EXHIBIT 7
STOCKHOLDERS' AGREEMENT
Among
FRANCE TELECOM,
DEUTSCHE TELEKOM AG
and
SPRINT CORPORATION
Dated as of January 31, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 2
ARTICLE II RESTRICTIONS ON TRANSFER OF SHARES 37
Section 2.1. General Transfer Restrictions 37
Section 2.2. Transfers to Qualified Subsidiaries 37
Section 2.3. Other Transfers Prior to the Fifth
Anniversary 38
Section 2.4. Other Transfers 38
Section 2.5. Company Rights to Purchase 40
Section 2.6. Termination of Transfer Restrictions;
Mandatory Redemption of Class A
Preference Stock 48
Section 2.7. Notice of Certain Actions 51
Section 2.8. Restrictive Legends 51
Section 2.9. Reorganization, Reclassification,
Merger, Consolidation or Disposition
of Shares 53
Section 2.10. Strategic Mergers; Business
Combinations; Company Tender for Shares 53
Section 2.11. Effect of Proposed Redemption 54
ARTICLE III PROVISIONS CONCERNING DISPOSITION
OF LONG DISTANCE ASSETS 54
Section 3.1. Offers to FT and DT 54
Section 3.2. Assignment of Rights 58
Section 3.3. Timing of Disposition 59
Section 3.4. Method of Purchase 59
Section 3.5. Termination of Rights 60
ARTICLE IV PROVISIONS CONCERNING
CHANGE OF CONTROL 61
Section 4.1. Sale of Assets or Control 61
Section 4.2. Required Share Purchases 61
ARTICLE V EQUITY PURCHASE RIGHTS 62
Section 5.1. Right to Purchase 62
Section 5.2. Notice 64
Section 5.3. Manner of Exercise; Manner of Payment 65
Section 5.4. Adjustments 66
Section 5.5. Closing of Purchases 66
Section 5.6. Terms of Payment 66
Section 5.7. Suspension of Equity Purchase Rights 67
ARTICLE VI HOLDINGS BY MAJOR COMPETITORS 68
ARTICLE VII COVENANTS 69
Section 7.1. Reservation and Availability of Capital
Stock 69
Section 7.2. Assignee Purchasers 69
Section 7.3. Automatic Exercise of Rights; Method
of Purchase 70
Section 7.4. Procedures for Redemption 72
Section 7.5. Joint Action by FT and DT 75
Section 7.6. Compliance with Tax Laws 75
Section 7.7. Compliance with Security Requirements 75
Section 7.8. Major Issuances 76
Section 7.9. Participation by Class A Directors in
Certain Circumstances 76
Section 7.10. Spin-offs 77
Section 7.11. FCC Licenses 78
Section 7.12. Issuance of Class A Stock 78
Section 7.13. Defeasance of Fifth Series 79
Section 7.14. Continuing Directors 79
Section 7.15. Long Distance Business 79
Section 7.16. Intellectual Property 79
Section 7.17. Rights Plan Events 79
ARTICLE VIII TERMINATION OF CERTAIN RIGHTS 80
ARTICLE IX TAX INDEMNIFICATION 81
Section 9.1. Indemnification for Company Purchase 81
Section 9.2. Indemnification for Supplementary
Payments 82
Section 9.3. Rebate of Indemnity 83
Section 9.4. Exclusions from Indemnity 84
Section 9.5. Consequences of Assignment 86
Section 9.6. Verification 86
Section 9.7. Contest Rights 87
ARTICLE X U.S. REAL PROPERTY TAX MATTERS 88
Section 10.1. Notification 88
Section 10.2. Control of FIRPTA Determination 88
Section 10.3. Issuance of Certification;
Related Matters 89
Section 10.4. Advisory Costs 90
Section 10.5. Indemnity 90
Section 10.6. Contest Rights 90
ARTICLE XI MISCELLANEOUS 92
Section 11.1. Notices 92
Section 11.2. Waiver, Amendment, etc. 93
Section 11.3. No Partnership 93
Section 11.4. Binding Agreement; Assignment;
No Third Party Beneficiaries 94
Section 11.5. Governing Law; Dispute Resolution;
Equitable Relief 94
Section 11.6. Severability 95
Section 11.7. Translation 96
Section 11.8. Table of Contents; Headings;
Counterparts 96
Section 11.9. Entire Agreement 96
Section 11.10. Waiver of Immunity 96
Section 11.11. Board Membership 97
Section 11.12. Effect of Conversion 97
Section 11.13. Continuing Director Approval 98
Exhibit A -- Form of Class A Holder Eligible Note
Exhibit B -- Form of Qualified Subsidiary Assumption
Agreement
Exhibit C -- Form of Qualified Stock Purchaser
Assumption Agreement
Exhibit D -- Non-Real Property Assets
Schedule A -- List of FT Associate Positions
Schedule B -- List of DT Associate Positions
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of January 31, 1996 (the "Agreement"),
among France Telecom, an exploitant public organized under the laws of France
("FT"); Deutsche Telekom AG, an Aktiengesellschaft organized under the laws of
Germany ("DT"); and Sprint Corporation, a corporation organized under the laws
of Kansas (the "Company").
RECITALS
--------
WHEREAS, each of the Company, Sprint Global Venture, Inc., a wholly-
owned Subsidiary of the Company ("Sprint Sub"), FT and DT have agreed to form a
joint venture to provide telecommunications services as provided in the Joint
Venture Agreement dated as of June 22, 1995, as amended, among Sprint Sub, FT,
DT and the Company (the "Joint Venture Agreement"), and to pursue various
telecommunications opportunities around the world as further provided therein;
WHEREAS, pursuant to the Investment Agreement, dated as of July 31,
1995, as amended, among FT, DT and the Company (including all schedules thereto,
and as may be further amended from time to time, the "Investment Agreement"), FT
and DT collectively are purchasing from the Company shares of its capital stock
as provided in the Investment Agreement; and
WHEREAS, the parties hereto have determined that it is in their best
interests that they enter into this Agreement providing for certain rights and
restrictions with respect to the shares of Class A Stock owned by FT and DT and
their permitted transferees and certain related rights and obligations of the
Company, FT and DT.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, each of FT, DT and the Company agrees 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.
"Amendment" means the Certificate of Amendment to the Articles of
Incorporation adopted and filed pursuant to Section 3.2(i) of the Investment
Agreement.
"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 Ratio" shall have the meaning set forth in Section 7.5(a)
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.
"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 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 Class A Stock and Common Stock held by one of FT or
DT or its Affiliates shall not also be deemed to be Beneficially Owned by the
other of FT or DT or its Affiliates.
"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 Investment 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.
"Cellular" means (a) until immediately prior to the Cellular Spin-off Date,
the Cellular and Wireless Division, (b) immediately prior to the Cellular Spin-
off Date, the direct or indirect wholly owned subsidiary of the Company owning
the assets of the Cellular and Wireless Division, the shares of which subsidiary
are to be distributed to the Company's stockholders in connection with the
Cellular Spin-off, and (c) on and after the Cellular Spin-off Date, such
company, provided that the term "Cellular" shall not include any assets retained
by the Company after the Cellular Spin-off Date.
