Class A Holder may pledge Shares (other than Post-
Restructuring Series 3 PCS Shares) except to a Person that is a bona fide
financial institution. Prior to the consummation of a pledge of Shares (other
than Post-Restructuring Series 3 PCS Shares) by a Class A Holder, such Class A
Holder shall deliver, or shall cause such prospective pledgee to deliver, an
acknowledgment that such pledgee has examined the legend set forth in Section
2.8(a) and understands and agrees that any rights it has with respect to such
Shares are subject to those of the Company set forth in this Agreement,
including agreeing that (i) no foreclosure on such Shares shall be effected
except as permitted by, and in accordance with, the terms of this Agreement, and
(ii) under no circumstances shall such pledgee be entitled to exercise voting
rights, consent rights or disapproval rights with respect to such Shares, except
for the right to vote as a holder of shares of Series 1 FON Stock or Series 1
PCS Stock, as the case may be, if such pledgee owns such Shares after a
foreclosure conducted in accordance with the terms hereof.
Section 2.9. Reorganization, Reclassification, Merger, Consolidation or
----------------------------------------------------------
Disposition of Shares. The provisions of this Article II shall apply, to the
- ---------------------
fullest extent set forth herein, with respect to the Shares and to any and all
equity securities of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise), or any other
securities of such entity which have, or which may be converted or exercised to
acquire securities which will have, a Vote, that in each case may be issued in
respect of, in exchange for, or in substitution of such Shares, including,
without limitation, in connection with any stock dividends, splits, reverse
splits, combinations, reclassifications, recapitalizations (including the
Recapitalization), mergers, consolidations and the like occurring after the date
hereof.
Section 2.10. Strategic Mergers; Business Combinations; Company Tender for
------------------------------------------------------------
Shares. Notwithstanding anything in this Article II to the contrary, the
- ------
restrictions on Transfer set forth in this Article II (not including Section
2.9) shall not apply to any conversion or exchange of Shares in connection with
a Strategic Merger or any other merger or other business combination not
prohibited by the Class A Provisions or a Transfer into a tender offer made by
the Company for Shares.
Section 2.11. Effect of Proposed Redemption. Following April intention to
-----------------------------
so redeem such Shares, which notice shall set forth the number of such Shares
held by the Class A Holders which are proposed to be redeemed. For a period of
120 days thereafter (as extended day for day for each day that such sales are
actually delayed during such time period because (i) the Shares proposed to be
redeemed cannot be sold due to the anti-fraud rules of the U.S. securities laws,
or (ii) the Company has delayed a proposed registration of such Shares in
accordance with Section 1.4 of the Amended and Restated Registration Rights
Agreement), the Class A Holders shall be entitled, on a pro rata basis in
accordance with their respective Committed Percentages, to sell free of the
restrictions on Transfer set forth in Section 2.3 hereof (but subject to the
provisions of Sections 2.4 and 2.5 hereof) that number of Shares in the
aggregate which the Company has
-44-
proposed to redeem from the Class A Holders. Notwithstanding the foregoing, the
Company may elect to redeem Shares held by the Class A Holders during such 120-
day period (as so extended) by paying to the Class A Holders the Market Price
(as defined in Section 2.2 of ARTICLE SIXTH of the Articles) (which if the
Company has so elected to redeem during such 120-day period (as so extended)
shall be modified in accordance with Article IX).
ARTICLE III
PROVISIONS CONCERNING DISPOSITION OF LONG DISTANCE ASSETS
---------------------------------------------------------
Section 3.1 Offers to FT and DT. (a) Subject to Section 3.5 of this
-------------------
Agreement, (i) after the first to occur of (x) January 31, 2001 and (y) such
- - -
time as (I) legislation shall have been enacted repealing Section 310, (II) an
- --
FCC Order shall have been issued or (III) outside counsel to the Company with a
---
nationally-recognized expertise in telecommunications regulatory matters
delivers to each of FT and DT a legal opinion in form and substance reasonably
satisfactory to each of FT and DT to the effect that Section 310 does not
prohibit FT or DT from owning the Long Distance Assets proposed to be
Transferred by the Company, and prior to the earliest to occur of (x) January
-
31, 2006, (y) the delivery by FT, DT or any of their Affiliates (or a Permitted
-
Designee (as such term is defined in the Joint Venture Agreement)) of a notice
pursuant to Section 17.2(b) of the Joint Venture Agreement indicating the
agreement to purchase all of the Sprint Venture Interests (as such term is
defined in the Joint Venture Agreement) following an offer by the Company or
Sprint Sub pursuant to Section 17.2(a) of the Joint Venture Agreement, and (z)
the delivery by the Company and/or Sprint Sub of a notice pursuant to Section
17.3(a) of the Joint Venture Agreement exercising the put right to sell all of
their Sprint Venture Interests (as such term is defined in the Joint Venture
Agreement) to FT, DT and Atlas (or a Permitted Designee (as such term is defined
in the Joint Venture Agreement)), or (ii) during any time in which the rights
--
provided to the Class A Holders under Section 8.2(b) of ARTICLE SIXTH of the
Articles would be in effect but for the fact that they have been suspended
pursuant to Sections 8.5(b)(ii) or (iii) of ARTICLE SIXTH of the Articles (each
such period described in clause (i) and clause (ii) being a "Restricted
Period"), and subject to the right of first offer in favor of FT and DT set
forth in Section 3.1(c) hereof, if the Company or any of its Subsidiaries
proposes to Transfer (except in a Lien Transfer, an Exempt Long Distance Asset
Divestiture or in a sale of all or substantially all of the Company's assets),
in a transaction or a series of related transactions, Long Distance Assets with
the effect that the Company and its Subsidiaries would no longer own 51 percent
or more of the Fair Market Value of the Long Distance Assets owned by them prior
thereto (calculated as at the date the Company or such Subsidiary enters into a
definitive agreement to effect such Transfer), then the Company must deliver an
LD Sale Notice in which it offers to sell at least 51 percent of the Fair Market
Value of the Long Distance Assets (calculated as of such date) (and any
liabilities to be assumed by the transferee in connection therewith) to FT and
DT, in the manner provided in Section 3.1(c), provided that the Company shall
--------
not be permitted to deliver such LD Sale Notice (and accordingly may not proceed
with such Transfer) unless a majority of the Continuing Directors shall have
first approved (unless such approval is not required pursuant to Section 11.13),
at a
-45-
meeting of Directors at which at least seven Continuing Directors are present, a
Transfer to FT and DT of the Specified Long Distance Assets at the price and
upon the terms and conditions set forth in the LD Sale Notice.
(b) Subject to Section 3.5 of this Agreement, during a Restricted Period,
the Company and its Subsidiaries shall not undertake a Lien Transfer unless each
creditor or other party which is the beneficiary of any Lien relating to such
Lien Transfer (a "Lien Creditor") and the Company execute a legally binding
instrument in favor of each of FT and DT in form and substance reasonably
satisfactory to each of FT and DT providing that at least 45 days prior to any
foreclosure or other execution upon the Long Distance Assets subject to such
Lien, such Lien Creditor and the Company shall provide each of FT and DT with
notice of such foreclosure or other execution, such notice to constitute an
exclusive and, subject to Section 3.2, irrevocable offer (i) for the Company to
sell to FT and DT all of such Long Distance Assets at a price equal to the Fair
Market Value of such assets, free and clear of any Lien relating to such Lien
Transfer, and upon other customary terms and conditions, or (ii) at FT's and
DT's option, to permit FT and/or DT to pay to such Lien Creditor all amounts due
to it which are secured by such Lien, in which case (x) such Lien Creditor shall
release such Lien, (y) FT and DT shall be subrogated to the claims of the Lien
Creditor against the Company and shall have all rights of such Lien Creditor
against the Company and in respect of such Lien, and (z) the Company shall
grant, and take all action necessary to perfect, a Lien in favor of FT and DT in
the Long Distance Assets subject to such Lien Transfer, securing the Company's
obligations subrogated to FT and DT, provided that the Company shall not be
--------
permitted to undertake any such Lien Transfer unless a majority of the
Continuing Directors shall have first approved (unless such approval is not
required under Section 11.13), at a meeting of Directors at which at least seven
Continuing Directors are present, each of the documents and transactions
contemplated by this sentence. FT and DT may exercise their rights hereunder by
delivering a notice to the Company at any time prior to any such foreclosure or
execution, setting forth which right it wishes to exercise. If FT and DT
exercise their rights under clause (i) of the preceding sentence, the provisions
of Sections 3.2 and 3.4 of this Agreement shall apply mutatis mutandis. For
------- --------
purposes of this Section 3.1(b), the Fair Market Value of any Long Distance
Assets shall be the value of such assets, without regard to the effect of the
Liens constituting the Lien Transfer in question, but considering all other
Liens on such assets and any other relevant factors, as determined by an
investment banking or appraisal firm of internationally recognized standing
reasonably satisfactory to the Company and FT and DT, the cost of which shall be
borne by the Company.
(c) Subject to Section 3.5 of this Agreement, during a Restricted Period,
if the Company or any of its Subsidiaries shall propose to Transfer (other than
in a Lien Transfer, an Exempt Long Distance Asset Divestiture or in a sale of
all or substantially all of the Company's assets), in a transaction or a series
of related transactions, Long Distance Assets with a Fair Market Value
(calculated as at the date the Company or such Subsidiary enters into a
definitive agreement to effect such Transfer) that, when aggregated with the
Fair Market Value of all Long Distance Assets previously so Transferred after
July 31, 1995 (calculated in each case as of the date the Company or such
Subsidiary entered into a definitive agreement to Transfer such Long
-46-
Distance Assets), equals or exceeds 30 percent of the Fair Market Value of the
Long Distance Assets of the Company and its Subsidiaries taken as a whole
(calculated as at the date the Company or such Subsidiary enters into a
definitive agreement to effect such Transfer), the Company shall first deliver
written notice (the "LD Sale Notice") to each of FT and DT stating that the
Company proposes to effect such a Transfer and setting forth in reasonable
detail (i) the Long Distance Assets proposed to be Transferred (the "Specified
Long Distance Assets"), (ii) the price which the Company expects to receive for
such assets and (iii) the other material terms and conditions of Transfer
---
(including the assumption of liabilities, if any, by the transferee in
connection therewith), provided that the Company shall not be permitted to
--------
deliver such LD Sale Notice (and accordingly may not proceed with such Transfer)
unless a majority of the Continuing Directors shall have first approved (unless
such approval is not required pursuant to Section 11.13), at a meeting of
Directors at which at least seven Continuing Directors are present, a Transfer
to FT and DT of the Specified Long Distance Assets at the price and upon the
terms and conditions set forth in the LD Sale Notice. The Company shall be
entitled to effect such proposed Transfer on terms no less favorable to the
Company than as set forth in the LD Sale Notice unless within 30 days of the
delivery of the LD Sale Notice to FT and DT, both FT and DT notify the Company
in writing of their disapproval of such Transfer.
(d) Upon receipt of notice to the Company that both FT and DT have
disapproved of such Transfer (an "LD Disapproval Notice"), unless the Company
abandons the proposed Transfer and notifies each of FT and DT of such
abandonment within thirty Business Days of delivery of an LD Disapproval Notice
(in which case the provisions of this Article III shall apply to any subsequent
Transfer of the Specified Long Distance Assets), FT and DT, or a Qualified LD
Purchaser (in the case of an assignment pursuant to Section 3.2) shall have the
exclusive and, subject to Section 3.2, irrevocable right to purchase all, but
not less than all, of the Specified Long Distance Assets at the price and upon
the terms and conditions (including the assumption of liabilities, if any, by
the transferee in connection therewith) set forth in the LD Sale Notice. FT and
DT, or a Qualified LD Purchaser (in case of an assignment pursuant to Section
3.2), may exercise the right described in this Section 3.1(d) by delivering
notice to the Company setting forth their irrevocable binding commitment to
purchase the Specified Long Distance Assets at the price and on the terms and
conditions set forth in the LD Sale Notice, subject to compliance with
Applicable Laws and the receipt of all required material Third Party Approvals
and Governmental Approvals. Such notice must be delivered within 90 days after
the date of receipt of the LD Sale Notice, such period to be extended to the
earlier to occur of (i) five Business Days following the latest to occur of the
next regularly scheduled meetings of the Supervisory Boards of FT, DT and any
Qualified LD Purchaser (in case of such an assignment), and (ii) 150 days
following the date of receipt of the LD Sale Notice described above (such
period, the "LD Option Period").
Section 3.2. Assignment of Rights. At any time during the LD Option
--------------------
Period, upon 45 days' notice (an "Assignment Notice") to the Company, FT and DT
may assign the rights described in Section 3.1(c) to one or more Qualified LD
Purchasers, provided that FT and DT shall disclose to the Company the identity
of each Qualified LD Purchaser and such other
-47-
relevant information regarding each such Qualified LD Purchaser as the Company
may reasonably request prior to assignment of such right. The Company, in its
sole discretion, may abandon any Transfer described in its LD Sale Notice
delivered pursuant to Section 3.1(c) upon notice to each of FT and DT within 15
days after delivery of an Assignment Notice, in which case the rights described
in Sections 3.1(c) and (d) shall automatically be rescinded and of no effect
notwithstanding FT's and DT's acceptance thereof, but in such event the Company
may not thereafter sell the Specified Long Distance Assets to such Qualified LD
Purchaser and may not offer to engage in a transaction involving Long Distance
Assets substantially identical to the Specified Long Distance Assets for a
period of one year following such abandonment. Any such subsequent transaction
within a Restricted Period shall be subject to this Article III.
Section 3.3. Timing of Disposition. If FT and DT fail to exercise the
---------------------
rights described in Sections 3.1(c) and (d), the Company may proceed to Transfer
the Specified Long Distance Assets, provided that it enters into a legally
--------
binding agreement, subject to standard terms and conditions for a purchase
contract for assets of the type to be Transferred, to Transfer the Specified
Long Distance Assets upon terms no less favorable to the Company than those
described in the LD Sale Notice delivered pursuant to Section 3.1 within 150
days after the end of the LD Option Period. If the Company does not obtain such
a binding agreement within such time (or if it abandons such Transfer pursuant
to Section 3.2), the Company may not engage in a transaction involving
substantially identical Long Distance Assets for one year from the date of the
LD Sale Notice. Any such subsequent transaction within a Restricted Period shall
be subject to this Article III.
Section 3.4. Method of Purchase. If FT and DT, or a Qualified LD
------------------
Purchaser, as the case may be, exercise the right provided in Section 3.1, the
closing of the purchase of the Specified Long Distance Assets shall take place
within 90 days after the date of exercise of such option, at the offices of King
& Spalding, 1185 Avenue of the Americas, New York, New York at 10:00 a.m., New
York time, or at such other date, time or place as the Company and FT and DT, or
the Qualified LD Purchaser, as the case may be, may agree, subject to the
receipt of all necessary material Governmental Approvals, material Third Party
Approvals and, if required by Applicable Law, approval of the stockholders of
the Company. At such closing, the Company shall deliver to FT and DT, or the
Qualified LD Purchaser, as the case may be, bills of sale, assignments,
endorsements, releases and such other documents and instruments as may be
necessary, or, as determined by counsel to FT and DT, or the Qualified LD
Purchaser, as the case may be, appropriate, to convey and vest in the buyer,
title to each of the Specified Long Distance Assets to the extent, and in
conformity with the terms of such sale, each as specified in the LD Sale Notice.
Simultaneously therewith, FT and DT, or the Qualified LD Purchaser, as the case
may be, shall deliver to the Company, by wire transfer of immediately available
funds to such bank and account as the Company may designate, a cash amount equal
to the purchase price of the Specified Long Distance Assets, as set forth in the
Company's LD Sale Notice delivered pursuant to Section 3.1(b). In addition to
any other obligations which FT and DT may have at such closing, if a Qualified
LD Purchaser is to purchase Specified Long Distance Assets at such closing, FT
and DT shall certify to the Company that such Qualified LD Purchaser meets the
-48-
qualifications set forth in this Agreement for being a Qualified LD Purchaser as
of the date of such closing. If, notwithstanding the relevant parties'
reasonable efforts, the required approvals described in this Section 3.4 have
not been received or the parties have not waived the requirement for any such
approvals at the time the closing is scheduled to occur hereunder, the closing
shall be postponed up to 180 days following the date of such originally
scheduled closing or such other time as the parties to such transaction may
agree. If by such time all such approvals have not been obtained or the
requirement for any such approvals waived by the parties to such transaction,
the rights of FT, DT and any Qualified LD Purchaser to purchase such Specified
Long Distance Assets shall terminate and the Company shall be entitled to
proceed with the proposed Transfer of such assets on the terms set forth in the
LD Sale Notice.
Section 3.5. Termination of Rights. Unless earlier terminated pursuant to
---------------------
Article VIII(b) hereof, the rights provided in this Article III and Section 7.15
hereof shall terminate, and cease to be of any further force or effect, (a) upon
the conversion of all of the outstanding shares of Class A Stock into Non-Class
A Common Stock pursuant to Sections 8.5(a), 8.5(b), 8.5(c) or 8.5(g) of ARTICLE
SIXTH of the Articles, (b) if the aggregate Committed Percentage of the Class A
Holders shall be below ten percent for more than 180 consecutive days following
a Major Issuance, or (c) upon a sale of all of the Venture Interests of the
Sprint Parties or the FT/DT Parties pursuant to Section 17.2, 17.3, 17.4, 19.3,
20.6 or 20.11 of the Joint Venture Agreement or on the date the Joint Venture is
otherwise terminated, in each case other than due to an FT/DT Joint Venture
Termination or a Corporation Joint Venture Termination. In addition, any rights
provided in this Article III and Section 7.15 hereof shall be suspended and may
not be exercised during any period of time in which the rights provided to the
Class A Holders under Section 8.2(b) of ARTICLE SIXTH of the Articles are
suspended pursuant to Section 8.5(b)(iv) of ARTICLE SIXTH of the Articles.
ARTICLE IV
PROVISIONS CONCERNING CHANGE OF CONTROL
---------------------------------------
Section 4.1. Sale of Assets or Control. So long as shares of Class A
-------------------------
Stock are outstanding, but subject to Article VIII of this Agreement, if the
Company determines to sell all or substantially all of the assets of the Company
or not to oppose a tender offer by a Person other than any Class A Holder or
Holders for Voting Securities of the Company representing more than 35 percent
of the Voting Power of the Company or to sell Control of the Company or to
effect a merger or other business combination, which would result in a Person
(other than FT or DT or any of their Qualified Subsidiaries) holding Voting
Securities of the resulting entity representing 35 percent or more of the Voting
Power of such entity, the Company shall conduct such transaction in accordance
with reasonable procedures to be determined by the Board of Directors, and
permit FT and DT to participate in that process on a basis no less favorable
than that granted any other participant.
-49-
Section 4.2. Required Share Purchases. If a Person other than FT, DT or
------------------------
any of their respective Affiliates makes a tender offer for Voting Securities of
the Company representing not less than 35 percent of the Voting Power of the
Company and the terms of such tender offer do not permit the Class A Holders to
sell an equal or greater percentage of:
(i) if the tender offer involves only Series 1 FON Stock,
Class A FON Shares as the holders of Series 1 FON Stock are permitted
to sell taking into account any proration,
(ii) if the tender offer involves only Series 1 PCS Stock,
Class A PCS Shares as the holders of Series 1 PCS Stock are permitted
to sell taking into account any proration, or
(iii) if the tender offer involves both Series 1 FON Stock and
Series 1 PCS Stock, Class A FON Shares and Class A PCS Shares as the
holders of Series 1 FON Stock and Series 1 PCS Stock, respectively,
are permitted to sell taking into account any proration,
then upon the purchase by such Person of securities representing not less than
35 percent of the Voting Power of the Company in such tender offer, FT, DT and
their Qualified Subsidiaries, as a group, shall have the option, exercisable
upon delivery of written notice to the Company (or its successor) at any time
within 30 days after the termination of the period during which tenders may be
made into such tender offer, to sell to the Company all but not less than all,
of the Shares that they were unable to tender on the same basis as the other
shareholders, at a price per share (x) in the case of Class A FON Shares, equal
to the price per share of Series 1 FON Stock offered pursuant to the tender
offer, (y) in the case of Class A PCS Shares, equal to the price per share of
Series 1 PCS Stock offered pursuant to the tender offer, and (z) in the case of
Class A FON Shares and Class A PCS Shares, equal to the price per share of
Series 1 FON Stock and Series 1 PCS Stock offered pursuant to the tender offer.
Notwithstanding the preceding sentence, the Class A Holders shall have no rights
pursuant to this Section 4.2 if, at the date of termination of the period during
which tenders may be made into such tender offer, the Class A Holders have a
right to receive in exchange for all the shares of each class and/or series of
Class A Stock corresponding to the classes and/or series of stock subject to the
tender offer, publicly traded securities with an aggregate Fair Market Value,
and/or cash in an amount, not less than the aggregate price per share of the
Series 1 FON Stock and/or Series 1 PCS Stock, as the case may be, paid pursuant
to the tender offer in a back-end transaction required to be effected within 90
days after the close of the tender offer.
-50-
ARTICLE V
EQUITY PURCHASE RIGHTS
----------------------
Section 5.1. Right to Purchase. Except as provided in Section 5.7 hereof,
-----------------
and except to the extent that the Class A Holders have acquired shares pursuant
to the FT/DT Restructuring Agreement which otherwise would have given rise to
Equity Purchase Rights hereunder, each Class A Holder shall have the right (an
"Equity Purchase Right") to purchase from the Company (on a pro rata basis
reflecting the respective ownership of shares of the applicable series or class
of Class A Stock corresponding to the underlying series or class of Non-Class A
Common Stock being issued, unless in the case of Section 5.1(d) all of the Class
A Holders provide the Company prior to such purchase with written instructions
to the contrary and such instructions are not inconsistent with Section 7.5
hereof or the Amended and Restated Standstill Agreement):
(a) except under the circumstances described in clauses (e) and (f)
below, if the Company shall issue (or sell from treasury) shares of Sprint
FON Common Stock prior to the Recapitalization (including, without
limitation, any shares issued upon (i) the exercise of stock options,
warrants or other rights not issued pursuant to the Rights Agreement or in
respect of options or other contractually binding rights under employee
benefit plans, arrangements or contracts or (ii) the conversion or exchange
of any securities) other than upon the conversion or exchange of Class A
Common Stock, that number of additional shares of Class A Common Stock
sufficient for the Class A Holders to maintain their aggregate Committed
Percentage as in effect immediately prior to the issuance of such shares,
such Shares to be purchased at a per share purchase price equal to the
Weighted Average Price paid for such shares of Sprint FON Common Stock
whose issuance gave rise to such Equity Purchase Right;
(b) except under the circumstances described in clauses (e) and (f)
below, if after the Recapitalization the Company shall issue (or sell from
treasury) shares of Sprint FON Common Stock (including, without limitation,
any shares issued upon (i) the exercise of stock options, warrants or other
rights not issued pursuant to the Rights Agreement or in respect of options
or other contractually binding rights under employee benefit plans,
arrangements or contracts or (ii) the conversion or exchange of any
securities) other than upon the conversion or exchange of the Series 3 FON
Stock or Class A Common Stock, that number of additional shares of Series 3
FON Stock sufficient for the Class A Holders to maintain their aggregate
Committed Percentage as in effect immediately prior to the issuance of such
shares, such Shares to be purchased at a per share purchase price equal to
the Weighted Average Price paid for such shares of Sprint FON Common Stock
whose issuance gave rise to such Equity Purchase Right;
(c) except to the extent the Class A Holders exercise their rights
provided in clause (d) below and except under the circumstances described
in clauses (e) and (f)
-51-
below, if the Company shall issue (or sell from treasury) shares of Sprint
PCS Common Stock (including, without limitation, any CP Conversion Shares
or any shares issued upon (i) the exercise of stock options, warrants or
-
other rights not issued pursuant to the Rights Agreement or in respect of
options or other contractually binding rights under employee benefit plans,
arrangements or contracts or (ii) the conversion or exchange of any
--
securities) other than upon the conversion or exchange of the Series 3 PCS
Stock or Class A Common Stock, that number of additional shares of Series 3
PCS Stock sufficient for the Class A Holders to maintain their aggregate
Committed Percentage as in effect immediately prior to the issuance of such
shares, such Shares to be purchased at a per share purchase price equal to
(x) if the Class A Holders exercise such Equity Purchase Rights during the
-
45 day period after the date of issuance (or sale from treasury) of such
shares of Sprint PCS Common Stock (the "Initial Decision Period") giving
rise to the Equity Purchase Right, the Market Price of a share of Series 1
PCS Stock on the date of such issuance, or (y) if the Class A Holders
-
exercise such Equity Purchase Right after the Initial Decision Period, the
higher of (I) the Market Price of a share of Series 1 PCS Stock on the date
-
of such issuance giving rise to the Equity Purchase Right, and (II) the
--
Market Price of a share of Series 1 PCS Stock on the date of such exercise
by FT and DT of the Equity Purchase Right;
(d) except to the extent the Class A Holders exercise their rights
provided in clause (c) above, if (i) the Company shall issue (or sell from
treasury) CP Conversion Shares, (ii) the Series 2 PCS Stock shall convert
into Series 1 PCS Stock pursuant to Section 7.5(a) of Article SIXTH of the
Articles, (iii) the Voting Power of the PCS Preferred Stock shall increase
due to a transfer of the PCS Preferred Stock, or (iv) the CP Warrants shall
be exercised in exchange for the issuance of Sprint PCS Stock, that number
of additional shares of Series 3 FON Stock sufficient for the Class A
Holders to maintain their aggregate Committed Percentage as in effect
immediately prior to such event, such Shares to be purchased at a per share
purchase price equal to the Market Price of a share of Series 1 FON Stock
on the date of such issuance giving rise to the Equity Purchase Right;
provided, that (x) the Equity Purchase Rights under this Section 5.1(d) may
not be exercised unless prior to exercising such rights the Class A Holders
deliver a written certificate signed by their respective chief financial
officers to the effect that such Class A Holders have made a good faith
determination that it is not practicable or advisable at such time to
acquire shares of Series 1 FON Stock through open market purchases or other
purchases from third parties, and (y) the maximum aggregate amount of
Series 3 FON Stock which may be purchased pursuant to this Section 5.1(d)
(either in a single purchase or in the aggregate through purchases over
time) shall not exceed $300 million;
(e) if the Company shall issue (or sell from treasury) Voting
Securities other than Sprint FON Common Stock or Sprint PCS Common Stock,
or issue shares of Sprint FON Common Stock or Sprint PCS Common Stock
pursuant to employee benefit plans, arrangements or contracts (other than
in respect of the exercise of stock options, warrants
-52-
or other rights (except rights issued pursuant to the Rights Agreement) in
existence at any time on or before April 26, 1996 (including pursuant to
employee benefit plans) or upon the conversion of any securities
outstanding on or before April 26, 1996) other than upon the conversion or
exchange of the Class A Stock or the Series 2 PCS Stock, that number of
additional shares of Series 3 FON Stock and/or Series 3 PCS Common Stock,
as the case may be, sufficient for the Class A Holders to maintain their
aggregate Committed Percentage (and relative proportionate holdings of
Series 3 FON Stock and Series 3 PCS Stock) as in effect immediately prior
to the issuance of such Voting Securities, such Shares to be purchased at a
per share purchase price equal to (i) in the case of the Series 3 FON
-
Stock, the Market Price of a share of Series 1 FON Stock on the date of the
issuance which gave rise to such Equity Purchase Right and (ii) in the case
--
of the Series 3 PCS Stock, the Market Price of a share of Series 1 PCS
Stock on the date of the issuance which gave rise to such Equity Purchase
Right; and
(f) if the Company shall issue (or sell from treasury) shares of
Sprint FON Common Stock or Sprint PCS Common Stock in respect of the
exercise of stock options, warrants or other rights (except rights issued
pursuant to the Rights Agreement) in existence at any time on or before
April 26, 1996 (including pursuant to employee benefit plans) or upon the
conversion of any securities outstanding on or before April 26, 1996, other
than upon the conversion or exchange of the Class A Stock, that number of
additional shares of Series 3 FON Stock or Series 3 PCS Stock, as the case
may be, sufficient for the Class A Holders to maintain their aggregate
Committed Percentage as in effect immediately prior to the issuance of such
Voting Securities, such Shares to be purchased at a per share purchase
price equal to the applicable FT/DT Weighted Purchase Price.