"Cellular and Wireless Division" means the Cellular and Wireless
Communications Services Division of the Company.
"Cellular Spin-off" shall have the meaning set forth in Article I of the
Investment Agreement.
"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.
"Class A Action" means action by the holders of a majority of the shares of
Class A Stock taken by a vote at either a regular or special meeting of the
stockholders of the Company or of the Class A Holders or by written consent
delivered to the Secretary of the Company.
"Class A Common Issuance Date" means the date the Company first issues
shares of Class A Common Stock.
"Class A Common Stock" means the Class A Common Stock of the Company.
"Class A Conversion Shares" means the shares of Class A Common Stock or
Common Stock into which the then outstanding shares of Class A Preference Stock
(or, as the case may be, a specified number of shares of Class A Preference
Stock) would, at the time of determination, be convertible at the then
applicable Conversion Price if the conditions to establishment of the Conversion
Date had been met.
"Class A Director" means any Director elected by the Class A Holders
pursuant to Section 2(a) of ARTICLE FIFTH of the Articles, appointed by Class A
Directors pursuant to Section 4(b) of ARTICLE FIFTH of the Articles, or elected
by the Class A Holders pursuant to Section 3(d) of the Class A Provisions.
"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 ▇▇▇▇▇'▇
Investors Service, Inc., Standard and Poor's Corporation or Duff & ▇▇▇▇▇▇ 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 ▇▇▇▇▇'▇ 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
& ▇▇▇▇▇▇ 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 Common Stock have been transferred in accordance with
Section 2.2 hereof or which purchases such shares pursuant to the Investment
Agreement, and any Qualified Stock Purchaser that acquires shares of Class A
Stock pursuant to Article VI or Section 5.1 of this Agreement or pursuant to
Section 2.2(b) of the Standstill Agreement (and shall include such Persons even
after all of the shares of Class A Stock have been converted into Common Stock
of the Company or the Fundamental Rights have terminated as to all outstanding
shares of Class A Preference Stock).
"Class A Preference Stock" means the Class A Preference Stock of the
Company.
"Class A Provisions" means that portion of ARTICLE SIXTH of the Articles
entitled "GENERAL PROVISIONS RELATING TO CLASS A STOCK".
"Class A Stock" means the Class A Common Stock or, if shares of Class A
Preference Stock are outstanding, the Class A Preference Stock.
"Closing Price" means, with respect to a security on any day, the last sale
price, regular way, or in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on The New York Stock Exchange, 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 and pursuant to Article II of the Investment 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 and Article II of the Investment Agreement.
"Common Stock" means the Common Stock of the Company.
"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 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 ▇▇▇▇▇'▇
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 & ▇▇▇▇▇▇ 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
(b) possession by such Person or Group of the power, directly or
indirectly, (i) to elect a majority of the board of directors (or equivalent
governing body) of the entity in question; or (ii) to direct or cause the
direction of the management and policies of or with respect to the entity in
question, whether through ownership of securities, by contract or otherwise.
"Conversion Date" has the meaning specified in the Class A Provisions.
"Conversion Price" means the applicable conversion price for shares of
Class A Preference Stock provided for in Section 3(b) of the Class A Provisions.
"Corporation Joint Venture Termination" means any of the following:
(a) the sale of Venture Interests by a Sprint Party pursuant to Section
20.5(a) of the Joint Venture Agreement; or
(b) the receipt by the FT/DT Parties of the Tie-Breaking Vote due to a
Funding Default, Material Non-Funding Default or Bankruptcy (as such terms are
defined in the Joint Venture Agreement) on the part of any of the Sprint
Parties.
"Director" means a member of the Board of Directors.
"DT" shall have the meaning specified in the preamble.
"DT Investor Confidentiality Agreement" shall have the meaning set forth in
the Investment Agreement.
"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,
Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, Ukraine, United Kingdom, and Vatican City.
"Excess Shares" shall have the meaning set forth in Section 5.1 hereof.
"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 the Initial
Issuance Date;
(b) Transfers of assets, shares or other equity interests (other than Long
Distance Assets) to (i) any entity in exchange for equity interests in such
entity if, after such transaction, the Company owns at least 51 percent of both
the Voting Power and equity interests in such entity or (ii) any joint venture
that is
an operating joint venture not controlled by any of its principals and in which
(x) the Company has the right, acting alone, to disapprove (and thereby
prohibit) decisions relating to acquisitions and divestitures involving more
than 20 percent of the Fair Market Value of such entity's assets, mergers,
consolidations and dissolution or liquidation of such entity and the adoption of
such entity's business plan and (y) Major Competitors of the Joint Venture do
not in the aggregate own more than 20% of the equity interests or Voting Power;
(c) transactions in which the Company exchanges one or more (i) local
exchange telephone businesses for one or more such businesses or (ii) public
cellular or wireless radio telecommunications service systems for one or more
such systems, provided that the Company shall not, directly or indirectly,
receive cash in any such transaction in an amount greater than 20 percent of the
Fair Market Value of the property or properties Transferred by it;
(d) Transfers of assets, shares or other equity interests (other than Long
Distance Assets) by the Company to any of its Subsidiaries, or by any of its
Subsidiaries to the Company or any other Subsidiary of the Company;
(e) (i) any Spin-off of equity interests of a wholly-owned Subsidiary that
is not a Subsidiary which, directly or indirectly, owns Long Distance Assets
(for purposes of this definition, the "Spun-off Entity"), 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, or (ii) the Cellular
Spin-off, unless a Notice of Abandonment (as defined in the Investment
Agreement) has been delivered;
(f) Transfers of assets (other than Long Distance Assets) of the Company
or any of its Subsidiaries that are primarily or exclusively used in connection
with providing information technology or data processing functions or services
(collectively, for purposes of this definition, the "IT Assets"), to any Person
that regularly provides information technology or data processing functions or
services on a commercial basis, in connection with a contractual arrangement
(for purposes of this definition, an "IT Service Contract") pursuant to which
such Person undertakes to provide information technology or data processing
functions or services to the Company or any of its Subsidiaries of substantially
the same nature as the services associated with the use of such assets prior to
such Transfer and upon commercially reasonable terms to the Company as
determined
in good faith by the Company, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted average useful
life of such assets, or the Company or such Subsidiary shall have the right to
cause such IT Service Contract to be renewed or extended for a period at least
as long as such weighted average useful life upon commercially reasonable terms
to the Company as determined in good faith by the Company, and (ii) the Transfer
of such assets will not materially and adversely affect the operation of the
Company; or
(g) Transfers of assets (other than Long Distance Assets or IT Assets) of
the Company or any of its Subsidiaries to any Person in connection with any
contractual arrangement (for purposes of this definition, a "Non-IT Service
Contract") pursuant to which such Person undertakes to provide services to the
Company or any of its Subsidiaries of substantially the same nature as the
services associated with the use of such assets prior to such Transfer and upon
commercially reasonable terms to the Company as determined in good faith by the
Company, provided, that (i) the Fair Market Value of such assets, together with
the Fair Market Value of assets of the Company Transferred to such Person or
other Persons in related transactions, do not represent more than five percent
of the Fair Market Value of the assets of the Company, (ii) the Transfer of such
assets will not materially and adversely affect the operation of the Company,
and (iii) the term of such Non-IT Service Contract shall be for a period at
least as long as the weighted average useful life of the assets so Transferred
or the Company or such Subsidiary has the right to cause such Non-IT Service
Contract to be renewed or extended for a period at least as long as such
weighted average useful life upon commercially reasonable terms to the Company
as determined in good faith by the Company.