Section 5.2. Notice. The Company shall deliver to each Class A Holder (a)
------ -
written notice of the proposed issuance of any Voting Securities not less than
15 days prior to such issuance, such notice to describe in reasonable detail the
expected Weighted Average Price for such Voting Securities and contain the
calculation thereof and (b) written notice of the issuance of such Voting
-
Securities within five days after such issuance, such notice to describe in
reasonable detail the Weighted Average Price, Market Price or FT/DT Weighted
Purchase Price for such Voting Securities and contain the calculation thereof,
provided that no such notices need be given in respect of (x) the issuance of CP
- -------- -
Conversion Shares or a transfer of shares of PCS Preferred Stock (provided that
--------
the Company shall give notice to the Class A Holders of the issuance of CP
Conversion Shares or a transfer of PCS Preferred Stock as soon as practicable
after the surrender of the related shares of Series 2 PCS Stock for conversion
or PCS Preferred Stock for transfer) or (y) in respect of the issuance of shares
-
of Sprint FON Stock or Sprint PCS Stock, as the case may be, to the holders of
securities of the Company in accordance with the terms thereof or grants or
exercises pursuant to qualified or non-qualified employee benefit plans,
arrangements or contracts, in each case as outstanding on January 31, 1996, or
dividend reinvestment plans or dividend reinvestment and stock purchase plans
or, in the case of securities issued after, and qualified or non-qualified
employee benefit plans, arrangements and contracts
-53-
adopted after, such date, if and only if the Class A Holders have been given
written notice of the issuance of such securities or the adoption of such plans,
arrangements and contracts thirty days prior to the date of such issuance or
adoption (such shares of Sprint FON Stock or Sprint PCS Stock, as applicable,
are collectively hereinafter referred to as the "Option Shares"). The Company
shall deliver to each Class A Holder, on the tenth Business Day of each calendar
quarter, written notice of the issuance during the preceding calendar quarter of
(i) Option Shares, such notice to describe in reasonable detail the Weighted
-
Average Price, Market Price or FT/DT Weighted Purchase Price for such Option
Shares and contain the calculation thereof and the securities or plans,
arrangements or contracts to which they relate and (ii) shares of Class A Stock
--
to each Class A Holder pursuant to Section 7.3(c) hereof, such notice to set
forth the purchase price for such shares of Class A Stock and the calculation
thereof.
Section 5.3. Manner of Exercise; Manner of Payment. The Class A Holders
-------------------------------------
may exercise their Equity Purchase Rights by written notice to the Company
delivered prior to the thirtieth day after the date of the related post-issuance
notice provided for in Section 5.2 hereof, or as provided in Section 7.3 or
7.17, as the case may be; provided that the Class A Holders may exercise their
Equity Purchase Rights arising under Section 5.1(c) with respect to an issuance
of Shares by written notice to the Company delivered prior to the second
anniversary of the date of such issuance. Payment for the additional Shares
purchased or subscribed for by Class A Holders which exercise their Equity
Purchase Rights shall be made as provided in Section 5.6 hereof or as otherwise
may be agreed by the Company and the exercising Class A Holder or Holders. The
total number of Shares issuable upon such exercise shall be issued and delivered
to the appropriate Class A Holder against delivery to the Company of the cash
and any notes therefor as provided in Section 5.6 hereof or as otherwise may be
agreed by the Company and the exercising Class A Holder or Holders. In
connection with the occurrence of any issuance that gives rise to Equity
Purchase Rights and to purchase rights of the Cable Partners under the PCS
Restructuring Agreement, Sprint shall use its reasonable efforts to coordinate
the exercise of purchase rights by the Cable Partners and FT and DT to avoid a
series of successive exercises of purchase rights triggered by a single
issuance.
Section 5.4. Adjustments. If the Class A Holders, upon exercise of their
-----------
Equity Purchase Rights, are issued Shares on a date after the date the related
Voting Securities are issued (a) the per share purchase price paid by the Class
-
A Holders shall be reduced to reflect the Fair Market Value of any dividend or
distribution made in respect of each such Voting Security prior to such issuance
and (b) such purchase price and the number of Shares purchased shall be
-
appropriately adjusted to reflect any stock split, stock dividend or other
combination or reclassification of the Class A Stock or Non-Class A Common
Stock, as the case may be, during such time, including the Recapitalization.
Section 5.5. Closing of Purchases. The closing of purchases of Shares
--------------------
pursuant to the exercise of Equity Purchase Rights by the exercising Class A
Holder shall take place on a date specified by the exercising Class A Holder,
which date shall be within 30 days after the exercise of such Equity Purchase
Rights, at the offices of King & Spalding, 1185 Avenue of the
-54-
Americas, New York, New York, at 10:00 a.m., New York City time, or at such
other date, time or place as the Company and such exercising Class A Holder may
otherwise agree. At such closing:
(a) the Company shall deliver, or cause to be delivered, to such
exercising Class A Holder, certificates representing the shares of Class A
Stock to be purchased by such exercising Class A Holder, in the name of
such holder, against payment of the purchase price therefor, as provided
below;
(b) such exercising Class A Holder shall deliver to the Company an
amount (the "Equity Purchase Price") equal to the product of (i) the
applicable price per share determined pursuant to Section 5.1 of this
Agreement and (ii) the number of Shares to be acquired by such exercising
Class A Holder.
Section 5.6. Terms of Payment. Payment for Shares purchased from the
----------------
Company pursuant to Section 5.1 hereof or Article VI hereof shall be made as
follows:
(a) if (i) the aggregate amount to be paid to the Company is less
than $200 million, (ii) the Equity Purchase Rights relating to such
purchase have arisen under Section 5.1(c) and such rights were exercised
after the Initial Decision Period or (iii) the Equity Purchase Rights
relating to such purchase have arisen under Section 5.1(d), payment shall
be made by the Class A Holder, or Qualified Stock Purchaser or Purchasers,
as the case may be, in cash by wire transfer to such account as the Company
may reasonably designate;
(b) if the amount to be paid to the Company is equal to or greater
than $200 million and less than $500 million, unless the Equity Purchase
Rights relating to such purchase have arisen under Section 5.1(c) and such
rights were exercised after the Initial Decision Period or the Equity
Purchase Rights relating to such purchase have arisen under Section 5.1(d),
not less than $200 million shall be paid in cash by the Class A Holders, or
Qualified Stock Purchaser or Purchasers, as the case may be, by wire
transfer to such account as the Company may reasonably designate and the
remainder, if any, shall be paid in two equal annual installments beginning
on the first anniversary of the date of such purchase, the respective
obligations of the Class A Holders, or Qualified Stock Purchaser or
Purchasers, as the case may be, to pay such installments to be evidenced by
Class A Holder Eligible Notes; or
(c) if the amount to be paid to the Company is equal to or greater
than $500 million, unless the Equity Purchase Rights relating to such
purchase have arisen under Section 5.1(c) and such rights were exercised
after the Initial Decision Period or the Equity Purchase Rights relating to
such purchase have arisen under Section 5.1(d), not less than $200 million
shall be paid in cash by the Class A Holders, or Qualified Stock Purchaser
or Purchasers, as the case may be, by wire transfer to such account as the
-55-
Company may reasonably designate within 30 days after such date of notice,
and the remainder shall be paid in Class A Holder Eligible Notes of the
Class A Holders, or Qualified Stock Purchaser or Purchasers, as the case
may be, one-third of such amount in Class A Holder Eligible Notes maturing
within one year after the date of such purchase, one-third of such amount
in Class A Holder Eligible Notes maturing within two years of such date,
and one-third of such amount in Class A Holder Eligible Notes maturing
within three years of such date.
Section 5.7. Suspension of Equity Purchase Rights. If at any time (a) the
------------------------------------
number of Voting Securities of the Company Beneficially Owned in the aggregate
by FT, DT and their Affiliates and Associates exceeds any of the applicable
Percentage Limitations as set forth in the Amended and Restated Standstill
Agreement (without regard to Section 2.3 of such agreement), or (b) the number
of Voting Securities of the Company Beneficially Owned in the aggregate by any
Qualified Stock Purchaser and its Affiliates and Associates exceeds any of the
applicable Percentage Limitations as set forth in the Qualified Stock Purchaser
Standstill Agreement applicable to such Qualified Stock Purchaser (without
regard to Section 2.2 of such agreement), the Company may by giving notice to
the Class A Holders whose aggregate Beneficial Ownership exceeds any of such
applicable Percentage Limitations specified in clauses (a) and (b) of this
Section 5.7 suspend the right of such Class A Holders to purchase additional
shares of any class or series of capital stock of the Company pursuant to this
Agreement or otherwise unless and until such purchase (including any purchase
pursuant to Section 7.3 or 7.17 hereof) would not result in the aggregate
Beneficial Ownership of the affected Class A Holders exceeding any of such
Percentage Limitations applicable to such Class A Holders.
Section 5.8. Record Date Blackout Purchases.
------------------------------
(a) During a Record Date Blackout Period, if a Class A Holder held a
Percentage Ownership Interest equal to at least 10% on the record date for
a stockholders' meeting or dividend payment which immediately preceded the
Record Date Blackout Period, such Class A Holders shall be entitled on a
pro rata basis with the other Class A Holders in accordance with their
respective Committed Percentages to purchase from the Company shares of
capital stock of the Company in an aggregate amount for all Class A Holders
equal to the Available Record Date Blackout Shares for such Record Date
Blackout Period. The class of shares to be purchased (i.e., Series 3 FON
Stock or Series 3 PCS Stock) shall be determined as set in Section 5.8(b)
below, and the price to be paid for such shares shall be (i) with respect
to Series 3 FON Stock, the Market Price of the Series 1 FON Stock as of the
date of purchase of the Series 3 FON Stock, and (ii) with respect to Series
3 PCS Stock, the Market Price of the Series 1 PCS Stock as of the date of
purchase of the Series 3 PCS Stock. Each Class A Holder shall be entitled
to exercise the rights under this Section 5.8(a) by written notice to the
Company delivered prior to the second Business Day before the record date
relating to such Record Date Blackout Period.
-56-
(b) The class of shares (i.e., Series 3 FON Stock or Series 3 PCS
Stock) to be issued to a Class A Holder under Section 5.8(a) with respect
to any Record Date Blackout Period shall be determined as follows:
(i) if the ratio of the Class A FON Shares owned by such Class
A Holder to the Class A PCS Shares owned by such Class A Holder
exceeds the then applicable ratio of the Votes attributable to all
outstanding Sprint FON Stock to the Votes attributable to all
outstanding Sprint PCS Stock, the Company shall issue shares of Series
3 PCS Stock pursuant to Section 5.8(a) until such time as the ratios
are equal, at which time the Company shall issue shares of Series 3
FON Stock and Series 3 PCS Stock in the same proportions as the then
applicable ratio of the Votes attributable to all outstanding Sprint
FON Stock to the Votes attributable to all outstanding Sprint PCS
Stock;
(ii) if the ratio of the Class A PCS Shares owned by such Class
A Holder to the Class A FON Shares owned by such Class A Holder
exceeds the then applicable ratio of the Votes attributable to all
outstanding Sprint PCS Stock to the Votes attributable to all
outstanding Sprint FON Stock, the Company shall issue shares of Series
3 FON Stock pursuant to Section 5.8(a) until such time as the ratios
are equal, at which time the Company shall issue shares of Series 3
FON Stock and Series 3 PCS Stock in the same proportions as the then
applicable ratio of the Votes attributable to all outstanding Sprint
FON Stock to the Votes attributable to all outstanding Sprint PCS
Stock; and
(iii) if the ratio of the Class A PCS Shares owned by such Class
A Holder to the Class A FON Shares owned by such Class A Holder equals
the then applicable ratio of the Votes attributable to all outstanding
Sprint PCS Stock to the Votes attributable to all outstanding Sprint
FON Stock, the Company shall issue shares of Series 3 FON Stock and
Series 3 PCS Stock in the same proportions as the then applicable
ratio of the Votes attributable to all outstanding Sprint FON Stock to
the Votes attributable to all outstanding Sprint PCS Stock.
(c) Shares purchased from the Company pursuant to this Section 5.8 shall
be purchased and paid for in accordance with Sections 5.4 and 5.5 (but not
Section 5.6) of this Agreement, mutatis mutandis, except that the closing of
------- --------
such purchase shall occur on the Business Day immediately preceding the record
date relating to such Record Date Blackout Period and at the closing the Class A
Holders shall pay the purchase price for the Shares so purchased in cash in
immediately available funds.
-57-
ARTICLE VI
HOLDINGS BY MAJOR COMPETITORS
-----------------------------
Until January 31, 2006, if a Major Competitor of FT or DT or of the Joint
Venture obtains a Percentage Ownership Interest of 20 percent or more as a
result of a Strategic Merger, the Class A Holders shall have the right to commit
within 30 days following the consummation of such Strategic Merger to purchase
from the Company (or its successor in such Strategic Merger) and, upon such
commitment, the Company or such successor shall be obligated to sell to the
Class A Holders, subject to Applicable Law and the receipt of any required
material Governmental Approvals, a number of shares of Class A Stock (which
shall consist of Series 3 FON Stock and Series 3 PCS Stock in the same
proportions as the Class A FON Shares and the Class A PCS Shares are owned by
the Class A Holders at the time of the event giving rise to the Class A Holders'
right to so commit) such that the aggregate Committed Percentage of the Class A
Holders shall be equal to the Percentage Ownership Interest of such Major
Competitor of FT or DT following consummation of such Strategic Merger, such
Shares to be purchased at a per share price equal to the applicable Weighted
Average Price paid by such Major Competitor, unless the Major Competitor has
only purchased Sprint FON Stock or Sprint PCS Stock (but not both), in which
event the Shares relating to the class not so purchased by the Major Competitor
shall be purchased at the Market Price on the date of the event giving rise to
the Class A Holders' right to so commit; provided that to the extent the
--------
purchase of Shares pursuant to this Article VI would violate the provisions of
Section 310, the Class A Holders shall have the right to assign to one or more
non-Alien Qualified Stock Purchasers the right to purchase such Shares from the
Company if such Class A Holders assigning such rights to a non-Alien Qualified
Stock Purchaser cause such Qualified Stock Purchaser to execute an undertaking
in accordance with Section 7.2 of this Agreement. Shares purchased from the
Company pursuant to this Article VI shall be purchased and paid in accordance
with Sections 5.4, 5.5 and 5.6 of this Agreement, mutatis mutandis.
------- --------
ARTICLE VII
COVENANTS
Section 7.1. Reservation and Availability of Capital Stock. The Company
---------------------------------------------
covenants and agrees that it will cause to be reserved and kept available, out
of the aggregate of its authorized but unissued shares of capital stock and its
issued shares of capital stock held in its treasury, the full number of shares
of
(a) Series 1 FON Stock then deliverable upon the conversion of
all outstanding Class A FON Shares,
-58-
(b) Series 1 PCS Stock then deliverable upon the conversion of
all outstanding Class A PCS Shares,
(c) Series 3 FON Stock then deliverable upon conversion of all
of the shares of Sprint FON Common Stock, and
(d) Series 3 PCS Stock then deliverable upon conversion of all
of the shares of Sprint PCS Common Stock,
in the case of each of clauses (a), (b), (c), (d), (e) and (f) that the Class A
Holders are permitted to acquire hereunder and under the FT/DT Restructuring
Agreement, the Articles and the Amended and Restated Standstill Agreement.
Section 7.2. Assignee Purchasers. As a condition to the assignment of
-------------------
rights to purchase shares of Class A Stock to a Qualified Stock Purchaser
pursuant to Article VI hereof or pursuant to the Amended and Restated Standstill
Agreement, FT and DT shall cause such Qualified Stock Purchaser to agree in
writing to be bound by the terms and conditions of this Agreement and a
Qualified Stock Purchaser Standstill Agreement pursuant to an instrument of
assumption substantially in the form of Exhibit C hereto and such Qualified
Stock Purchaser thereby shall become a party to this Agreement.
Section 7.3. Automatic Exercise of Rights with Respect to Option Shares;
----------------------------------------------------------
Method of Purchase.
- ------------------
(a) The Class A Holders, at their option, may lend to the
Company, and the Company shall borrow, in the aggregate up to an amount
specified in writing from time to time to the Company by the Class A
Holders, which amount has been determined in good faith by the Class A
Holders to be reasonably necessary to cover the purchase price payable by
them in connection with their exercise of equity purchase rights pursuant
to Section 5.1 with respect to Option Shares to be issued during the
succeeding three-month period (the "Exercise Amount"), and from time to
time at the option of the Class A Holders, the Class A Holders may lend to
the Company, and the Company shall borrow from the Class A Holders in the
aggregate (pro rata from each Class A Holder in accordance with its
relative Committed Percentage at the time of such borrowing), an amount
equal to the difference between the Exercise Amount and the amount then
outstanding on such loans from the Class A Holders. All loans hereunder
shall be evidenced by notes ("Company Stock Payment Notes") satisfactory in
form and substance to each party hereto.
(b) For so long as the Class A Holders are entitled to purchase
Shares pursuant to Section 5.1, subject to subsections (c), (e) and (f) of
this Section 7.3, each Class A Holder holding a Company Stock Payment Note
hereby agrees to exercise its rights to purchase from the Company, and
shall so purchase and the Company shall sell,
-59-
shares of Class A Common Stock, Series 3 FON Stock or Series 3 PCS Stock,
as the case may be, pursuant to Section 5.1 hereof upon, and simultaneously
with, any issuance of Option Shares.
(c) For so long as the Class A Holders are entitled to purchase
Shares pursuant to Section 5.1, subject to subsections (e) and (f) of this
Section 7.3, contemporaneously with each issuance of Option Shares,
(i) the Company shall either (A) deliver, or cause to be
delivered, to each Class A Holder a stock certificate bearing the
legends set forth in Section 2.8 of this Agreement, registered in
the name of such Class A Holder on the stock ledger of the
Company and representing the number of Shares which such Class A
Holder is entitled to purchase pursuant to Section 5.1 hereof as
a result of such issuance of Option Shares, or (B) cause the
Company's transfer agent to reflect on its books and records the
ownership by such Class A Holder of an additional number of
Shares representing the number of Shares which such Class A
Holder is entitled to purchase pursuant to Section 5.1 hereof as
a result of such issuance of Option Shares; and
(ii) pursuant to the terms of the Company Stock Payment
Notes, (x) the Company shall repay (in accordance with the
procedures set forth in clause (y), below) a portion of the
principal of such Company Stock Payment Notes equal to the amount
of the purchase price for such Shares (as determined in
accordance with Section 5.1 hereof) (a "Mandatory Payment
Amount"), provided that the Company shall hold such Mandatory
Payment Amount in trust for the benefit of such exercising Class
A Holder, subject to clause (y) below, and (y) simultaneously
with such payment, the Company shall apply such Mandatory Payment
Amount to the payment of such purchase price,
provided that no such purchase of Shares shall occur if the unpaid
principal amount of Company Stock Payment Notes held by the exercising
Class A Holder represents insufficient funds to pay such purchase price in
its entirety, in which case no reduction in the unpaid principal amount of
the Company Stock Payment Notes held by such exercising Class A Holder
shall occur.
(d) Subject to subsections (c), (e) and (f), the provisions of
this Section 7.3 shall be deemed to comply with all the requirements of
Article V hereof with respect to the exercise of such rights relating to
the issuance by the Company of Option Shares and no further notices must be
delivered or action be taken pursuant to this Agreement on the part of any
of the Class A Holders or the Company in order to effectuate the exercise
of such rights.
-60-
(e) This Section 7.3 shall become immediately inoperative and of
no force and effect with respect to any Class A Holder (i) upon delivery by
such Class A Holder to the Company of a notice to that effect, or (ii) if,
with respect to such Class A Holder, ownership of at least 10% of the
Voting Securities of the Company by such Class A Holder is not a necessary
condition or sufficient condition to obtaining a Treaty Benefit, as
determined in a manner identical to that set forth in Sections
2(a)(iii)(2), (3), (4) and (5) of ARTICLE FIFTH of the Articles with
respect to the termination of the provisions of Section 2(a)(iii)(1) of
such ARTICLE FIFTH provided that this Section 7.3 thereafter shall become
--------
operative and of full force and effect with respect to such Class A Holder
(i) if this Section 7.3 is not at that time of no force and effect pursuant
to clause (ii) of this Section 7.3(e), upon delivery by such Class A Holder
to the Company of a notice to that effect or (ii) if, with respect to such
Class A Holder, ownership of at least 10% of the Voting Securities of the
Company by such Class A Holder is a necessary condition or sufficient
condition to obtaining a Treaty Benefit, as determined in a manner
identical to that set forth in Sections 2(a)(iii)(2), (3), (4) and (5) of
ARTICLE FIFTH of the Articles with respect to the termination of the
provisions of Section 2(a)(iii)(1) of such ARTICLE FIFTH.
(f) The rights and obligations of the Class A Holders and the
Company under this Section 7.3 shall terminate upon the conversion of all
outstanding shares of Class A Stock as provided in Section 8.5 of ARTICLE
SIXTH of the Articles, provided that such termination shall not affect any
rights of the Class A Holders to payment under any Company Stock Payment
Notes then outstanding.
Section 7.4. Procedures for Redemption.
-------------------------
(a) If the aggregate percentage of Shares Beneficially Owned by
the Class A Holders is less than the percentage permitted under Section 310
to be Beneficially Owned by Aliens, the Company will not redeem any Shares
Beneficially Owned by the Class A Holders pursuant to Section 2.2 of
ARTICLE SIXTH of the Articles, provided that notwithstanding the foregoing,
the Company may, after consultation in good faith with each of the Class A
Holders to consider alternatives to such redemption, redeem Shares
Beneficially Owned by the Class A Holders if and to the extent that the
outstanding shares of Class A Stock represent Votes constituting greater
than 20% of the aggregate Voting Power of the Company, in each case at such
time, and if, after considering all reasonable alternatives, the failure to
redeem such Shares would have a material adverse effect on the Company as
reflected in a resolution certified to the Class A Holders by a
determination made in good faith by the Independent Directors.
(b)(i) If at any time the Company should invoke its right to
redeem its capital stock, the Company shall unless prohibited by Applicable
Law first designate for redemption capital stock other than shares of Class
A Stock, before designating for redemption any shares of Class A Stock.
-61-
(ii) If the Company issues Redemption Securities in full or partial
payment of the redemption price for shares of Class A Stock in a
circumstance in which Section 7.4(b)(i) hereof or Section 2.2(f) of ARTICLE
SIXTH of the Articles requires adjustment under Article IX of this
Agreement, then principal payments under such Redemption Securities shall
be adjusted to comply with the requirements of Article IX such that the
Class A Holders shall receive an amount equal to the principal amount of
such Redemption Securities.
(c) The Company shall take all reasonable measures to permit the
Class A Holders to obtain or maintain their Percentage Ownership Interest
in accordance with Applicable Laws of the United States, including applying
for a waiver of the restrictions on Alien ownership set forth in Section
310 if there is a reasonable possibility of obtaining such a waiver.