"Exempt Long Distance Asset Divestitures" mean, with respect to the Company
and its Subsidiaries:
(a) Transfers of Long Distance Assets to a Qualified Joint Venture;
(b) Transfers of Long Distance Assets to any entity if the Company and its
Subsidiaries after such transaction own at least 70 percent of both the Voting
Power and equity interests of such entity, provided that if a Major Competitor
of FT or DT or the 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
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:
(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.
"Fix" or "Fixed" means, in relation to the Conversion Price, the initial
establishment of the Conversion Price in accordance with Section 3(b) of the
Class A Provisions.
"Fixed Closing Date" means the date of the first closing to occur under the
Investment Agreement after the date on which the Conversion Price is Fixed.
"Formula Price" means, 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 Common Stock on
the date of sale of such share, and (b) an amount equal to the Weighted Average
Price paid by the Class A Holders for the 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 purchase of such Class A Common Stock until the date of redemption.
"France" means the Republic of France, including French Guiana, Guadeloupe,
Martinique and Reunion, and its territories and possessions.
"FT" shall have the meaning specified in the preamble.
"FT Investor Confidentiality Agreement" shall have the meaning specified in
the Investment Agreement.
"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 Weighted Purchase Price" means (a) prior to the Class A Common
Issuance Date, the conversion price of the Class A Preference Stock in effect
from time to time, adjusted in accordance with the Class A Provisions solely
with respect to shares of Class A Preference Stock purchased from the Company
pursuant to this Agreement and the Investment Agreement, and (b) on and after
the Class A Common Issuance Date, the Weighted Average Price paid by FT, DT,
their respective Qualified Subsidiaries and any Qualified Stock Purchasers for
shares of Class A Common Stock, calculated solely with respect to shares of
Class A Common Stock (or shares of Class A Preference Stock which have been
converted into shares of Class A Common Stock) purchased from the Company
pursuant to this Agreement and the Investment Agreement.
"Fundamental Rights" means the rights of the holders of Class A Preference
Stock to elect Directors pursuant to ARTICLE FIFTH of the Articles, and the
rights of the holders of Class A Preference Stock provided in Sections 4, 5, 6
and 8 of the Class A Provisions.
"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.
"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 the date of the execution of
the Investment Agreement who is not an executive officer of the Company shall be
deemed to be an Independent Director hereunder.
"Initial Issuance Date" means the first date that any shares of Class A
Stock are issued.
"Investment Agreement" shall have the meaning set forth in the second
WHEREAS clause.
"Investment Completion Date" means the date of the Supplemental Preference
Stock Closing (as defined in the Investment Agreement) or the Class A Common
Issuance Date, whichever shall first occur.
"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" shall have the meaning set forth in the first
WHEREAS clause.
"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;
(b) Liens or other comparable arrangements relating to the financing of
accounts receivable; and
(c) Liens securing any other indebtedness for borrowed money, provided
that (i) the amount of such indebtedness, when added to the aggregate amount of
purchase money indebtedness referred to in clause (a) above, does not exceed 30%
of the total book value of the Long Distance Assets as at the date of the most
recently published balance sheet of the Company, (ii) the indebtedness secured
by such Liens is secured only by Liens on Long Distance Assets, (iii) the face
amount of such indebtedness does not exceed the book value of the Long Distance
Assets subject to such Liens, and (iv) such indebtedness is for a term no longer
than the estimated useful life of the Long Distance Assets subject to such
Liens.
"Liquidation Preference" shall have the meaning set forth in the Class A
Provisions.
"Local Exchange Division" means the Local Communications Services Division
of the Company.
"Long Distance Assets" means:
(a) the assets reflected in the Company's balance sheet for the year ended
December 31, 1994 as included in the Long Distance Division;
(b) any assets acquired by the Company or any of its Subsidiaries
following December 31, 1994 that are reflected in the Company's balance sheet as
included in the Long Distance Division;
(c) any assets of the Company or any of its Subsidiaries that are not
reflected in the Company's balance sheet for the year ended December 31, 1994 as
included in the Long Distance Division, which after December 31, 1994 are
transferred by the Company or any of its Subsidiaries to, or reclassified by the
Company or any of its Subsidiaries as part of, the Long Distance Division;
(d) any assets acquired by the Company after December 31, 1994 that are
used or held for use primarily for the benefit of the Long Distance Business;
and
(e) any assets referred to in clauses (a) through (c) above that are used
or held for use primarily for the benefit of the Long Distance Business which
are transferred or reclassified by the Company or any of its Subsidiaries
outside of the Long Distance Division, but which continue to be owned by the
Company or any of its Subsidiaries;
provided that the term "Long Distance Assets" shall not include (i) any assets
that are used or held for use primarily for the benefit of any Non-Long
Distance Business, or (ii) any other assets reflected in the Company's balance
sheet for the year ended December 31, 1994 as included in the Cellular and
Wireless Division or the Local Exchange Division (other than as such assets in
the Cellular and Wireless Division or the Local Exchange Division may be
transferred or reclassified in accordance with paragraph (c) of this
definition).
"Long Distance Business" means all long distance telecommunications
activities and services of the Company and its Subsidiaries at the relevant
time, including (but not limited to) all long distance transport services,
switching and value-added services for voice, data, video and multimedia
transmission, migration paths and intelligent overlapping architectures,
provided that the term "Long Distance Business" shall not include any activities
or services primarily related to any Non-Long Distance Business.
"Long Distance Division" means the Long Distance Communications Services
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 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.
"Market Price" means, with respect to a security on any date, the Closing
Price of such security on the Trading Day immediately prior to such date. The
Market Price shall be deemed to be equal to (a) in the case of a share of Class
A Common Stock, the Market Price of a share of Common Stock; and (b) in the case
of a share of Class A Preference Stock, the Liquidation Preference. The Market
Price of any options, warrants, rights or other securities convertible into or
exercisable for Class A Common Stock (except for the Class A Preference Stock)
shall be equal to the Market Price of options, warrants, rights or other
securities convertible into or exercisable for Common Stock upon the same terms
and otherwise containing the same terms as such options, warrants, rights or
other securities convertible into or exercisable for Class A Common Stock.
"Material Adverse Effect" means, with respect to any Person, the effect of
any event, occurrence, fact, condition or change that is materially adverse to
the business, operations, results of operations, financial condition, assets or
liabilities of such Person.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotations System.