(d) (i) On or prior to April 26, 1999, the Company shall have the
right, at any time during which the Company has the right pursuant to
Section 7.4(a) hereof to redeem shares of Class A Stock in accordance with
Section 2.2 of ARTICLE SIXTH of the Articles and following a determination
by the Board of Directors that such redemption is necessary or advisable to
comply with the requirements of Section 310, to deliver a notice (a
"Required Sale Notice") to the Class A Holders requiring them to sell (a
"Surplus Shares Sale") that number of shares of Class A Stock (the "Surplus
Shares") necessary so that, immediately following such Surplus Shares Sale,
the aggregate Percentage Ownership Interest of the Class A Holders shall be
20% or such greater percentage specified in such notice as being necessary
or advisable for the Class A Holders to attain in order to comply with the
requirements of Section 310.
(ii) Upon receipt of the Required Sale Notice, the Class A Holders
shall sell the Surplus Shares in third party or open market sales. The
Surplus Shares Sale shall be conducted as promptly as practicable following
receipt of the Required Sale Notice, but in no event later than 120 days
following the date of receipt thereof, as extended day for day for each day
that such sales are actually delayed during such time period because (i)
the Surplus Shares cannot be sold due to the anti-fraud rules of the U.S.
securities laws, or (ii) the Company has delayed a proposed registration of
the Surplus Shares in accordance with Section 1.4 of the Amended and
Restated Registration Rights Agreement.
(iii) Each Class A Holder selling Surplus Shares shall, promptly upon
the conclusion of the Surplus Shares Sale, deliver to the Company a notice
stating that such Surplus Shares Sale has been concluded and indicating the
total amount of consideration received therefrom (the "Total Realized
Amount") for the Surplus Shares sold in such sale. Following receipt of
such notice, the Company shall pay (a "Supplementary Payment") to each
Class A Holder selling Surplus Shares the excess, if any, of the
-62-
aggregate Formula Price applicable to such Surplus Shares over the Total
Realized Amount (in each case as modified to comply with the requirements
of Section 9.2).
Section 7.5. Joint Action by FT and DT.
-------------------------
(a) The ratio of the aggregate Percentage Ownership Interest of
the overall Voting Power of the Company of one of FT or DT (and its
Qualified Subsidiaries) to the aggregate Percentage Ownership Interest of
the overall Voting Power of the Company of the other of FT or DT (and its
Qualified Subsidiaries) shall not be greater than 3 to 2 (the "Applicable
Overall Ratio").
(b) The ratio of the aggregate Percentage Ownership Interest of
the Voting Power represented by the Class A FON Shares of one of FT or DT
(and its Qualified Subsidiaries) to the aggregate Percentage Ownership
Interest of the Voting Power represented by the Class A FON Shares of the
other of FT or DT (and its Qualified Subsidiaries) shall not be greater
than 4 to 1 (the "Applicable FON Ratio"). In addition, the ratio of the
aggregate Percentage Ownership Interest of the Voting Power represented by
the Class A PCS Shares of one of FT or DT (and its Qualified Subsidiaries)
to the aggregate Percentage Ownership Interest of the Voting Power
represented by the Class A PCS Shares of the other of FT or DT (and its
Qualified Subsidiaries) shall not be greater than 4 to 1 (the "Applicable
PCS Ratio")
(c) FT and DT shall vote, and shall cause each of their
respective Qualified Subsidiaries to vote, all shares of Class A Stock held
by them as a single block on all matters.
Section 7.6. Compliance with Tax Laws. FT and DT shall furnish the
------------------------
Company or its paying agent any certification, information return, documentation
or other form that they are entitled to furnish and that is required under
Applicable Law to establish the applicability of, or relief or exemption from,
United States withholding taxes.
Section 7.7. Compliance with Security Requirements. To the extent that,
-------------------------------------
in connection with a United States government contract, an agency of the United
States government or a contractor requires the Company to restrict access to any
properties or information reasonably related to such contract on the basis of
Applicable Law with respect to United States national security matters and to
the extent that other Applicable Law requires the Company to restrict access to
any properties or information and, in accordance with such restrictions, access
to certain properties or information may not be given to any Director elected by
the Class A Holders without appropriate security clearance, such Director will
not be given access to such properties or information and may not participate in
deliberations of the Board of Directors or the board of directors of any of the
Company's Subsidiaries in which such information with respect to such properties
is disclosed. Any such exclusion shall be reflected accurately in the minutes of
such deliberations. Without limiting the generality of the foregoing, no Class A
Director shall (i)
-63-
have access to classified information or controlled unclassified information
entrusted to the Company except as permissible under the United States
Department of Defense Industrial Security Program (the "DISP") and applicable
United States laws and regulations, (ii) either seek or accept classified
information or controlled unclassified information entrusted to the Company,
except as permissible under the DISP or applicable United States laws and
regulations, or (iii) fail to advise any committee established by the Company to
monitor compliance with national security matters promptly if such Class A
Director reasonably believes any violations or attempted violations of, or
actions inconsistent with, Applicable Laws or contractual provisions relating to
national security matters have occurred.
Section 7.8. Major Issuances.
---------------
(a) At least 90 days before the consummation, directly or
indirectly, by the Company of any Major Issuance to be effected prior to
January 31, 2001, the Company shall deliver to each Class A Holder a notice
of such proposed Major Issuance. If there is a written notice signed by FT
and DT disapproving such proposed Major Issuance within 75 days of the
delivery of such notice and the Company nevertheless effects such Major
Issuance, the Class A Holders may elect to be released from the Transfer
Restrictions or elect to maintain an aggregate Committed Percentage of at
least ten percent as provided in subsection (b) of this Section 7.8.
(b) If the aggregate Committed Percentage of the Class A Holders
falls below ten percent because of a Major Issuance, in addition to Equity
Purchase Rights (if applicable), within 180 days after such Major Issuance
the Class A Holders may deliver to the Company a written notice in which
each Class A Holder commits to the Company to purchase from third parties,
within three years after such notice, a number of shares of Series 1 FON
Stock and/or Series 1 PCS Stock, as the case may be, sufficient to increase
the aggregate Committed Percentage of all Class A Holders to at least ten
percent based on the Voting Power of the Company as at the date of such
notice.
(c) Upon delivery of notice to the Company by each of the Class
A Holders following a Major Issuance committing each such Class A Holder
not to exercise its Equity Purchase Rights in respect of a Major Issuance
or its related rights provided in subsection (b) of this Section 7.8, the
Class A Holders shall automatically and without any further action on their
part be released from the Transfer Restrictions.
Section 7.9. Participation by Class A Directors in Certain Circumstances.
-----------------------------------------------------------
If the Joint Venture Agreement is terminated, the Company may exclude the Class
A Directors from deliberations of the Board of Directors that a majority of the
Independent Directors, in their good faith judgment, believe involve (a)
sensitive information relating to the Company and its relationship to FT or DT
or the Company's activities that are competitive with the activities of FT or
DT, or (b) matters in which such Class A Directors or the Class A Holders
otherwise have
-64-
conflicts of interest with the Company. Any such exclusion shall be reflected
accurately in the minutes of such deliberations.
Section 7.10. Spin-offs. Prior to consummating any Exempt Long Distance
---------
Asset Divestiture (before the end of the Restricted Period described in Section
3.1(a)(i) hereof) involving a Spin-off,
(a) the Company shall cause the entity whose equity interests
are to be distributed in such Spin-off to
(i) execute agreements with each of FT, DT and their
respective Qualified Subsidiaries at the time of such Spin-off no less
favorable to FT and DT than this Agreement, the Amended and Restated
Registration Rights Agreement, the Amended and Restated Standstill
Agreement, and the Amended and Restated Confidentiality Agreements
(the "Principal Investment Documents"); and
(ii) adopt bylaws no less favorable to FT and DT than the
Bylaws.
(b) each of FT, DT and their respective Qualified Subsidiaries that
are Class A Holders shall have been afforded a reasonable opportunity (and
in no event less than 90 days) to review and approve such Principal
Investment Documents, following delivery of such documents prepared in
substantial conformity with the requirements of this Section 7.10, provided
--------
that, unless FT, DT and their respective Qualified Subsidiaries shall have
delivered a notice to the Company, prior to the end of the forty-fifth day
following delivery of such documents, stating that such documents were not
prepared in substantial conformity with the requirements of this Section
7.10, such documents shall be deemed to have been prepared in substantial
conformity with this Section 7.10.
Following the expiration of the period provided in clause (b) of this Section
7.10, each of FT, DT and their respective Qualified Subsidiaries shall execute
and deliver the Principal Investment Documents, provided that if each such party
--------
does not so execute and deliver such Principal Investment Documents, the Company
shall nonetheless have the right to proceed with such Spin-off and the Company
shall have no obligation to provide to such Class A Holders securities of such
Spin-off Entity with rights no less favorable to the Class A Holders than those
applicable to the Class A Stock set forth in the Articles and the Bylaws. The
rights and obligations of the parties hereto under this Section 7.10 shall be
suspended or terminate, and cease to be of any further force or effect, (a) with
respect to any proposed Spin-off of a Subsidiary of the Company which, directly
or indirectly, owns Long Distance Assets, upon the suspension or termination, as
the case may be, of the rights of the Class A Holders under Article III hereof;
and (b) with respect to any proposed Spin-off of a Subsidiary of the Company
other than a Subsidiary which, directly or indirectly, owns Long Distance
Assets, upon the suspension or termination, as the case may be, of the rights of
the Class A Holders pursuant to Article VIII hereof.
-65-
Section 7.11. FCC Licenses. The Company shall not hold directly any
------------
Licenses from the FCC, if the holding of such Licenses by the Company would
result in a Material Adverse Effect on the Company and its Subsidiaries taken as
a whole.
Section 7.12. Issuance of Class A Stock. So long as the Class A Holders
-------------------------
own any shares of Class A Stock, the Company shall not issue any shares of Class
A Stock to any Person other than FT, DT, their respective Qualified Subsidiaries
and Qualified Stock Purchasers.
Section 7.13. Defeasance of Fifth Series. If at any time the consolidated
--------------------------
net worth of the Company and its Subsidiaries taken as a whole, determined in
accordance with Generally Accepted Accounting Principles as applied in the
Company's most recent financial statements included in a filing with the SEC,
shall be less than $1 billion, the Company shall defease the Fifth Series of the
Preferred Stock, by any means reasonably acceptable to FT and DT.
Section 7.14. Continuing Directors. The Company shall maintain at least
--------------------
seven Continuing Directors on the Board of Directors at all times.
Section 7.15. Long Distance Business. Except as otherwise required or
----------------------
permitted by this Agreement, the Other Investment Documents, the Articles or the
Joint Venture Documents, the Company shall not hold in the Local Exchange
Division, or any other division of the Company other than the Long Distance
Division assets which are primarily used, or held primarily for use, in or for
the benefit of the Long Distance Business, except for assets that in the
aggregate are not material to the operation of the Long Distance Business.
Section 7.16. Intellectual Property. In any sale of 51% of the Fair Market
---------------------
Value of the Long Distance Assets required by the last sentence of Section
3.1(a) hereof, the Company shall use its reasonable efforts to grant to such
Person a non-exclusive, perpetual and worldwide license upon commercially
reasonable terms to use all intellectual property not included in the definition
of Long Distance Assets owned or licensed by the Company which is reasonably
necessary to utilize fully the Long Distance Assets so purchased; provided,
however, that the Company shall have no obligation to license the "Sprint" brand
name or any other brand names, tradenames or trademarks owned or licensed by the
Company or any of its Subsidiaries.
Section 7.17. Automatic Exercise of Rights with Respect to CP Conversion
----------------------------------------------------------
Shares, etc.; Method of Purchase.
- --------------------------------
(a) For so long as the Class A Holders are entitled to purchase
Shares pursuant to Section 5.1, subject to subsections (b), (d) and (e) of
this Section 7.17, each Class A Holder hereby agrees to exercise its rights
to purchase from the Company, and shall so purchase and the Company shall
sell, shares of Series 3 PCS Stock pursuant to Section 5.1 hereof upon, and
simultaneously with, an Issuance Event that occurs during an Applicable CP
Period. For purposes of this Section 7.17, an "Issuance Event" means (i)
any issuance of CP Conversion Shares and (ii) an increase in the per share
vote of any
-66-
shares of PCS Preferred Stock upon a Transfer of such Shares, provided the
Company receives notice or otherwise learns of such Transfer.
(b) For so long as the Class A Holders are entitled to purchase
Shares pursuant to Section 5.1, subject to subsections (d) and (e) of this
Section 7.17, contemporaneously with each Issuance Event during an
Applicable CP Period,
(i) the Company shall either (A) deliver, or cause to be
delivered, to each Class A Holder a stock certificate bearing the
legends set forth in Section 2.8 of this Agreement, registered in the
name of such Class A Holder on the stock ledger of the Company and
representing the number of Shares which such Class A Holder is
entitled to purchase pursuant to Section 5.1 hereof as a result of
such Issuance Event, or (B) cause the Company's transfer agent to
reflect on its books and records the ownership by such Class A Holder
of an additional number of Shares representing the number of Shares
which such Class A Holder is entitled to purchase pursuant to Section
5.1 hereof as a result of such Issuance Event; and
(ii) the principal amount of the applicable FT/DT Stock Payment
Note shall be increased by the amount of the purchase price for such
Shares (as determined in accordance with Section 5.1 hereof), which
principal amount shall be repaid in accordance with the terms of such
FT/DT Stock Payment Note.
(c) Subject to subsections (b), (d) and (e), the provisions of this
Section 7.17 shall be deemed to comply with all the requirements of Article
V hereof with respect to the exercise of such rights relating to the
Issuance Event and no further notices must be delivered or action be taken
pursuant to this Agreement on the part of any of the Class A Holders or the
Company in order to effectuate the exercise of such rights.
(d) This Section 7.17 shall become immediately inoperative and of no
force and effect with respect to any Class A Holder (i) upon delivery by
such Class A Holder to the Company of a notice to that effect, or (ii) if,
with respect to such Class A Holder, ownership of at least 10% of the
Voting Securities of the Company by such Class A Holder is not a necessary
condition or sufficient condition to obtaining a Treaty Benefit, as
determined in a manner identical to that set forth in Sections
2(a)(iii)(2), (3), (4) and (5) of ARTICLE FIFTH of the Articles with
respect to the termination of the provisions of Section 2(a)(iii)(1) of
such ARTICLE FIFTH, provided that this Section 7.17 thereafter shall become
--------
operative and of full force and effect with respect to such Class A Holder
(i) if this Section 7.17 is not at that time of no force and effect
pursuant to clause (ii) of this Section 7.17(d), upon delivery by such
Class A Holder to the Company of a notice to that effect or (ii) if, with
respect to such Class A Holder, ownership of at least 10% of the Voting
Securities of the Company by such Class A Holder is a necessary condition
or sufficient condition to obtaining a Treaty Benefit, as determined in a
manner identical to that set forth in Sections 2(a)(iii)(2), (3), (4) and
(5) of ARTICLE FIFTH of
-67-
the Articles with respect to the termination of the provisions of Section
2(a)(iii)(1) of such ARTICLE FIFTH.
(e) The rights and obligations of the Class A Holders and the Company
under this Section 7.17 shall terminate upon the conversion of all
outstanding shares of Class A Stock as provided in Section 8.5 of ARTICLE
SIXTH of the Articles, provided that such termination shall not affect any
rights of the Company to payment under any FT/DT Stock Payment Notes then
outstanding.
Section 7.18. Notice of Record Dates. Unless the aggregate Committed
----------------------
Percentage of the Class A Holders falls below ten percent, (i) at least ten
Trading Days prior to the date so fixed, the Company shall give written notice
to FT and DT of each date fixed by the Board of Directors as the record date
(which shall be a Trading Day) for a meeting of the stockholders of the Company
or for the payment of dividends in respect of the Sprint FON Stock, the Sprint
PCS Stock or the Class A Common Stock, and (ii) at least ten Trading Days before
such a record date for a meeting of the stockholders of the Company or for the
payment of dividends, the Company shall provide FT and DT with a calculation
setting forth the respective votes to which each class and series of Sprint FON
Stock, Sprint PCS Stock and Class A Common Stock shall be entitled in connection
with such meeting of stockholders (or, with respect to a record date for the
payment of dividends, would be entitled if such record date were a record date
for a meeting of stockholders and not a record date for the payment of
dividends).
ARTICLE VIII
TERMINATION OF CERTAIN RIGHTS
-----------------------------
(a) The rights of the Class A Holders under Articles IV, V and VI
and Sections 7.3, 7.4, 7.8, 7.11 and 7.13 hereof shall terminate:
(i) if at any time the aggregate Committed Percentage of the Class A
Holders is below ten percent (x) for more than 180 consecutive days or (y)
immediately following a Transfer of Class A Stock by a Class A Holder;
(ii) upon the conversion of all of the outstanding shares of Class A
Stock into shares of Non-Class A Common Stock pursuant to Sections 8.5(b),
8.5(d) or 8.5(g) of ARTICLE SIXTH of the Articles;
(iii) upon a sale of all of the Venture Interests of the Sprint
Parties or the FT/DT Parties pursuant to Section 17.2, 17.3, 17.4, 19.3,
20.6 or 20.11 of the Joint Venture Agreement or on the date on which the
Joint Venture is otherwise terminated, in each case other than due to an
FT/DT Joint Venture Termination or a Corporation Joint Venture Termination,
provided that the rights of the Class A Holders under Sections 7.3,
-68-
7.8(b) and 7.13 hereof and Article V hereof shall terminate on the third
anniversary of the date of such sale or termination; or
(iv) upon the consummation of a transaction involving a Change of
Control within the meaning of clause (a) of the definition of Change of
Control.
(b) The rights of the Class A Holders under Articles III, IV, V and
VI hereof, and Sections 7.3, 7.8, 7.13, 7.15 and 7.17 hereof, shall terminate
upon (i) the conversion of all of the outstanding shares of Class A Stock into
shares of Non-Class A Common Stock, pursuant to Section 8.5(h) of ARTICLE SIXTH
of the Articles.
(c) The rights of the Class A Holders under Articles IV and VI hereof
and Sections 7.4, 7.8, 7.11 and 7.13 hereof shall be suspended and may not be
exercised during any period of time in which the rights provided to the Class A
Holders under Sections 8.2 (except Sections 8.2(a)(iii) and 8.2(c)), 8.3, 8.4,
8.5 and 8.6 of ARTICLE SIXTH of the Articles are suspended pursuant to Section
8.5(b) of ARTICLE SIXTH of the Articles.
(d) The rights of a Qualified Stock Purchaser under Articles IV, V
and VI hereof and Sections 7.3, 7.4, 7.8, 7.11, 7.13 and 7.17 hereof shall
terminate upon (i) the conversion of the outstanding shares of Class A Stock
owned by such Qualified Stock Purchaser into Non-Class A Common Stock, pursuant
to Section 8.5(k) of ARTICLE SIXTH of the Articles, and the rights of a
Qualified Stock Purchaser under Articles IV and VI hereof and Sections 7.4, 7.8,
7.11, 7.13 and 7.17 hereof shall be suspended and may not be exercised during
any period of time in which the rights provided to such Qualified Stock
Purchaser under Sections 8.2 (except Sections 8.2(a)(iii) and 8.2(c)), 8.3, 8.4,
8.5 and 8.6 of ARTICLE SIXTH of the Articles are suspended pursuant to Section
8.5(k) of ARTICLE SIXTH of the Articles.
ARTICLE IX
TAX INDEMNIFICATION
-------------------
Section 9.1. Indemnification for Company Purchase. If the Company
------------------------------------
purchases Shares held by a Class A Holder under Section 2.5 or 7.4 of this
Agreement or Section 2.2(f) of ARTICLE SIXTH of the Articles (a "Company
Purchase") in the context where such Sections provide that such purchase price
or redemption price be modified in accordance with this Article IX and as a
result thereof such Class A Holder (together with any Class A Holder described
in Section 9.2, an "Indemnitee") incurs U.S. federal income taxes in excess of
the U.S. federal income taxes it would have incurred had it sold such Shares to
a third party unrelated to the Company or its Affiliates at the applicable price
set forth in such Section or Article (such sale to an unrelated third party, an
"Unrelated Party Sale" and such excess U.S. federal income taxes, "Excess
Taxes"), the Company shall indemnify and hold harmless such Indemnitee on an
after-tax basis from and against such Excess Taxes. For purposes of the
preceding sentence, the
-69-
taxes that would have been incurred in an Unrelated Party Sale shall be net of
any refund of Taxes that would have been obtained had withholding under Section
1445 of the Code (or any successor provision) applied to such Unrelated Party
Sale. If Excess Taxes are imposed through withholding at the source, the Company
shall pay, in connection with the applicable Company Purchase, such additional
amounts as may be necessary such that after deduction or withholding of all such
Excess Taxes (including taxes imposed on such additional amounts), the
Indemnitee receives the amount it would have received had no such Excess Taxes
been imposed. The Company shall promptly furnish to the applicable Indemnitee an
appropriate receipt for the payment of any taxes imposed through withholding.
Section 9.2. Indemnification for Supplementary Payments. If the Company
------------------------------------------
makes a Supplementary Payment to a Class A Holder in respect of Shares disposed
of pursuant to Section 7.4(d) of this Agreement and as a result thereof such
Class A Holder incurs taxes in connection with the transaction contemplated in
such Section 7.4(d) in excess of the taxes it would have incurred had such Class
A Holder sold such Shares in an Unrelated Party Sale for the Formula Price in
the case of a transaction contemplated by Section 7.4 (such excess taxes,
"Section 9.2 Excess Taxes"), the Company shall indemnify and hold harmless such
Class A Holder on an after-tax basis from and against such Section 9.2 Excess
Taxes. For purposes of the preceding sentence, the taxes that would have been
incurred in an Unrelated Party Sale at the Formula Price shall be net of any
refund of taxes that would have been obtained had withholding under Section 1445
of the Code (or any successor provision) applied to such Unrelated Party Sale.
Section 9.3. Rebate of Indemnity. Within nine months after the end of
-------------------
each of the five consecutive taxable years of an Indemnitee starting with the
taxable year in which the Company has paid any amounts pursuant to Sections 9.1
or 9.2 in respect of such Indemnitee (a "Company Tax Payment"), such Indemnitee
shall determine whether it is in a better after-tax economic position as a
result of such Company Tax Payment than it would have been in had such
Indemnitee (a) in the case of a Company Tax Payment pursuant to Section 9.1,
sold the Shares purchased by the Company in an Unrelated Party Sale or (b) in
the case of a Company Tax Payment pursuant to Section 9.2, sold the Shares
disposed of pursuant to Section 7.4(d) of this Agreement in an Unrelated Party
Sale at the Formula Price (the amount of such difference in after-tax economic
positions under the preceding clauses (a) or (b), a "Windfall Benefit"). The
applicable Indemnitee shall promptly thereafter pay to the Company all or a
portion of such Windfall Benefit so that, after taking into account all prior
such payments and the tax consequences of making all such payments, such
Indemnitee is in the same after-tax economic position that it would have been in
had it (a) in the case of a Company Tax Payment pursuant to Section 9.1, sold
the Shares purchased by the Company in an Unrelated Party Sale or (b) in the
case of a Company Tax Payment pursuant to Section 9.2, sold the Shares disposed
of pursuant to Section 7.4(d) of this Agreement in an Unrelated Party Sale at
the Formula Price. In the case of a Windfall Benefit relating to an increase in
the tax basis in shares of Class A Stock of an Indemnitee attributable to a
Company Tax Payment (such Windfall Benefit, a "Basis Windfall"), the preceding
sentence shall be applied without regard to the five year time limitation
contained in the first sentence of this paragraph, provided, however, that no
-------- -------
Indemnitee shall be required
-70-
after the five year limit contained in the first sentence of this paragraph to
pay any amount to the Company on account of such Basis Windfall unless the
Company notifies such Indemnitee in writing of the existence of such Basis
Windfall within three months after the date such Indemnitee disposes of Shares
in a transaction in which such Basis Windfall results in a savings of U.S.
taxes. In no event shall the amount payable by any Indemnitee to the Company
under this paragraph exceed the amount of the Company Tax Payment. If any
applicable Indemnitee subsequently determines (within five years after the end
of the taxable year of the Company in which the Indemnitee has paid a Windfall
Benefit to the Company) that the amount of such Windfall Benefit has been
reduced because of an audit adjustment, disallowance of tax credits, a carryback
or carryforward of losses or credits or for any other reason, the Company shall
promptly after notification thereof make a reconciling payment to such
Indemnitee in an amount necessary so that such Indemnitee is in the same after-
tax economic position, after taking into account the tax consequences of such
reconciling payment, that such Indemnitee would have been in had it (a) in the
case of a Company Tax Payment pursuant to Section 9.1, sold the Shares purchased
by the Company in an Unrelated Party Sale or (b) in the case of a Company Tax
Payment pursuant to Section 9.2, sold the Shares disposed of pursuant to Section
7.4(d) of this Agreement in an Unrelated Party Sale at the Formula Price.
Section 9.4. Exclusions from Indemnity. Notwithstanding Sections 9.1 and
-------------------------
9.2, the Company shall not be required to indemnify an Indemnitee under this
Agreement for any portion of Excess Taxes or Section 9.2 Excess Taxes to the
extent that such portion would not be imposed on such Indemnitee but for one or
more of the following events:
(a) the failure of such Indemnitee to qualify for the benefits
of the applicable income tax treaty between the United
States and the country of the Indemnitee's residence;
(b) the failure of such Indemnitee to supply the Company with
any form or other similar document that it is entitled to
supply and that is required to obtain or claim available
benefits of an applicable income tax treaty or relief that
may be provided under the Code with respect to Excess Taxes
or Section 9.2 Excess Taxes, provided, that this Section
9.4(b) shall not apply unless the Company requests from such
Indemnitee such form or similar document in writing within a
reasonable period of time before the relevant Company
Purchase or Supplementary Payment takes place;
(c) the imposition of Excess Taxes or Section 9.2 Excess Taxes
on a transferee or assignee of an original Class A Holder's
Shares, but only to the extent the amount of Excess Taxes or
Section 9.2 Excess Taxes required to be paid by the Company
exceeds the amount of Excess Taxes or Section 9.2 Excess
Taxes that would have been required to be paid by the
Company absent any transfer of such original Class A
Holder's Shares, provided, that this Section 9.4(c) shall
--------
not apply if the transferee or
-71-
assignee is a Qualified Subsidiary and has held such Shares
for at least six months prior to the date such Qualified
Subsidiary first undertook those discussions or negotiations
that resulted in the Company's right to purchase such Shares
pursuant to Section 2.5, has held such Shares prior to the
date that the FCC has requested that the Company reduce its
foreign ownership pursuant to Section 310 in the case of a
transaction under Section 7.4;
(d) penalties arising solely from actions taken by such
Indemnitee in connection with unrelated transactions; and
(e) the Excess Taxes or Section 9.2 Excess Taxes are imposed on
the Company Purchase or Supplementary Payment solely because
such Indemnitee conducts unrelated activities in the United
States sufficient to cause such Indemnitee to be treated as
engaged in a trade or business in the United States for U.S.
federal income tax purposes and such Indemnitee's income or
gain from the Company Purchase or Supplementary Payment to
be treated as effectively connected with that U.S. trade or
business.