"Non-Long Distance Business" means (a) the ownership of any equity or
other interests in the Joint Venture or any of the JV Entities; the enforcement
or performance of any of the rights or obligations of the Company or any
Subsidiary of the Company pursuant to the Joint Venture Agreement; or any
activities or services of the Joint Venture or any of the JV Entities; (b) the
Triple Play Activities; (c) any activities or services primarily related to the
provision of subscriber connections to a local exchange or switch providing
access to the public switched telephone network; (d) any activities or services
primarily related to the provision of exchange access services for the purpose
of originating or terminating long distance telecommunications services; (e) any
activities or services primarily related to the resale by the Local Exchange
Division of long distance telecommunications services of the Company or other
carriers; (f) any activities or services primarily related to the provision of
inter-LATA long distance telecommunications services that are incidental to the
local exchange services business of the Local Exchange Division; (g) any
activities or services primarily related to the provision of intra-LATA long
distance telecommunications services; (h) any activities or services (whether
local, intra-LATA or inter-LATA) primarily related to the provision of cellular,
PCS, ESMR or paging services, mobile telecommunications services or any other
voice, data or voice/data wireless services, whether fixed or mobile, or related
to telecommunications services provided through communications satellite systems
(whether low, medium or high orbit systems); and (i) the use of the "Sprint"
brand name or any other brand names, trade names or trademarks owned or licensed
by the Company or any of its Subsidiaries.
"North America" means the current geographic area covered by the following
countries: Canada, the United States of 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.
"Optional Shares" shall have the meaning set forth in Section 2.5(a) of the
Investment Agreement.
"Optional Shares Closing" shall have the meaning set forth in Section
2.5(c) of the Investment Agreement.
"Other Investment Documents" means the Investment Agreement, the Standstill
Agreement, the FT Investor Confidentiality Agreement, the DT Investor
Confidentiality
Agreement, any Qualified Subsidiary Standstill Agreement, the 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 Standstill Agreement or any confidentiality agreement
entered into by a holder of equity interests of a Qualified Subsidiary pursuant
to the FT Investor Confidentiality Agreement or the DT Investor Confidentiality
Agreement.
"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.
"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.
"Preferred Stock" means any series of Preferred Stock of the Company, but
shall not include the Class A Preference Stock.
"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.
"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.
"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 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 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 until the second anniversary of
the Initial Issuance Date, no Voting Securities of such entity may be
Beneficially Owned by a Major Competitor of the Company or of the Joint Venture,
and thereafter no such Major Competitor or Major Competitors may, individually
or in the aggregate, Beneficially Own Voting Securities representing ten percent
or more of the Voting Power of such entity, and provided, further, that if the
Voting Securities of such entity owned directly by FT and DT or indirectly
through Wholly-Owned Subsidiaries of either of them are entitled to a number of
Votes representing in the aggregate less than 80 percent of the Voting Power of
such entity, then:
(i) the Voting Securities owned by FT and DT and Wholly-Owned Subsidiaries,
plus Voting Securities, if any, owned by Passive Financial Institutions must in
the aggregate be entitled to a number of Votes representing at least 80 percent
of the Voting Power of such entity; and
(ii) FT and DT and Wholly-Owned Subsidiaries must in the aggregate 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.
"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
subsection (b) of Section 2 of the provisions of ARTICLE SIXTH of the Articles
entitled GENERAL PROVISIONS RELATING TO ALL STOCK or Section 3(a)(i) of the
Class A Provisions, 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
subsection (d) of Section 2 of the provisions of ARTICLE SIXTH of the Articles
entitled GENERAL PROVISIONS RELATING TO ALL STOCK or Section 3(a)(i) of the
Class A Provisions, at least equal to the redemption price required to be paid
by such Section 2 or Section 3(a)(i) of the Class A Provisions.
"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.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated the date hereof, among the Company, FT and DT, as it may be amended or
supplemented from time to time.
"Requested Sale Supplementary Payment" shall have the meaning set forth in
Section 3(a)(i) of the Class A Provisions.
"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 August 8, 1989,
between the Company and UMB Bank, n.a., as
amended on June 4, 1992 and as of July 31, 1995, as it may be 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.
"Shares" means (a) shares of Class A Stock, Common Stock or any other
Voting Securities of the Company, (b) securities of the Company convertible into
Voting Securities of the Company and (c) options, warrants or other rights to
acquire such Voting Securities, but in the case of this clause (c) excluding any
rights of the Class A Holders or FT and DT to acquire Voting Securities of the
Company pursuant to the Investment Agreement and this Agreement (but not
excluding any Voting Securities received upon the exercise of such rights).
"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, provided that the term "Spin-off" shall not include
the Cellular Spin-off unless a Notice of Abandonment has been delivered.
"Spin-Off Investment Agreement" shall have the meaning set forth in Section
7.10(a)(i) hereof.
"Sprint Party" shall have the meaning set forth in the Joint Venture
Agreement.
"Sprint Sub" shall have the meaning set forth in the first WHEREAS clause.
"Standstill Agreement" means the Standstill Agreement, dated as of July 31,
1995, among the Company, FT and DT, as it may be amended or supplemented from
time to time.
"Strategic Investor Standstill Agreement" shall have the meaning set forth
in the Investment Agreement.
"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.
"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
(e) any other 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.
"Triple Play Activities" means (a) the ownership of any equity or other
interests in MajorCo, L.P. or any of its successors or Affiliates; the
enforcement or performance of any of the rights or obligations of the Company or
any Subsidiary of
the Company pursuant to the Agreement of Limited Partnership of MajorCo, L.P. or
any other agreement or arrangement contemplated thereby, except to the extent
relating to the provision of services by the Company as the long distance
telecommunications provider to MajorCo, L.P.; or any activities or services of
MajorCo, L.P. or any of its successors or Affiliates; (b) the ownership of any
equity or other interests in any Teleport Entity (as that term is defined in the
Contribution Agreement (the "Contribution Agreement"), dated as of March 28,
1995, by and among TCI Network Services, Comcast Telephony Services, Cox
Telephony Partnership, MajorCo, L.P. and NewTelco, L.P.); or any activities or
services of any Teleport Entity or any of their respective successors or
Affiliates; and (c) the ownership of any equity or other interests in PhillieCo,
L.P., or any of its successors or Affiliates; the enforcement or performance of
any of the rights or obligations of the Company or any Subsidiary of the Company
pursuant to the Amended and Restated Agreement of Limited Partnership of
PhillieCo, L.P., dated as of February 17, 1995, or any other agreement or
arrangement contemplated thereby, except to the extent relating to the provision
of services by the Company as the long distance telecommunications provider to
PhillieCo, L.P.; or any activities or services of PhillieCo, L.P. or any of its
successors or Affiliates.
"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.
"Vote" means, with respect to any entity, the ability to cast a vote at a
stockholders', members' or comparable meeting of such entity with respect to the
election of directors, managers or other members of such entity's governing
body, or the ability to cast a general partnership or comparable vote, provided
that with respect to the Company only, the term "Vote" means the ability to
exercise general voting power (as opposed to the exercise of special voting or
disapproval rights such as those set forth in the Class A Provisions) with
respect to matters other than the election of directors at a meeting of the
stockholders of the Company.
"Voting Power" means, with respect to any entity as at any date, the
aggregate number of Votes outstanding as at such date in respect of such entity.