Section 9.5. Consequences of Assignment. If the Company assigns to a
--------------------------
third party its rights hereunder to effect a Company Purchase, the Company shall
remain liable (and such third party shall not be liable) under the provisions of
this Article with respect to the purchase or Supplementary Payment by the third
party (taking into account the actual tax effect to the Indemnitee of such third
party purchase or Supplementary Payment in determining the taxes incurred in
excess of the taxes the Indemnitee would have incurred had the shares been sold
in an Unrelated Party Sale), and the "Excess Taxes" and Section 9.2 Excess Taxes
in such determination shall be computed by taking into account not only U.S.
taxes but also any taxes imposed by any other jurisdiction to the extent such
taxes would not have been imposed absent such an assignment.
Section 9.6. Verification. The chief tax officer of any party hereto
------------
making or seeking a payment pursuant to this Article IX shall furnish to the
other applicable party hereto a written statement describing in reasonable
detail the taxes which are the subject of such payment and the computation of
the amount so payable. In case of any dispute among the applicable parties
hereto regarding the amount of any payment under this Article IX, the applicable
parties shall negotiate in good faith to resolve such dispute. Notwithstanding
Section 11.5(b) of this Agreement, if such dispute cannot be resolved by the
parties hereto, then such dispute shall be referred to an independent accounting
firm of international standing reasonably acceptable to the parties hereto in
question. The decision of such accounting firm shall be conclusive absent
manifest error. The cost of employing such accounting firm shall be borne in
equal parts by the parties to such dispute.
-72-
Section 9.7. Contest Rights. (a) Each Indemnitee shall exert its best
--------------
efforts to inform the Company, either orally or in writing, of any requests
received by such Indemnitee for information from, or potential claims by, the
U.S. Internal Revenue Service regarding the U.S. taxation of a Company Purchase
or Supplementary Payment.
(b) If the Company provides an Indemnitee with a written statement
regarding the manner in which the Company shall characterize a Company Purchase
or Supplementary Payment for U.S. Federal income tax purposes, such Indemnitee
shall thereafter treat such Company Purchase or Supplementary Payment for U.S.
Federal income tax purposes in a manner consistent with such characterization by
the Company, provided that such Indemnitee shall have no such obligation of
consistent characterization if such Indemnitee receives an opinion from U.S. tax
counsel of national standing to the effect that such characterization by the
Indemnitee lacks substantial authority.
(c) If an Indemnitee receives written notice from the U.S. Internal
Revenue Service (including, without limitation, in a preliminary or "30-day"
letter) that such Indemnitee is liable for Excess Taxes or Section 9.2 Excess
Taxes, such Indemnitee shall promptly notify the Company in writing of such fact
and shall permit the Company to assume control over the handling, disposition
and settlement of the Excess Taxes issue or Section 9.2 Excess Taxes issue at
the examination, administrative and judicial levels in the U.S. Such Indemnitee
shall be entitled to participate in all meetings with the U.S. Internal Revenue
Service relating to the Excess Taxes issue or Section 9.2 Excess Taxes issue and
to review and consult on all submissions to the U.S. Internal Revenue Service or
any court with respect to the Excess Taxes issue or Section 9.2 Excess Taxes
issue. Such Indemnitee shall cooperate with the Company, as reasonably
requested, in connection with any such examination or administrative or judicial
proceedings, including, without limitation, by way of signing and filing
protests, petitions, notices of appeal and court pleadings and executing powers
of attorney to enable the Company to represent the interests of the Indemnitee
in, and to assume control over, relevant examinations or proceedings insofar as
they relate to Excess Taxes or Section 9.2 Excess Taxes; provided, however, that
expenses incurred by such Indemnitee in connection with actions taken at the
request of the Company shall be reimbursed to such Indemnitee by the Company on
an after-tax basis. The Company shall be entitled to employ counsel of its
choice in connection with any of the matters described in this Article and shall
bear all expenses associated with the employment of such counsel. The provisions
of this paragraph shall also apply to a claim for refund of Excess Taxes or
Section 9.2 Excess Taxes paid or withheld. Notwithstanding the foregoing
provisions of this Section 9.7(c), if the Company assumes control over an Excess
Taxes issue or Section 9.2 Excess Taxes issue at the examination, administrative
or judicial levels, the Company shall not be entitled to settle or compromise
any such claim except upon the written consent of the applicable Indemnitee. If
an applicable Indemnitee fails to grant such consent, the Company shall not be
required to pay any amounts in excess of the amount it would have paid had such
Indemnitee consented to such settlement or compromise, and such Indemnitee shall
bear any further cost or expense of contesting such Excess Taxes issue or
Section 9.2 Excess Taxes issue.
-73-
ARTICLE X
U.S. REAL PROPERTY TAX MATTERS
------------------------------
Section 10.1. Notification. The Company shall notify each Class A Holder
------------
whenever a FIRPTA Determination shall be required under the applicable rules of
the Code and regulations thereunder. Such notification shall, to the extent
practical, be made sufficiently far in advance of any date on which the actions
described in Section 10.3 will be necessary so as to allow for reasonable time
for the performance of the legal, accounting and valuation analyses described in
this Article X.
Section 10.2. Control of FIRPTA Determination. If one or more Class A
-------------------------------
Holders notify the Company that they desire to control a FIRPTA Determination
(each a "Notifying Class A Holder"):
(a) the Company shall cooperate fully with such Notifying
Class A Holders and their legal, accounting and valuation advisors with
respect to such FIRPTA Determination. Such cooperation shall include
making available information and knowledgeable personnel as reasonably
requested as well as making reasonable representations necessary for such
advisors to render their opinions and judgments described in this Article
X, to the extent that the Company may make such representations in its
good faith judgment. The Company shall not, however, be obligated to make
any representations as to the fair market value of assets; and
(b) the Company shall for purposes of such FIRPTA
Determination classify as non-real property each of the assets identified
as non-real property on Exhibit D to the 1996 Stockholders' Agreement,
provided that there has been no change in law, official interpretation or
guidance (a "Change in Law") with respect to such classification occurring
after the date hereof. The Company and the Notifying Class A Holders shall
endeavor to agree as to the classification of any assets not described as
non-real property on Exhibit D to the 1996 Stockholders' Agreement (and as
to any assets so described but as to which there has been a Change in Law)
but, in the absence of such agreement, the Company shall accept the
reasonable opinion (containing analysis, if appropriate) of nationally
recognized accountants or tax counsel chosen by such Notifying Class A
Holders as to whether it is reasonable to assert that a given asset should
or should not be considered to constitute real property for purposes of
such FIRPTA Determination.
Section 10.3. Issuance of Certification; Related Matters. In connection
------------------------------------------
with any FIRPTA Determination referred to in Section 10.2, the Company shall,
upon the presentation by the Notifying Class A Holders of a reasonable opinion
(containing analysis, if appropriate) of nationally recognized accountants or
tax counsel to the effect that it is reasonable to assert that the Company is
not, and has not at any time during the preceding five years (or shorter period
-74-
during which any such Notifying Class A Holders held Shares) been, a U.S. real
property holding corporation as defined under the Code and the regulations
thereunder and as tested on the determination dates described in U.S. Treasury
Regulation (S) 1.897-2(c) (or any successor provision):
(a) in the case of a disposition by a Notifying Class A Holder of
Shares to a third party (related or unrelated), issue the statement
described in U.S. Treasury Regulation (S) 1.897-2 (or any successor
provision) indicating that the Shares do not constitute a U.S. real
property interest (as defined in the Code and the regulations thereunder)
and timely provide appropriate notice to the U.S. Internal Revenue Service;
and
(b) in the case of any redemption or exchange (including a deemed
exchange) by the Company of Shares held by any such Notifying Class A
Holders, comply with all requirements described in this Article X and
refrain from withholding any U.S. tax from the proceeds of such redemption
or exchange pursuant to Section 1445 of the Code (or any successor
provision).
In rendering any opinion described in this Section 10.3, the
accountants or tax counsel for the Notifying Class A Holders shall be entitled
to rely in their discretion upon advice of nationally recognized valuation
experts as they deem appropriate and upon information and representations
provided by the Company pursuant to this Article X.
Section 10.4. Advisory Costs. The Company shall pay 50% of all reasonable
--------------
costs of legal, accounting and valuation services incurred by any Notifying
Class A Holder in connection with any FIRPTA Determination.
Section 10.5. Indemnity. Each Notifying Class A Holder with respect to any
---------
FIRPTA Determination shall severally, but not jointly, reimburse the Company on
an after-tax basis for (a) any tax under Section 897 of the Code or any
successor provision (a "FIRPTA Tax") of such Notifying Class A Holder that the
U.S. Internal Revenue Service collects from the Company, including any
applicable interest and penalties imposed with respect to such FIRPTA Tax, and
(b) any FIRPTA Tax (including applicable interest and penalties) of the third
party described in Section 10.3(a) collected from or imposed on the Company, or
any penalties or interest imposed directly on the Company, with respect to such
Notifying Class A Holder, but in the case of clause (b) of this Section 10.5,
such reimbursement obligation shall apply only to taxes, interest and penalties
arising as a result of the Company's taking any action under Section 10.2(b) or
Section 10.3 hereof with respect to such Notifying Class A Holder based upon the
opinion provided by such Notifying Class A Holder pursuant to Section 10.2 or
10.3.
Section 10.6. Contest Rights. (a) The Company shall exert its best efforts
--------------
to inform each Class A Holder, either orally or in writing, of any requests
received by the Company for
-75-
information from, or potential claims by, the U.S. Internal Revenue Service
regarding any matter that could result in liability to any Class A Holder under
Section 10.5 hereof.
(b) If the Company receives written notice from the U.S. Internal
Revenue Service (including, without limitation, in a preliminary or "30-
day" letter) regarding any item for which any Class A Holder may be liable
under Section 10.5 hereof, the Company shall promptly notify such Class A
Holder in writing of such fact and shall permit the Class A Holders so
notified to assume control over the handling, disposition and settlement of
any such matter at the examination, administrative and judicial levels. The
Company shall be entitled to participate in all meetings with the U.S.
Internal Revenue Service relating to such issue and to review and consult
on all submissions to the U.S. Internal Revenue Service or any court with
respect to any such issue. The Company shall cooperate with such Class A
Holders, as reasonably requested, in connection with any such examination
or administrative or judicial proceedings, including, without limitation,
by way of signing and filing protests, petitions, notices of appeal and
court pleadings and executing powers of attorney to enable such Class A
Holders to represent the interests of the Company in, and to assume control
over, relevant examinations or proceedings insofar as they relate to the
issues described in this Article; provided, however, that expenses incurred
by the Company in connection with actions taken at the request of the Class
A Holders shall be reimbursed to the Company by such Class A Holders on an
after-tax basis. The Class A Holders shall be entitled to employ counsel of
their choice in connection with any of the matters described in this
Article X and shall bear all expenses associated with the employment of
such counsel. The provisions of this paragraph shall also apply to any
claim for a refund of taxes paid or withheld in connection with the matters
described in this Article X. Notwithstanding the foregoing provisions of
this Section 10.6(b), if any Class A Holders assume control over any issue
concerning the liability of the Company described in this Article at the
examination, administrative or judicial levels, such Class A Holders shall
not be entitled to settle or compromise any such claim except upon the
written consent of the Company. If the Company fails to grant such consent,
such Class A Holders shall not be required to pay any amounts pursuant to
Section 10.5 in excess of the amounts they would have paid had the Company
consented to such settlement or compromise, and the Company shall bear any
further cost or expense of contesting any such issue.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1. Notices. All notices and other communications required or
-------
permitted by this Agreement shall be made in writing in the English language and
any such notice or communication shall be deemed delivered when delivered in
person, transmitted by telex or telecopier, or seven days after it has been sent
by air mail, as follows:
-76-
FT: 6 place d'Alleray
75505 Paris Cedex 15
France
Attn: Group Executive Vice President Resources
Tel: (33-1) 44-44-84-72
Fax: (33-1) 44-44-01-51
with a copy to:
6 place d'Alleray
75505 Paris Cedex 15
France
Attn: General Counsel
Tel: (33-1) 44-44-84-76
Fax: (33-1) 44-44-02-13
and with a copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
U.S.A.
Attn: Alfred J. Ross, Jr., Esq.
Tel: (212) 848-4000
Fax: (212) 848-8434
DT: Friedrich-Ebert-Allee 140
D-53113 Bonn
Germany
Tel: 49-228-181-9000
Fax: 49-228-181-8970
Attn: Chief Executive Officer
with a copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
U.S.A.
Attn: Robert P. Davis, Esq.
Tel: (212) 225-2000
Fax: (212) 225-3999
Sprint: 2330 Shawnee Mission
Parkway, East Wing
Westwood, Kansas 66205
U.S.A.
Attn: General Counsel
-77-
Tel: (913) 624-8440
Fax: (913) 624-8426
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
U.S.A.
Attn: Bruce N. Hawthorne, Esq.
Tel: (404) 572-4903
Fax: (404) 572-5146
The parties to this Agreement shall promptly notify each other in the manner
provided in this Section 11.1 of any change in their respective addresses. A
notice of change of address shall not be deemed to have been given until
received by the addressee. Communications by telex or telecopier also shall be
sent concurrently by mail, but shall in any event be effective as stated above.
Section 11.2. Waiver, Amendment, etc. This Agreement may not be amended or
----------------------
supplemented, and no waivers of or consents to departures from the provisions
hereof shall be effective, unless set forth in a writing signed by, and
delivered to, all the parties hereto. No failure or delay of any party in
exercising any power or right under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power.
Section 11.3. No Partnership. This Agreement is not intended, nor should
--------------
anything herein be construed, to create the relationship of partners, joint
venturers, principal and agent, or other fiduciary relationship among the Class
A Holders and the Company. Except as expressly set forth herein, none of the
Class A Holders will have any authority to represent or to bind the other Class
A Holder or Holders or the Company in any manner whatsoever, and each Class A
Holder will be solely responsible and liable for its own acts.
Section 11.4. Binding Agreement; Assignment; No Third Party Beneficiaries.
-----------------------------------------------------------
This Agreement will be binding upon and inure to the benefit of the parties
hereto and their successors and permitted assigns. Except as set forth herein
and by operation of law, no party to this Agreement may assign or delegate all
or any portion of its rights, obligations or liabilities under this Agreement
without the prior written consent of each other party to this Agreement. Nothing
expressed or implied herein is intended or will be construed to confer upon or
to give to any third party any rights or remedies by virtue hereof.
Section 11.5. GOVERNING LAW; DISPUTE RESOLUTION; EQUITABLE RELIEF. (a)
---------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (REGARDLESS OF
-78-
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW).
(b) EXCEPT AS PROVIDED IN ARTICLE IX HEREOF, EACH PARTY TO THIS AGREEMENT
IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING BY IT
AGAINST ANY OF THE OTHER PARTIES WITH RESPECT TO ITS RIGHTS, OBLIGATIONS OR
LIABILITIES UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL
BE BROUGHT BY SUCH PARTY ONLY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR, IN THE EVENT (BUT ONLY IN THE EVENT) SUCH
COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION OVER SUCH ACTION, SUIT OR
PROCEEDING, IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY, AND
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO THE
JURISDICTION OF EACH OF THE AFORESAID COURTS IN PERSONAM, WITH RESPECT TO ANY
SUCH ACTION, SUIT OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, CLAIMS FOR
INTERIM RELIEF, COUNTERCLAIMS, ACTIONS WITH MULTIPLE DEFENDANTS AND ACTIONS IN
WHICH SUCH PARTY IS IMPLED). EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A JURY TRIAL IN ANY LEGAL ACTION, SUIT OR
PROCEEDING WITH RESPECT TO, OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT. EACH OF FT AND DT HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM
(IN SUCH CAPACITY, THE "PROCESS AGENT"), WITH AN OFFICE AT 1633 BROADWAY, NEW
YORK, NEW YORK 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND
ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDINGS WITH RESPECT TO THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED
COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT, PROVIDED THAT IN THE CASE
OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE
SHALL ALSO DELIVER A COPY THEREOF TO FT AND DT IN THE MANNER PROVIDED IN SECTION
11.1. FT AND DT SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO CONTINUE SAID
APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT FT AND
DT WILL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES
IN NEW YORK, NEW YORK. IN THE EVENT OF THE TRANSFER OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS AND BUSINESS OF THE PROCESS AGENT TO ANY OTHER CORPORATION BY
CONSOLIDATION, MERGER, SALE OF ASSETS OR OTHERWISE, SUCH OTHER CORPORATION SHALL
BE SUBSTITUTED HEREUNDER FOR THE PROCESS AGENT WITH THE SAME EFFECT AS IF NAMED
HEREIN IN PLACE OF CT CORPORATION SYSTEM. EACH OF FT AND DT FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
AIRMAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS
-79-
ADDRESS SET FORTH IN THIS AGREEMENT, SUCH SERVICE OF PROCESS TO BE EFFECTIVE
UPON ACKNOWLEDGMENT OF RECEIPT OF SUCH REGISTERED MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW. EACH OF FT AND DT EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING
WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF NEW YORK AND
OF THE UNITED STATES OF AMERICA.
(c) EACH PARTY HERETO AGREES THAT MONEY DAMAGES WOULD NOT BE A SUFFICIENT
REMEDY FOR THE OTHER PARTIES HERETO FOR ANY BREACH OF THIS AGREEMENT BY IT, AND
THAT IN ADDITION TO ALL OTHER REMEDIES THE OTHER PARTIES HERETO MAY HAVE, THEY
SHALL BE ENTITLED TO SPECIFIC PERFORMANCE AND TO INJUNCTIVE OR OTHER EQUITABLE
RELIEF AS A REMEDY FOR ANY SUCH BREACH TO THE EXTENT PERMITTED BY APPLICABLE
LAW. EACH PARTY HERETO AGREES NOT TO OPPOSE THE GRANTING OF SUCH RELIEF IN THE
EVENT A COURT DETERMINES THAT SUCH A BREACH HAS OCCURRED, AND TO WAIVE ANY
REQUIREMENT FOR THE SECURING OR POSTING OF ANY BOND IN CONNECTION WITH SUCH
REMEDY.
Section 11.6. Severability. The invalidity or unenforceability of any
------------
provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by Applicable Law, each party hereto
waives any provision of Applicable Law that renders any provision hereof
prohibited or unenforceable in any respect. If any provision of this Agreement
is held to be unenforceable for any reason, to the extent permitted by
applicable Law it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties to this Agreement to the extent possible.
Section 11.7. Translation. The parties hereto have negotiated this
-----------
Agreement in the English language, and have prepared successive drafts and the
definitive texts of this Agreement in the English language. For purposes of
complying with the loi n 94-665 du 4 aout 1994 relative a l'emploi de la langue
------------------------------------------------------------
francaise, the parties hereto have prepared a French version of this Agreement,
- ---------
which French version was executed and delivered simultaneously with the
execution and delivery of the English version hereof, such English version
having likewise been executed and delivered. The parties deem the French and
English versions of this Agreement to be equally authoritative.
Section 11.8. Table of Contents; Headings; Counterparts. The table of
-----------------------------------------
contents and the headings in this Agreement are for convenience of reference
only and will not affect the construction of any provisions hereof. This
Agreement may be executed in one or more counterparts, each of which when so
executed and delivered will be deemed an original but all of which will
constitute one and the same Agreement.
-80-
Section 11.9. Entire Agreement. This Agreement and the Other Investment
----------------
Documents embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein, provided that this provision
shall not abrogate (a) any other written agreement between the parties hereto,
executed simultaneously with this Agreement, or (b) the understanding set forth
in Item 1 of Schedule 2 to that certain memorandum dated June 22, 1995 among the
Company, FT and DT. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter, except
as so provided in the preceding sentence.
Section 11.10. Waiver of Immunity. Each of FT and DT agrees that, to the
------------------
extent that it or any of its property is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise based upon its status as an
agency or instrumentality of government from any legal action, suit or
proceeding or from set off or counterclaim relating to this Agreement from the
jurisdiction of any competent court described in Section 11.5, from service of
process, from attachment prior to judgment, from attachment in aid of execution
of a judgment, from execution pursuant to a judgment or an arbitral award or
from any other legal process in any jurisdiction, it, for itself and its
property expressly, irrevocably and unconditionally waives, and agrees not to
plead or claim, any such immunity with respect to such matters arising with
respect to this Agreement or the subject matter hereof or thereof (including any
obligation for the payment of money). Each of FT and DT agrees that the waiver
in this provision is irrevocable and is not subject to withdrawal in any
jurisdiction or under any statute, including the Foreign Sovereign Immunities
Act, 28 U.S.C. (P) 1602 et seq. The foregoing waiver shall constitute a present
waiver of immunity at any time any action is initiated against FT or DT with
respect to this Agreement.
Section 11.11. Acquisitions by FT and DT of Stock from Third Parties.
-----------------------------------------------------
Except as provided by Section 5.7, nothing in this Agreement shall prohibit FT
or DT from acquiring shares of Sprint PCS Common Stock or Sprint FON Common
Stock from third parties other than the Company; provided, however, that such
-------- -------
purchases may be made only if permitted by the Amended and Restated Standstill
Agreement.
Section 11.12. Effect of Conversion. (a) If all of the shares of Class A
--------------------
Stock shall have been converted into Non-Class A Common Stock, pursuant to
Section 8.5 of ARTICLE SIXTH of the Articles, each share of Class A Stock to
have been issued by the Company thereafter pursuant to this Agreement shall (i)
in the case of Class A Common Stock, instead be issued as one duly issued, fully
paid and nonassessable share of Sprint FON Common Stock, (ii) in the case of
Series 3 FON Stock, instead be issued as one duly issued, fully paid and
nonassessable share of Series 1 FON Stock, and (iii) in the case of Series 3 PCS
Stock, instead be issued as one duly issued, fully paid and nonassessable share
of Series 1 PCS Stock.
(b) If all of the shares of Class A Stock held by a Qualified Stock
Purchaser shall have been converted into Non-Class A Common Stock, pursuant to
Section 8.5 of ARTICLE SIXTH of the Articles, each share of Class A Stock to
have been issued by the Company to such
-81-
Qualified Stock Purchaser pursuant to this Agreement shall (i) in the case of
Class A Common Stock, instead be issued as one duly issued, fully paid and
nonassessable share of Sprint FON Common Stock, (ii) in the case of Series 3 FON
Stock, instead be issued as one duly issued, fully paid and nonassessable shares
of Series 1 FON Stock, and (iii) in the case of Series 3 PCS Stock, instead be
issued as one duly issued, fully paid and nonassessable shares of Series 1 PCS
Stock.
Section 11.13. Continuing Director Approval. Where Continuing Director
----------------------------
approval is otherwise explicitly required under this Agreement with respect to a
transaction or determination on the part of the Company, such approval shall not
be required if (a) the Fair Price Provisions have been deleted in their
entirety, (b) the Fair Price Provisions have been modified so as explicitly not
to apply to any Class A Holder, or they have been modified in a manner
reasonably satisfactory to FT and DT so as explicitly not to apply to any
transactions with any Class A Holder contemplated by this Agreement or by the
Other Investment Documents or the Articles, (c) the transaction in question is
not a "Business Combination" within the meaning of the Fair Price Provisions, or
(d) the Class A Holder that is a party to the transaction, along with its
Affiliates (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as in effect on October 1, 1982) and Associates (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as in effect on
October 1, 1982), is not an "Interested Stockholder" or an "Affiliate" of an
"Interested Stockholder" within the meaning of the Fair Price Provisions. Where
this Agreement provides that Continuing Director approval is explicitly required
to undertake a transaction or make a determination on the part of the Company,
the Company shall not undertake such transaction or make such determination
unless it first delivers a certificate, signed by a duly authorized officer of
the Company, to each of FT and DT, certifying that such approval either has been
obtained or is not required as set forth in the preceding sentence, and FT and
DT shall be entitled to rely on such certificate.
-82-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SPRINT CORPORATION
By: /s/ Don A. Jensen
-------------------------------------
Name: Don A. Jensen
Title: Vice President and Secretary
FRANCE TELECOM S.A.
By:_____________________________________
Name:
Title:
DEUTSCHE TELEKOM AG
By:_____________________________________
Name:
Title:
-83-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date above written.
SPRINT CORPORATION
By:_______________________________
Name:
Title:
FRANCE TELECOM S.A.
By: /s/ [SIGNATURE ILLEGIBLE]^^
-------------------------------
Name: [ ILLEGIBLE]
Title: Senior Vice President
DEUTSCHE TELEKOM AG
By:_______________________________
Name:
Title:
-84-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date above written.
SPRINT CORPORATION
By:_______________________________
Name:
Title:
FRANCE TELECOM S.A.
By:
_______________________________
Name:
Title:
DEUTSCHE TELEKOM AG
By: /s/ DR. RON SOMMER
-------------------------------
Name: DR. RON SOMMER
Title: Vorstandsvorsitsender
-85-