"Voting Securities" means, with respect to an entity, any capital stock or
debt securities of such entity if the holders thereof are ordinarily, in the
absence of contingencies,
entitled to a Vote, even though the right to such Vote has been suspended by the
happening of such a contingency, and in the case of the Company, shall include,
without limitation, the Common Stock and the Class A Stock, but shall not
include any shares issued pursuant to the Rights Agreement to the extent such
issuance is caused by action of a Class A Holder.
"Weighted Average Price" means the weighted average per unit price paid by
the purchasers of any capital stock, debt instrument or security of the Company.
In determining the price of shares of Common Stock or Class A Common Stock
issued upon the conversion or exchange of securities or issued upon the exercise
of options, warrants or other rights, the consideration for such shares shall be
deemed to include the price paid to purchase the convertible security or the
warrant, option or other right, plus any additional consideration paid upon
conversion or exercise. If any portion of the price paid is not cash, the
Independent Directors (acting by majority vote) shall determine in good faith
the Fair Market Value of such non-cash consideration. If any new shares of
Common Stock are issued together with other shares or securities or
distributions of other assets of the Company for consideration which covers both
the new shares and such other shares, securities or other assets, the portion of
such consideration allocable to such new shares shall be determined in good
faith by the Independent Directors (acting by majority vote), in each case as
certified in a resolution sent to all Class A Holders.
"Wholly-Owned Subsidiaries" means companies or other business organizations
all of the outstanding Voting Securities of which are owned, directly or
indirectly, by either or both of FT and DT, other than any de minimis ownership
required by Applicable Law.
"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 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 the Fifth Anniversary. Until the
fifth anniversary of the Initial Issuance Date, Shares shall not be Transferred
by a Class A Holder except as provided in Section 2.2.
Section 2.4. Other Transfers. After Section 2.3 hereof shall no longer
apply or shall be 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:
(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 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; and
(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 and
Article II of the Investment 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.
(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 and
Article II of the Investment 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 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 (or, if Class A Preference Stock is proposed to be Transferred, per number
of Class A Conversion Shares related to the shares of Class A Preference Stock
in question) 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 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 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 (or per number of Class A Conversion Shares related to each Class A
Preference Share, as the case may be), as adjusted to comply with the
requirements of Article IX, of the Common Stock 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 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 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 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 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 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 Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York time, 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 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 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; Mandatory
Redemption of Class A Preference Stock. (a) At any time after the earlier of
the Class A Common Issuance Date and the date when the Conversion Price shall
have been Fixed, 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; Section 8.8 of the Investment 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 (other than as to the timing of the
Optional Shares Closing or an Article IV Closing, as the case may be), 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;
(iv) if the Company shall have determined to proceed with a transaction
described in Section 4.1 hereof;
(v) at any time after the Investment Completion Date, 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 and Section 2.5 of the
Investment 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 and Article II of the Investment Agreement, falls below five
percent;
(vi) at any time after the Investment Completion Date, 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 and Section 2.5 of the
Investment 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 Common 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 Common 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 Common Stock have
been converted into shares of Common Stock, the Fundamental Rights as to all
outstanding shares of Class A Preference Stock have terminated, or the rights of
the Class A Holders under Section 4 of the Class A Provisions are suspended
pursuant to clauses (ii) or (iii) of Section 7(b) of the Class A Provisions, if,
between the second and fifth anniversaries of the Initial Issuance Date, the
Company or any of its Subsidiaries, as the case may be, shall take or engage in,
directly or indirectly, any of the actions described in Section 4(a)(i),
4(a)(ii), 4(a)(iii) or 4(a)(iv) of the Class A Provisions, 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) While shares of Class A Preference Stock are outstanding, but
prior to the time the Conversion Price shall have been Fixed,
(i) if the event described in Section 2.6(a)(iii) shall occur, the Class A
Holders may make the election provided in Section 7(n)(i) of the Class A
Provisions.
(ii) if the event described in Section 2.6(a)(iv) shall occur, the Class A
Holders may make the election provided in Section 7(f)(ii)(y)(B) of the Class A
Provisions.
(iii) if any of the events described in Section 2.6(a) (other than clauses
(iii) or (iv) thereof) shall occur, the Class A Holders may make the election
provided in Section 7(n)(ii) of the Class A Provisions.
(c) If the Company fails to redeem all of the outstanding shares of
Class A Preference Stock when required pursuant to Section 3(c), 7(f) or 7(n) of
the Class A Provisions, in addition to whatever other rights and remedies the
Class A Holders may have, hereunder or otherwise, such Shares may be transferred
without any restriction provided for in this Article II other than the
restrictions set forth in Section 2.4 hereof, and in accordance with Section
7(o) of the Class A Provisions.
(d) The Transfer Restrictions shall cease to be of further force and
effect as provided in Section 7(f) and 7(n) of the Class A Provisions.
Section 2.7. Notice of Certain Actions. Unless all of the
outstanding shares of Class A Common Stock have been converted into shares of
Common Stock, the Fundamental Rights have terminated as to all outstanding
shares of Class A Preference Stock, or the rights of the Class A Holders under
Section 4 of the Class A Provisions are suspended pursuant to clause (ii) or
(iii) of Section 7(b) of the Class A Provisions, for a period of three years
following the date which is two years after the Initial Issuance Date, 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 4(a)(i) and
4(a)(ii) of the Class A Provisions, or (b) the Company taking or engaging in,
directly or indirectly, any of the transactions described in Sections 4(a)(iii)
and 4(a)(iv) of the Class A Provisions, 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, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 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.
(g) No Class A Holder may pledge Shares except to a Person that is a
bona fide financial institution. Prior to the consummation of a pledge of
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 the 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
Common Stock 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, 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 the third
anniversary of the Investment Completion Date, the Company shall, prior to
redeeming any Shares pursuant to Section 2 of that portion of ARTICLE SIXTH of
the Articles entitled "GENERAL PROVISIONS RELATING TO ALL STOCK," provide the
Class A Holders with notice of its 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 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 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 of that
portion of ARTICLE SIXTH of the Articles entitled "GENERAL PROVISIONS RELATING
TO ALL STOCK") (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) the fifth anniversary of the
date of this Agreement 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) the tenth anniversary of the date of this Agreement,
(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 4(b) of the Class A Provisions would be in effect but for the fact that
they have been suspended pursuant to Sections 7(b)(ii) or (iii) of the Class A
Provisions (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 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
the date of the Investment Agreement (calculated in each case as of the date the
Company or such Subsidiary entered into a definitive agreement to Transfer such
Long 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 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 Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, 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 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 termination of the Fundamental Rights as to all outstanding shares of
Class A Preference Stock or upon the conversion of all of the outstanding shares
of Class A Common Stock into Common Stock, in either case pursuant to Section
7(a) (or if all of such Fundamental Rights would have been so terminated or such
shares would have been so converted except for the proviso thereto), 7(b), 7(c)
or 7(g) of the Class A Provisions, (b) after the Investment Completion Date, 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, (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, or (d) prior to the Investment Completion Date, if
the outstanding Class A Preference Stock has an aggregate liquidation value of
less than $1.5 billion as a result of a Transfer of shares of Class A Preference
Stock by a Class A Holder (other than a Transfer contemplated by Section
7.4(b)(i)(y) hereof). 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
4(b) of the Class A Provisions are suspended pursuant to clause (iv) of Section
7(b) of the Class A Provisions.
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.
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 their Shares as the other holders of
Voting Securities of the Company 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, at a price per share
(or, if the tender offer period terminates, shares of Class A Preference Stock
are outstanding and the Investment Completion Date has not occurred, at a price
per number of shares of Class A Preference Stock equal to the price per share
that would apply to shares of Common Stock that would be issuable in respect of
the related Class A Conversion Shares (assuming that, if the Conversion Price
shall not have been Fixed, the Conversion Price is equal to the Target Price))
equal to the price per share of Common Stock offered pursuant to the tender
offer, all but not less than all, of the Shares that they were unable to tender
on the same basis as the other shareholders, provided, that 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 Class A
Stock publicly traded securities with an aggregate Fair Market Value, and/or
cash in an amount, not less than the aggregate price per share of Common Stock
(or per that number of related Class A Conversion Shares, 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.
ARTICLE V
EQUITY PURCHASE RIGHTS
----------------------
Section 5.1. Right to Purchase. Following the Investment Completion
Date, and except as provided in Section 5.7 hereof, 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 Class A Stock):
(a) except under the circumstances described in clauses (b) and (c) below,
if after the Investment Completion Date, the Company shall issue (or sell from
treasury) shares of 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 Class A Preference Stock or the Class A Common
Stock, that number of additional shares of Class A Preference Stock (if Class A
Preference Stock shall then be outstanding) or Class A Common Stock (if no Class
A Preference Stock shall then be outstanding) 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) in the case of Class A Common Stock, the Weighted
Average Price paid for such shares of Common Stock whose issuance gave rise to
such Equity Purchase Right, and (y) in the case of the Class A Preference Stock,
the product of the Weighted Average Price paid for such shares of Common Stock
multiplied by the number of Class A Conversion Shares related to one share of
Class A Preference Stock outstanding immediately prior to such purchase;
(b) if after the Investment Completion Date the Company shall issue (or
sell from treasury) Voting Securities other than Common Stock, or issue shares
of Common Stock pursuant to employee benefit plans, arrangements or contracts
(other than in respect of the exercise of stock options, warrants or other
rights (except rights issued pursuant to the Rights Agreement) in existence at
any time on or before the Investment Completion Date (including pursuant to
employee benefit plans)) or upon the conversion of any securities outstanding on
or before the Investment Completion Date other than upon the conversion or
exchange of the Class A Preference Stock or the Class A Common Stock, that
number of additional shares of Class A Preference Stock (if the Class A
Preference Stock shall then be outstanding) or Class A Common Stock (if no Class
A Preference Stock shall then be outstanding) 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 (i) in the case of the Class A Common Stock, the
Market Price of a share of Common Stock on the date of the issuance which gave
rise to such Equity Purchase Right and (ii) in the case of the Class A
Preference Stock, the product of the Market Price of a share of Common Stock on
such date of issuance, multiplied by the number
of Class A Conversion Shares related to one share of Class A Preference Stock
outstanding immediately prior to such purchase; and
(c) if after the Investment Completion Date, the Company shall issue (or
sell from treasury) shares of 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 the Investment Completion Date
(including pursuant to employee benefit plans) or upon the conversion of any
securities outstanding on or before the Investment Completion Date other than
upon the conversion or exchange of the Class A Preference Stock or the Class A
Common Stock, that number of additional shares of Class A Preference Stock (if
the Class A Preference Stock shall then be outstanding) or Class A Common Stock
(if no Class A Preference Stock shall then be outstanding) 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 (i) in the case of Class A
Common Stock, the FT/DT Weighted Purchase Price; and (ii) in the case of Class A
Preference Stock, the product of the FT/DT Weighted Purchase Price multiplied by
the number of Class A Conversion Shares related to such share of Class A
Preference Stock outstanding immediately prior to such purchase, provided that
Shares purchased hereunder with respect to the issuance of Excess Shares shall
be purchased for a per share purchase price equal to (x) in the case of Class A
Common Stock, the Weighted Average Price for such Excess Shares and (y) in the
case of Class A Preference Stock, the product of the Weighted Average Price for
such Excess Shares multiplied by the number of Class A Conversion Shares related
to one share of Class A Preference Stock outstanding immediately prior to such
purchase. As used herein, "Excess Shares" means those shares of Common Stock
issued by the Company after the date of the Investment Agreement (other than
pursuant to employee benefit plans) in respect of the exercise of rights
("Rights") to purchase Common Stock or similar instruments (except rights issued
pursuant to the Rights Agreement) issued after the date of the Investment
Agreement and on or prior to the Investment Completion Date that, when
aggregated with all other shares of Common Stock which have been issued by the
Company after the date of the Investment Agreement in respect of the exercise of
Rights issued after the date of the Investment Agreement and on or prior to the
Investment Completion Date, exceed five percent of the number of shares of
Common Stock outstanding on the date of the Investment Agreement (adjusted to
reflect any stock split, subdivision, stock dividend or other reclassification,
consolidation or combination of the Company's Voting Securities after the date
of the Investment Agreement).
Section 5.2. Notice. The Company shall deliver to each Class A
Holder (a) written notice of the proposed issuance of any Voting Securities
after the Investment Completion Date 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 the issuance of shares of Common Stock 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 the Initial
Issuance Date 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 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 Common Stock 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 following the Investment Completion Date,
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, as the case may be. 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.
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 Common Stock, Class A Preference Stock or
Class A Common Stock, as the case may be, during such time.
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 Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, 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 the aggregate amount to be paid to the Company is less than $200
million, 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, 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, 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 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 the applicable Percentage
Limitation as set forth in the 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 the applicable Percentage Limitation 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 such applicable Percentage Limitation specified in clauses (a)
and (b) of this Section 5.7 suspend the right of such Class A Holders to
purchase additional shares of Class A Stock pursuant to this Agreement or
otherwise until such time as any
such purchase (including any purchase pursuant to Section 7.3 hereof) would not
result in the aggregate Beneficial Ownership of the affected Class A Holders
exceeding such Percentage Limitation applicable to such Class A Holders.
ARTICLE VI
HOLDINGS BY MAJOR COMPETITORS
-----------------------------
Until the tenth anniversary of the Initial Issuance Date, 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 the later of (a) 30 days following
the consummation of such Strategic Merger, and (b) 30 days following the Fixed
Closing Date 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 after the Investment Completion Date,
subject to Applicable Law and the receipt of any required material Governmental
Approvals, a number of shares of Class A Preference Stock (if the Class A
Preference Stock shall then be outstanding) or Class A Common Stock (if no Class
A Preference Stock shall then be outstanding) 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 (i)
in the case of Class A Common Stock, the Weighted Average Price paid by such
Major Competitor; and (ii), in the case of Class A Preference Stock, the product
of such Weighted Average Price and the number of Class A Conversion Shares
related to one share of Class A Preference Stock outstanding immediately prior
to the date of such purchase, 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, provided that if
the Class A Holders exercise their rights to purchase Shares from the Company
hereunder on or before the date on which they are required to notify the Company
of the exercise of their right to purchase
Optional Shares pursuant to Section 2.5 of the Investment Agreement, such Shares
shall be purchased at a closing to occur concurrently with the Optional Shares
Closing.
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 Class A Common Stock,
Class A Preference Stock and Common Stock and its issued shares of Common Stock
held in its treasury, for the purpose of effecting the conversion of shares of
Common Stock, Class A Preference Stock and Class A Common Stock contemplated
under the Articles, the full number of shares of (a) Common Stock then
deliverable upon the conversion of all outstanding shares of Class A Common
Stock and Class A Preference Stock, (b) Class A Common Stock then deliverable
upon the conversion of all outstanding shares of Class A Preference Stock, and
(c) Class A Common Stock and Class A Preference Stock then deliverable upon
conversion of all of the shares of Common Stock, in the case of each of clauses
(a), (b) and (c) that the Class A Holders are permitted to acquire hereunder and
under the Investment Agreement, the Articles and the Standstill Agreement.
Section 7.2. Assignee Purchasers. As a condition to the assignment of
rights to purchase shares of Class A Preference Stock or Class A Common Stock to
a Qualified Stock Purchaser pursuant to Article VI hereof or pursuant to the
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; Method of Purchase. (a) From and
after the Investment Completion Date, 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, shares of Class A Preference Stock (or, if no shares of
Class A Preference Stock shall then be outstanding, Class A Common Stock)
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.
(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 Common Stock or the termination of the Fundamental Rights as to all
outstanding
shares of Class A Preference Stock, as the case may be, as provided in Section 7
of the Class A Provisions, 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
ARTICLE SIXTH, GENERAL PROVISIONS RELATING TO ALL STOCK, Section 2 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 such Class A
Preference Stock, or Class A Common Stock, as the case may be, represent Votes
constituting greater than 20% of the aggregate Voting Power of the Company 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, provided that
prior to the Fixed Closing Date (x) the Company shall have no right to redeem
shares of Class A Preference Stock pursuant to the Articles to the extent that
such redemption would reduce the aggregate liquidation value represented by the
outstanding Class A Preference Stock to below $1.5 billion, but (y) in such
circumstance, if the Votes represented by the outstanding Class A Preference
Stock exceed 20% of the aggregate Voting Power of the Company, the Company shall
have the right to purchase from the Class A Holders for a per share price equal
to the Liquidation Preference thereof (as adjusted to comply with the
requirements of Article IX hereof) such number of shares of Class A Preference
Stock as in the reasonable good faith judgment of the Board of Directors is
necessary to comply with the requirements of Section 310, provided that (a) the
Company may purchase Shares only to the extent the outstanding Class A
Preference Stock represents in excess of 20% of the aggregate Voting Power of
the Company, (b) this Agreement, the Investment Agreement and the Articles as
amended by the Amendment shall be modified so as to maintain the
rights of the Parties hereunder and thereunder (including, without limitation,
appropriate modifications for durations of disapproval rights) and (c) the
Company shall not purchase any Shares from the Class A Holders pursuant to this
clause (y) 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,
such purchase of Class A Preference Stock from the Class A Holders.
(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(f) of ARTICLE SIXTH of the Articles
entitled "GENERAL PROVISIONS RELATING TO ALL STOCK" 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 the third anniversary of the Investment Completion
Date, 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
Preference Stock or Class A Common Stock, as the case may be, in accordance with
Section 2 of that portion of ARTICLE SIXTH of the Articles entitled "GENERAL
PROVISIONS RELATING TO ALL STOCK" 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 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 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 one of FT or DT (and its Qualified
Subsidiaries) to the aggregate Percentage Ownership Interest of the other of FT
or DT (and its Qualified Subsidiaries) (i) until the Investment Completion Date
shall be 1 to 1, and (ii) thereafter shall not be greater than 3 to 2 (in each
case, the "Applicable Ratio").
(b) 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) 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 on
or after the second anniversary of the Initial Issuance Date and prior to the
fifth anniversary of the Initial Issuance Date, 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 after the earlier of the Fixed Closing Date
and the Investment Completion Date, 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) and the rights under Section 2.5 of the Investment
Agreement (if applicable), within the later of (i) 180 days after such Major
Issuance, and (ii) 180 days after the Fixed Closing Date, 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 the later of such notice or the Investment Completion
Date, a number of shares of Common Stock 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 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) or Exempt Asset Divestiture (before the second anniversary of
the Initial Issuance Date) in each case involving a Spin-off,
(a) the Company shall cause the entity whose equity interests are to be
distributed in such Spin-off to
(i) if such Spin-off occurs after the Initial Issuance Date and before
the later to occur of the date of the Optional Shares Closing and the Investment
Completion Date, execute an investment agreement (or its equivalent) with
respect to the spun-off entity (the "Spin-Off Investment Agreement") with FT, DT
and any of its Qualified Subsidiaries that are party to the Investment Agreement
at the time of such Spin-off containing terms which are no less favorable to FT
and DT than those set forth in the Investment Agreement;
(ii) 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 Registration
Rights Agreement, the Standstill Agreement, the FT Investor Confidentiality
Agreement and the DT Investor Confidentiality Agreement (the "Principal
Investment Documents"); and
(iii) 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 Spin-Off Investment Agreement (if applicable) and such 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.
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 following
the Initial Issuance Date, 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 as
amended by the Amendment or the Joint Venture Documents, the Company shall not
hold in the Local Exchange Division, the Cellular and Wireless 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. Rights Plan Events. The notice described in Section
7(p) of the Class A Provisions, upon the
Distribution Date (as defined in the Rights Agreement), shall constitute an
irrevocable and continuing waiver of any right that FT, DT or the Class A
Holders may have to disapprove the Cellular Spin-off under this Agreement, the
Articles, the Other Investment Documents or any document or agreement relating
thereto. If such notice is delivered, then within 90 days following the
Distribution Date the Company and the Class A Holders shall execute a Spin-off
Investment Agreement and Principal Investment Documents with respect to the
Cellular Spin-off in accordance with Section 7.10 hereof, mutatis mutandis.
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 after the Investment Completion Date, 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
Common Stock into shares of Common Stock or a termination of the Fundamental
Rights as to all outstanding shares of Class A Preference Stock, in either case
pursuant to Sections 7(b), 7(c), 7(d) or 7(g) of the Class A Provisions;
(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, 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;
(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; or
(v) if at any time prior to the Investment Completion Date, the aggregate
liquidation value of the Class A Preference Stock
is less than $1.5 billion as a result of a Transfer of shares of Class A
Preference Stock by a Class A Holder (other than a Transfer contemplated by
Section 7.4(b)(i)(y) hereof).
(b) The rights of the Class A Holders under Articles III, IV, V and
VI hereof, and Sections 7.3, 7.8, 7.13 and 7.15 hereof, shall terminate upon (i)
the conversion of all of the outstanding shares of Class A Common Stock into
shares of Common Stock or (ii) the termination of the Fundamental Rights as to
all outstanding shares of Class A Preference Stock, in either case pursuant to
Section 7(h) of the Class A Provisions.
(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 4 (except Sections 4(a)(iii) and 4(c)), 5, 6, 7 and 8 of
the Class A Provisions are suspended pursuant to Section 7(b) of the Class A
Provisions.
(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 and 7.13 hereof shall terminate
upon (i) the conversion of the outstanding shares of Class A Common Stock owned
by such Qualified Stock Purchaser into Common Stock or, (ii) the termination of
the Fundamental Rights as to the shares of Class A Preference Stock owned by
such Qualified Stock Purchaser, in either case pursuant to Section 7(k) of the
Class A Provisions, and the rights of a Qualified Stock Purchaser 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 such Qualified Stock Purchaser under Sections 4 (except Sections 4(a)(iii)
and 4(c)), 5, 6, 7 and 8 of the Class A Provisions are suspended pursuant to
Section 7(k) of the Class A Provisions.
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(f) of that portion of ARTICLE SIXTH of the Articles
entitled "GENERAL PROVISIONS RELATING TO ALL STOCK" or Section 3(a) of the Class
A Provisions (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 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 or a Requested Sale
Supplementary Payment pursuant to Section 3(a) of the Class A Provisions and as
a result thereof such Class A Holder incurs taxes in connection with the
transaction contemplated in such Section 7.4(d) or such Section 3(a), as the
case may be, 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 or for the aggregate
Liquidation Preference of such Shares in the case of a transaction contemplated
by such Section 3(a) (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 or at the aggregate Liquidation Preference, as
the case may be, 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 or Section 3(a) of the Class A Provisions, as the case may be, in an
Unrelated Party Sale at the Formula Price in the case of a disposition pursuant
to Section 7.4(d) or at the aggregate Liquidation Preference of such Shares in
the case of a disposition pursuant to such Section 3(a) (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, or at the aggregate
Liquidation Preference of such Shares in the case of a disposition pursuant to
Section 3(a) of the Class A Provisions. 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 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 or Section 3(a) of the Class A
Provisions in an Unrelated Party Sale at the Formula Price in the case of a
disposition pursuant to such Section 7.4(d) or the aggregate Liquidation
Preference of such Shares in the case of a disposition pursuant to such Section
3(a).
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,
Supplementary Payment or Requested Sale 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 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, or in the case of a transaction
under Section 3(a) of the Class A Provisions has held such shares prior to the
earlier of (x) the date on which all conditions necessary to establish the
Conversion Date as a date certain pursuant to Section 3(a) of the Class A
Provisions have been satisfied, and (y) the date on which the Company notifies
each of FT and DT in good faith that it is reasonably likely that upon
conversion, the shares of Class A Preference Stock will convert into Class A
Common Stock or Common Stock representing in excess of 20% of the Voting Power
of the Company (for purposes of this Section 9.4(c), a Share received upon a
conversion shall be considered held by a Qualified Subsidiary during the period
such Qualified Subsidiary held the Share that was surrendered in connection with
such conversion);
(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, Supplementary Payment or Requested Sale 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, Supplementary Payment or
Requested Sale 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, Supplementary Payment or Requested
Sale Supplementary Payment by the third party (taking into account the actual
tax effect to the Indemnitee of such third party purchase or Supplementary
Payment or Requested Sale 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.
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,
Supplementary Payment or Requested Sale 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,
Supplementary Payment or Requested Sale Supplementary Payment for U.S. Federal
income tax purposes, such Indemnitee shall thereafter treat such Company
Purchase, Supplementary Payment or Requested Sale 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.
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, 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 (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
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 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:
FT: ▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Cedex 15
France
Attn: Executive Vice President,
International
Tel: (▇▇-▇) ▇▇-▇▇-▇▇-▇▇
Fax: (▇▇-▇) ▇▇-▇▇-▇▇-▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
DT: ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Attn: Chief Executive Officer
Tel: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Sprint: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ Wing
Westwood, Kansas 66205
U.S.A.
Attn: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The parties 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 (including, without
limitation, any successor of FT in a privatization) 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. In the event of a reorganization of FT pursuant to, as a
result of or in connection with, a privatization, the corporation or other
entity formed to continue the business activities of FT shall assume the rights
and obligations of FT under this Agreement.
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 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 ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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 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. 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, 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 both this
Agreement and the Memorandum of Understanding, dated June 14, 1994 (the "MOU"),
among each of the parties hereto, in the English language, and have prepared
successive drafts and the definitive texts of the MOU and this Agreement in the
English language. For purposes of complying with the 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.
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. Board Membership. (a) FT confirms that its present
intention is to nominate its Chairman of the Board to be a Class A Director.
(b) DT confirms that its present intention is to nominate its
Vorstandsvorsitzender to be a Class A Director.
Section 11.12. Effect of Conversion. (a) If all of the shares of Class A
Common Stock shall have been converted into Common Stock or if there is a
termination of Fundamental Rights as to all outstanding shares of Class A
Preference Stock, in either case pursuant to Section 7 of the Class A
Provisions, 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 Common Stock, and (ii) in the case of Class A Preference Stock, instead be
issued as that number of duly issued, fully paid and nonassessable shares of
Common Stock equal to the number of Class A Conversion Shares related to one
share of Class A Preference Stock outstanding immediately prior to the date of
issuance.
(b) If all of the shares of Class A Common Stock held by a Qualified Stock
Purchaser shall have been converted into Common Stock or if there is a
termination of Fundamental Rights as to shares of Class A Preference Stock owned
by such Qualified Stock Purchaser, in either case pursuant to Section 7 of the
Class A provisions, each share of Class A Stock to have been issued by the
Company to such 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 Common Stock, and (ii) in the case of Class A
Preference Stock, instead be issued as that number of duly issued, fully paid
and nonassessable shares of Common Stock equal to the number of Class A
Conversion Shares related to one share of Class A Preference Stock outstanding
immediately prior to the date of issuance.
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 as amended by the
Amendment, (c) the transaction in question is not a "Business Combination"
within the meaning of the Fair Price Provisions, or (d) the Class A Holder that
is a party to the transaction, along with its Affiliates (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as in effect on
October 1, 1982) and Associates (as such term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as in effect on October 1, 1982), is not an
"Interested Stockholder" or an "Affiliate" of an "Interested Stockholder" within
the meaning of the Fair Price Provisions. Where this Agreement provides that
Continuing Director approval is explicitly required to undertake a transaction
or make a determination on the part of the Company, the Company shall not
undertake such transaction or make such determination unless it first delivers a
certificate, signed by a duly authorized officer of the Company, to each of FT
and DT, certifying that such approval either has been obtained or is not
required as set forth in the preceding sentence, and FT shall be entitled to
rely on such certificate.
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/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
FRANCE TELECOM
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
DEUTSCHE TELEKOM AG
By: /s/ ▇▇. ▇▇▇▇▇▇▇ May
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Name: ▇▇. ▇▇▇▇▇▇▇ May
Title: Member of the Board of
Management